Market Overview

Colgate Announces 2nd Quarter 2018 Results

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Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net sales
of $3,886 million in second quarter 2018, an increase of 1.5% versus
second quarter 2017. Global unit volume increased 1.5%, and pricing and
foreign exchange were even with the year ago period. The previously
disclosed professional skin care acquisitions contributed 1.0% to Net
sales and unit volume growth in the quarter. Organic sales (Net sales
excluding the impact of foreign exchange, acquisitions and divestments)
increased 0.5%.

Net income and Diluted earnings per share in second quarter 2018 were
$637 million and $0.73, respectively. Net income in second quarter 2018
included $51 million ($0.06 per diluted share) of aftertax charges
resulting from the Company's Global Growth and Efficiency Program and a
$15 million ($0.02 per diluted share) benefit from a previously
disclosed foreign tax matter.

Net income and Diluted earnings per share in second quarter 2017 were
$524 million and $0.59, respectively. Net income in second quarter 2017
included $115 million ($0.13 per diluted share) of aftertax charges
resulting from the Global Growth and Efficiency Program.

Excluding charges resulting from the Global Growth and Efficiency
Program in both periods and the benefit from a foreign tax matter in
2018, Net income in second quarter 2018 was $673 million, an increase of
5% versus second quarter 2017, and Diluted earnings per share in second
quarter 2018 was $0.77, an increase of 7% versus second quarter 2017.

Gross profit margin was 59.2% in second quarter 2018 versus 60.1% in
second quarter 2017. Excluding charges resulting from the Global Growth
and Efficiency Program in both periods, Gross profit margin was 59.3% in
second quarter 2018, a decrease of 140 basis points versus the year ago
quarter as higher raw and packaging material costs were partially offset
by cost savings from the Company's funding-the-growth initiatives.

Selling, general and administrative expenses were 33.5% of Net sales in
second quarter 2018 versus 34.2% of Net sales in second quarter 2017.
Excluding charges resulting from the Global Growth and Efficiency
Program in both periods, Selling, general and administrative expenses
decreased by 60 basis points to 33.2% of Net sales in second quarter
2018 as a result of lower overhead expenses as a percentage of Net
sales. Worldwide advertising investment increased 1% to $403 million
versus $399 million in the year ago quarter.

Operating profit increased to $946 million in second quarter 2018
compared to $878 million in second quarter 2017. Excluding charges
resulting from the Global Growth and Efficiency Program in both periods,
Operating profit was $1,004 million in second quarter 2018, a decrease
of 1% versus second quarter 2017. Operating profit margin was 24.3% in
second quarter 2018 versus 22.9% in second quarter 2017. Excluding
charges resulting from the Global Growth and Efficiency Program in both
periods, Operating profit margin was 25.8% in second quarter 2018, a
decrease of 80 basis points versus the year ago quarter. This decrease
in Operating profit margin was due to a decrease in Gross profit,
partially offset by a decrease in Selling, general and administrative
expenses, both as a percentage of Net sales.

Net cash provided by operations year to date was $1,297 million compared
to $1,305 million in the comparable 2017 period. Working capital as a
percentage of Net sales was negative 2.1% compared to negative 3.9% in
the year ago period.

Ian Cook, Chairman and Chief Executive Officer, commented on the second
quarter results, "The second quarter was another challenging one with
category growth rates remaining soft in many markets around the world
and recent unfavorable movements in foreign exchange. Net sales grew
1.5% and organic sales grew 0.5%, below our expectations, due to unit
volume declines in emerging markets and flat pricing worldwide.

"Advertising investment increased in absolute dollars versus second
quarter 2017 and we continue to plan for increased advertising
investment, both absolutely and as a percent to sales, for the full year
in support of new products, our base businesses and longer-term
consumption-building activities.

"Colgate's leadership of the global toothpaste market continued during
the quarter with our global market share at 42.1% year to date. Our
global leadership in manual toothbrushes also continued with Colgate's
global market share in that category at 32.3% year to date."

Mr. Cook continued, "As we look ahead, while uncertainty in global
markets and category growth worldwide remain challenging, we are
maintaining our heightened focus on brand building and increased
productivity while accelerating our change efforts. Based on current
spot rates, we expect a low-single-digit net sales increase and
low-single-digit organic sales growth in 2018, with sequential
improvement in organic sales growth in the balance of the year.

"On a GAAP basis, based on current spot rates and including the impact
of the Global Growth and Efficiency Program, we expect gross margin for
the year to be even with 2017 and expect double-digit earnings per share
growth versus 2017.

"Excluding charges resulting from the Global Growth and Efficiency
Program, the one-time charge related to U.S. tax reform in 2017 and the
benefit from a foreign tax matter in 2018, based on current spot rates,
we are planning for a year of increased operating cash flow, modestly
lower gross margin, increased advertising investment and
mid-single-digit earnings per share growth versus 2017."

