NEW YORK–(BUSINESS WIRE)– Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net sales
of $3,867 million in third quarter 2016, a decrease of 3.5% versus third
quarter 2015. Global unit volume decreased 4.0%, pricing increased 3.0%
and foreign exchange was negative 2.5%. Excluding divested businesses
and the impact of the previously disclosed deconsolidation of the
Company’s Venezuelan operations, unit volume increased 1.5%. Organic
sales (Net sales excluding the impact of foreign exchange, acquisitions,
divestments and the deconsolidation of the Company’s Venezuelan
operations) grew 4.5%.
Net income and Diluted earnings per share in third quarter 2016 were
$702 million and $0.78, respectively. Net income in third quarter 2016
included $32 million ($0.04 per diluted share) of aftertax charges
resulting from the Company’s Global Growth and Efficiency Program (the
“2012 Restructuring Program”), a $63 million ($0.07 per diluted share)
aftertax gain on the sale of land in Mexico, $22 million ($0.02 per
diluted share) of benefits related to previously disclosed tax matters
and an aftertax charge of $4 million ($0.00 per diluted share) for a
previously disclosed litigation matter.
Net income and Diluted earnings per share in third quarter 2015 were
$726 million and $0.80, respectively. Net income in third quarter 2015
included a $120 million ($0.13 per diluted share) aftertax gain on the
sale of the Company’s South Pacific laundry detergent business and $47
million ($0.05 per diluted share) of aftertax charges resulting from the
2012 Restructuring Program and an effective devaluation in Venezuela.
Excluding charges resulting from the 2012 Restructuring Program in both
periods, the gain on the sale of land in Mexico, the benefits related to
tax matters and the charge for a litigation matter in 2016, and the gain
on the sale of the Company’s South Pacific laundry detergent business
and the charge related to an effective devaluation in Venezuela in 2015,
Net income in third quarter 2016 was $653 million, even with third
quarter 2015, and Diluted earnings per share in third quarter 2016 was
$0.73, an increase of 1% versus third quarter 2015. Excluding these
items in both periods, as applicable, and excluding Venezuela’s
operating results in both periods, Diluted earnings per share increased
double digit on a currency-neutral basis.
Gross profit margin was 60.1% in third quarter 2016 versus 58.7% in
third quarter 2015. Excluding charges from the 2012 Restructuring
Program in both periods, Gross profit margin was 60.4% in third quarter
2016, an increase of 160 basis points versus the year ago quarter. This
increase was primarily driven by cost savings from the Company’s
funding-the-growth initiatives and the 2012 Restructuring Program, and
higher pricing, partially offset by higher raw and packaging material
costs, which included foreign exchange transaction costs, and the impact
of the deconsolidation of the Company’s Venezuelan operations effective
December 31, 2015.
Selling, general and administrative expenses were 34.2% of Net sales in
third quarter 2016 versus 33.7% of Net sales in third quarter 2015.
Excluding charges from the 2012 Restructuring Program in both periods,
Selling, general and administrative expenses increased by 70 basis
points to 34.0% of Net sales in third quarter 2016, primarily due to
increased advertising investment. Worldwide advertising investment
increased 3% to $339 million versus $328 million in the year ago quarter.
Operating profit decreased to $1,071 million in third quarter 2016
compared to $1,136 million in third quarter 2015. Excluding charges
resulting from the 2012 Restructuring Program in both periods, the gain
on the sale of land in Mexico and the charge for a litigation matter in
2016, and the gain on the sale of the Company’s South Pacific laundry
detergent business and the charge related to an effective devaluation in
Venezuela in 2015, Operating profit was $1,022 million in third quarter
2016, an increase of 1% versus third quarter 2015. Operating profit
margin was 27.7% in third quarter 2016 versus 28.4% in third quarter
2015. Excluding these items in both periods, as applicable, Operating
profit margin was 26.4% in third quarter 2016, an increase of 110 basis
points versus the year ago quarter.
Net cash provided by operations year-to-date was $2,317 million compared
to $2,108 million in the comparable 2015 period, reflecting strong
operating earnings and the timing of income tax payments, partially
offset by the impact of the deconsolidation of the Company’s Venezuelan
operations effective December 31, 2015 and a voluntary contribution to
an employee postretirement plan. Working capital as a percentage of Net
sales was negative 3.4% compared to negative 1.3% in the year ago
period, reflecting the Company’s continued tight focus on working
capital and the impact of reclassifying current deferred tax assets to
noncurrent deferred tax assets upon the adoption of a new accounting
standard.
Ian Cook, Chairman, President and Chief Executive Officer, commented on
the third quarter results, “As expected, foreign currency headwinds
continued during the third quarter, which together with the impact of
the deconsolidation of the Company’s Venezuelan operations resulted in
the 3.5% net sales decline.
“In the face of continued challenging macroeconomic conditions
worldwide, we are pleased to have achieved another quarter of strong
organic sales growth, with every operating division contributing. The
4.5% worldwide organic sales growth was led by emerging markets where
organic sales grew a strong 8.0%, despite economic challenges in several
countries.
“Pleasingly, the sizable expansion in gross profit margin this quarter
funded an increase in advertising, both absolutely and as a percent to
sales.
“Colgate’s leadership of the global toothpaste market continued during
the quarter with its global market share now at 44.0% year-to-date. Our
global leadership in manual toothbrushes also continued with Colgate’s
global market share in that category now at 33.2% year-to-date.
“As we look ahead, macroeconomic conditions and foreign exchange
volatility remain challenging. We continue to expect a low to mid
single-digit net sales decline for the year due to currency headwinds
and the impact of the deconsolidation of the Company’s Venezuelan
operations. Despite this, we continue to anticipate another year of
solid organic sales growth in 2016, driven by a full new product
pipeline across all categories and geographies.
“On a GAAP basis, based on current spot rates, we continue to plan for a
year of gross margin expansion and continue to expect high double-digit
earnings per share growth, reflecting the impact of the 2015 charge
related to the deconsolidation of our Venezuelan operations.
“Excluding the 2015 and 2016 one-time items, based on current spot
rates, we continue to plan for a year of gross margin expansion, and
continue to expect earnings per share to be flat with 2015 on a dollar
basis. This reflects a double-digit increase in earnings per share on a
currency-neutral basis, excluding Venezuela from 2015 and 2016 results.”
In closing, Mr. Cook commented on the outlook for 2017, “Looking ahead,
we continue to see uncertainty in foreign exchange rates. As we enter
our global budget process, on a GAAP basis, we are planning for a year
of gross margin expansion and mid to high single-digit earnings per
share growth on a dollar basis.
“Excluding charges related to the 2012 Restructuring Program in both
periods and the other 2016 one-time items, we are planning for a year of
gross margin expansion and, consistent with our long-term strategy, our
goal is to return to double-digit earnings per share growth on a dollar
basis.”
At 11:00 a.m. ET today, Colgate will host a conference call to elaborate
on third quarter results. To access this call as a webcast, please go to
Colgate’s website at http://www.colgatepalmolive.com.
The following are comments about divisional performance for third
quarter 2016 versus the year ago period. See attached Geographic Sales
Analysis Percentage Changes and Segment Information tables for
additional information on divisional net sales and operating profit.
