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Colgate Announces 2nd Quarter 2023 Results

Colgate-Palmolive Company (NYSE:CL):

  • Net sales increased 7.5%; Organic sales* increased 8.0% with growth in every division and in all four categories
  • GAAP EPS declined 17% to $0.60; Base Business EPS* increased 7% to $0.77
  • GAAP Gross profit margin and Base Business Gross profit margin* both increased 80 basis points to 57.8%, including a negative 70 basis point impact from private label sales resulting from the previously disclosed acquisitions of pet food businesses
  • Net cash provided by operations was $1,457 million for the first six months of 2023
  • Colgate’s leadership in toothpaste continued with its global market share at 40.5% year to date
  • Colgate’s leadership in manual toothbrushes continued with its global market share at 30.4% year to date
  • The Company updated its financial guidance for full year 2023

Second Quarter Total Company Results (GAAP)

($ in millions except per share amounts)

2023

2022

Change

Net Sales

$4,822

$4,484

+7.5%

EPS (diluted)

$0.60

$0.72

-17%

 

 

 

 

 

 

 

 

Second Quarter Total Company Results (Base Business - Non-GAAP)*

 

2023

2022

Change

Organic Sales Growth

+8.0%

Base Business EPS (diluted)

$0.77

$0.72

+7%

*Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 6 - Geographic Sales Analysis Percentage Changes” and “Table 8 - Non-GAAP Reconciliations” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.

Colgate-Palmolive Company (NYSE:CL) today reported results for second quarter 2023. Noel Wallace, Chairman, President and Chief Executive Officer, commented on the Base Business second quarter results, “We are pleased to have delivered another quarter of strong top-line momentum along with an increase in profitability. Net sales increased 7.5% and organic sales grew 8.0%. Gross profit margin, operating profit margin, operating profit, net income, earnings per share and free cash flow all increased versus the year ago quarter.

“We believe we are well positioned to continue to drive top and bottom line growth through the balance of 2023 as our gross margin expansion, driven by sustained pricing and the benefits from funding-the-growth and other productivity initiatives, allows us to invest behind our brands. Advertising spending increased significantly in the quarter to drive brand health and in support of our strong innovation and pricing activity. Strong investment levels should continue in the back half of the year as we work to deliver balanced organic sales growth.

“Our strong results this quarter and in the first half add to our confidence that we are executing the right strategies to deliver on our updated 2023 financial targets, drive cash flow and generate long-term value for our stakeholders.”

Full Year 2023 Guidance

Based on current spot rates:

  • The Company now expects net sales growth to be 5% to 8% including the benefit from our acquisitions of pet food businesses and a low-single-digit negative impact from foreign exchange.
  • The Company now expects organic sales growth to be 5% to 7%.
  • On a GAAP basis, the Company still expects gross profit margin expansion, increased advertising investment and double-digit earnings-per-share growth.
  • On a non-GAAP (Base Business) basis, the Company still expects gross profit margin expansion and increased advertising investment and now expects earnings-per-share growth to be at the high end of mid-single-digits.

Divisional Performance

The following are comments about divisional performance for second quarter 2023 versus the year ago period. See attached "Table 6 - Geographic Sales Analysis Percentage Changes" and "Table 5 - Segment Information" for additional information on net sales and operating profit by division.

 

Second Quarter Sales Growth By Division

(% change 2Q 2023 vs. 2Q 2022)

 

 

 

 

Net

Sales

Organic

Sales*

As Reported

Volume**

Organic

Volume

Pricing

FX

North America

+1.5%

+2.0%

-7.0%

-7.0%

+9.0%

-0.5%

Latin America

+15.5%

+16.0%

+0.5%

+0.5%

+15.5%

-0.5%

Europe

+6.0%

+5.5%

-6.5%

-6.5%

+12.0%

+0.5%

Asia Pacific

-4.5%

+1.0%

-4.5%

-4.5%

+5.5%

-5.5%

Africa/Eurasia

+4.5%

+20.5%

+10.5%

+10.5%

+10.0%

-16.0%

Hill's

+16.0%

+10.5%

+4.0%

-3.0%

+13.5%

-1.5%

 

 

 

 

 

 

 

Total Company

+7.5%

+8.0%

-1.5%

-3.0%

+11.0%

-2.0%

*Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 6 - Geographic Sales Analysis Percentage Changes” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.

**The impact of the previously disclosed acquisitions of pet food businesses on as reported volume was 7.0% and 1.5% for Hill's and Total Company, respectively.

 

Second Quarter Operating Profit By Division

($ in millions)

 

2Q 2023

% Change vs

2Q 2022

% to Net

Sales

Change in basis

points vs 2Q 2022

% to Net Sales

North America

$227

16%

23.2%

+290

Latin America

$363

38%

30.8%

+490

Europe

$134

1%

19.8%

-100

Asia Pacific

$169

3%

25.5%

+190

Africa/Eurasia

$62

24%

23.1%

+360

Hill's

$191

-10%

18.1%

-520

 

 

 

 

 

Total Company, As Reported

$974

10%

20.2%

+50

Total Company, Base Business*

$992

11%

20.6%

+60

*Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 8 - Non-GAAP Reconciliations” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.

