Kimberly-Clark Announces Third Quarter 2022 Results
Executive Summary
- Third quarter 2022 net sales of
$5.1 billion increased 1 percent compared to the year-ago period, including organic sales growth of 5 percent. - Diluted net income per share for the third quarter was
$1.38 in 2022 and$1.39 in 2021. - Third quarter adjusted earnings per share were
$1.40 in 2022, down 14 percent compared to$1.62 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 continues to target full-year 2022 organic sales growth of 5 to 7 percent and expects adjusted earnings per share at the lower end of
$5.60 to$6.00 range
"Our third quarter results reflect strong execution by our teams around the world in the face of a challenging macro environment," said Chairman and CEO
Hsu continued, "We continue to execute our plan to restore margins over time and are seeing progress with sequential margin improvement this quarter. As we navigate persistent input cost inflation, we're focused on driving our growth strategy, serving consumers, customers and communities while living our purpose of Better Care for a Better World."
Third Quarter 2022 Operating Results
Sales of
Third quarter operating profit was $655 million in 2022 and
Results were impacted by
The third quarter effective tax rate was 22.4 percent in 2022 and 21.6 percent in 2021. The third quarter adjusted effective tax rate was 22.3 percent in 2022 and 20.9 percent in 2021. Kimberly-Clark's share of net income of equity companies in the third quarter was $29 million in 2022 and
Cash Flow and Balance Sheet
Cash provided by operations in the third quarter was $798 million in 2022 and
Third Quarter 2022 Business Segment Results
Personal Care Segment
Third quarter sales of
Sales in
Sales in D&E markets increased 5 percent. Net selling prices increased sales 15 percent and product mix improved 3 percent while volumes declined 6 percent. Changes in foreign currency exchange rates decreased sales 6 percent. Organic sales growth was strong across
Sales in developed markets outside
Consumer Tissue Segment
Third quarter sales of
Sales in
Sales in D&E markets increased 3 percent. Net selling prices rose 12 percent and product mix improved 1 point, while volumes were down 6 percent. Changes in foreign currency exchange rates decreased sales 5 percent.
Sales in developed markets outside
K-C Professional (KCP) Segment
Third quarter sales of
Sales in
Sales in D&E markets increased 7 percent. Net selling prices increased 8 percent, volumes grew 2 percent and product mix increased sales approximately 2 points. Changes in foreign currency exchange rates decreased sales 6 percent.
Sales in developed markets outside
Year-To-Date Results
For the first nine months of 2022, sales of
Year-to-date operating profit was
Year-to-date adjusted operating profit was
Through nine 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 assumptions subject to change given the high level of volatility in the macro environment.
- Net sales increase 2 to 4 percent with organic sales growth of 5 to 7 percent (no change).
- Foreign currency exchange rates unfavorable 3 to 4 percent on net sales (previous estimate 3 percent) with mid-to high-single digit impact on operating profit (previously mid-single digit).
- Adjusted effective tax rate 22 to 23 percent (previous estimate 22 to 24 percent).
- Adjusted earnings per share outlook remains at the lower end of
$5.60 to$6.00 range (no change). - Capital spending
$0.9 to$1.0 billion (previous range$1.0 to$1.1 billion ).