North America (21% of Company Sales)
North America Net sales increased 1.0% in third quarter 2016. Unit
volume increased 1.5% with 0.5% lower pricing, while foreign exchange
was even with the year ago quarter. Organic sales increased 1.0% during
the quarter.
Operating profit in North America increased 6% in the third quarter of
2016 to $273 million, or 150 basis points to 34.1% of Net sales. This
increase in Operating profit as a percentage of Net sales was due to an
increase in Gross profit and a decrease in Selling, general and
administrative expenses, both as a percentage of Net sales. This
increase in Gross profit was primarily driven by cost savings from the
Company’s funding-the-growth initiatives, which were partially offset by
higher raw and packaging material costs. This decrease in Selling,
general and administrative expenses was due to lower overhead expenses,
which were partially offset by an increase in advertising investment.
In the U.S., new product launches are contributing to volume growth.
Market share gains year-to-date were seen in toothpaste, manual
toothbrushes, mouthwash, liquid hand soap, body wash, liquid cleaners
and fabric conditioners. Colgate’s share of the toothpaste market
strengthened to 35.7% year-to-date, up 0.3 share points versus the year
ago period, driven by strong sales of Colgate Total Daily Repair,
Colgate Optic White Platinum High Impact White, Colgate Sensitive Smart
White and Tom’s of Maine Rapid Relief Sensitive toothpastes. In manual
toothbrushes, Colgate strengthened its brand market leadership in the
U.S. with its market share in that category at 41.9% year-to-date, up
0.5 share points versus the year ago period. Strong sales of Colgate
360° Enamel Health Sensitive, Colgate 360° Optic White Platinum and
Colgate Total 360° 4 Zone manual toothbrushes contributed to volume
growth in the quarter.
Successful new products driving volume growth in the U.S. in other
categories include Colgate Total Daily Repair and Colgate Kids
mouthwashes, Colgate Total 360° Whole Mouth Clean battery toothbrush,
Softsoap Pure foaming hand soap, Softsoap Luminous Oils and Irish Spring
Signature For Men body washes and Palmolive Fusion Clean dish liquid.
Latin America (24% of Company Sales)
Latin America Net sales decreased 13.0% in third quarter 2016. Unit
volume decreased 16.0% with 9.0% higher pricing, while foreign exchange
was negative 6.0%. Excluding the impact of the deconsolidation of the
Company’s Venezuelan operations, unit volume increased 1.5% driven by
volume gains in Mexico. Organic sales for Latin America increased 10.5%.
Operating profit in Latin America decreased 1% in the third quarter of
2016 to $298 million, while as a percentage of Net sales it increased
410 basis points to 32.3% of Net sales. This increase in Operating
profit as a percentage of Net sales was primarily due to an increase in
Gross profit and a decrease in Selling, general and administrative
expenses, both as a percentage of Net sales. This increase in Gross
profit was due to higher pricing as cost savings from the Company’s
funding-the-growth initiatives were offset by higher costs, which
included foreign exchange transaction costs and the impact of the
deconsolidation of the Company’s Venezuelan operations effective
December 31, 2015. This decrease in Selling, general and administrative
expenses was due to lower overhead expenses, which were partially offset
by an increase in advertising investment.
Colgate strengthened its leadership in toothpaste in Latin America
during the quarter, driven by market share gains in Brazil, Peru,
Uruguay, Paraguay, Puerto Rico, Nicaragua and Costa Rica. Strong sales
of Colgate Luminous White Advanced Expert, Colgate Sensitive Pro-Alivio,
Colgate Total Professional Daily Repair and Colgate Triple Action Extra
Whitening toothpastes contributed to volume growth throughout the
region. Colgate’s leadership in the manual toothbrush category continued
throughout the region, driven by strong sales of Colgate Luminous White
Advanced Toothbrush + Built-In Whitening Pen, Colgate 360° Gold and
Colgate Professional Lab series manual toothbrushes.
Products in other categories contributing to growth throughout the
region include Colgate Plax Ice Infinity mouthwash, Protex Pro-Hidrata
shower gel, bar soap and liquid hand soap, Protex for Men 3 in 1 shower
gel and bar soap, Palmolive Naturals Almond and Omega Oil shower gel,
bar soap and liquid hand soap, Suavitel Superior Care Vanilla fabric
conditioner, Axion Complete dish liquid and Fabuloso Pure Cleaning
liquid cleaner.
Europe (16% of Company Sales)
Europe Net sales decreased 1.5% in third quarter 2016. Unit volume
increased 4.0%, pricing decreased 2.5% and foreign exchange was negative
3.0%. Volume gains were led by Germany and the United Kingdom. Organic
sales for Europe increased 1.5%.
Operating profit in Europe decreased 8% in the third quarter of 2016 to
$158 million, or 200 basis points to 25.9% of Net sales. This decrease
in Operating profit as a percentage of Net sales was primarily due to a
decrease in Gross profit and an increase in Selling, general and
administrative expenses, both as a percentage of Net sales. This
decrease in Gross profit was primarily driven by higher raw and
packaging material costs, which included foreign exchange transaction
costs, and lower pricing due to increased in-store promotional
activities, partially offset by cost savings from the Company’s
funding-the-growth initiatives. The increase in Selling, general and
administrative expenses was due to higher advertising investment.
Colgate maintained its oral care leadership in Europe during the
quarter, driven by toothpaste market share gains in Spain, France,
Belgium, Austria, Denmark, Poland, Hungary, Czech Republic, Italy,
Bulgaria, Bosnia and Latvia. Successful premium products contributing to
volume gains in oral care include Colgate Max White White and Protect,
Colgate Total Proof, Colgate Sensitive Pro Relief Extra Strength,
Colgate Kids and elmex Sensitive Professional Repair & Prevent
toothpastes, Colgate Max White Expert White Toothbrush + Built-In
Whitening Pen and Colgate 360° Advanced manual toothbrushes.
Premium innovations contributing to volume growth in other product
categories include Sanex Advanced shower oils and body balms, Palmolive
Gourmet shower gels, Palmolive Sensorials line of dish liquids,
Palmolive Skin Garden shower gel, bath foam, liquid hand soap, bar soap
and body lotion, Sanex Men shower gel and deodorant, a range of Ajax
specialist kitchen spray cleaners and Soupline Complete Care fabric
conditioner.
Asia Pacific (19% of Company Sales)
Asia Pacific Net sales decreased 1.5% during third quarter 2016. Unit
volume was even with the year ago quarter while pricing increased 0.5%
and foreign exchange was negative 2.0%. Excluding divested businesses,
unit volume increased 2.5%. Volume gains were led by the Philippines and
India. Organic sales for Asia Pacific increased 3.0%.
Operating profit in Asia Pacific increased to $230 million in the third
quarter of 2016, or 60 basis points to 31.8% of Net sales. This increase
in Operating profit as a percentage of Net sales was primarily due to an
increase in Gross profit and a decrease in Selling, general and
administrative expenses, both as a percentage of Net sales. This
increase in Gross profit was mainly driven by cost savings from the
Company’s funding-the-growth initiatives and the 2012 Restructuring
Program, mix and higher pricing, partially offset by higher raw and
packaging material costs, which included foreign exchange transaction
costs. This decrease in Selling, general and administrative expenses was
due to lower overhead expenses, which were partially offset by an
increase in advertising investment.