North America (20% of Company Sales)

  • Organic sales growth in home care and personal care was partially offset by organic sales declines in oral care.
  • In the United States, Colgate's share of the toothpaste market is 33.9% year to date and its share of the manual toothbrush market is 41.0% year to date.
  • The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing and cost savings from the Company’s funding-the-growth initiatives, partially offset by higher raw and packaging material costs.

Latin America (24% of Company Sales)

  • Organic sales growth was led by Argentina, Mexico, Brazil and Colombia.
  • The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing and cost savings from the Company’s funding-the-growth initiatives, partially offset by higher raw and packaging material costs and a value-added tax refund in the second quarter of 2022.

Europe (14% of Company Sales)

  • Organic sales growth was led by the United Kingdom and Germany.
  • The decrease in Operating profit as a percentage of Net sales was primarily due to significantly higher raw and packaging material costs and increased advertising investment, partially offset by higher pricing, cost savings from the Company’s funding-the-growth initiatives, favorable mix and lower amortization expenses.

Asia Pacific (14% of Company Sales)

  • Organic sales growth led by India, the Philippines and Australia was partially offset by organic sales declines in the Greater China region.
  • The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company's funding-the-growth initiatives, decreased advertising investment, higher pricing and lower overhead expenses, partially offset by significantly higher raw and packaging material costs.

Africa/Eurasia (6% of Company Sales)

  • Organic sales growth was led by the Eurasia region, Türkiye and South Africa.
  • The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing, cost savings from the Company’s funding-the-growth initiatives and lower overhead expenses, partially offset by significantly higher raw and packaging material costs, which included foreign exchange transaction costs, and increased advertising investment.

Hill's Pet Nutrition (22% of Company Sales)

  • Organic sales growth led by the United States and Europe was partially offset by organic sales declines in Australia.
  • The decrease in Operating profit as a percentage of Net sales was primarily due to significantly higher raw and packaging material costs, unfavorable mix due to private label sales resulting from the previously disclosed acquisitions of pet food businesses and increased advertising investment, partially offset by higher pricing, cost savings from the Company’s funding-the-growth initiatives and lower overhead expenses.

Prepared Materials and Webcast Information

At approximately 7:00 a.m. ET today, Colgate will post its prepared materials (in PDF format) regarding second quarter results to the Investor Center section of its website at https://investor.colgatepalmolive.com/events-and-presentations.

At 8:00 a.m. ET today, Colgate will host a conference call regarding second quarter results. To access this call as a webcast, please go to Colgate’s website at www.colgatepalmolive.com.

About Colgate-Palmolive

Colgate-Palmolive Company is a caring, innovative growth company that is reimagining a healthier future for all people, their pets and our planet. Focused on Oral Care, Personal Care, Home Care and Pet Nutrition, we sell our products in more than 200 countries and territories under brands such as Colgate, Palmolive, elmex, hello, meridol, Sorriso, Tom’s of Maine, EltaMD, Filorga, Irish Spring, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet. The Company is recognized for its leadership and innovation in promoting sustainability and community wellbeing, including its achievements in decreasing plastic waste and promoting recyclability, saving water, conserving natural resources and improving children’s oral health through the Colgate Bright Smiles, Bright Futures program, which has reached more than 1.6 billion children since 1991. For more information about Colgate’s global business and how the Company is building a future to smile about, visit www.colgatepalmolive.com. CL-E

Market Share Information

Management uses market share information as a key indicator to monitor business health and performance. References to market share in this press release are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).

Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce and certain club retailers and discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party vendors it uses to provide data are reliable, but it has not verified the accuracy or completeness of the data or any assumptions underlying the data. In addition, market share information reported by the Company may be different from market share information reported by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.

Cautionary Statement on Forward-Looking Statements

This press release and the related webcast may contain forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (SEC) in its rules, regulations and releases) that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin levels, earnings per share levels, financial goals, the impact of foreign exchange, the impact of COVID-19, the impact of the war in Ukraine, cost-reduction plans (including the 2022 Global Productivity Initiative), tax rates, interest rates, new product introductions, digital capabilities, commercial investment levels, acquisitions, divestitures, share repurchases or legal or tax proceedings, among other matters. These statements are made on the basis of the Company’s views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of these statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. For more information about factors that could impact the Company’s business and cause actual results to differ materially from forward-looking statements, investors should refer to the Company’s filings with the SEC (including, but not limited to, the information set forth under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent filings with the SEC). Copies of these filings may be obtained upon request from the Company’s Investor Relations Department or on the Company’s website at www.colgatepalmolive.com.

