Kimberly-Clark Announces Second Quarter 2022 Results
Executive Summary
- Second quarter 2022 net sales of
$5.1 billion increased 7 percent compared to the year-ago period, including organic sales growth of 9 percent. - Diluted net income per share for the second quarter was
$1.29 in 2022 and$1.19 in 2021. - Second quarter adjusted earnings per share were
$1.34 in 2022, down 9 percent compared to$1.47 in 2021. Adjusted earnings per share exclude certain items described later in this news release. - Diluted net income per share for 2022 is expected to be
$5.67 to$6.10 . - The company is now targeting full-year 2022 organic sales growth of 5 to 7 percent compared to prior outlook of 4 to 6 percent and maintains adjusted earnings per share range of
$5.60 to$6.00 .
"I'm pleased to close the first half of the year with another quarter of excellent execution by our teams who delivered strong organic sales growth, with increases in all our segments. Our growth strategy is working," said
Hsu continued, "As we manage our business prudently in the near-term, we're committed to investing in our people, brands and capabilities to ensure we continue to be well positioned to deliver balanced and sustainable growth over the long-term."
Second Quarter 2022 Operating Results
Sales of
Second quarter operating profit was $621 million in 2022 and
Results were impacted by
The second quarter effective tax rate was 21.8 percent in 2022 and 22.8 percent in 2021. The second quarter adjusted effective tax rate was 22.0 percent in 2022 and 22.5 percent in 2021. Kimberly-Clark's share of net income of equity companies in the second quarter was $29 million in 2022 and
Cash Flow and Balance Sheet
Cash provided by operations in the second quarter was $740 million in 2022 and
Second Quarter 2022 Business Segment Results
Personal Care Segment
Second quarter sales of
Sales in
Sales in D&E markets increased 7 percent. Net selling prices increased sales 12 percent and product mix improved 3 points while volumes declined 6 percent. Changes in foreign currency exchange rates decreased sales 2 percent. Organic sales growth was driven by
Sales in developed markets outside
Consumer Tissue Segment
Second quarter sales of
Sales in
Sales in D&E markets increased 4 percent. Net selling prices rose 9 percent and product mix improved 3 percent, while volumes were down 7 percent. Changes in foreign currency exchange rates decreased sales 1 point.
Sales in developed markets outside
K-C Professional (KCP) Segment
Second quarter sales of
Sales in
Sales in D&E markets increased 4 percent. Net selling prices increased 7 percent, product mix increased sales 1 point while volumes declined 2 percent. Changes in foreign currency exchange rates decreased sales 2 percent.
Sales in developed markets outside
Year-To-Date Results
For the first six months of 2022, sales of
Year-to-date operating profit was
Year-to-date adjusted operating profit was
Through six months, diluted net income per share was
2022 Outlook and Key Planning Assumptions
The company updated key planning and guidance assumptions for full-year 2022. The outlook reflects a reasonable set of assumptions subject to change given the high level of volatility in the macro environment.
- Net sales increase 2 to 4 percent (no change).
- Organic sales increase 5 to 7 percent (prior target 4 to 6 percent).
- Foreign currency exchange rates unfavorable approximately 3 percent (prior estimate approximately 2 percent).
- Adjusted operating profit down mid-single digit percent (prior estimate down low to mid-single digit).
- Key cost inputs expected to increase
$1.4 to$1.6 billion (previous estimate$1.1 to$1.3 billion ). Costs are projected to increase or remain elevated for most inputs, including pulp and other raw materials as well as distribution and energy. - Adjusted earnings per share remains
$5.60 to$6.00 . Given the current cost outlook, expect to be at the lower end of the range.
Prepared Management Remarks and Live Question and Answer Webcast
At approximately
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 reconciliations to the comparable GAAP financial measures:
- Pension settlements. In the second quarter of 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.
- 2018 Global Restructuring Program. In 2018, the company initiated a restructuring program to reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. Restructuring charges were incurred in 2018, 2019, 2020 and 2021. The restructuring actions were completed by the end of 2021.