Colgate continued its toothpaste leadership in the Asia Pacific region
during the quarter, with market share gains in Hong Kong, Taiwan, the
Philippines, New Zealand, Vietnam and Pakistan. Successful new products
including Colgate 360° Charcoal Gel, Colgate Sensitive Salt Minerals,
Colgate Total Pro Breath Health, Colgate Enamel Health, Colgate Optic
White Power White, Colgate Fresh Confidence Bamboo Charcoal, Colgate
Sensitive Clove Essence, Colgate Naturals and Colgate MinionsTM
toothpastes contributed to volume growth in the region.
Successful products contributing to volume growth in other categories in
the region include Colgate Pain Out dental gel, Colgate A1, Colgate Slim
Soft Charcoal Spiral, Colgate Gum Clean, Colgate Zig Zag Charcoal,
Colgate Super Flexi Black and Colgate MinionsTM manual
toothbrushes, Colgate Plax Ice Infinity and Colgate Plax Spicy Fresh
mouthwash, Palmolive Oil Infusions body wash, liquid hand soap and body
lotions and Protex Thai Therapy bar soap.
Africa/Eurasia (6% of Company Sales)
Africa/Eurasia Net sales increased 1.5% during third quarter 2016. Unit
volume decreased 2.0%, pricing increased 10.5% and foreign exchange was
negative 7.0%. Volume gains in the North Africa/Middle East region were
more than offset by volume declines in South Africa. Organic sales for
Africa/Eurasia increased 8.5%.
Operating profit in Africa/Eurasia increased 14% in the third quarter of
2016 to $50 million, or 210 basis points to 20.0% of Net sales. This
increase in Operating profit as a percentage of Net sales was primarily
due to an increase in Gross profit, partially offset by an increase in
Selling, general and administrative expenses, both as a percentage of
Net sales. This increase in Gross profit was mainly driven by cost
savings from the Company’s funding-the-growth initiatives and higher
pricing, partially offset by higher costs, primarily driven by higher
raw and packaging material costs, which included foreign exchange
transaction costs. This increase in Selling, general and administrative
expenses was due to higher overhead expenses and increased advertising
investment.
Colgate continued its toothpaste leadership in Africa/Eurasia during the
quarter, with market share gains in Russia, Turkey, Saudi Arabia, South
Africa, Israel, the United Arab Emirates, Tunisia, Kuwait, Kazakhstan,
Oman and Qatar. Successful products contributing to sales in the region
include Colgate Total Pro Breath Health, Colgate Optic White Lasting
White and Colgate Sensitive Pro-Relief Repair & Prevent toothpastes,
Colgate 360° Charcoal Gold and Colgate Slim Soft Sensitive Gum Care
manual toothbrushes, Palmolive Aroma Sensations and Palmolive Naturals
shower gels and Lady Speed Stick Bio Protection deodorant.
Hill’s Pet Nutrition (14% of Company Sales)
Hill’s Net sales increased 2.5% in third quarter 2016. Unit volume
decreased 2.0% with 3.5% higher pricing, while foreign exchange was
positive 1.0%. Volume declines in the United States, Western Europe and
Japan were partially offset by volume gains in the rest of Asia, Latin
America and Russia. Hill’s organic sales increased 1.5%.
Hill’s Operating profit increased 3% in the third quarter of 2016 to
$162 million, or 10 basis points to 28.9% of Net sales. This increase in
Operating profit as a percentage of Net sales was due to an increase in
Gross profit and a decrease in Other (income) expense, net, partially
offset by an increase in Selling, general and administrative expenses.
This increase in Gross profit was mainly driven by cost savings from the
Company’s funding-the-growth initiatives and higher pricing, partially
offset by higher costs, primarily driven by higher raw and packaging
material costs, which included foreign exchange transaction costs. This
increase in Selling, general and administrative expenses was due to
increased advertising investment and higher overhead expenses. This
decrease in Other (income) expense, net was in part due to a foreign
sales tax benefit.
Successful products contributing to sales in the U.S. include Hill’s
Prescription Diet Metabolic + Mobility and Metabolic + Urinary, Hill’s
Prescription Diet z/d for skin and food sensitivities, Hill’s
Prescription Diet i/d for digestive care, Hill’s Prescription Diet Derm
Defense for environmental sensitivities, Hill’s Science Diet Urinary and
Hairball Control, Hill’s Science Diet Perfect Weight stews, Hill’s
Science Diet Healthy Cuisine and Hill’s Science Diet Sensitive Stomach
and Skin Small & Toy Breed.
Successful products contributing to sales internationally include Hill’s
Prescription Diet Metabolic + Mobility and Metabolic + Urinary, Hill’s
Prescription Diet Derm Defense, Hill’s Prescription Diet z/d, Hill’s
Prescription Diet i/d, Hill’s Science Diet Urinary and Hill’s Science
Diet Perfect Weight.
***
About Colgate-Palmolive: Colgate-Palmolive is a leading global consumer
products company, tightly focused on Oral Care, Personal Care, Home Care
and Pet Nutrition. Colgate sells its products in over 200 countries and
territories around the world under such internationally recognized brand
names as Colgate, Palmolive, Speed Stick, Lady Speed Stick, Softsoap,
Irish Spring, Protex, Sorriso, Kolynos, elmex, Tom’s of Maine, Sanex,
Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science
Diet, Hill’s Prescription Diet and Hill’s Ideal Balance. For more
information about Colgate’s global business, visit the Company’s website
at http://www.colgatepalmolive.com.
To learn more about Colgate Bright Smiles, Bright Futures® oral health
education program, please visit http://www.colgatebsbf.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). 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 calculated by the Company may be different from market share
information calculated 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. Such statements may relate, for example, to sales or volume
growth, organic sales growth, profit or profit margin growth, earnings
per share growth (including on a currency-neutral basis), financial
goals, the impact of foreign exchange volatility, cost-reduction plans
including the 2012 Restructuring Program, tax rates, new product
introductions or commercial investment levels, among other matters.
These statements are made on the basis of our views and assumptions as
of this time and we undertake no obligation to update these statements
except as required by law. We caution 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. Investors should consult the Company’s filings with the
Securities and Exchange Commission (including the information set forth
under the caption “Risk Factors” in the Company’s Annual Report on Form
10-K for the year ended December 31, 2015) for information about certain
factors that could cause such differences. Copies of these filings may
be obtained upon request from the Company’s Investor Relations
Department or on the Company’s website at http://www.colgatepalmolive.com.
Non-GAAP Financial Measures
The following provides information regarding the non-GAAP financial
measures used in this earnings release and/or the related webcast:
This release discusses Net sales growth (GAAP) and organic sales growth,
which is Net sales growth excluding the impact of foreign exchange,
acquisitions, divestments and the deconsolidation of the Company’s
Venezuelan operations (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, divestments and the
deconsolidation of the Company’s Venezuelan operations. See “Geographic
Sales Analysis Percentage Changes” for the three and nine months ended
September 30, 2016 vs 2015 included with this release for a comparison
of organic sales growth to Net sales growth in accordance with GAAP.