At 11:00 a.m. ET today, Colgate will host a conference call to elaborate
on second 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 second
quarter 2018 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 8.0% in second quarter 2018. Unit
volume increased 7.0%, pricing increased 0.5% and foreign exchange was
positive 0.5%. The previously disclosed professional skin care
acquisitions contributed 5.5% to Net sales and unit volume growth.
Organic sales and organic unit volume for North America increased 2.0%
and 1.5%, respectively.

Operating profit in North America increased 4% in second quarter 2018 to
$264 million, while as a percentage of Net sales it decreased 140 basis
points to 32.0%. This decrease in Operating profit as a percentage of
Net sales was due to a decrease in Gross profit, an increase in Selling,
general and administrative expenses and an increase in Other (income)
expense, net, all as a percentage of Net sales. This decrease in Gross
profit was primarily due to higher raw and packaging material costs,
partially offset by cost savings from the Company's funding-the-growth
initiatives. This increase in Selling, general and administrative
expenses was due to higher overhead expenses, partially offset by
decreased advertising investment. This increase in Other (income)
expense, net was primarily due to the amortization of intangible assets
resulting from the professional skin care acquisitions.

In the U.S., Colgate maintained its leadership in the toothpaste
category during the quarter with its market share at 34.9% year to date.
Successful products include Colgate Optic White Stain Fighter, Colgate
Optic White Stain-Less White and Tom's of Maine toothpastes. In manual
toothbrushes, Colgate widened its brand market leadership in the U.S.
with its market share in that category at 41.9% year to date, supported
by the success of Colgate Total 360° Advanced Optic White and Colgate
Gum Health manual toothbrushes.

Products succeeding in other categories include Softsoap Hydra Bliss
body wash and liquid hand soap, Irish Spring Non-Stop Fresh body wash,
Fabuloso Complete liquid cleaner and Suavitel Complete fabric
conditioner.

Latin America (24% of Company Sales)

Latin America Net sales decreased 7.0% in second quarter 2018. Unit
volume decreased 1.0%, pricing decreased 0.5% and foreign exchange was
negative 5.5%. Excluding the impact of the truckers' strike in Brazil,
Latin America unit volume would have increased in the quarter. Volume
declines in Central America were partially offset by volume gains in the
Southern Cone region. Organic sales for Latin America decreased 1.5%.

Operating profit in Latin America decreased 15% in second quarter 2018
to $262 million, or 270 basis points to 28.1% 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 due to higher raw and packaging
material costs, partially offset by cost savings from the Company's
funding-the-growth initiatives. This increase in Selling, general and
administrative expenses was due to higher overhead expenses.

Colgate maintained its toothpaste leadership in Latin America during the
quarter, with market share gains in Brazil, Peru, Costa Rica, Chile,
Guatemala and Panama. Products succeeding in oral care in the region
include Colgate Total 12 Salud Visible, Colgate Luminous White XD Shine,
Colgate Triple Action Xtra Freshness and Colgate Kids toothpastes.
Colgate's leadership in the manual toothbrush category continued
throughout the region, supported by the success of Colgate 360° Advanced
Total 12 and Colgate Pro Cuidado manual toothbrushes.

Products succeeding in other categories include Colgate Total 12
mouthwash, Protex Pro-Hidrata, Palmolive Natural Secrets and Palmolive
Neutro Balance shower gels and bar soaps, Suavitel Complete fabric
conditioner and Fabuloso Complete liquid cleaner.

Europe (16% of Company Sales)

Europe Net sales increased 6.0% in second quarter 2018. Unit volume
increased 2.5%, pricing decreased 3.5% and foreign exchange was positive
7.0%. Volume gains were led by France, the United Kingdom and Italy.
Organic sales for Europe decreased 1.0%.

Operating profit in Europe increased 7% in second quarter 2018 to $156
million or 20 basis points to 25.2% of Net sales. This increase in
Operating profit as a percentage of Net sales was due to a decrease in
Selling, general and administrative expenses and a decrease in Other
(income) expense, net, partially offset by a decrease in Gross profit,
all as a percentage of Net sales. This decrease in Gross profit was
primarily due to higher raw and packaging material costs and lower
pricing, partially offset by cost savings from the Company's
funding-the-growth initiatives. This decrease in Selling, general and
administrative expenses was due to decreased advertising investment,
partially offset by higher overhead expenses.

Colgate maintained its toothpaste leadership in Europe during the
quarter, with toothpaste market share gains in France, Germany, Italy,
Greece, Denmark and Sweden. Products succeeding in oral care include
Colgate Max White Expert Complete, Colgate Natural Extracts and meridol
Parodont Expert toothpastes and Colgate 360° Advanced Whole Mouth Health
and Colgate 360° Advanced Max White Expert White manual toothbrushes.