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.
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. To keep up with the latest news and to learn more about the company's 150-year history of innovation, visit kimberly-clark.com.
Copies of Kimberly-Clark's Annual Report to Stockholders and its proxy statements and other
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
CONSOLIDATED INCOME STATEMENTS (Millions, except per share amounts) |
|||||
Three Months Ended |
|||||
2022 |
2021 |
Change |
|||
|
$ 5,063 |
$ 4,722 |
+7 % |
||
Cost of products sold |
3,534 |
3,242 |
+9 % |
||
Gross Profit |
1,529 |
1,480 |
+3 % |
||
Marketing, research and general expenses |
906 |
854 |
+6 % |
||
Other (income) and expense, net |
2 |
13 |
-85 % |
||
Operating Profit |
621 |
613 |
+1 % |
||
Nonoperating expense |
(27) |
(55) |
-51 % |
||
Interest income |
1 |
2 |
-50 % |
||
Interest expense |
(68) |
(65) |
+5 % |
||
Income Before Income Taxes and Equity Interests |
527 |
495 |
+6 % |
||
Provision for income taxes |
(115) |
(113) |
+2 % |
||
Income Before Equity Interests |
412 |
382 |
+8 % |
||
Share of net income of equity companies |
29 |
28 |
+4 % |
||
Net Income |
441 |
410 |
+8 % |
||
Net income attributable to noncontrolling interests |
(4) |
(6) |
-33 % |
||
Net Income Attributable to |
$ 437 |
$ 404 |
+8 % |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 1.30 |
$ 1.20 |
+8 % |
||
Diluted |
$ 1.29 |
$ 1.19 |
+8 % |
||
Cash Dividends Declared |
$ 1.16 |
$ 1.14 |
+2 % |
||
Common Shares Outstanding |
|
||||
2022 |
2021 |
||||
Outstanding shares as of |
337.6 |
336.9 |
|||
Average diluted shares for three months ended |
338.3 |
338.3 |
|||
Unaudited |
CONSOLIDATED INCOME STATEMENTS (Millions, except per share amounts) |
|||||
Six Months Ended |
|||||
2022 |
2021 |
Change |
|||
|
$ 10,158 |
$ 9,465 |
+7 % |
||
Cost of products sold |
7,109 |
6,396 |
+11 % |
||
Gross Profit |
3,049 |
3,069 |
-1 % |
||
Marketing, research and general expenses |
1,792 |
1,669 |
+7 % |
||
Other (income) and expense, net |
(57) |
17 |
N.M. |
||
Operating Profit |
1,314 |
1,383 |
-5 % |
||
Nonoperating expense |
(31) |
(61) |
-49 % |
||
Interest income |
3 |
3 |
— |
||
Interest expense |
(133) |
(128) |
+4 % |
||
Income Before Income Taxes and Equity Interests |
1,153 |
1,197 |
-4 % |
||
Provision for income taxes |
(229) |
(260) |
-12 % |
||
Income Before Equity Interests |
924 |
937 |
-1 % |
||
Share of net income of equity companies |
52 |
67 |
-22 % |
||
Net Income |
976 |
1,004 |
-3 % |
||
Net income attributable to noncontrolling interests |
(16) |
(16) |
— |
||
Net Income Attributable to |
$ 960 |
$ 988 |
-3 % |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 2.85 |
$ 2.92 |
-2 % |
||
Diluted |
$ 2.84 |
$ 2.92 |
-3 % |
||
Cash Dividends Declared |
$ 2.32 |
$ 2.28 |
+2 % |
||
Common Shares Outstanding |
|
||||
2022 |
2021 |
||||