To supplement Colgate’s Condensed Consolidated Statements of Income
presented in accordance with GAAP, the Company has disclosed non-GAAP
measures of operating results that exclude certain items. Worldwide
Gross profit, Gross profit margin, 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, Effective income tax rate, Net income attributable to
Colgate-Palmolive Company and Diluted earnings per common share are
discussed both as reported (on a GAAP basis) and, as applicable,
excluding charges resulting from the 2012 Restructuring Program, a gain
on the sale of land in Mexico, benefits from previously disclosed tax
matters, a charge for a previously disclosed litigation matter, a gain
on the sale of the Company’s South Pacific laundry detergent business,
charges related to effective devaluations in Venezuela and a charge
related to a foreign tax matter (non-GAAP). 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, gains and losses from certain
divestitures and certain 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 nine months
ended September 30, 2016 and 2015 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 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. In addition, these
non-GAAP financial measures may not be the same as similar measures
presented by other companies.
The Company defines free cash flow before dividends as Net cash provided
by operations less Capital expenditures. As management uses this measure
to evaluate the Company’s ability to satisfy current and future
obligations, repurchase stock, pay dividends and fund future business
opportunities, 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. Free cash flow before dividends is not a GAAP
measurement and may not be comparable to similarly titled measures
reported by other companies. See “Condensed Consolidated Statements of
Cash Flows” for the nine months ended September 30, 2016 and 2015 for a
comparison of free cash flow before dividends to Net cash provided by
operations as reported in accordance with GAAP.
Explanatory Note Regarding Currency-Neutral
Calculations
Diluted earnings per share growth for third quarter 2016, on a
currency-neutral basis, eliminates from Diluted earnings per share
growth (GAAP) charges resulting from the 2012 Restructuring Program, a
gain on the sale of land in Mexico, benefits from previously disclosed
tax matters, a charge for a previously disclosed litigation matter, a
gain on the sale of the Company’s South Pacific laundry detergent
business, a charge related to an effective devaluation in Venezuela,
2015 and 2016 Venezuela results and period-over-period changes in
foreign exchange rates in the translation of local currency results into
U.S. dollars. Accordingly, for purposes of calculating Diluted earnings
per share growth for third quarter 2016, on a currency-neutral basis,
third quarter 2016 local currency results, which include the impact of
foreign currency transaction gains and losses, are translated into U.S.
dollars using average foreign exchange rates for third quarter 2015.
Management’s estimate of earnings per share growth on a currency-neutral
basis for full year 2016 eliminates from earnings per share growth
(GAAP) a charge related to the change of accounting for the Company’s
Venezuelan subsidiary, charges resulting from the 2012 Restructuring
Program, a gain on the sale of land in Mexico, benefits from previously
disclosed tax matters, a charge for a previously disclosed litigation
matter, charges related to effective devaluations in Venezuela, a gain
on the sale of the Company’s South Pacific laundry detergent business, a
charge related to a foreign tax matter, a charge for a foreign
competition law matter, 2015 and 2016 Venezuela results and
period-over-period changes in foreign exchange rates in the translation
of local currency results into U.S. dollars. Accordingly, for purposes
of estimating earnings per share growth for full year 2016, on a
currency-neutral basis, estimated full year 2016 local currency results,
which include the impact of foreign currency transaction gains and
losses, are translated into U.S. dollars using 2015 average foreign
exchange rates by quarter.
(See attached tables for third quarter results.)
| Table 1 | ||||||||
| Colgate-Palmolive Company | ||||||||
| Condensed Consolidated Statements of Income | ||||||||
| For the Three Months Ended September 30, 2016 and 2015 | ||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||
| 2016 | 2015 | |||||||
| Net sales | $ | 3,867 | $ | 3,999 | ||||
| Cost of sales | 1,543 | 1,652 | ||||||
| Gross profit | 2,324 | 2,347 | ||||||
| Gross profit margin | 60.1 | % | 58.7 | % | ||||
| Selling, general and administrative expenses | 1,322 | 1,347 | ||||||
| Other (income) expense, net | (69 | ) | (136 | ) | ||||
| Operating profit | 1,071 | 1,136 | ||||||
| Operating profit margin | 27.7 | % | 28.4 | % | ||||
| Interest (income) expense, net | 25 | 5 | ||||||
| Income before income taxes | 1,046 | 1,131 | ||||||
| Provision for income taxes | 300 | 361 | ||||||
| Effective tax rate | 28.7 | % | 31.9 | % | ||||
| Net income including noncontrolling interests | 746 | 770 | ||||||
| Less: Net income attributable to noncontrolling interests | 44 | 44 | ||||||
| Net income attributable to Colgate-Palmolive Company | $ | 702 | $ | 726 | ||||
| Earnings per common share | ||||||||
| Basic | $ | 0.79 | $ | 0.81 | ||||
| Diluted | $ | 0.78 | $ | 0.80 | ||||
| Average common shares outstanding | ||||||||
| Basic | 891.9 | 900.1 | ||||||
| Diluted | 899.2 | 906.9 | ||||||
| Table 2 | ||||||||
| Colgate-Palmolive Company | ||||||||
| Condensed Consolidated Statements of Income | ||||||||
| For the Nine Months Ended September 30, 2016 and 2015 | ||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||
| 2016 | 2015 | |||||||
| Net sales | $ | 11,474 | $ | 12,135 | ||||
| Cost of sales | 4,598 | 5,029 | ||||||
| Gross profit | 6,876 | 7,106 | ||||||
| Gross profit margin | 59.9 | % | 58.6 | % | ||||
| Selling, general and administrative expenses | 3,996 | 4,178 | ||||||
| Other (income) expense, net | (2 | ) | — | |||||
| Operating profit | 2,882 | 2,928 | ||||||
| Operating profit margin | 25.1 | % | 24.1 | % | ||||
