Kimberly-Clark Announces First Quarter 2021 Results
Executive Summary
- First quarter 2021 net sales of
$4.7 billion decreased 5 percent compared to the year-ago period, including an organic sales decline of 8 percent. - Diluted net income per share for the first quarter was
$1.72 in 2021 and$1.92 in 2020. - First quarter adjusted earnings per share were
$1.80 in 2021 compared to$2.13 in 2020. Adjusted earnings per share exclude certain items described later in this news release. - Diluted net income per share for 2021 is anticipated to be
$6.65 to$7.15 . - The company is now targeting full-year 2021 organic sales growth of 0 to 1 percent and adjusted earnings per share of
$7.30 to$7.55 . The prior outlook was for organic sales growth of 1 to 2 percent and adjusted earnings per share of$7.75 to$8.00 . The updated earnings outlook reflects significantly higher input cost inflation and lower sales volumes, partially offset by higher net selling prices and additional cost savings.
Chairman and Chief Executive Officer
Hsu continued, "Looking ahead, we will continue to execute K-C Strategy 2022, focus on further improving our market positions and invest for long-term success. While our updated outlook reflects a more challenging near-term environment, our business remains fundamentally healthy and we are confident in our strategies to create long-term shareholder value."
First Quarter 2021 Operating Results
Sales of
The volume comparison reflects increased shipments in the year-ago period to support consumer stock up related to the outbreak of COVID-19. The stock up impacted all business segments, in particular consumer tissue, and all major geographies. In addition, volumes in North American consumer products in 2021 were negatively impacted by supply chain disruptions related to severe weather conditions that occurred in February in the southern part of the United States. The disruptions included the temporary shutdown of several company manufacturing facilities and reduced availability of raw materials from suppliers, mostly impacting the company's personal care segment.
In
First quarter operating profit was
The first quarter effective tax rate was 20.9 percent in 2021 and 23.6 percent in 2020. The first quarter adjusted effective tax rate was 20.9 percent in 2021 and 23.2 percent in 2020. The rate in 2021 benefited from certain planning initiatives.
Cash Flow and Balance Sheet
Cash provided by operations in the first quarter was
First Quarter 2021 Business Segment Results
Personal Care Segment
First quarter sales of
Sales in
Sales in D&E markets increased 12 percent. The Softex Indonesia acquisition increased sales by 11 percent while changes in currency rates reduced sales 5 percent. Volumes rose 4 percent and the combined impact of changes in net selling prices and product mix increased sales 2 percent. Organic sales increased in
Sales in developed markets outside
Consumer Tissue Segment
First quarter sales of
Sales in
Sales in D&E markets decreased 11 percent including a 2 point negative impact from changes in currency rates. Volumes fell 10 percent and net selling prices were down 2 percent, while product mix improved 1 percent. The Softex Indonesia acquisition increased sales 2 percent.
Sales in developed markets outside
K-C Professional (KCP) Segment
First quarter sales of
Sales in
Sales in D&E markets decreased 18 percent including a 2 point negative impact from changes in currency rates. Volumes fell 21 percent, with significant declines in all major geographies, while net selling prices increased 5 percent.
Sales in developed markets outside
2018 Global Restructuring Program
In
The restructuring is expected to be completed in 2021. Total restructuring charges are anticipated to be
2021 Outlook and Key Planning Assumptions
The company updated the following key planning and guidance assumptions for full-year 2021:
- Net sales increase 3 to 5 percent (prior assumption 4 to 6 percent).
- Organic sales increase 0 to 1 percent (prior target 1 to 2 percent). Versus the previous assumption, volumes are expected to be lower and net selling prices are expected to be higher.
- Foreign currency exchange rates favorable between 1 and 2 percent (no change).
- Softex Indonesia acquisition expected to increase sales 2 percent while exited businesses in conjunction with the 2018 Global Restructuring Program anticipated to reduce sales slightly (no change).
- Adjusted operating profit expected to decline 3 to 6 percent year-on-year (prior assumption similar, to up 2 percent).
- Benefits from higher net selling prices, partially offset by the impact of lower volumes.
- Key cost inputs expected to increase
$900 to$1,050 million (previous estimate$450 to$600 million ). The increased estimate is driven by polymer-based materials and pulp. - Cost savings of
$460 to$520 million , including$340 to$380 million from the FORCE program and$120 to$140 million from the 2018 Global Restructuring Program. The prior estimate was for total savings of$400 to$460 million . - Adjusted earnings per share of
$7.30 to$7.55 (previous outlook$7.75 to$8.00 ).
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 charges for the 2018 Global Restructuring Program (mentioned elsewhere in this release) for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures.
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 and acquisitions also impact the year-over-year change in net sales.