Non-GAAP Financial Measures

The following provides definitions and other information regarding the non-GAAP financial measures used in this press release and the related prepared materials and webcast, which may not be the same as or comparable to similar measures presented by other companies:

  • Base Business: Base Business refers to non-GAAP measures of operating results that exclude certain items. Base Business operating results exclude, as applicable, charges related to an ERISA litigation matter, a foreign tax matter, the 2022 Global Productivity Initiative and product recall costs.
  • Organic sales growth: Net sales growth excluding the impact of foreign exchange, acquisitions and divestments.
  • Free cash flow before dividends: Net cash provided by operations less Capital expenditures.

This press release discusses Net sales growth (GAAP) and Organic sales growth (non-GAAP). Management believes the organic sales growth measure provides investors and analysts with useful supplemental information regarding the Company’s underlying sales trends by presenting sales growth excluding the external factor of foreign exchange as well as the impact from acquisitions and divestments. See “Geographic Sales Analysis Percentage Changes” for the three and six months ended June 30, 2023 versus 2022 included with this release for a comparison of Organic sales growth to Net sales growth in accordance with GAAP.

Selling, general and administrative expenses, Selling, general and administrative expenses as a percentage of Net sales, Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, Effective income tax rate, Net income attributable to Colgate-Palmolive Company and Diluted earnings per common share are disclosed on both an as reported (GAAP) and Base Business (non-GAAP) basis. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company’s normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, acquisition-related costs, gains and losses from certain divestitures and certain other unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company’s business performance, and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company’s underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. See “Non-GAAP Reconciliations” for the three and six months ended June 30, 2023 and 2022 included with this release for a reconciliation of these financial measures to the related GAAP measures.

The Company uses these financial measures internally in its budgeting process, to evaluate segment and overall operating performance and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company’s underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

As management uses free cash flow before dividends to evaluate the Company’s ability to satisfy current and future obligations, pay dividends, fund future business opportunities and repurchase stock, the Company believes that it provides useful information to investors. Free cash flow before dividends is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. See “Condensed Consolidated Statements of Cash Flows” for the six months ended June 30, 2023 and 2022 for a comparison of free cash flow before dividends to Net cash provided by operations as reported in accordance with GAAP.

(See attached tables for second quarter results.)

 

 

 

 

 

Table 1

Colgate-Palmolive Company

 

Condensed Consolidated Statements of Income

 

For the Three Months Ended June 30, 2023 and 2022

 

(Dollars in Millions Except Per Share Amounts) (Unaudited)

 

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Net sales

 

$

4,822

 

 

$

4,484

 

 

 

 

 

 

Cost of sales

 

 

2,035

 

 

 

1,930

 

 

 

 

 

 

Gross profit

 

 

2,787

 

 

 

2,554

 

 

 

 

 

 

Gross profit margin

 

 

57.8

%

 

 

57.0

%

 

 

 

 

 

Selling, general and administrative expenses

 

 

1,768

 

 

 

1,657

 

 

 

 

 

 

Other (income) expense, net

 

45

 

 

 

13

 

 

 

 

 

 

Operating profit

 

974

 

 

884

 

 

 

 

 

 

Operating profit margin

 

 

20.2

%

 

 

19.7

%

 

 

 

 

 

Non-service related postretirement costs

 

 

29

 

 

 

12

 

 

 

 

 

 

Interest (income) expense, net

 

 

58

 

 

 

31

 

 

 

 

 

 

Income before income taxes

 

 

887

 

 

 

841

 

 

 

 

 

 

Provision for income taxes

 

 

353

 

 

 

202

 

 

 

 

 

 

Effective tax rate

 

 

39.8

%

 

 

24.0

%

 

 

 

 

 

Net income including noncontrolling interests

 

 

534

 

 

 

639

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

32

 

 

 

36

 

 

 

 

 

 

Net income attributable to Colgate-Palmolive Company

 

$

502

 

 

$

603

 

 

 

 

 

 

Earnings per common share

 

 

 

 

Basic

 

$

0.61

 

 

$

0.72

 

Diluted

 

$

0.60

 

 

$

0.72

 

 

 

 

 

 

Supplemental Income Statement Information

 

 

 

 

Average common shares outstanding

 

 

 

 

Basic

 

 

829.4

 

 

 

836.8

 

Diluted

 

 

831.3

 

 

 

839.4

 

 

 

 

 

 

Advertising

 

$

601

 

 

$

501

 

 

 

 

 

 

Table 2

Colgate-Palmolive Company

 

Condensed Consolidated Statements of Income

 

For the Six Months Ended June 30, 2023 and 2022

 

(Dollars in Millions Except Per Share Amounts) (Unaudited)

 

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Net sales

 

$

9,592

 

 

$

8,883

 

 

 

 

 

 

Cost of sales

 

 

4,093

 

 

 

3,757

 

 

 

 

 

 

Gross profit

 

 

5,499

 

 

 

5,126

 

 

 

 

 

 

Gross profit margin

 

 

57.3

%

 

 

57.7

%

 

 

 

 