| Interest (income) expense, net | 78 | 19 | ||||||
| Income before income taxes | 2,804 | 2,909 | ||||||
| Provision for income taxes | 846 | 940 | ||||||
| Effective tax rate | 30.2 | % | 32.3 | % | ||||
| Net income including noncontrolling interests | 1,958 | 1,969 | ||||||
| Less: Net income attributable to noncontrolling interests | 123 | 127 | ||||||
| Net income attributable to Colgate-Palmolive Company | $ | 1,835 | $ | 1,842 | ||||
| Earnings per common share | ||||||||
| Basic | $ | 2.05 | $ | 2.04 | ||||
| Diluted | $ | 2.04 | $ | 2.02 | ||||
| Average common shares outstanding | ||||||||
| Basic | 893.2 | 904.1 | ||||||
| Diluted | 900.2 | 911.8 | ||||||
| Table 3 | ||||||||||||
| Colgate-Palmolive Company | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| As of September 30, 2016, December 31, 2015 and September 30, 2015 | ||||||||||||
| (Dollars in Millions) (Unaudited) | ||||||||||||
| September 30, | December 31, | September 30, | ||||||||||
| 2016 | 2015 | 2015 | ||||||||||
| Cash and cash equivalents | $ | 1,298 | $ | 970 | $ | 1,445 | ||||||
| Receivables, net | 1,560 | 1,427 | 1,561 | |||||||||
| Inventories | 1,193 | 1,180 | 1,277 | |||||||||
| Other current assets | 713 | 807 | 806 | |||||||||
| Property, plant and equipment, net | 3,837 | 3,796 | 3,959 | |||||||||
| Other assets, including goodwill and intangibles* | 4,022 | 3,755 | 4,491 | |||||||||
| Total assets | $ | 12,623 | $ | 11,935 | $ | 13,539 | ||||||
| Total debt* | $ | 6,523 | $ | 6,548 | $ | 6,766 | ||||||
| Other current liabilities | 3,748 | 3,232 | 3,701 | |||||||||
| Other non-current liabilities | 2,124 | 2,199 | 2,482 | |||||||||
| Total liabilities | 12,395 | 11,979 | 12,949 | |||||||||
| Total Colgate-Palmolive Company shareholders’ equity | (133 | ) | (299 | ) | 255 | |||||||
| Noncontrolling interests | 361 | 255 | 335 | |||||||||
| Total liabilities and shareholders’ equity | $ | 12,623 | $ | 11,935 | $ | 13,539 | ||||||
| Supplemental Balance Sheet Information | ||||||||||||
| Debt less cash, cash equivalents and marketable securities** | $ | 4,980 | $ | 5,476 | $ | 5,175 | ||||||
| Working capital % of sales | (3.4 | )% | 0.5 | % | (1.3 | )% | ||||||
|
*To conform to the current year presentation required by the FASB |
|
**Marketable securities of $245, $102 and $146 as of September 30, 2016, December 31, 2015 and September 30, 2015, respectively, are included in Other current assets. |
| Table 4 | ||||||||
| Colgate-Palmolive Company | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| For the Nine Months Ended September 30, 2016 and 2015 | ||||||||
| (Dollars in Millions) (Unaudited) | ||||||||
| 2016 | 2015 | |||||||
| Operating Activities | ||||||||
| Net income including noncontrolling interests | $ | 1,958 | $ | 1,969 | ||||
|
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations: |
||||||||
| Depreciation and amortization | 329 | 337 | ||||||
| Restructuring and termination benefits, net of cash | (1 | ) | 68 | |||||
| Venezuela remeasurement charge | — | 34 | ||||||
| Stock-based compensation expense | 102 | 104 | ||||||
| Gain on sale of land in Mexico | (97 | ) | — | |||||
| Gain on sale of South Pacific laundry detergent business | — | (187 | ) | |||||
| Deferred income taxes | 50 | (42 | ) | |||||
| Voluntary benefit plan contribution | (53 | ) | — | |||||
| Cash effects of changes in: | ||||||||
| Receivables | (126 | ) | (172 | ) | ||||
| Inventories | 4 | 1 | ||||||
| Accounts payable and other accruals | 101 | (18 | ) | |||||
| Other non-current assets and liabilities | 50 | 14 | ||||||
| Net cash provided by operations | 2,317 | 2,108 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (392 | ) | (459 | ) | ||||
| Purchases of marketable securities and investments | (271 | ) | (499 | ) | ||||
| Proceeds from sale of marketable securities and investments | 158 | 398 | ||||||
| Proceeds from sale of land in Mexico | 60 | — | ||||||
| Proceeds from sale of South Pacific laundry detergent business | — | 221 | ||||||
| Payment for acquisitions, net of cash acquired | — | (13 | ) | |||||
| Other | — | 8 | ||||||
| Net cash used in investing activities | (445 | ) | (344 | ) | ||||
| Financing Activities | ||||||||
| Principal payments on debt | (5,446 | ) | (6,691 | ) | ||||
| Proceeds from issuance of debt | 5,447 | 7,293 | ||||||
| Dividends paid | (1,053 | ) | (1,033 | ) | ||||
| Purchases of treasury shares | (913 | ) | (1,196 | ) | ||||
| Proceeds from exercise of stock options and excess tax benefits | 418 | 301 | ||||||
| Net cash used in financing activities | (1,547 | ) | (1,326 | ) | ||||
| Effect of exchange rate changes on Cash and cash equivalents | 3 | (82 | ) | |||||
| Net increase in Cash and cash equivalents | 328 | 356 | ||||||
| Cash and cash equivalents at beginning of the period | 970 | 1,089 | ||||||
| Cash and cash equivalents at end of the period | $ | 1,298 | $ | 1,445 | ||||
| Supplemental Cash Flow Information | ||||||||
|
Free cash flow before dividends (Net cash provided by operations less Capital expenditures) |
||||||||
| Net cash provided by operations | $ | 2,317 | $ | 2,108 | ||||
| Less: Capital expenditures | (392 | ) | (459 | ) | ||||
| Free cash flow before dividends | $ | 1,925 | $ | 1,649 | ||||
| Income taxes paid | $ | 696 | $ | 967 | ||||
| Table 5 | ||||||||||||||||
| Colgate-Palmolive Company | ||||||||||||||||
| Segment Information | ||||||||||||||||
| For the Three and Nine Months Ended September 30, 2016 and 2015 | ||||||||||||||||
| (Dollars in Millions) (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net Sales | ||||||||||||||||
| Oral, Personal and Home Care | ||||||||||||||||
| North America | $ | 800 | $ | 791 | $ | 2,393 | $ | 2,360 | ||||||||
| Latin America | 924 | 1,064 | 2,710 | 3,277 | ||||||||||||
| Europe | 609 | 617 | 1,803 | 1,829 | ||||||||||||
| Asia Pacific | 723 | 735 | 2,163 | 2,279 | ||||||||||||
| Africa/Eurasia | 250 | 246 | 720 | 754 | ||||||||||||
| Total Oral, Personal and Home Care | 3,306 | 3,453 | 9,789 | 10,499 | ||||||||||||
| Pet Nutrition | 561 | 546 | 1,685 | 1,636 | ||||||||||||
| Total Net Sales | $ | 3,867 | $ | 3,999 | $ | 11,474 | $ | 12,135 | ||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Operating Profit | ||||||||||||||||