About
Copies of
As more fully described in
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 |
|||||||
2021 |
2020 |
Change |
|||||
|
$ |
4,743 |
$ |
5,009 |
-5 % |
||
Cost of products sold |
3,154 |
3,218 |
-2 % |
||||
Gross Profit |
1,589 |
1,791 |
-11 % |
||||
Marketing, research and general expenses |
815 |
873 |
-7 % |
||||
Other (income) and expense, net |
4 |
14 |
-71 % |
||||
Operating Profit |
770 |
904 |
-15 % |
||||
Nonoperating expense |
(6) |
(11) |
-45 % |
||||
Interest income |
1 |
2 |
-50 % |
||||
Interest expense |
(63) |
(61) |
+3 % |
||||
Income Before Income Taxes and Equity Interests |
702 |
834 |
-16 % |
||||
Provision for income taxes |
(147) |
(197) |
-25 % |
||||
Income Before Equity Interests |
555 |
637 |
-13 % |
||||
Share of net income of equity companies |
39 |
38 |
+3 % |
||||
Net Income |
594 |
675 |
-12 % |
||||
Net income attributable to noncontrolling interests |
(10) |
(15) |
-33 % |
||||
Net Income Attributable to |
$ |
584 |
$ |
660 |
-12 % |
||
Per Share Basis |
|||||||
Net Income Attributable to |
|||||||
Basic |
$ |
1.73 |
$ |
1.93 |
-10 % |
||
Diluted |
$ |
1.72 |
$ |
1.92 |
-10 % |
||
Cash Dividends Declared |
$ |
1.14 |
$ |
1.07 |
+7 % |
||
Common Shares Outstanding |
|
||||||
2021 |
2020 |
||||||
Outstanding shares as of |
337.6 |
340.8 |
|||||
Average diluted shares for three months ended |
339.4 |
344.1 |
Unaudited |
|
||||||||
NON-GAAP RECONCILIATIONS |
||||||||
(Millions, except per share amounts) |
||||||||
Three Months Ended |
||||||||
As Reported |
2018 Global Restructuring Program |
As Adjusted Non-GAAP |
||||||
Cost of products sold |
$ |
3,154 |
$ |
25 |
$ |
3,129 |
||
Gross Profit |
1,589 |
(25) |
1,614 |
|||||
Marketing, research and general expenses |
815 |
9 |
806 |
|||||
Operating Profit |
770 |
(34) |
804 |
|||||
Provision for income taxes |
(147) |
7 |
(154) |
|||||
Effective tax rate |
20.9 % |
— |
20.9 % |
|||||
Net income attributable to noncontrolling interests |
(10) |
1 |
(11) |
|||||
Net Income Attributable to |
584 |
(26) |
610 |
|||||
Diluted Earnings per Share(a) |
1.72 |
(0.08) |
1.80 |
|||||
Three Months Ended |
||||||||
As Reported |
2018 Global Program |
As Adjusted Non-GAAP |
||||||
Cost of products sold |
$ |
3,218 |
$ |
70 |
$ |
3,148 |
||
Gross Profit |
1,791 |
(70) |
1,861 |
|||||
Marketing, research and general expenses |
873 |
23 |
850 |
|||||
Operating Profit |
904 |
(93) |
997 |
|||||
Provision for income taxes |
(197) |
18 |
(215) |
|||||
Effective tax rate |
23.6 % |
— |
23.2 % |
|||||
Net income attributable to noncontrolling interests |
(15) |
1 |
(16) |
|||||
Net Income Attributable to |
660 |
(74) |
734 |
|||||
Diluted Earnings per Share(a) |
1.92 |
(0.22) |
2.13 |
(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) |
|||||
March 31, 2021 |
|
||||
ASSETS |
|||||
Current Assets |
|||||
Cash and cash equivalents |
$ |
320 |
$ |
303 |
|
Accounts receivable, net |
2,199 |
2,235 |
|||
Inventories |
1,956 |
1,903 |
|||
Other current assets |
668 |
733 |
|||
Total Current Assets |
5,143 |
5,174 |
|||
Property, Plant and Equipment, Net |
7,887 |
8,042 |
|||
Investments in Equity Companies |
349 |
300 |
|||
|
1,820 |
1,895 |
|||
Other Intangible Assets, Net |
805 |
832 |
|||
Other Assets |
1,222 |
1,280 |
|||
TOTAL ASSETS |
$ |
17,226 |
$ |
17,523 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Current Liabilities |
|||||
Debt payable within one year |
$ |
1,274 |
$ |
486 |
|
Trade accounts payable |
3,152 |
3,336 |
|||
Accrued expenses and other current liabilities |
1,883 |
2,262 |
|||
Dividends payable |
385 |
359 |
|||
Total Current Liabilities |
6,694 |
6,443 |
|||
Long-Term Debt |
7,548 |
7,878 |
|||
Noncurrent Employee Benefits |
839 |
864 |
|||
Deferred Income Taxes |
698 |
723 |
|||
Other Liabilities |
673 |
718 |
|||
|
28 |
28 |
|||