 

Selling, general and administrative expenses

 

 

3,526

 

 

 

3,298

 

 

 

 

 

 

Other (income) expense, net

 

 

90

 

 

 

84

 

 

 

 

 

 

Operating profit

 

 

1,883

 

 

 

1,744

 

 

 

 

 

 

Operating profit margin

 

 

19.6

%

 

 

19.6

%

 

 

 

 

 

Non-service related postretirement costs

 

 

323

 

 

 

50

 

 

 

 

 

 

Interest (income) expense, net

 

 

112

 

 

 

58

 

 

 

 

 

 

Income before income taxes

 

 

1,448

 

 

 

1,636

 

 

 

 

 

 

Provision for income taxes

 

 

500

 

 

 

394

 

 

 

 

 

 

Effective tax rate

 

 

34.5

%

 

 

24.1

%

 

 

 

 

 

Net income including noncontrolling interests

 

 

948

 

 

 

1,242

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

74

 

 

 

80

 

 

 

 

 

 

Net income attributable to Colgate-Palmolive Company

 

$

874

 

 

$

1,162

 

 

 

 

 

 

Earnings per common share

 

 

 

 

Basic(1)

 

$

1.05

 

 

$

1.39

 

Diluted(1)

 

$

1.05

 

 

$

1.38

 

 

 

 

 

 

Supplemental Income Statement Information

 

 

 

 

Average common shares outstanding

 

 

 

 

Basic

 

 

830.4

 

 

 

838.7

 

Diluted

 

 

832.1

 

 

 

841.5

 

 

 

 

 

 

Advertising

 

$

1,180

 

 

$

1,007

 

Note:

(1) Basic and diluted earnings per share are computed independently for each quarter and any year-to-date period presented. As a result of changes in shares outstanding during the year and rounding, the sum of the quarters' earnings per share may not equal the earnings per share for any year-to-date period.

 

 

 

 

 

 

 

Table 3

Colgate-Palmolive Company

 

Condensed Consolidated Balance Sheets

 

As of June 30, 2023, December 31, 2022 and June 30, 2022

 

(Dollars in Millions) (Unaudited)

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

June 30,

 

 

2023

 

2022

 

2022

Cash and cash equivalents

 

$

819

 

 

$

775

 

 

$

858

 

Receivables, net

 

 

1,656

 

 

 

1,504

 

 

 

1,490

 

Inventories

 

 

2,039

 

 

 

2,074

 

 

 

2,012

 

Other current assets

 

 

923

 

 

 

760

 

 

 

800

 

Property, plant and equipment, net

 

 

4,431

 

 

 

4,307

 

 

 

3,765

 

Goodwill

 

 

3,373

 

 

 

3,352

 

 

 

3,238

 

Other intangible assets, net

 

 

1,901

 

 

 

1,920

 

 

 

2,314

 

Other assets

 

 

1,085

 

 

 

1,039

 

 

 

1,234

 

Total assets

 

$

16,227

 

 

$

15,731

 

 

$

15,711

 

 

 

 

 

 

 

 

Total debt

 

$

8,989

 

 

$

8,766

 

 

$

7,986

 

Other current liabilities

 

 

4,597

 

 

 

3,979

 

 

 

4,366

 

Other non-current liabilities

 

 

2,326

 

 

 

2,180

 

 

 

2,801

 

Total liabilities

 

 

15,912

 

 

 

14,925

 

 

 

15,153

 

Total Colgate-Palmolive Company shareholders’ equity

 

 

(64

)

 

 

401

 

 

 

168

 

Noncontrolling interests

 

 

379

 

 

 

405

 

 

 

390

 

Total liabilities and equity

 

$

16,227

 

 

$

15,731

 

 

$

15,711

 

 

 

 

 

 

 

 

Supplemental Balance Sheet Information

 

 

 

 

 

 

Debt less cash, cash equivalents and marketable securities(1)

 

$

7,903

 

 

$

7,816

 

 

$

7,008

 

Working capital % of sales

 

(1.3

)%

 

 

1.0

%

 

 

(1.0

)%

Note:

(1) Marketable securities of $267, $175 and $120 as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively, are included in Other current assets.

 

 

 

 

 

Table 4

Colgate-Palmolive Company

 

Condensed Consolidated Statements of Cash Flows

 

For the Six Months Ended June 30, 2023 and 2022

 

(Dollars in Millions) (Unaudited)

 

 

 

 

 

 

 

 

2023

 

 

 

2022

 

Operating Activities

 

 

 

 

Net income including noncontrolling interests

 

$

948

 

 

$

1,242

 

Adjustments to reconcile Net income including noncontrolling interests to Net cash provided by operations:

 

 

Depreciation and amortization

 

 

273

 

 

 

276

 

ERISA litigation matter

 

 

267

 

 

 

Restructuring and termination benefits, net of cash

 

 

(8

)

 

 

73

Stock-based compensation expense

 

 

37

 

 

 