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 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 |
|||
|
$ 5,053 |
$ 5,010 |
+1 % |
||
Cost of products sold |
3,510 |
3,527 |
— |
||
Gross Profit |
1,543 |
1,483 |
+4 % |
||
Marketing, research and general expenses |
873 |
819 |
+7 % |
||
Other (income) and expense, net |
15 |
7 |
+114 % |
||
Operating Profit |
655 |
657 |
— |
||
Nonoperating expense |
(18) |
(10) |
+80 % |
||
Interest income |
4 |
1 |
+300 % |
||
Interest expense |
(73) |
(64) |
+14 % |
||
Income Before Income Taxes and Equity Interests |
568 |
584 |
-3 % |
||
Provision for income taxes |
(127) |
(126) |
+1 % |
||
Income Before Equity Interests |
441 |
458 |
-4 % |
||
Share of net income of equity companies |
29 |
21 |
+38 % |
||
Net Income |
470 |
479 |
-2 % |
||
Net income attributable to noncontrolling interests |
(3) |
(10) |
-70 % |
||
Net Income Attributable to |
$ 467 |
$ 469 |
— |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 1.38 |
$ 1.39 |
-1 % |
||
Diluted |
$ 1.38 |
$ 1.39 |
-1 % |
||
Cash Dividends Declared |
$ 1.16 |
$ 1.14 |
+2 % |
||
Common Shares Outstanding |
|
||||
2022 |
2021 |
||||
Outstanding shares as of |
337.5 |
336.7 |
|||
Average diluted shares for three months ended |
338.3 |
337.5 |
|||
Unaudited |
|
|||||
CONSOLIDATED INCOME STATEMENTS |
|||||
(Millions, except per share amounts) |
|||||
Nine Months Ended |
|||||
2022 |
2021 |
Change |
|||
|
$ 15,211 |
$ 14,475 |
+5 % |
||
Cost of products sold |
10,619 |
9,923 |
+7 % |
||
Gross Profit |
4,592 |
4,552 |
+1 % |
||
Marketing, research and general expenses |
2,665 |
2,488 |
+7 % |
||
Other (income) and expense, net |
(42) |
24 |
N.M. |
||
Operating Profit |
1,969 |
2,040 |
-3 % |
||
Nonoperating expense |
(49) |
(71) |
-31 % |
||
Interest income |
7 |
4 |
+75 % |
||
Interest expense |
(206) |
(192) |
+7 % |
||
Income Before Income Taxes and Equity Interests |
1,721 |
1,781 |
-3 % |
||
Provision for income taxes |
(356) |
(386) |
-8 % |
||
Income Before Equity Interests |
1,365 |
1,395 |
-2 % |
||
Share of net income of equity companies |
81 |
88 |
-8 % |
||
Net Income |
1,446 |
1,483 |
-2 % |
||
Net income attributable to noncontrolling interests |
(19) |
(26) |
-27 % |
||
Net Income Attributable to |
$ 1,427 |
$ 1,457 |
-2 % |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 4.23 |
$ 4.32 |
-2 % |
||
Diluted |
$ 4.22 |
$ 4.31 |
-2 % |
||
Cash Dividends Declared |
$ 3.48 |
$ 3.42 |
+2 % |
||
Common Shares Outstanding |
|
||||
2022 |
2021 |
||||
Average diluted shares for nine months ended |
338.3 |
338.4 |
|||
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 |
$ (18) |
$ (10) |
$ (8) |
|||
Provision for income taxes |
(127) |
2 |
(129) |
|||
Effective tax rate |
22.4 % |
— |
22.3 % |
|||
Net Income Attributable to |
467 |
(8) |
475 |
|||
Diluted Earnings per Share(a) |
1.38 |
(0.02) |
1.40 |
|||
Three Months Ended |
||||||
As Reported |
2018 Global Restructuring Program |
As Adjusted Non-GAAP |
||||
Cost of products sold |
$ 3,527 |
$ 48 |
$ 3,479 |
|||
Gross Profit |
1,483 |
(48) |
1,531 |
|||
Marketing, research and general expenses |
819 |
39 |
780 |
|||
Other (income) and expense, net |
7 |
1 |
6 |
|||
Operating Profit |
657 |
(88) |
745 |
|||
Nonoperating expense |
(10) |
(9) |
(1) |
|||
Provision for income taxes |
(126) |
16 |
(142) |
|||
Effective tax rate |
21.6 % |
— |
20.9 % |
|||
Net income attributable to noncontrolling interests |
(10) |
2 |
(12) |
|||
Net Income Attributable to |
469 |
(79) |