Products succeeding in other categories include Colgate Plax mouthwash,
Sanex Zero% shower gel, deodorant and body lotion, Sanex Dermo shower
gel, Palmolive Aroma Sensations shower gel, Palmolive Handwash + Lotion
liquid hand soap, Ajax Boost liquid cleaner and Soupline Parfum Supreme
fabric conditioner.

Asia Pacific (18% of Company Sales)

Asia Pacific Net sales increased 1.5% during second quarter 2018. Unit
volume decreased 1.0%, pricing increased 1.0% and foreign exchange was
positive 1.5%. Volume declines in the Greater China region were
partially offset by volume gains in India and the Philippines. Organic
sales for Asia Pacific were even with the year ago period.

Operating profit in Asia Pacific decreased 1% in second quarter 2018 to
$203 million, or 100 basis points to 30.1% 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 due to higher raw and packaging
material costs, partially offset by cost savings from the Company's
funding-the-growth initiatives. This increase in Selling, general and
administrative expenses was due to higher overhead expenses, partially
offset by decreased advertising investment.

Colgate maintained its toothpaste leadership in the Asia Pacific region
during the quarter with market share gains in the Philippines. Products
succeeding in the region include Colgate Naturals, Colgate Swarna
Vedshakti, Colgate MaxFresh and elmex Sensitive toothpastes.

Products succeeding in other categories include Colgate Slim Soft
Advanced, Colgate Slim Soft Micro Silky and Colgate Slim Soft Flex Clean
manual toothbrushes, Protex Thai Therapy bar soap, Colgate Plax
mouthwash, Palmolive Luminous Oils shower gel, and Softlan Aroma Therapy
fabric conditioner.

Africa/Eurasia (6% of Company Sales)

Africa/Eurasia Net sales increased 1.0% during second quarter 2018. Unit
volume increased 2.0%, pricing increased 1.0% and foreign exchange was
negative 2.0%. Volume gains were led by the Sub-Saharan region and South
Africa. Organic sales for Africa/Eurasia increased 3.0%.

Operating profit in Africa/Eurasia decreased 7% in second quarter 2018
to $42 million, or 140 basis points to 17.3% of Net sales. This decrease
in Operating profit as a percentage of Net sales was primarily due to a
decrease in Gross profit, partially offset by a decrease in Selling,
general and administrative expenses, both as a percentage of Net sales.
This decrease in Gross profit was primarily due to higher raw and
packaging material costs, partially offset by cost savings from the
Company's funding-the-growth initiatives. This decrease in Selling,
general and administrative expenses was primarily due to lower overhead
expenses.

Colgate maintained its toothpaste leadership in Africa/Eurasia during
the quarter, with market share gains in Saudi Arabia, United Arab
Emirates, Kenya, Kuwait, Morocco and Qatar. Successful products
contributing to sales in the region include Colgate Ancient Secrets,
Colgate Natural Extracts, Colgate Optic White Expert White and Colgate
Maximum Cavity Protection toothpastes, Colgate 360° Advanced Whole Mouth
Clean and Colgate Slim Soft Advanced manual toothbrushes, Palmolive
Gourmet and Palmolive Luminous Oils shower gel and Protex Herbal bar
soap.

Hill's Pet Nutrition (15% of Company Sales)

Hill's Net sales increased 3.5% during second quarter 2018. Unit volume
increased 1.0%, pricing increased 1.0% and foreign exchange was positive
1.5%. Volume gains in the United States and Australia were partially
offset by volume declines in South Africa. Hill's organic sales
increased 2.0%.

Hill's Operating profit decreased 2% in second quarter 2018 to $165
million, or 160 basis points to 27.9% of Net sales. This decrease in
Operating profit as a percentage of Net sales was due to a decrease in
Gross profit and an increase in Other (income) expense, net, both as a
percentage of Net sales. This decrease in Gross profit was primarily due
to higher raw and packaging material costs, partially offset by cost
savings from the Company's funding-the-growth initiatives. This increase
in Other (income) expense, net was due to the expiration of a foreign
sales tax benefit.

Successful products contributing to sales in the U.S. include Hill's
Prescription Diet k/d and k/d + Mobility, Hill's Prescription Diet i/d
for digestive care, Hill's Science Diet Youthful Vitality, Hill's
Science Diet Urinary and Hairball Control and Hill's Science Diet Kitten.

Successful products contributing to sales internationally include Hill's
Prescription Diet k/d and k/d + Mobility, Hill's Prescription Diet
Metabolic + Urinary, Hill's Prescription Diet k/d Early Stage, Hill's
Science Diet Youthful Vitality and Hill's Science Diet Kitten.