Average diluted shares for six months ended |
338.3 |
338.8 |
|||
Unaudited |
|||||
N.M. - Not Meaningful |
NON-GAAP RECONCILIATIONS (Millions, except per share amounts) |
||||||
Three Months Ended |
||||||
As Reported |
Pension |
As Adjusted Non-GAAP |
||||
Nonoperating expense |
$ (27) |
$ (24) |
$ (3) |
|||
Provision for income taxes |
(115) |
6 |
(121) |
|||
Effective tax rate |
21.8 % |
— |
22.0 % |
|||
Net Income Attributable to |
437 |
(18) |
455 |
|||
Diluted Earnings per Share(a) |
1.29 |
(0.05) |
1.34 |
|||
Three Months Ended |
||||||
As Reported |
2018 Global Restructuring Program |
As Adjusted Non-GAAP |
||||
Cost of products sold |
$ 3,242 |
$ 25 |
$ 3,217 |
|||
Gross Profit |
1,480 |
(25) |
1,505 |
|||
Marketing, research and general expenses |
854 |
30 |
824 |
|||
Other (income) and expense, net |
13 |
8 |
5 |
|||
Operating Profit |
613 |
(63) |
676 |
|||
Nonoperating expense |
(55) |
(56) |
1 |
|||
Provision for income taxes |
(113) |
25 |
(138) |
|||
Effective tax rate |
22.8 % |
— |
22.5 % |
|||
Net Income Attributable to |
404 |
(94) |
498 |
|||
Diluted Earnings per Share(a) |
1.19 |
(0.28) |
1.47 |
|||
(a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding. |
||||||
Unaudited |
NON-GAAP RECONCILIATIONS (Millions, except per share amounts) |
|||||||||
Six Months Ended |
|||||||||
As Reported |
Acquisition of |
Pension |
As Adjusted Non-GAAP |
||||||
Marketing, research and general expenses |
$ 1,792 |
$ 21 |
$ — |
$ 1,771 |
|||||
Other (income) and expense, net |
(57) |
(85) |
— |
28 |
|||||
Operating Profit |
1,314 |
64 |
— |
1,250 |
|||||
Nonoperating expense |
(31) |
— |
(24) |
(7) |
|||||
Provision for income taxes |
(229) |
4 |
6 |
(239) |
|||||
Effective tax rate |
19.9 % |
— |
— |
21.5 % |
|||||
Net Income Attributable to |
960 |
68 |
(18) |
910 |
|||||
Diluted Earnings per Share(a) |
2.84 |
0.20 |
(0.05) |
2.69 |
|||||
Six Months Ended |
|||||||||
As Reported |
2018 Global Restructuring Program |
As Adjusted Non-GAAP |
|||||||
Cost of products sold |
$ 6,396 |
$ 50 |
$ 6,346 |
||||||
Gross Profit |
3,069 |
(50) |
3,119 |
||||||
Marketing, research and general expenses |
1,669 |
39 |
1,630 |
||||||
Other (income) and expense, net |
17 |
8 |
9 |
||||||
Operating Profit |
1,383 |
(97) |
1,480 |
||||||
Nonoperating expense |
(61) |
(56) |
(5) |
||||||
Provision for income taxes |
(260) |
32 |
(292) |
||||||
Effective tax rate |
21.7 % |
— |
21.6 % |
||||||
Net income attributable to noncontrolling interests |
(16) |
1 |
(17) |
||||||
Net Income Attributable to |
988 |
(120) |
1,108 |
||||||
Diluted Earnings per Share(a) |
2.92 |
(0.35) |
3.27 |
||||||
(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 |
$ 311 |
$ 270 |
|
Accounts receivable, net |
2,469 |
2,207 |
|
Inventories |
2,278 |
2,239 |
|
Other current assets |
604 |
849 |
|
Total Current Assets |
5,662 |
5,565 |
|
Property, Plant and Equipment, Net |
7,931 |
8,097 |
|