Stockholders' Equity |
|||||
|
518 |
626 |
|||
Noncontrolling Interests |
228 |
243 |
|||
Total Stockholders' Equity |
746 |
869 |
|||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
17,226 |
$ |
17,523 |
2021 Data is Unaudited |
|
|||||
CONSOLIDATED CASH FLOW STATEMENTS |
|||||
(Millions) |
|||||
Three Months Ended |
|||||
2021 |
2020 |
||||
Operating Activities |
|||||
Net income |
$ |
594 |
$ |
675 |
|
Depreciation and amortization |
189 |
213 |
|||
Asset impairments |
3 |
— |
|||
Stock-based compensation |
22 |
15 |
|||
Deferred income taxes |
(35) |
(9) |
|||
Net (gains) losses on asset dispositions |
4 |
7 |
|||
Equity companies' earnings (in excess of) less than dividends paid |
(39) |
(38) |
|||
Operating working capital |
(400) |
(144) |
|||
Postretirement benefits |
(15) |
(14) |
|||
Other |
(2) |
(1) |
|||
Cash Provided by Operations |
321 |
704 |
|||
Investing Activities |
|||||
Capital spending |
(298) |
(352) |
|||
Investments in time deposits |
(159) |
(105) |
|||
Maturities of time deposits |
207 |
96 |
|||
Other |
5 |
2 |
|||
Cash Used for Investing |
(245) |
(359) |
|||
Financing Activities |
|||||
Cash dividends paid |
(359) |
(357) |
|||
Change in short-term debt |
744 |
(282) |
|||
Debt proceeds |
5 |
1,241 |
|||
Debt repayments |
(253) |
(252) |
|||
Proceeds from exercise of stock options |
10 |
108 |
|||
Acquisitions of common stock for the treasury |
(169) |
(214) |
|||
Other |
(30) |
(24) |
|||
Cash Used for Financing |
(52) |
220 |
|||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(7) |
(28) |
|||
Change in Cash and Cash Equivalents |
17 |
537 |
|||
Cash and Cash Equivalents - Beginning of Period |
303 |
442 |
|||
Cash and Cash Equivalents - End of Period |
$ |
320 |
$ |
979 |
Unaudited |
|
|||||||
SELECTED BUSINESS SEGMENT DATA |
|||||||
(Millions) |
|||||||
Three Months Ended |
|||||||
2021 |
2020 |
Change |
|||||
|
|||||||
Personal Care |
$ |
2,462 |
$ |
2,422 |
+2 % |
||
Consumer Tissue |
1,510 |
1,723 |
-12 % |
||||
K-C Professional |
752 |
848 |
-11 % |
||||
Corporate & Other |
19 |
16 |
N.M. |
||||
TOTAL |
$ |
4,743 |
$ |
5,009 |
-5 % |
||
OPERATING PROFIT |
|||||||
Personal Care |
$ |
481 |
$ |
527 |
-9 % |
||
Consumer Tissue |
269 |
365 |
-26 % |
||||
K-C Professional |
126 |
181 |
-30 % |
||||
Corporate & Other(a) |
(102) |
(155) |
N.M. |
||||
Other (income) and expense, net(a) |
4 |
14 |
-71 % |
||||
TOTAL OPERATING PROFIT |
$ |
770 |
$ |
904 |
-15 % |
(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. |
PERCENTAGE CHANGE IN NET SALES VERSUS PRIOR YEAR |
||||||||||||||
Three Months Ended |
||||||||||||||
Total(a) |
Volume |
Net Price |
Mix/ Other |
Acquisition(b) |
Currency |
Organic(c) |
||||||||
Personal Care |
2 |
(3) |
— |
1 |
4 |
(1) |
(2) |
|||||||
Consumer Tissue |
(12) |
(14) |
— |
(1) |
— |
1 |
(14) |
|||||||
K-C Professional |
(11) |
(21) |
7 |
2 |
— |
1 |
(13) |
|||||||
TOTAL CONSOLIDATED |
(5) |
(10) |
1 |
1 |
2 |
— |
(8) |
(a) |
Total may not equal the sum of volume, net price, mix/other, acquisition and currency due to rounding. |
(b) |
Acquisition of Softex Indonesia. |
(c) |
Combined impact of changes in volume, net price and mix/other. |
N.M. - Not Meaningful |
|
Unaudited |
|
||||||||
NON-GAAP RECONCILIATIONS |
||||||||
OUTLOOK FOR 2021 |
||||||||
|
||||||||
ESTIMATED FULL YEAR 2021 DILUTED EARNINGS PER SHARE |
||||||||
Adjusted earnings per share |
$ |
7.30 |
- |
$ |
7.55 |
|||
Adjustment for charges related to the 2018 Global Restructuring Program |
(0.65) |
- |
(0.40) |
|||||
Per share basis – diluted net income attributable to |
$ |
6.65 |
- |
$ |
7.15 |
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SOURCE
Investor Relations contact: Paul Alexander, 972-281-1440, palexand@kcc.com, or Media Relations contact: Terry Balluck, 972-281-1397, terry.balluck@kcc.com