***

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 and Hill's Prescription Diet. 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

Effective January 1, 2018, as required, the Company adopted ASU No.
2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost," on a retrospective basis. As a result, for
all periods presented, only the service related component of pension and
other postretirement benefit costs is included in Operating profit. The
non-service related components (interest cost, expected return on assets
and amortization of actuarial gains and losses) are included in a new
line item, "Non-service related postretirement costs," which is below
Operating profit. Adoption of this standard had no effect on Net income
attributable to Colgate-Palmolive Company, Earnings per common share or
Cash flow. Refer to the Company's website at http://www.colgatepalmolive.com
for reconciliations to previously reported amounts for all quarters of
2017 as well as for years 2017 and 2016.

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 (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,
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 Global Growth and Efficiency Program, tax rates, U.S. tax reform,
new product introductions or commercial investment levels, acquisitions,
divestitures, 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, 2017 and subsequent Quarterly Reports on Form 10-Q).
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 and divestments (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, 2018 vs 2017 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, Non-service related postretirement costs, 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 excluding charges resulting from the Global Growth and
Efficiency Program and, as applicable, the benefit from 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 six months ended June 30, 2018 and 2017 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. 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 a non-GAAP measure
and may not be comparable to similarly titled measures reported by other
companies. See "Condensed Consolidated Statements of Cash Flows" for the
six months ended June 30, 2018 and 2017 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, 2018 and 2017
 
(Dollars in Millions Except Per Share Amounts) (Unaudited)
 
2018

2017(1)

 
Net sales $ 3,886 $ 3,826
 
Cost of sales 1,585 1,526
 
Gross profit 2,301 2,300
 
Gross profit margin

59.2

%

60.1 %
 
Selling, general and administrative expenses 1,300 1,309
 
Other (income) expense, net 55 113
 
Operating profit 946 878
 
Operating profit margin 24.3 % 22.9 %
 
Non-service related postretirement costs 23 25
 
Interest (income) expense, net 35 24
 
Income before income taxes 888 829
 
Provision for income taxes 213 269
 
Effective tax rate 24.0 % 32.4 %
 
Net income including noncontrolling interests 675 560
 
Less: Net income attributable to noncontrolling interests 38 36
 
Net income attributable to Colgate-Palmolive Company $ 637 $ 524
 
Earnings per common share
Basic $ 0.73 $ 0.59
Diluted $ 0.73 $ 0.59
 
Average common shares outstanding
Basic 871.7 883.8
Diluted 874.0 890.8

 

 

(1) The Company adopted ASU No. 2017-07, "Compensation–Retirement
Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost," on
January 1, 2018. The adoption of this standard resulted in the
non-service related postretirement costs being presented separately
in the income statement from the service cost component and the
non-service related postretirement costs no longer being included in
Operating profit. As this standard was applied retrospectively, as
required, the Company reclassified certain amounts to a new line
below Operating profit called Non-service related postretirement
costs. The reclassification had no effect on Net income attributable
to Colgate-Palmolive Company, Earnings per common share or Cash flow.
 
Refer to the Company's website for reconciliations to previously
reported amounts for all quarters of 2017 as well as for years 2017
and 2016.
 

   
Table 2
Colgate-Palmolive Company
 
Condensed Consolidated Statements of Income
 
For the Six Months Ended June 30, 2018 and 2017
 
(Dollars in Millions Except Per Share Amounts) (Unaudited)
 
2018

2017(1)

 
Net sales $ 7,888 $ 7,588
 
Cost of sales 3,179 3,019
 
Gross profit 4,709 4,569
 
Gross profit margin 59.7 % 60.2 %
 
Selling, general and administrative expenses 2,692 2,645
 
Other (income) expense, net 88 134
 
Operating profit 1,929 1,790
 
Operating profit margin 24.5 % 23.6 %
 
Non-service related postretirement costs 47 52
 
Interest (income) expense, net 70 47
 
Income before income taxes 1,812 1,691
 
Provision for income taxes 459 520
 
Effective tax rate 25.3 % 30.8 %
 
Net income including noncontrolling interests 1,353 1,171
 
Less: Net income attributable to noncontrolling interests 82 77
 
Net income attributable to Colgate-Palmolive Company $ 1,271 $ 1,094
 
Earnings per common share

Basic(2)

$ 1.46 $ 1.24

Diluted(2)

$ 1.45 $ 1.23
 
Average common shares outstanding
Basic 873.5 884.2
Diluted 877.0 890.9

 

 

(1) The Company adopted ASU No. 2017-07, "Compensation–Retirement
Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost," on
January 1, 2018. The adoption of this standard resulted in the
non-service related postretirement costs being presented separately
in the income statement from the service cost component and the
non-service related postretirement costs no longer being included in
Operating profit. As this standard was applied retrospectively, as
required, the Company reclassified certain amounts to a new line
below Operating profit called Non-service related postretirement
costs. The reclassification had no effect on Net income attributable
to Colgate-Palmolive Company, Earnings per common share or Cash flow.
 