Investments in Equity Companies |
270 |
290 |
|
|
2,102 |
1,840 |
|
Other Intangible Assets, Net |
893 |
810 |
|
Other Assets |
1,256 |
1,235 |
|
TOTAL ASSETS |
$ 18,114 |
$ 17,837 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current Liabilities |
|||
Debt payable within one year |
$ 1,031 |
$ 433 |
|
Trade accounts payable |
3,701 |
3,840 |
|
Accrued expenses and other current liabilities |
2,089 |
2,096 |
|
Dividends payable |
388 |
380 |
|
Total Current Liabilities |
7,209 |
6,749 |
|
Long-Term Debt |
7,698 |
8,141 |
|
Noncurrent Employee Benefits |
829 |
809 |
|
Deferred Income Taxes |
703 |
694 |
|
Other Liabilities |
673 |
681 |
|
|
260 |
26 |
|
Stockholders' Equity |
|||
|
593 |
514 |
|
Noncontrolling Interests |
149 |
223 |
|
Total Stockholders' Equity |
742 |
737 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 18,114 |
$ 17,837 |
|
2022 Data is Unaudited |
CONSOLIDATED CASH FLOW STATEMENTS (Millions) |
|||||||
Three Months Ended |
Six Months Ended |
||||||
2022 |
2021 |
2022 |
2021 |
||||
Operating Activities |
|||||||
Net income |
$ 441 |
$ 410 |
$ 976 |
$ 1,004 |
|||
Depreciation and amortization |
192 |
189 |
380 |
378 |
|||
Asset impairments |
— |
— |
— |
3 |
|||
Gain on previously held equity investment in Thinx |
— |
— |
(85) |
— |
|||
Stock-based compensation |
52 |
20 |
68 |
42 |
|||
Deferred income taxes |
17 |
(39) |
(35) |
(74) |
|||
Net (gains) losses on asset dispositions |
7 |
11 |
13 |
15 |
|||
Equity companies' earnings (in excess of) less than dividends paid |
2 |
6 |
(21) |
(32) |
|||
Operating working capital |
21 |
(95) |
(348) |
(495) |
|||
Postretirement benefits |
13 |
51 |
(1) |
36 |
|||
Other |
(5) |
12 |
(3) |
9 |
|||
Cash Provided by Operations |
740 |
565 |
944 |
886 |
|||
Investing Activities |
|||||||
Capital spending |
(217) |
(201) |
(470) |
(499) |
|||
Acquisition of business, net of cash acquired |
(12) |
— |
(46) |
— |
|||
Proceeds from dispositions of property |
1 |
30 |
1 |
30 |
|||
Investments in time deposits |
(217) |
(292) |
(300) |
(451) |
|||
Maturities of time deposits |
290 |
226 |
545 |
433 |
|||
Other |
(6) |
(5) |
(7) |
— |
|||
Cash Used for Investing |
(161) |
(242) |
(277) |
(487) |
|||
Financing Activities |
|||||||
Cash dividends paid |
(391) |
(389) |
(775) |
(748) |
|||
Change in short-term debt |
(281) |
216 |
553 |
960 |
|||
Debt proceeds |
— |
— |
— |
5 |
|||
Debt repayments |
— |
— |
(300) |
(253) |
|||
Proceeds from exercise of stock options |
52 |
17 |
75 |
27 |
|||
Acquisitions of common stock for the treasury |
(24) |
(162) |
(49) |
(331) |
|||
Cash dividends paid to noncontrolling interests |
(82) |
— |
(82) |
(17) |
|||
Other |
(27) |
(24) |
(42) |
(37) |
|||
Cash Used for Financing |
(753) |
(342) |
(620) |
(394) |
|||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(8) |
5 |
(6) |
(2) |
|||
Change in Cash and Cash Equivalents |
(182) |
(14) |
41 |
3 |