| Oral, Personal and Home Care | ||||||||||||||||
| North America | $ | 273 | $ | 258 | $ | 762 | $ | 699 | ||||||||
| Latin America | 298 | 300 | 829 | 929 | ||||||||||||
| Europe | 158 | 172 | 437 | 466 | ||||||||||||
| Asia Pacific | 230 | 229 | 668 | 676 | ||||||||||||
| Africa/Eurasia | 50 | 44 | 138 | 128 | ||||||||||||
| Total Oral, Personal and Home Care | 1,009 | 1,003 | 2,834 | 2,898 | ||||||||||||
| Pet Nutrition | 162 | 157 | 479 | 450 | ||||||||||||
| Corporate(1) | (100 | ) | (24 | ) | (431 | ) | (420 | ) | ||||||||
| Total Operating Profit | $ | 1,071 | $ | 1,136 | $ | 2,882 | $ | 2,928 | ||||||||
|
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 costs and gains and losses on sales of non-core product lines and assets. |
|
Corporate Operating profit (loss) for the three months ended September 30, 2016 includes charges of $42 related to the 2012 Restructuring Program, a charge of $6 for a previously disclosed litigation matter and a gain of $97 resulting from the sale of land in Mexico. Corporate Operating profit (loss) for the three months ended September 30, 2015 included charges of $46 related to the 2012 Restructuring Program, a charge of $18 related to the remeasurement of the Company’s Venezuelan subsidiary’s local currency-denominated net monetary assets as a result of an effective devaluation and a gain of $187 on the sale of the Company’s laundry detergent business in the South Pacific. |
|
Corporate Operating profit (loss) for the nine months ended September 30, 2016 includes charges of $156 related to the 2012 Restructuring Program, a charge of $6 for a previously disclosed litigation matter and a gain of $97 resulting from the sale of land in Mexico. Corporate Operating profit (loss) for the nine months ended September 30, 2015 included charges of $198 related to the 2012 Restructuring Program, charges of $34 related to the remeasurement of the Company’s Venezuelan subsidiary’s local currency-denominated net monetary assets as a result of effective devaluations and a gain of $187 on the sale of the Company’s laundry detergent business in the South Pacific. |
| Table 6 | |||||||||||||||||||||
| Colgate-Palmolive Company | |||||||||||||||||||||
| Geographic Sales Analysis Percentage Changes | |||||||||||||||||||||
| For the Three Months Ended September 30, 2016 vs 2015 | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| COMPONENTS OF SALES CHANGE | |||||||||||||||||||||
| Pricing | |||||||||||||||||||||
| Coupons | |||||||||||||||||||||
| Sales | Consumer & | ||||||||||||||||||||
| Change | Organic | As Reported | Organic | Ex-Divested | Trade | Foreign | |||||||||||||||
|
Region |
As Reported |
Sales Change |
Volume (1) |
Volume |
Volume (2) |
Incentives |
Exchange |
||||||||||||||
| Total Company | (3.5 | )% | 4.5 | % | (4.0 | )% | 1.5 | % | 1.5 | % | 3.0 | % | (2.5 | )% | |||||||
| Europe | (1.5 | )% | 1.5 | % | 4.0 | % | 4.0 | % | 4.0 | % | (2.5 | )% | (3.0 | )% | |||||||
| Latin America (3) | (13.0 | )% | 10.5 | % | (16.0 | )% | 1.5 | % | 1.5 | % | 9.0 | % | (6.0 | )% | |||||||
| Asia Pacific (4) | (1.5 | )% | 3.0 | % | — | % | 2.5 | % | 2.5 | % | 0.5 | % | (2.0 | )% | |||||||
| Africa/Eurasia | 1.5 | % | 8.5 | % | (2.0 | )% | (2.0 | )% | (2.0 | )% | 10.5 | % | (7.0 | )% | |||||||
| Total International | (6.0 | )% | 6.0 | % | (5.5 | )% | 2.0 | % | 2.0 | % | 4.0 | % | (4.5 | )% | |||||||
| North America | 1.0 | % | 1.0 | % | 1.5 | % | 1.5 | % | 1.5 | % | (0.5 | )% | — | % | |||||||
| Total CP Products | (4.5 | )% | 4.5 | % | (4.0 | )% | 2.0 | % | 2.0 | % | 2.5 | % | (3.0 | )% | |||||||
| Hill’s | 2.5 | % | 1.5 | % | (2.0 | )% | (2.0 | )% | (2.0 | )% | 3.5 | % | 1.0 | % | |||||||
| Emerging Markets (5) | (6.0 | )% | 8.0 | % | (7.0 | )% | 2.0 | % | 2.0 | % | 6.0 | % | (5.0 | )% | |||||||
| Developed Markets | (0.5 | )% | 1.0 | % | — | % | 1.0 | % | 1.0 | % | — | % | (0.5 | )% | |||||||
| Notes: |
|
(1) As Reported Volume includes the impact of acquisitions, divestments and the deconsolidation of the Company’s Venezuelan operations, as applicable. |
|
(2) Ex-Divested Volume excludes the impact of divestments and the deconsolidation of the Company’s Venezuelan operations, as applicable. |
|
(3) Effective December 31, 2015, the Company concluded it no longer met the accounting criteria for consolidation of its Venezuelan subsidiary (“CP Venezuela”) and began accounting for CP Venezuela using the cost method of accounting. As a result, effective December 31, 2015, CP Venezuela’s net assets and results are no longer included in the Company’s Consolidated Financial Statements. The impact of the deconsolidation of the Company’s Venezuelan operations on three months sales and volume was 4.5% for the Total Company. |
|
(4) The sale of the Company’s laundry detergent business in the South Pacific was completed on August 31, 2015. The impact of the sale of the Company’s laundry detergent business in the South Pacific on three months sales and volume was 0.5% for the Total Company. |
|
(5) 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 Nine Months Ended September 30, 2016 vs 2015 | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| COMPONENTS OF SALES CHANGE | |||||||||||||||||||||
| Pricing | |||||||||||||||||||||
| Coupons | |||||||||||||||||||||
| Sales | Consumer & | ||||||||||||||||||||
| Change | Organic | As Reported | Organic | Ex-Divested | Trade | Foreign | |||||||||||||||
|
Region |
As Reported |
Sales Change |
Volume (1) |
Volume |
Volume(2) |
Incentives |
Exchange |
||||||||||||||
| Total Company | (5.5 | )% | 4.5 | % | (3.0 | )% | 2.0 | % | 2.0 | % | 2.5 | % | (5.0 | )% | |||||||
| Europe | (1.5 | )% | 1.0 | % | 4.0 | % | 4.0 | % | 4.0 | % | (3.0 | )% | (2.5 | )% | |||||||
| Latin America (3) | (17.5 | )% | 10.0 | % | (13.5 | )% | 1.5 | % | 1.5 | % | 8.5 | % | (12.5 | )% | |||||||
| Asia Pacific (4) | (5.0 | )% | 3.0 | % | (1.0 | )% | 2.5 | % | 2.5 | % | 0.5 | % | (4.5 | )% | |||||||
| Africa/Eurasia | (4.5 | )% | 8.0 | % | (1.0 | )% | (1.0 | )% | (1.0 | )% | 9.0 | % | (12.5 | )% | |||||||
| Total International | (9.0 | )% | 5.5 | % | (4.5 | )% | 2.0 | % | 2.0 | % | 3.5 | % | (8.0 | )% | |||||||
| North America | 1.5 | % | 2.0 | % | 3.0 | % | 3.0 | % | 3.0 | % | (1.0 | )% | (0.5 | )% | |||||||