Refer to the Company's website for reconciliations to previously
reported amounts for all quarters of 2017 as well as for years 2017
and 2016.
 
(2) 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 necessarily equal
the earnings per share for any year-to-date period.
 

     
Table 3
Colgate-Palmolive Company
 
Condensed Consolidated Balance Sheets
 
As of June 30, 2018, December 31, 2017 and June 30, 2017
 
(Dollars in Millions) (Unaudited)
 
June 30, December 31, June 30,
2018 2017 2017
Cash and cash equivalents $ 833 $ 1,535 $ 1,241
Receivables, net 1,545 1,480 1,526
Inventories 1,254 1,221 1,199
Other current assets 540 403 589
Property, plant and equipment, net 3,908 4,072 3,930
Other assets, including goodwill and intangibles 4,570   3,965   4,095  
Total assets $ 12,650   $ 12,676   $ 12,580  
 
Total debt $ 6,865 $ 6,577 $ 6,519
Other current liabilities 3,596 3,397 3,767
Other non-current liabilities 2,378   2,459   2,206  
Total liabilities 12,839 12,433 12,492
Total Colgate-Palmolive Company shareholders' equity (523 ) (60 ) (242 )
Noncontrolling interests 334   303   330  
Total liabilities and equity $ 12,650   $ 12,676   $ 12,580  
 
Supplemental Balance Sheet Information
Debt less cash, cash equivalents and marketable securities(1) $ 5,949 $ 5,024 $ 5,123
Working capital % of sales (2.1 )% (2.0

)%

(3.9 )%
 
(1) Marketable securities of $83, $18 and $155 as of June 30, 2018,
December 31, 2017 and June 30, 2017, 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, 2018 and 2017
 
(Dollars in Millions) (Unaudited)
 
2018 2017
Operating Activities
Net income including noncontrolling interests $ 1,353 $ 1,171
Adjustments to reconcile net income including noncontrolling
interests to net cash provided by operations:
Depreciation and amortization 258 226
Restructuring and termination benefits, net of cash (14 ) 78
Stock-based compensation expense 47 53
Deferred income taxes 2 (64 )
Voluntary benefit plan contributions (57 )
Cash effects of changes in:
Receivables (200 ) (64 )
Inventories (30 ) 9
Accounts payable and other accruals (96 ) (61 )
Other non-current assets and liabilities (23 ) 14  
Net cash provided by operations 1,297 1,305
 
Investing Activities
Capital expenditures (216 ) (229 )
Purchases of marketable securities and investments (96 ) (201 )
Proceeds from sale of marketable securities and investments 19 114
Payment for acquisitions, net of cash acquired (727 )
Other 7   4  
Net cash used in investing activities (1,013 ) (312 )
 
Financing Activities
Principal payments on debt (3,953 ) (1,841 )
Proceeds from issuance of debt 4,266 1,761
Dividends paid (756 ) (716 )
Purchases of treasury shares (696 ) (660 )
Proceeds from exercise of stock options 160   337  
Net cash used in financing activities (979 ) (1,119 )
 
Effect of exchange rate changes on Cash and cash equivalents (7 ) 52  
Net increase (decrease) in Cash and cash equivalents (702 ) (74 )
Cash and cash equivalents at beginning of the period 1,535   1,315  
Cash and cash equivalents at end of the period $ 833   $ 1,241  
 
Supplemental Cash Flow Information
Free cash flow before dividends (Net cash provided by operations
less Capital expenditures)
Net cash provided by operations $ 1,297 $ 1,305
Less: Capital expenditures (216 ) (229 )
Free cash flow before dividends $ 1,081   $ 1,076  
 
 
Income taxes paid $ 468 $ 639
 

       
Table 5
Colgate-Palmolive Company
 
Segment Information
 
For the Three and Six Months Ended June 30, 2018 and 2017
 
(Dollars in Millions) (Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Net Sales
Oral, Personal and Home Care
 
North America $ 824 $ 764 $ 1,651 $ 1,524
Latin America 933 1,002 1,862 1,926
Europe 620 584 1,268 1,142
Asia Pacific 674 663 1,433 1,383
Africa/Eurasia 243   241   498   487  
 
Total Oral, Personal and Home Care 3,294 3,254 6,712 6,462
 
Pet Nutrition 592   572   1,176   1,126  
 
Total Net Sales $ 3,886   $ 3,826   $ 7,888   $ 7,588  
 
 
Three Months Ended June 30, Six Months Ended June 30,
2018

2017(1)