45

Deferred income taxes

 

 

(156

)

 

 

(16

)

Cash effects of changes in:

 

 

 

 

Receivables

 

 

(112

)

 

 

(191

)

Inventories

 

 

54

 

 

 

(332

)

Accounts payable and other accruals

 

 

153

 

 

 

(167

)

Other non-current assets and liabilities

 

 

1

 

 

 

(16

)

Net cash provided by (used in) operations

 

 

1,457

 

 

 

914

 

 

 

 

 

 

Investing Activities

 

 

 

 

Capital expenditures

 

 

(347

)

 

 

(300

)

Purchases of marketable securities and investments

 

 

(225

)

 

 

(126

)

Proceeds from sale of marketable securities and investments

 

 

146

 

 

 

35

Payment for acquisition, net of cash acquired

 

 

 

 

 

(90

)

Other investing activities

 

 

(12

)

 

 

(1

)

Net cash provided by (used in) investing activities

 

 

(438

)

 

 

(482

)

 

 

 

 

 

Financing Activities

 

 

 

 

Short-term borrowing (repayment) less than 90 days, net

 

 

(415

)

 

 

988

Principal payments on debt

 

 

(903

)

 

 

Proceeds from issuance of debt

 

 

1,497

 

 

 

14

Dividends paid

 

 

(847

)

 

 

(814

)

Purchases of treasury shares

 

 

(551

)

 

 

(791

)

Proceeds from exercise of stock options

 

 

259

 

 

 

236

Other financing activities

 

 

5

 

 

 

(18

)

Net cash provided by (used in) financing activities

 

 

(955

)

 

 

(385

)

 

 

 

 

 

Effect of exchange rate changes on Cash and cash equivalents

 

 

(20

)

 

 

(21

)

Net increase (decrease) in Cash and cash equivalents

 

 

44

 

 

 

26

 

Cash and cash equivalents at beginning of the period

 

 

775

 

 

 

832

 

Cash and cash equivalents at end of the period

 

$

819

 

 

$

858

 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

Free cash flow before dividends (Net cash provided by operations less Capital expenditures)

 

 

 

 

Net cash provided by operations

 

$

1,457

 

 

$

914

Less: Capital expenditures

 

 

(347

)

 

 

(300

)

Free cash flow before dividends

 

$

1,110

 

 

$

614

 

 

 

 

 

 

 

 

 

 

 

Income taxes paid

 

$

450

 

 

$

477

 

Interest paid

 

$

129

 

 

$

65

 

 

 

 

 

 

 

 

 

 

Table 5

Colgate-Palmolive Company

 

 

 

 

 

Segment Information

 

 

 

 

 

For the Three and Six Months Ended June 30, 2023 and 2022

 

 

 

 

 

(Dollars in Millions) (Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net Sales

 

 

 

 

 

 

 

 

Oral, Personal and Home Care

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

978

 

 

$

965

 

 

$

1,936

 

 

$

1,891

 

Latin America

 

 

1,178

 

 

 

1,019

 

 

 

2,253

 

 

 

1,973

 

Europe

 

 

678

 

 

 

639

 

 

 

1,328

 

 

 

1,293

 

Asia Pacific

 

 

664

 

 

 

696

 

 

 

1,402

 

 

 

1,422

 

Africa/Eurasia

 

 

268

 

 

 

256

 

 

 

556

 

 

 

523

 

 

 

 

 

 

 

 

 

 

Total Oral, Personal and Home Care

 

 

3,766

 

 

 

3,575

 

 

 

7,475

 

 

 

7,102

 

 

 

 

 

 

 

 

 

 

Pet Nutrition

 

 

1,056

 

 

 

909

 

 

 

2,117

 

 

 

1,781

 

 

 

 

 

 

 

 

 

 

Total Net Sales

 

$

4,822

 

 

$

4,484

 

 

$

9,592

 

 

$

8,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Operating Profit

 

 

 

 

 

 

 

 

Oral, Personal and Home Care

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

227

 

 

$

196

 

 

$

420

 

 

$

359

 

Latin America

 

 

363

 

 

 

264

 

 

 

678

 

 

 

529

 

Europe

 

 

134

 

 

 

133

 

 

 

250

 

 

 

283

 

Asia Pacific

 

 

169

 

 

 

164

 

 

 

371

 

 

 

370

 

Africa/Eurasia

 

 

62

 

 

 

50

 

 

 

130

 

 

 

94

 

 

 

 

 

 

 

 

 

 

Total Oral, Personal and Home Care

 

 

955

 

 

 

807

 

 

 

1,849

 

 

 

1,635

 

 

 

 

 

 

 

 

 

 

Pet Nutrition

 

 

191

 

 

 

212

 

 

 

374

 

 

 

416

 

Corporate(1)

 

 

(172

)

 

 

(135

)

 

 

(340

)

 

 

(307

)

 

 

 

 

 

 

 

 

 

Total Operating Profit

 

$

974

 

 

$

884

 

 

$

1,883

 

 

$

1,744

 

Note:

(1) Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs, restructuring and related implementation charges and gains and losses on sales of non-core product lines and assets.