548 |
|||
Diluted Earnings per Share(a) |
1.39 |
(0.23) |
1.62 |
(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) |
||||||||||
Nine Months Ended |
||||||||||
As Reported |
Acquisition of |
Pension |
As Adjusted Non-GAAP |
|||||||
Marketing, research and general expenses |
$ 2,665 |
$ 21 |
$ — |
$ 2,644 |
||||||
Other (income) and expense, net |
(42) |
(85) |
— |
43 |
||||||
Operating Profit |
1,969 |
64 |
— |
1,905 |
||||||
Nonoperating expense |
(49) |
— |
(34) |
(15) |
||||||
Provision for income taxes |
(356) |
4 |
8 |
(368) |
||||||
Effective tax rate |
20.7 % |
— |
— |
21.8 % |
||||||
Net Income Attributable to |
1,427 |
68 |
(26) |
1,385 |
||||||
Diluted Earnings per Share(a) |
4.22 |
0.20 |
(0.08) |
4.09 |
||||||
Nine Months Ended |
||||||||||
As Reported |
2018 Global Restructuring Program |
As Adjusted Non-GAAP |
||||||||
Cost of products sold |
$ 9,923 |
$ 98 |
$ 9,825 |
|||||||
Gross Profit |
4,552 |
(98) |
4,650 |
|||||||
Marketing, research and general expenses |
2,488 |
78 |
2,410 |
|||||||
Other (income) and expense, net |
24 |
9 |
15 |
|||||||
Operating Profit |
2,040 |
(185) |
2,225 |
|||||||
Nonoperating expense |
(71) |
(65) |
(6) |
|||||||
Provision for income taxes |
(386) |
48 |
(434) |
|||||||
Effective tax rate |
21.7 % |
— |
21.4 % |
|||||||
Net income attributable to noncontrolling interests |
(26) |
3 |
(29) |
|||||||
Net Income Attributable to |
1,457 |
(199) |
1,656 |
|||||||
Diluted Earnings per Share(a) |
4.31 |
(0.59) |
4.89 |
|||||||
(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 |
$ 362 |
$ 270 |
|
Accounts receivable, net |
2,333 |
2,207 |
|
Inventories |
2,281 |
2,239 |
|
Other current assets |
649 |
849 |
|
Total Current Assets |
5,625 |
5,565 |
|
Property, Plant and Equipment, Net |
7,737 |
8,097 |
|
Investments in Equity Companies |
266 |
290 |
|
|
2,043 |
1,840 |
|
Other Intangible Assets, Net |
866 |
810 |
|
Other Assets |
1,299 |
1,235 |
|
TOTAL ASSETS |
$ 17,836 |
$ 17,837 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current Liabilities |
|||
Debt payable within one year |
$ 959 |
$ 433 |
|
Trade accounts payable |
3,660 |
3,840 |
|
Accrued expenses and other current liabilities |
2,190 |
2,096 |
|
Dividends payable |
388 |
380 |
|
Total Current Liabilities |
7,197 |
6,749 |
|
Long-Term Debt |
7,628 |
8,141 |
|
Noncurrent Employee Benefits |
837 |
809 |
|
Deferred Income Taxes |
636 |
694 |
|
Other Liabilities |
695 |
681 |
|
|
260 |
26 |
|
Stockholders' Equity |
|||
|
437 |
514 |
|
Noncontrolling Interests |
146 |
223 |
|
Total Stockholders' Equity |
583 |
737 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 17,836 |
$ 17,837 |
2022 Data is Unaudited |
|
|||||||
CONSOLIDATED CASH FLOW STATEMENTS |
|||||||
(Millions) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
2022 |
2021 |
2022 |
2021 |
||||
Operating Activities |
|||||||
Net income |
$ 470 |
$ 479 |
$ 1,446 |
$ 1,483 |
|||
Depreciation and amortization |
188 |
194 |
568 |
572 |
|||
Asset impairments |
— |
— |
— |
3 |
|||
Gain on previously held equity investment in Thinx |
— |
— |
(85) |
— |
|||
Stock-based compensation |
33 |
(12) |
101 |
30 |
|||
Deferred income taxes |
(96) |
32 |
(131) |
(42) |
|||
Net (gains) losses on asset dispositions |
1 |
19 |
14 |
34 |
|||
Equity companies' earnings (in excess of) less than dividends paid |
— |
7 |
(21) |
(25) |
|||
Operating working capital |
182 |
63 |
(166) |
(432) |
|||
Postretirement benefits |
7 |
3 |
6 |
39 |
|||
Other |
13 |
(3) |
10 |
6 |
|||