2018

2017(1)

Operating Profit
Oral, Personal and Home Care
 
North America $ 264 $ 255 $ 521 $ 502
Latin America 262 309 535 580
Europe 156 146 318 288
Asia Pacific 203 206 429 425
Africa/Eurasia 42   45   92   91  
 
Total Oral, Personal and Home Care 927 961 1,895 1,886
 
Pet Nutrition 165 169 329 332
Corporate(2) (146 ) (252 )   (295 ) (428 )  
 
Total Operating Profit $ 946   $ 878   $ 1,929   $ 1,790  
 
Notes:
(1) The Company adopted ASU No. 2017-07, "Compensation–Retirement
Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost," on
January 1, 2018. The adoption of this standard resulted in the
non-service related postretirement costs being presented separately
in the income statement from the service cost component and the
non-service related postretirement costs no longer being included in
Operating profit. As this standard was applied retrospectively, as
required, the Company reclassified the non-service components from
Operating profit to a new line below Operating profit called
Non-service related postretirement costs. Refer to the Company's
website for reconciliations to previously reported amounts for all
quarters of 2017 as well as for years 2017 and 2016.
 
(2) 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 June
30, 2018 includes charges of $58 related to the Global Growth and
Efficiency Program. Corporate Operating profit (loss) for the
three months ended June 30, 2017 included charges of $141 related
to the Global Growth and Efficiency Program.

 

Corporate Operating profit (loss) for the six months ended June
30, 2018 includes charges of $82 related to the Global Growth and
Efficiency Program. Corporate Operating profit (loss) for the six
months ended June 30, 2017 included charges of $186 related to the
Global Growth and Efficiency Program.

 

 
Table 6
Colgate-Palmolive Company
 
Geographic Sales Analysis Percentage Changes
 
For the Three Months Ended June 30, 2018 vs 2017
 
(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 Incentives Exchange
 
Total Company(1) 1.5 % 0.5 % 1.5 % 0.5 % 1.5 % % %
 
Europe 6.0 % (1.0 )% 2.5 % 2.5 % 2.5 % (3.5 )% 7.0 %
 
Latin America (7.0 )% (1.5 )% (1.0 )% (1.0 )% (1.0 )% (0.5 )% (5.5 )%
 
Asia Pacific 1.5 % % (1.0 )% (1.0 )% (1.0 )% 1.0 % 1.5 %
 
Africa/Eurasia 1.0 % 3.0 % 2.0 % 2.0 % 2.0 % 1.0 % (2.0 )%
 
Total International (1.0 )% (0.5 )% % % % (0.5 )% (0.5 )%
 
North America(1) 8.0 % 2.0 % 7.0 % 1.5 % 7.0 % 0.5 % 0.5 %
 
Total CP Products 1.0 % % 1.5 % 0.5 % 1.5 % (0.5 )% %
 
Hill's 3.5 % 2.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.5 %
 
 
Emerging Markets(2) (3.0 )% (0.5 )% (0.5 )% (0.5 )% (0.5 )% % (2.5 )%
 
Developed Markets 6.0 % 1.0 % 4.0 % 1.5 % 4.0 % (0.5 )% 2.5 %
 
Notes:
(1) The impact of the previously disclosed professional skin care
acquisitions on as reported volume was 1.0% for Total Company and
5.5% for North America.
(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, 2018 vs 2017
 
(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 Incentives Exchange
 
Total Company(1) 4.0 % 1.0 % 2.0 % 1.0 % 2.0 % % 2.0 %
 
Europe 11.0 % 0.5 % 3.5 % 3.5 % 3.5 % (3.0 )% 10.5 %
 
Latin America (3.5 )% (0.5 )% (0.5 )% (0.5 )% (0.5 )% % (3.0 )%
 
Asia Pacific 3.5 % % % % % % 3.5 %
 
Africa/Eurasia 2.5 % 1.0 % (0.5 )% (0.5 )% (0.5 )% 1.5 % 1.5 %
 
Total International 2.5 % % 0.5 % 0.5 % 0.5 % (0.5 )% 2.5 %
 
North America(1) 8.5 % 3.5 % 8.0 % 3.5 % 8.0 % % 0.5 %
 
Total CP Products 4.0 % 0.5 % 2.0 % 1.0 % 2.0 % (0.5 )% 2.5 %
 
Hill's 4.5 % 1.5 % 1.0 % 1.0 % 1.0 % 0.5 % 3.0 %
 
 
Emerging Markets(2) 0.5 % % (0.5 )% (0.5 )% (0.5 )% 0.5 % 0.5 %
 
Developed Markets 7.5 % 2.0 % 4.5 % 2.5 % 4.5 % (0.5 )% 3.5 %
 
Notes:
(1) The impact of the previously disclosed professional skin care
acquisitions on as reported volume was 1.0% for Total Company and
4.5% for North America.
(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, 2018 and 2017
 