| Total CP Products | (7.0 | )% | 4.5 | % | (3.5 | )% | 2.0 | % | 2.0 | % | 2.5 | % | (6.0 | )% | |||||||
| Hill’s | 3.0 | % | 3.5 | % | 1.0 | % | 1.0 | % | 1.0 | % | 2.5 | % | (0.5 | )% | |||||||
| Emerging Markets (5) | (10.0 | )% | 7.0 | % | (6.0 | )% | 1.5 | % | 1.5 | % | 5.5 | % | (9.5 | )% | |||||||
| Developed Markets | (0.5 | )% | 2.0 | % | 1.0 | % | 2.5 | % | 2.5 | % | (0.5 | )% | (1.0 | )% | |||||||
| Notes: |
|
(1) As Reported Volume includes the impact of acquisitions, divestments and the deconsolidation of the Company’s Venezuelan operations, as applicable. |
|
(2) Ex-Divested Volume excludes the impact of divestments and the deconsolidation of the Company’s Venezuelan operations, as applicable. |
|
(3) Effective December 31, 2015, the Company concluded it no longer met the accounting criteria for consolidation of its Venezuelan subsidiary (“CP Venezuela”) and began accounting for CP Venezuela using the cost method of accounting. As a result, effective December 31, 2015, CP Venezuela’s net assets and results are no longer included in the Company’s Consolidated Financial Statements. The impact of the deconsolidation of the Company’s Venezuelan operations on nine months sales and volume was 4.0% for the Total Company. |
|
(4) The sale of the Company’s laundry detergent business in the South Pacific was completed on August 31, 2015. The impact of the sale of the Company’s laundry detergent business in the South Pacific on nine months sales and volume was 0.5% for the Total Company. |
|
(5) 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 September 30, 2016 and 2015 | ||||||||||||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||||||||||||
| Gross Profit | 2016 | 2015 | ||||||||||||||||
| Gross profit, GAAP | $ | 2,324 | $ | 2,347 | ||||||||||||||
| 2012 Restructuring Program | 11 | 3 | ||||||||||||||||
| Gross profit, non-GAAP | $ | 2,335 | $ | 2,350 | ||||||||||||||
| Basis Point | ||||||||||||||||||
| Gross Profit Margin | 2016 | 2015 | Change | |||||||||||||||
| Gross profit margin, GAAP | 60.1 | % | 58.7 | % | 140 | |||||||||||||
| 2012 Restructuring Program | 0.3 | % | 0.1 | % | ||||||||||||||
| Gross profit margin, non-GAAP | 60.4 | % | 58.8 | % | 160 | |||||||||||||
| Selling, General and Administrative Expenses | 2016 | 2015 | ||||||||||||||||
| Selling, general and administrative expenses, GAAP | $ | 1,322 | $ | 1,347 | ||||||||||||||
| 2012 Restructuring Program | (9 | ) | (15 | ) | ||||||||||||||
| Selling, general and administrative expenses, non-GAAP | $ | 1,313 | $ | 1,332 | ||||||||||||||
| Basis Point | ||||||||||||||||||
|
Selling, General and Administrative Expenses as a Percentage of Net Sales |
2016 | 2015 | Change | |||||||||||||||
|
Selling, general and administrative expenses as a percentage of Net sales, GAAP |
34.2 | % | 33.7 | % | 50 | |||||||||||||
| 2012 Restructuring Program | (0.2 | )% | (0.4 | )% | ||||||||||||||
|
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP |
34.0 | % | 33.3 | % | 70 | |||||||||||||
| Other (Income) Expense, Net | 2016 | 2015 | ||||||||||||||||
| Other (income) expense, net, GAAP | $ | (69 | ) | $ | (136 | ) | ||||||||||||
| 2012 Restructuring Program | (22 | ) | (28 | ) | ||||||||||||||
| Gain on sale of land in Mexico | 97 | — | ||||||||||||||||
| Charge for a previously disclosed litigation matter | (6 | ) | — | |||||||||||||||
| Venezuela remeasurement charge | — | (18 | ) | |||||||||||||||
| Gain on sale of South Pacific laundry detergent business | — | 187 | ||||||||||||||||
| Other (income) expense, net, non-GAAP | $ | — | $ | 5 | ||||||||||||||
| Operating Profit | 2016 | 2015 | % Change | |||||||||||||||
|
Operating profit, GAAP |
$ | 1,071 | $ | 1,136 | (6 | )% | ||||||||||||
| 2012 Restructuring Program | 42 | 46 | ||||||||||||||||
| Gain on sale of land in Mexico | (97 | ) | — | |||||||||||||||
| Charge for a previously disclosed litigation matter | 6 | — | ||||||||||||||||
| Venezuela remeasurement charge | — | 18 | ||||||||||||||||
| Gain on sale of South Pacific laundry detergent business | — | (187 | ) |
|
||||||||||||||
| Operating profit, non-GAAP | $ | 1,022 | $ | 1,013 | 1 | % | ||||||||||||
| Basis Point | ||||||||||||||||||
| Operating Profit Margin | 2016 | 2015 | Change | |||||||||||||||
| Operating profit margin, GAAP | 27.7 | % | 28.4 | % | (70 | ) | ||||||||||||
| 2012 Restructuring Program | 1.1 | % | 1.1 | % | ||||||||||||||
| Gain on sale of land in Mexico | (2.5 | )% | — | % | ||||||||||||||
| Charge for a previously disclosed litigation matter | 0.1 | % | — | % | ||||||||||||||
| Venezuela remeasurement charge | — | % | 0.5 | % | ||||||||||||||
| Gain on sale of South Pacific laundry detergent business | — | % | (4.7 | )% | ||||||||||||||
| Operating profit margin, non-GAAP | 26.4 | % | 25.3 | % | 110 | |||||||||||||
| Table 8 | |||||||||||||||||||||||
| Continued | |||||||||||||||||||||||
| Colgate-Palmolive Company | |||||||||||||||||||||||
| Non-GAAP Reconciliations | |||||||||||||||||||||||
| For the Three Months Ended September 30, 2016 and 2015 | |||||||||||||||||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | |||||||||||||||||||||||
| 2016 | |||||||||||||||||||||||
|
Income Before |
Provision For |
Net Income |
Net Income |
Effective |
Diluted |
||||||||||||||||||
| As Reported GAAP | $ | 1,046 | $ | 300 | $ | 746 | $ | 702 | 28.7 | % | $ | 0.78 | |||||||||||
| 2012 Restructuring Program | 42 | 10 | 32 | 32 | (0.2 | )% | 0.04 | ||||||||||||||||
| Gain on sale of land in Mexico | (97 | ) | (34 | ) | (63 | ) | (63 | ) | (0.6 | )% | (0.07 | ) | |||||||||||
|
Benefits from previously disclosed tax |
— | 22 | (22 | ) | (22 | ) | 2.2 | % | (0.02 | ) | |||||||||||||
|
Charge for a previously disclosed |
6 | 2 | 4 | 4 | — | % | — | ||||||||||||||||
| Non-GAAP |
$ |
997 |
$ |
300 |
$ |
697 |
$ |
653 |
30.1 | % | $ | 0.73 | |||||||||||
| 2015 | |||||||||||||||||||||||
|
Income Before |
Provision For |
Net Income |
Net Income |
Effective |
Diluted |
||||||||||||||||||
| As Reported GAAP | $ | 1,131 | $ | 361 | $ | 770 | $ | 726 | 31.9 | % | $ | 0.80 | |||||||||||
| 2012 Restructuring Program | 46 | 11 | 35 | 35 | (0.3 | )% | 0.04 | ||||||||||||||||