 

Corporate Operating profit (loss) for the three months ended June 30, 2023 included charges resulting from the 2022 Global Productivity Initiative of $18.

 

Corporate Operating profit (loss) for the six months ended June 30, 2023 included product recall costs of $25 and charges resulting from the 2022 Global Productivity Initiative of $23.

 

Corporate Operating profit (loss) for the three and six months ended June 30, 2022 included charges resulting from the 2022 Global Productivity Initiative of $13 and $76, respectively.

Table 6

Colgate-Palmolive Company

 

Geographic Sales Analysis Percentage Changes

 

For the Three Months Ended June 30, 2023 vs. 2022

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPONENTS OF SALES CHANGE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pricing

 

 

 

 

 

 

 

 

 

 

 

 

Coupons

 

 

 

 

Sales

 

 

 

 

 

 

 

Consumer &

 

 

 

 

Change

 

Organic

 

As Reported

 

Organic

 

Trade

 

Foreign

Region

 

As Reported

 

Sales Change

 

Volume(1)

 

Volume

 

Incentives

 

Exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

7.5

%

 

8.0

%

 

(1.5

)%

 

(3.0

)%

 

11.0

%

 

(2.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

1.5

%

 

2.0

%

 

(7.0

)%

 

(7.0

)%

 

9.0

%

 

(0.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Latin America

 

15.5

%

 

16.0

%

 

0.5

%

 

0.5

%

 

15.5

%

 

(0.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

6.0

%

 

5.5

%

 

(6.5

)%

 

(6.5

)%

 

12.0

%

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

(4.5

)%

 

1.0

%

 

(4.5

)%

 

(4.5

)%

 

5.5

%

 

(5.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Africa/Eurasia

 

4.5

%

 

20.5

%

 

10.5

%

 

10.5

%

 

10.0

%

 

(16.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total CP Products

 

5.5

%

 

7.5

%

 

(3.0

)%

 

(3.0

)%

 

10.5

%

 

(2.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Hill’s

 

16.0

%

 

10.5

%

 

4.0

%

 

(3.0

)%

 

13.5

%

 

(1.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emerging Markets(2)

 

7.0

%

 

11.0

%

 

(1.0

)%

 

(1.0

)%

 

12.0

%

 

(4.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed Markets

 

8.0

%

 

6.0

%

 

(2.5

)%

 

(5.0

)%

 

11.0

%

 

(0.5

)%

Notes:

(1) The impact of the previously disclosed acquisitions of pet food businesses on as reported volume was 1.5%, 7.0% and 2.5% for Total Company, Hill's and Developed Markets, respectively.

 

(2) Emerging Markets include Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe.

Table 7

Colgate-Palmolive Company

 

Geographic Sales Analysis Percentage Changes

 

For the Six Months Ended June 30, 2023 vs. 2022

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPONENTS OF SALES CHANGE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pricing

 

 

 

 

 

 

 

 

 

 

 

 

Coupons

 

 

 

 

Sales

 

 

 

 

 

 

 

Consumer &

 

 

 

 

Change

 

Organic

 

As Reported

 

Organic

 

Trade

 

Foreign

Region

 

As Reported

 

Sales Change

 

Volume(1)

 

Volume

 

Incentives

 

Exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

8.0

%

 

9.0

%

 

(1.0

)%

 

(2.5

)%

 

11.5

%

 

(2.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

2.5

%

 

3.0

%

 

(7.0

)%

 

(7.0

)%

 

10.0

%

 

(0.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Latin America

 

14.0

%

 

15.0

%

 

(1.5

)%

 

(1.5

)%

 

16.5

%

 

(1.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

2.5

%

 

5.0

%

 

(5.0

)%

 

(5.0

)%

 

10.0

%

 

(2.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

(1.5

)%

 

5.0

%

 

(1.0

)%

 

(1.0

)%

 

6.0

%

 

(6.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Africa/Eurasia

 

6.5

%

 

18.5

%

 

2.5

%

 

2.5

%

 

16.0

%

 

(12.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total CP Products

 

5.5

%

 

8.0

%

 

(3.5

)%

 

(3.5

)%

 

11.5

%

 

(2.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Hill’s

 

19.0

%

 

12.0

%

 

8.0

%

 

(0.5

)%

 

12.5

%

 

(1.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emerging Markets(2)

 

7.5

%

 

11.5

%

 

(1.5

)%

 

(1.5

)%

 

13.0

%

 

(4.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed Markets

 

8.0

%

 

6.5

%

 

(0.5

)%

 

(3.5

)%

 

10.0

%

 

(1.5

)%

Notes:

(1) The impact of the previously disclosed acquisitions of pet food businesses on as reported volume was 1.5%, 8.5% and 3.0% for Total Company, Hill's and Developed Markets, respectively.

