Colgate Announces 4th Quarter 2018 Results
Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net sales of $3,811 million in fourth quarter 2018, a decrease of
2.0% versus fourth quarter 2017. Global unit volume increased 0.5%, pricing increased 2.5% and foreign exchange was negative 5.0%.
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 2.0%.
Net income and Diluted earnings per share in fourth quarter 2018 were $606 million and $0.70, respectively. Net income in fourth
quarter 2018 included $32 million ($0.04 per diluted share) of aftertax charges resulting from the Company’s Global Growth and
Efficiency Program.
Net income and Diluted earnings per share in fourth quarter 2017 were $323 million and $0.37, respectively. Net income in fourth
quarter 2017 included $61 million ($0.07 per diluted share) of aftertax charges resulting from the Global Growth and Efficiency
Program and a charge related to U.S. tax reform of $275 million ($0.31 per diluted share).
Excluding charges resulting from the Global Growth and Efficiency Program in both periods and the charge related to U.S. tax
reform in 2017, Net income in fourth quarter 2018 was $638 million, a decrease of 3% versus fourth quarter 2017, and Diluted
earnings per share in fourth quarter 2018 was $0.74, a decrease of 1% versus fourth quarter 2017.
Gross profit margin was 59.1% in fourth quarter 2018 versus 59.8% in fourth quarter 2017. Excluding charges resulting from the
Global Growth and Efficiency Program in both periods, Gross profit margin was 59.4% in fourth quarter 2018, a decrease of 100 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 and higher pricing.
Selling, general and administrative expenses were 34.8% of Net sales in fourth quarter 2018 versus 34.6% of Net sales in fourth
quarter 2017. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Selling, general and
administrative expenses increased 70 basis points versus the year ago quarter to 34.6% of Net sales in fourth quarter 2018 due to
higher overhead expenses, driven by higher logistics costs, and increased advertising investment, both as a percentage of Net
sales. On an absolute basis, worldwide advertising investment increased 2% to $376 million in fourth quarter 2018 versus $369
million in the year ago quarter.
Operating profit decreased to $891 million in fourth quarter 2018 compared to $960 million in fourth quarter 2017. Excluding
charges resulting from the Global Growth and Efficiency Program in both periods, Operating profit was $936 million in fourth
quarter 2018, a decrease of 10% versus fourth quarter 2017. Operating profit margin was 23.4% in fourth quarter 2018 versus 24.7%
in fourth quarter 2017. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, Operating profit
margin was 24.6% in fourth quarter 2018, a decrease of 210 basis points versus the year ago quarter. This decrease in Operating
profit margin 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.
Net cash provided by operations year to date was $3,056 million compared to $3,054 million in the comparable 2017 period.
Working capital as a percentage of Net sales was negative 1.7% compared to negative 2.0% in the year ago period.
Ian Cook, Chairman and Chief Executive Officer, commented on the fourth quarter results, “We are pleased with the improvement in
organic sales growth this quarter, driven by 2.5% positive pricing.
“Colgate’s leadership of the global toothpaste market continued during the quarter with our global market share at 42.0% 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, “Looking ahead to 2019, based on current spot rates, we expect net sales to be flat to up low-single-digits,
with organic sales growth of 2% to 4% as we are planning for increased investment behind our brands, higher pricing and strong
innovation, led by the relaunches of Colgate Total and Hill’s Science Diet and our continued focus on naturals.
“We are also planning to invest in expanding our portfolio offerings by bringing brands like elmex and meridol into new markets
and by broadening our e-commerce offerings, including direct to consumer, to build on our strong e-commerce growth in 2018. We also
plan to continue to increase our investment behind our professional skin care businesses, Elta MD and PCA Skin.
“On a GAAP basis, based on current spot rates, we are planning for a year of gross margin expansion and expect a
low-single-digit decline in earnings per share.