|||
Cash and Cash Equivalents - Beginning of Period |
493 |
320 |
270 |
303 |
|||
Cash and Cash Equivalents - End of Period |
$ 311 |
$ 306 |
$ 311 |
$ 306 |
|||
Unaudited |
SELECTED BUSINESS SEGMENT DATA (Millions) |
||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||
2022 |
2021 |
Change |
2022 |
2021 |
Change |
|||||||
|
||||||||||||
Personal Care |
$ 2,710 |
$ 2,517 |
+8 % |
$ 5,439 |
$ 4,979 |
+9 % |
||||||
Consumer Tissue |
1,537 |
1,424 |
+8 % |
3,105 |
2,934 |
+6 % |
||||||
K-C Professional |
802 |
765 |
+5 % |
1,582 |
1,517 |
+4 % |
||||||
Corporate & Other |
14 |
16 |
N.M. |
32 |
35 |
N.M. |
||||||
TOTAL |
$ 5,063 |
$ 4,722 |
+7 % |
$ 10,158 |
$ 9,465 |
+7 % |
||||||
OPERATING PROFIT |
||||||||||||
Personal Care |
$ 466 |
$ 454 |
+3 % |
$ 941 |
$ 935 |
+1 % |
||||||
Consumer Tissue |
178 |
196 |
-9 % |
349 |
465 |
-25 % |
||||||
K-C Professional |
85 |
110 |
-23 % |
175 |
236 |
-26 % |
||||||
Corporate & Other(a) |
(106) |
(134) |
N.M. |
(208) |
(236) |
N.M. |
||||||
Other (income) and expense, net(a) |
2 |
13 |
-85 % |
(57) |
17 |
N.M. |
||||||
TOTAL OPERATING PROFIT |
$ 621 |
$ 613 |
+1 % |
$ 1,314 |
$ 1,383 |
-5 % |
(a) |
Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, |
PERCENTAGE CHANGE IN NET SALES VERSUS PRIOR YEAR |
|||||||||||||||
Three Months Ended |
|||||||||||||||
Total(a) |
Volume |
Net Price |
Mix/ Other |
Acquisition/ |
Currency |
Organic(c) |
|||||||||
Personal Care |
8 |
(1) |
9 |
1 |
1 |
(2) |
9 |
||||||||
Consumer Tissue |
8 |
3 |
7 |
1 |
— |
(3) |
11 |
||||||||
K-C Professional |
5 |
(3) |
9 |
2 |
— |
(3) |
7 |
||||||||
TOTAL CONSOLIDATED |
7 |
(1) |
9 |
1 |
— |
(2) |
9 |
||||||||
Six Months Ended |
|||||||||||||||
Total(a) |
Volume |
Net Price |
Mix/ Other |
Acquisition/ |
Currency |
Organic(c) |
|||||||||
Personal Care |
9 |
1 |
9 |
2 |
— |
(2) |
11 |
||||||||
Consumer Tissue |
6 |
3 |
6 |
1 |
(1) |
(2) |
9 |
||||||||
K-C Professional |
4 |
(2) |
7 |
2 |
— |
(2) |
7 |
||||||||
TOTAL CONSOLIDATED |
7 |
1 |
7 |
1 |
— |
(2) |
10 |
(a) |
Total may not equal the sum of volume, net price, mix/other, acquisition/exited businesses and currency due to rounding. |
(b) |
Combined impact of the acquisition of |
(c) |
Combined impact of changes in volume, net price and mix/other. |
Unaudited |
|
N.M. - Not Meaningful |
NON-GAAP RECONCILIATIONS OUTLOOK FOR 2022 |
||||||
|
||||||
ESTIMATED FULL YEAR 2022 DILUTED EARNINGS PER SHARE |
||||||
Adjusted earnings per share |
$ 5.60 |
- |
$ 6.00 |
|||
Acquisition of controlling interest in Thinx |
0.20 |
- |
0.20 |
|||
Pension settlements |
(0.13) |
- |
(0.10) |
|||
Per share basis – diluted net income attributable to |
$ 5.67 |
- |
$ 6.10 |
[KMB-F]
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SOURCE
Investor Relations contact: Taryn Miller, 972-281-1318, KC.InvestorRelations@kcc.com; Media Relations contact: Terry Balluck, 972-281-1397, media.relations@kcc.com