 

(2) Emerging Markets include Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe.

Table 8

Colgate-Palmolive Company

 

Non-GAAP Reconciliations

 

For the Three Months Ended June 30, 2023 and 2022

 

(Dollars in Millions Except Per Share Amounts) (Unaudited)

 

 

 

 

 

 

 

Selling, General and Administrative Expenses

 

 

2023

 

 

 

2022

 

 

 

Selling, general and administrative expenses, GAAP

 

$

1,768

 

 

$

1,657

 

 

 

2022 Global Productivity Initiative

 

 

(2

)

 

 

(3

)

 

 

Selling, general and administrative expenses, non-GAAP

 

$

1,766

 

 

$

1,654

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis Point

Selling, General and Administrative Expenses as a Percentage of Net Sales

 

 

2023

 

 

 

2022

 

 

Change

Selling, general and administrative expenses as a percentage of Net sales, GAAP

 

 

36.7

%

 

 

37.0

%

 

(30

)

2022 Global Productivity Initiative

 

 

(0.1

)%

 

 

(0.1

)%

 

 

Selling, general and administrative expenses as a percentage of Net sales, non-GAAP

 

 

36.6

%

 

 

36.9

%

 

(30

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense, Net

 

 

2023

 

 

 

2022

 

 

 

Other (income) expense, net, GAAP

 

$

45

 

 

$

13

 

 

 

2022 Global Productivity Initiative

 

 

(16

)

 

 

(10

)

 

 

Other (income) expense, net, non-GAAP

 

$

29

 

 

$

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Profit

 

 

2023

 

 

 

2022

 

 

% Change

Operating profit, GAAP

 

$

974

 

 

$

884

 

 

10

%

2022 Global Productivity Initiative

 

 

18

 

 

 

13

 

 

 

Operating profit, non-GAAP

 

$

992

 

 

$

897

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis Point

Operating Profit Margin

 

 

2023

 

 

 

2022

 

 

Change

Operating profit margin, GAAP

 

 

20.2

%

 

 

19.7

%

 

50

 

2022 Global Productivity Initiative

 

 

0.4

%

 

 

0.3

%

 

 

Operating profit margin, non-GAAP

 

 

20.6

%

 

 

20.0

%

 

60

 

 

 

 

 

 

 

 

 

 

Non-Service Related Postretirement Costs

 

 

2023

 

 

 

2022

 

 

 

Non-service related postretirement costs, GAAP

 

$

29

 

 

$

12

 

 

 

2022 Global Productivity Initiative

 

 

(3

)

 

 

5

 

 

 

Non-service related postretirement costs, non-GAAP

 

$

26

 

 

$

17

 

 

 

Table 8

Continued

Colgate-Palmolive Company

 

Non-GAAP Reconciliations

 

For the Three Months Ended June 30, 2023 and 2022

 

(Dollars in Millions Except Per Share Amounts) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

Income Before

Income Taxes

 

Provision For

Income Taxes(1)

 

Net Income

Including

Noncontrolling

Interests

 

Less: Income

Attributable to

Noncontrolling

Interests

 

Net Income

Attributable To

Colgate-Palmolive

Company

 

Effective Income

Tax Rate(2)

 

Diluted Earnings

Per Share

As Reported GAAP

$

887

 

$

353

 

$

534

 

$

32

 

$

502

 

39.8%

 

$

0.60

Foreign tax matter

 

 

 

(126)

 

 

126

 

 

 

 

126

 

(14.2)%

 

 

0.15

2022 Global Productivity Initiative

 

21

 

 

4

 

 

17

 

 

1

 

 

16

 

(0.2)%

 

 

0.02

Non-GAAP

$

908

 

$

231

 

$

677

 

$

33

 

$

644

 

25.4%

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

Income Before

Income Taxes

 

Provision For

Income Taxes(1)

 

Net Income

Including

Noncontrolling

Interests

 

Less: Income

Attributable to

Noncontrolling

Interests

 

Net Income

Attributable To

Colgate-Palmolive

Company

 

Effective Income

Tax Rate(2)

 

Diluted Earnings

Per Share

As Reported GAAP

$

841

 

$

202

 

$

639

 

$

36

 

$

603

 

24.0%

 

$

0.72

2022 Global Productivity Initiative

 

8

 

 

2

 

 

6

 

 

1

 

 

5

 

—%

 

 

Non-GAAP

$

849

 

$

204

 

$

645

 

$

37

 

$

608

 

24.0%

 

$

0.72

The impact of non-GAAP adjustments may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.

 

Notes:

(1) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.

 

(2) The impact of non-GAAP items on the Company’s effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment on Income before income taxes and Provision for income taxes.