(Dollars in Millions Except Per Share Amounts) (Unaudited)
 
Gross Profit       2018  

2017

 
Gross profit, GAAP $ 2,301 $ 2,300
Global Growth and Efficiency Program 5   21  
Gross profit, non-GAAP $ 2,306   $ 2,321  
 
Basis Point
Gross Profit Margin 2018 2017 Change
Gross profit margin, GAAP 59.2 % 60.1 % (90 )
Global Growth and Efficiency Program 0.1 % 0.6 %    
Gross profit margin, non-GAAP 59.3 % 60.7 %   (140 )
 
 
Selling, General and Administrative Expenses 2018

2017(1)

Selling, general and administrative expenses, GAAP $ 1,300 $ 1,309
Global Growth and Efficiency Program (10 ) (17 )  
Selling, general and administrative expenses, non-GAAP $ 1,290   $ 1,292  
 
Basis Point
Selling, General and Administrative Expenses as a Percentage of
Net Sales
2018

2017(1)

Change
Selling, general and administrative expenses as a percentage of Net
sales, GAAP
33.5 % 34.2 % (70 )
Global Growth and Efficiency Program (0.3 )% (0.4 )%    
Selling, general and administrative expenses as a percentage of Net
sales, non-GAAP
33.2 % 33.8 %   (60 )
 
 
Other (Income) Expense, Net 2018

2017(1)

Other (income) expense, net, GAAP $ 55 $ 113
Global Growth and Efficiency Program (43 ) (103 )  
Other (income) expense, net, non-GAAP $ 12   $ 10  
 
 
Operating Profit 2018

2017(1)

% Change
Operating profit, GAAP $ 946 $ 878 8 %
Global Growth and Efficiency Program 58   141    
Operating profit, non-GAAP $ 1,004   $ 1,019   (1 )%
 
Basis Point
Operating Profit Margin 2018

2017(1)

Change
Operating profit margin, GAAP 24.3 % 22.9 % 140
Global Growth and Efficiency Program 1.5 % 3.7 %    
Operating profit margin, non-GAAP 25.8 % 26.6 %   (80 )
 
 
Non-Service Related Postretirement Costs 2018

2017(1)

Non-service related postretirement costs, GAAP $ 23 $ 25
Global Growth and Efficiency Program (3 ) (1 )  
Non-service related postretirement costs, non-GAAP $ 20   $ 24  
 

 
Table 8
Continued
Colgate-Palmolive Company
 
Non-GAAP Reconciliations
 
For the Three Months Ended June 30, 2018 and 2017
 
(Dollars in Millions Except Per Share Amounts) (Unaudited)
 
  2018

Income
Before
Income
Taxes

 

Provision
For
Income
Taxes(2)

 

Net Income
Including
Noncontrolling
Interests

 

Less: Income
Attributable
To
Noncontrolling
Interests

 

Net Income
Attributable
To
Colgate-
Palmolive
Company

 

Effective
Income
Tax Rate(3)

 

Diluted
Earnings
Per Share

As Reported GAAP $ 888 $ 213 $ 675 $ 38 $ 637 24.0 % $ 0.73
Global Growth and Efficiency Program 61 13 48 (3 ) 51 (0.2 )% 0.06
Benefit from a foreign tax matter   15   (15 )   (15 ) 1.6 % (0.02 )
Non-GAAP $ 949   $ 241   $ 708   $ 35   $ 673   25.4 % $ 0.77  
 
 
2017

Income Before
Income Taxes

Provision For
Income Taxes(2)

Net Income
Including
Noncontrolling
Interests

Net Income
Attributable
To
Colgate-
Palmolive
Company

Effective
Income
Tax Rate(3)

Diluted
Earnings
Per Share

As Reported GAAP $ 829 $ 269 $ 560 $ 524 32.4 % $ 0.59
Global Growth and Efficiency Program 142   27   115   115   (1.9 )% 0.13  
Non-GAAP $ 971   $ 296   $ 675   $ 639   30.5 % $ 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 Company adopted ASU No. 2017-07, "Compensation–Retirement
Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost," on
January 1, 2018. The adoption of this standard resulted in the
non-service related postretirement costs being presented separately
in the income statement from the service cost component and the
non-service related postretirement costs no longer being included in
Operating profit. The reclassification had no effect on Net income
attributable to Colgate-Palmolive Company, Earnings per common share
or Cash flow.
 
Refer to the Company's website for reconciliations to previously
reported amounts for all quarters of 2017 as well as for years 2017
and 2016.
 