Cash Provided by Operations |
798 |
782 |
1,742 |
1,668 |
|||
Investing Activities |
|||||||
Capital spending |
(209) |
(235) |
(679) |
(734) |
|||
Acquisition of business, net of cash acquired |
— |
— |
(46) |
— |
|||
Proceeds from dispositions of property |
6 |
1 |
7 |
31 |
|||
Investments in time deposits |
(111) |
(181) |
(411) |
(632) |
|||
Maturities of time deposits |
87 |
165 |
632 |
598 |
|||
Other |
(13) |
1 |
(20) |
1 |
|||
Cash Used for Investing |
(240) |
(249) |
(517) |
(736) |
|||
Financing Activities |
|||||||
Cash dividends paid |
(392) |
(385) |
(1,167) |
(1,133) |
|||
Change in short-term debt |
(66) |
(106) |
487 |
854 |
|||
Debt proceeds |
— |
— |
— |
5 |
|||
Debt repayments |
(12) |
(16) |
(312) |
(269) |
|||
Proceeds from exercise of stock options |
9 |
25 |
84 |
52 |
|||
Acquisitions of common stock for the treasury |
(25) |
(62) |
(74) |
(393) |
|||
Cash dividends paid to noncontrolling interests |
— |
— |
(82) |
(17) |
|||
Other |
(3) |
(3) |
(45) |
(40) |
|||
Cash Used for Financing |
(489) |
(547) |
(1,109) |
(941) |
|||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(18) |
(6) |
(24) |
(8) |
|||
Change in Cash and Cash Equivalents |
51 |
(20) |
92 |
(17) |
|||
Cash and Cash Equivalents - Beginning of Period |
311 |
306 |
270 |
303 |
|||
Cash and Cash Equivalents - End of Period |
$ 362 |
$ 286 |
$ 362 |
$ 286 |
Unaudited |
|
||||||||||||
SELECTED BUSINESS SEGMENT DATA |
||||||||||||
(Millions) |
||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||
2022 |
2021 |
Change |
2022 |
2021 |
Change |
|||||||
|
||||||||||||
Personal Care |
$ 2,628 |
$ 2,656 |
-1 % |
$ 8,067 |
$ 7,635 |
+6 % |
||||||
Consumer Tissue |
1,578 |
1,541 |
+2 % |
4,683 |
4,475 |
+5 % |
||||||
K-C Professional |
836 |
797 |
+5 % |
2,418 |
2,314 |
+4 % |
||||||
Corporate & Other |
11 |
16 |
N.M. |
43 |
51 |
N.M. |
||||||
TOTAL |
$ 5,053 |
$ 5,010 |
+1 % |
$ 15,211 |
$ 14,475 |
+5 % |
||||||
OPERATING PROFIT |
||||||||||||
Personal Care |
$ 423 |
$ 496 |
-15 % |
$ 1,364 |
$ 1,431 |
-5 % |
||||||
Consumer Tissue |
218 |
222 |
-2 % |
567 |
687 |
-17 % |
||||||
K-C Professional |
119 |
96 |
+24 % |
294 |
332 |
-11 % |
||||||
Corporate & Other(a) |
(90) |
(150) |
N.M. |
(298) |
(386) |
N.M. |
||||||
Other (income) and expense, net(a) |
15 |
7 |
+114 % |
(42) |
24 |
N.M. |
||||||
TOTAL OPERATING PROFIT |
$ 655 |
$ 657 |
— |
$ 1,969 |
$ 2,040 |
-3 % |
(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/ |
Currency |
Organic(c) |
|||||||||
Personal Care |
(1) |
(7) |
8 |
1 |
1 |
(4) |
2 |
||||||||
Consumer Tissue |
2 |
(3) |
9 |
— |
— |
(4) |
7 |
||||||||
K-C Professional |
5 |
(5) |
14 |
1 |
— |
(4) |
9 |
||||||||
TOTAL CONSOLIDATED |
1 |
(5) |
9 |
1 |
— |
(4) |
5 |
||||||||
Nine Months Ended |
|||||||||||||||
Total(a) |
Volume |
Net Price |
Mix/ Other |
Acquisition/ |
Currency |
Organic(c) |
|||||||||
Personal Care |
6 |
(2) |
8 |
2 |
— |
(3) |
8 |
||||||||
Consumer Tissue |
5 |
1 |
7 |
— |
— |
(3) |
8 |
||||||||
K-C Professional |
4 |
(3) |
9 |
1 |
— |
(3) |
7 |
||||||||
TOTAL CONSOLIDATED |
5 |
(1) |
8 |
1 |
— |
(3) |
8 |
(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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View original content:https://www.prnewswire.com/news-releases/kimberly-clark-announces-third-quarter-2022-results-301657856.html
SOURCE
Investor Relations contact: Brian Ezzell, 972-281-1318, KC.InvestorRelations@kcc.com; Media Relations contact: Aileen Zerrudo, 972-281-1200, media.relations@kcc.com