 

Table 9

Colgate-Palmolive Company

 

Non-GAAP Reconciliations

 

For the Six Months Ended June 30, 2023 and 2022

 

(Dollars in Millions Except Per Share Amounts) (Unaudited)

 

 

 

 

 

 

 

Selling, General and Administrative Expenses

 

 

2023

 

 

 

2022

 

 

 

Selling, general and administrative expenses, GAAP

 

$

3,526

 

 

$

3,298

 

 

 

2022 Global Productivity Initiative

 

 

(2

)

 

 

(3

)

 

 

Selling, general and administrative expenses, non-GAAP

 

$

3,524

 

 

$

3,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis Point

Selling, General and Administrative Expenses as a Percentage of Net Sales

 

 

2023

 

 

 

2022

 

 

Change

Selling, general and administrative expenses as a percentage of Net sales, GAAP

 

 

36.8

%

 

 

37.1

%

 

(30

)

2022 Global Productivity Initiative

 

 

(0.1

)%

 

 

%

 

 

Selling, general and administrative expenses as a percentage of Net sales, non-GAAP

 

 

36.7

%

 

 

37.1

%

 

(40

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense, Net

 

 

2023

 

 

 

2022

 

 

 

Other (income) expense, net, GAAP

 

$

90

 

 

$

84

 

 

 

Product recall costs

 

 

(25

)

 

 

 

 

 

2022 Global Productivity Initiative

 

 

(21

)

 

 

(73

)

 

 

Other (income) expense, net, non-GAAP

 

$

44

 

 

$

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Profit

 

 

2023

 

 

 

2022

 

 

% Change

Operating profit, GAAP

 

$

1,883

 

 

$

1,744

 

 

8

%

Product recall costs

 

 

25

 

 

 

 

 

 

2022 Global Productivity Initiative

 

 

23

 

 

 

76

 

 

 

Operating profit, non-GAAP

 

$

1,931

 

 

$

1,820

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis Point

Operating Profit Margin

 

 

2023

 

 

 

2022

 

 

Change

Operating profit margin, GAAP

 

 

19.6

%

 

 

19.6

%

 

 

Product recall costs

 

 

0.3

%

 

 

%

 

 

2022 Global Productivity Initiative

 

 

0.2

%

 

 

0.9

%

 

 

Operating profit margin, non-GAAP

 

 

20.1

%

 

 

20.5

%

 

(40

)

 

 

Non-Service Related Postretirement Costs

 

 

2023

 

 

 

2022

 

 

 

Non-service related postretirement costs, GAAP

 

$

323

 

 

$

50

 

 

 

ERISA litigation matter

 

 

(267

)

 

 

 

 

 

2022 Global Productivity Initiative

 

 

(4

)

 

 

(14

)

 

 

Non-service related postretirement costs, non-GAAP

 

$

52

 

 

$

36

 

 

 

Table 9

Continued

Colgate-Palmolive Company

 

Non-GAAP Reconciliations

 

For the Six Months Ended June 30, 2023 and 2022

 

(Dollars in Millions Except Per Share Amounts) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

Income Before

Income Taxes

 

Provision For

Income Taxes(1)

 

Net Income

Including

Noncontrolling

Interests

 

Less: Income

Attributable to

Noncontrolling

Interests

 

Net Income

Attributable To

Colgate-Palmolive

Company

 

Effective Income

Tax Rate(2)

 

Diluted Earnings

Per Share

As Reported GAAP

$

1,448

 

$

500

 

$

948

 

$

74

 

$

874

 

34.5%

 

$

1.05

ERISA litigation matter

 

267

 

 

55

 

 

212

 

 

 

 

212

 

(2.2)%

 

 

0.25

Foreign tax matter

 

 

 

(126)

 

 

126

 

 

 

 

126

 

(7.3)%

 

 

0.15

2022 Global Productivity Initiative

 

27

 

 

5

 

 

22

 

 

1

 

 

21

 

(0.1)%

 

 

0.03

Product recall costs

 

25

 

 

6

 

 

19

 

 

 

 

19

 

—%

 

 

0.02

Non-GAAP

$

1,767

 

$

440

 

$

1,327

 

$

75

 

$

1,252

 

24.9%

 

$

1.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

Income Before

Income Taxes

 

Provision For

Income Taxes(1)

 

Net Income

Including

Noncontrolling

Interests

 

Less: Income

Attributable to

Noncontrolling

Interests

 

Net Income

Attributable To

Colgate-Palmolive

Company

 

Effective Income

Tax Rate(2)

 

Diluted Earnings

Per Share

As Reported GAAP

$

1,636

 

$

394

 

$

1,242

 

$

80

 

$

1,162

 

24.1%

 

$

1.38

2022 Global Productivity Initiative

 

90

 

 

19

 

 

71

 

 

1

 

 

70

 

(0.2)%

 

 

0.08

Non-GAAP

$

1,726

 

$

413

 

$

1,313

 

$

81

 

$

1,232

 

23.9%

 

$

1.46

The impact of non-GAAP adjustments may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.

 

Notes:

(1) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.

 

(2) The impact of non-GAAP items on the Company’s effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustments on Income before income taxes and Provision for income taxes.

 

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