(2) 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.
 
(3) 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, 2018 and 2017
 
(Dollars in Millions Except Per Share Amounts) (Unaudited)
 
Gross Profit         2018   2017  
Gross profit, GAAP $ 4,709 $ 4,569
Global Growth and Efficiency Program 11   35  
Gross profit, non-GAAP $ 4,720   $ 4,604  
 
Basis Point
Gross Profit Margin 2018 2017 Change
Gross profit margin, GAAP 59.7 % 60.2 % (50 )
Global Growth and Efficiency Program 0.1 % 0.5 %    
Gross profit margin, non-GAAP 59.8 % 60.7 %   (90 )
 
 
Selling, General and Administrative Expenses 2018

2017(1)

Selling, general and administrative expenses, GAAP $ 2,692 $ 2,645
Global Growth and Efficiency Program (15 ) (38 )  
Selling, general and administrative expenses, non-GAAP $ 2,677   $ 2,607  
 
Basis Point
Selling, General and Administrative Expenses as a Percentage of
Net Sales
2018

2017(1)

Change
Selling, general and administrative expenses as a percentage of Net
sales, GAAP
34.1 % 34.9 % (80 )
Global Growth and Efficiency Program (0.2 )% (0.5 )%    
Selling, general and administrative expenses as a percentage of Net
sales, non-GAAP
33.9 % 34.4 %   (50 )
 
 
Other (Income) Expense, Net 2018

2017(1)

Other (income) expense, net, GAAP $ 88 $ 134
Global Growth and Efficiency Program (56 ) (113 )  
Other (income) expense, net, non-GAAP $ 32   $ 21  
 
 
Operating Profit 2018

2017(1)

% Change
Operating profit, GAAP $ 1,929 $ 1,790 8 %
Global Growth and Efficiency Program 82   186    
Operating profit, non-GAAP $ 2,011   $ 1,976   2 %
 
Basis Point
Operating Profit Margin 2018

2017(1)

Change
Operating profit margin, GAAP 24.5 % 23.6 % 90
Global Growth and Efficiency Program 1.0 % 2.4 %    
Operating profit margin, non-GAAP 25.5 % 26.0 %   (50 )
 
 
Non-Service Related Postretirement Costs 2018

2017(1)

Non-service related postretirement costs, GAAP $ 47 $ 52
Global Growth and Efficiency Program (7 ) (2 )  
Non-service related postretirement costs, non-GAAP $ 40   $ 50  
 

 
Table 9
Continued
Colgate-Palmolive Company
 
Non-GAAP Reconciliations
 
For the Six Months Ended June 30, 2018 and 2017
 
(Dollars in Millions Except Per Share Amounts) (Unaudited)
 
  2018

Income
Before
Income
Taxes

 

Provision
For
Income
Taxes(2)

 

Net Income
Including
Noncontrolling
Interests

 

Less: Income
Attributable
To
Noncontrolling
Interests

 

Net Income
Attributable
To
Colgate-
Palmolive
Company

 

Effective
Income
Tax Rate(3)

 

Diluted
Earnings
Per Share

As Reported GAAP $ 1,812 $ 459 $ 1,353 $ 82 $ 1,271 25.3 % $ 1.45
Global Growth and Efficiency Program 89 21 68 (3 ) 71 (0.1 )% 0.08
Benefit from a foreign tax matter   15   (15 )   (15 ) 0.8 % (0.02 )
Non-GAAP $ 1,901   $ 495   $ 1,406   $ 79   $ 1,327   26.0 % $ 1.51  
 
 
2017

Income Before
Income Taxes

Provision For
Income Taxes(2)

Net Income
Including
Noncontrolling
Interests

Net Income
Attributable
To
Colgate-
Palmolive
Company

Effective
Income
Tax Rate(3)

Diluted
Earnings
Per Share

As Reported GAAP $ 1,691 $ 520 $ 1,171 $ 1,094 30.8 % $ 1.23
Global Growth and Efficiency Program 188   42   146   146   (0.9 )% 0.16  
Non-GAAP $ 1,879   $ 562   $ 1,317   $ 1,240   29.9 % $ 1.39  
 
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 Company adopted ASU No. 2017-07, "Compensation–Retirement
Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost," on
January 1, 2018. The adoption of this standard resulted in the
non-service related postretirement costs being presented separately
in the income statement from the service cost component and the
non-service related postretirement costs no longer being included in
Operating profit. The reclassification had no effect on Net income
attributable to Colgate-Palmolive Company, Earnings per common share
or Cash flow.
 
Refer to the Company's website for reconciliations to previously
reported amounts for all quarters of 2017 as well as for years 2017
and 2016.
 
(2) 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.
 
(3) 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.

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