| Venezuela remeasurement charge | 18 | 6 | 12 | 12 | 0.1 | % | 0.01 | ||||||||||||||||
|
Gain on sale of South Pacific laundry |
(187 | ) | (67 | ) | (120 | ) | (120 | ) | (0.8 | )% | (0.13 | ) | |||||||||||
| Non-GAAP | $ | 1,008 | $ | 311 | $ | 697 | $ | 653 | 30.9 | % | $ | 0.72 | |||||||||||
| 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. |
|
(3) The impact of non-GAAP adjustments on Diluted earnings per share may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding. |
| Table 9 | |||||||||||||||||||
| Colgate-Palmolive Company | |||||||||||||||||||
| Non-GAAP Reconciliations | |||||||||||||||||||
| For the Nine Months Ended September 30, 2016 and 2015 | |||||||||||||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | |||||||||||||||||||
| Gross Profit | 2016 | 2015 | |||||||||||||||||
| Gross profit, GAAP | $ | 6,876 | $ | 7,106 | |||||||||||||||
| 2012 Restructuring Program | 31 | 11 | |||||||||||||||||
| Gross profit, non-GAAP | $ | 6,907 | $ | 7,117 | |||||||||||||||
| Basis Point | |||||||||||||||||||
| Gross Profit Margin | 2016 | 2015 | Change | ||||||||||||||||
| Gross profit margin, GAAP | 59.9 | % | 58.6 | % | 130 | ||||||||||||||
| 2012 Restructuring Program | 0.3 | % | — | % | |||||||||||||||
| Gross profit margin, non-GAAP | 60.2 | % | 58.6 | % | 160 | ||||||||||||||
| Selling, General and Administrative Expenses | 2016 | 2015 | |||||||||||||||||
| Selling, general and administrative expenses, GAAP | $ | 3,996 | $ | 4,178 | |||||||||||||||
| 2012 Restructuring Program | (49 | ) | (44 | ) | |||||||||||||||
| Selling, general and administrative expenses, non-GAAP | $ | 3,947 | $ | 4,134 | |||||||||||||||
| Basis Point | |||||||||||||||||||
|
Selling, General and Administrative Expenses as a Percentage of Net Sales |
2016 | 2015 | Change | ||||||||||||||||
|
Selling, general and administrative expenses as a percentage of Net sales, GAAP |
34.8 | % | 34.4 | % | 40 | ||||||||||||||
| 2012 Restructuring Program | (0.4 | )% | (0.3 | )% | |||||||||||||||
|
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP |
34.4 | % | 34.1 | % | 30 | ||||||||||||||
| Other (Income) Expense, Net | 2016 | 2015 | |||||||||||||||||
| Other (income) expense, net, GAAP | $ | (2 | ) | $ | — | ||||||||||||||
| 2012 Restructuring Program | (76 | ) | (143 | ) | |||||||||||||||
| Gain on sale of land in Mexico | 97 | — | |||||||||||||||||
| Charge for a previously disclosed litigation matter | (6 | ) | — | ||||||||||||||||
| Venezuela remeasurement charges | — | (34 | ) | ||||||||||||||||
| Gain on sale of South Pacific laundry detergent business | — | 187 | |||||||||||||||||
| Other (income) expense, net, non-GAAP | $ | 13 | $ | 10 | |||||||||||||||
| Operating Profit | 2016 | 2015 | % Change | ||||||||||||||||
| Operating profit, GAAP |
$ |
2,882 |
$ | 2,928 | (2 | )% | |||||||||||||
| 2012 Restructuring Program | 156 | 198 | |||||||||||||||||
| Gain on sale of land in Mexico | (97 | ) | — | ||||||||||||||||
| Charge for a previously disclosed litigation matter | 6 | — | |||||||||||||||||
| Venezuela remeasurement charges | — | 34 | |||||||||||||||||
| Gain on sale of South Pacific laundry detergent business | — | (187 | ) | ||||||||||||||||
| Operating profit, non-GAAP | $ | 2,947 | $ | 2,973 | (1 | )% | |||||||||||||
| Basis Point | |||||||||||||||||||
| Operating Profit Margin | 2016 | 2015 | Change | ||||||||||||||||
| Operating profit margin, GAAP | 25.1 | % | 24.1 | % | 100 | ||||||||||||||
| 2012 Restructuring Program | 1.4 | % | 1.6 | % | |||||||||||||||
| Gain on sale of land in Mexico | (0.8 | )% | — | % | |||||||||||||||
| Charge for a previously disclosed litigation matter | — | % | — | % | |||||||||||||||
| Venezuela remeasurement charges | — | % | 0.3 | % | |||||||||||||||
| Gain on sale of South Pacific laundry detergent business | — | % | (1.5 | )% | |||||||||||||||
| Operating profit margin, non-GAAP | 25.7 | % | 24.5 | % | 120 | ||||||||||||||
| Table 9 | ||||||||||||||||||||||||||
| Continued | ||||||||||||||||||||||||||
| Colgate-Palmolive Company | ||||||||||||||||||||||||||
| Non-GAAP Reconciliations | ||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2016 and 2015 | ||||||||||||||||||||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||||||||||||||||||||
| 2016 | ||||||||||||||||||||||||||
|
Income |
Provision |
Net Income |
Less: Income |
Net Income |
Effective |
Diluted |
||||||||||||||||||||
| As Reported GAAP | $ | 2,804 | $ | 846 | $ | 1,958 | $ | 123 | $ | 1,835 | 30.2 | % | $ | 2.04 | ||||||||||||
| 2012 Restructuring Program | 156 | 41 | 115 | 1 | 114 | (0.2 | )% | 0.13 | ||||||||||||||||||
| Gain on sale of land in Mexico | (97 | ) | (34 | ) | (63 | ) | — | (63 | ) | (0.2 | )% | (0.07 | ) | |||||||||||||
|
Benefits from previously disclosed tax |
— | 35 | (35 | ) | — | (35 | ) | 1.2 | % | (0.04 | ) | |||||||||||||||
|
Charge for a previously disclosed |
6 | 2 | 4 |
— |
4 | — | % | — | ||||||||||||||||||
| Non-GAAP | $ | 2,869 | $ | 890 | $ | 1,979 | $ | 124 | $ | 1,855 | 31.0 | % | $ | 2.06 | ||||||||||||
| 2015 | ||||||||||||||||||||||||||
|
Income |
Provision |
Net Income |
Less: Income |
Net Income |
Effective |
Diluted |
||||||||||||||||||||
| As Reported GAAP | $ | 2,909 | $ | 940 | $ | 1,969 | $ | 127 | $ | 1,842 | 32.3 | % | $ | 2.02 | ||||||||||||
| 2012 Restructuring Program | 198 | 54 | 144 | 2 | 142 | (0.3 | )% | 0.15 | ||||||||||||||||||
| Venezuela remeasurement charges | 34 | 12 | 22 | — | 22 | — | 0.02 | |||||||||||||||||||
| Charge for a foreign tax matter | — | (15 | ) | 15 | — | 15 | (0.5 | )% | 0.02 | |||||||||||||||||
|
Gain on sale of South Pacific laundry |
(187 | ) | (67 | ) | (120 | ) |
— |
(120 | ) | (0.2 | )% | (0.13 | ) | |||||||||||||
| Non-GAAP | $ | 2,954 | $ | 924 | $ | 2,030 | $ | 129 | $ | 1,901 | 31.3 | % | $ | 2.08 | ||||||||||||
| 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. |
|
(3) The impact of non-GAAP adjustments on Diluted earnings per share may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding. |
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Contacts
Colgate-Palmolive Company
Bina Thompson, 212-310-3072
or
John
Faucher, 212-310-3653
or
Hope Spiller, 212-310-2291
Source: Colgate-Palmolive Company
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