"Excluding charges resulting from the Global Growth and Efficiency Program in both 2018 and 2019, the charge related to U.S. tax
reform in 2018 and the benefit from a foreign tax matter in 2018, based on current spot rates, we are planning for a year of gross
margin expansion, increased advertising investment and a mid-single-digit decline in earnings per share. Our outlook reflects an
increase in raw material prices, an increase in our tax rate year-over-year and the uncertainty surrounding the global economy,
exchange rates and pricing.
“Given our plans to increase investment behind our brands to drive acceleration in organic sales growth, we believe our earnings
outlook for 2019 is appropriate.”
At 11:00 a.m. ET today, Colgate will host a conference call to elaborate on fourth 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 fourth 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 (22% of Company Sales)
North America Net sales increased 5.0% in fourth quarter 2018. Unit volume increased 3.0%, pricing increased 2.5% and foreign
exchange was negative 0.5%. The previously disclosed professional skin care acquisitions contributed 5.0% to Net sales and unit
volume growth. Organic sales for North America increased 0.5% and organic unit volume decreased 2.0%.
Operating profit in North America decreased 7% in fourth quarter 2018 to $257 million, or 410 basis points to 30.6% of Net
sales. 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, primarily driven by increased logistics costs. 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 leadership in the toothpaste category during the quarter with its market share at 34.8% 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 41.5% year to date, supported by the success of Colgate 360° Total 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 (23% of Company Sales)
Latin America Net sales decreased 9.0% in fourth quarter 2018. Unit volume decreased 3.5%, pricing increased 4.5% and foreign
exchange was negative 10.0%. Volume declines in Brazil and Argentina were partially offset by volume gains in Mexico. Organic sales
for Latin America increased 1.0%.
Operating profit in Latin America decreased 17% in fourth quarter 2018 to $238 million, or 270 basis points to 26.8% 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 due to higher raw and packaging material costs, which included foreign exchange transaction costs, partially offset by
cost savings from the Company’s funding-the-growth initiatives and higher pricing. This decrease in Selling, general and
administrative expenses was due to decreased advertising investment.
Colgate maintained its toothpaste leadership in Latin America during the quarter, with market share gains in Guatemala,
Dominican Republic, Panama, Chile, El Salvador and Nicaragua. Products succeeding in the region include Colgate Natural Extracts,
Colgate Total 12 Salud Visible and Colgate Triple Action Xtra Freshness toothpastes. Colgate’s leadership in the manual toothbrush
category continued throughout the region, supported by the success of Colgate Pro Cuidado and Colgate Premier manual
toothbrushes.
Products succeeding in other categories include Colgate Total 12 mouthwash, Protex Deep Clean and Palmolive Natureza Secreta bar
soaps, Lady Speed Stick Clinical and Speed Stick Clinical spray deodorants, Axion dish liquid and Fabuloso Complete liquid
cleaner.
Europe (16% of Company Sales)
Europe Net sales decreased 2.5% in fourth quarter 2018. Unit volume increased 2.0%, pricing decreased 1.0% and foreign exchange
was negative 3.5%. Volume gains were driven by the United Kingdom and France. Organic sales for Europe increased 1.0%.
Operating profit in Europe was even with the year ago quarter, while as a percentage of Net sales, it increased 70 basis points
to 25.9% 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, all as a
percentage of Net sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth
initiatives, partially offset by higher raw and packaging material costs. This increase in Selling, general and administrative
expenses was due to increased advertising investment, partially offset by lower overhead expenses. This decrease in Other (income)
expense, net was primarily due to a non-recurring expense recorded in the year ago quarter.
Colgate maintained its toothpaste leadership in Europe during the quarter, with market share gains in France, Italy, Greece, the
Netherlands, Denmark and Belgium. Products succeeding in oral care include Colgate Max White Expert Complete, Colgate Natural
Extracts Charcoal and elmex toothpastes, Colgate 360° Advanced Whole Mouth Health and Colgate Slim Soft Advanced manual
toothbrushes and Colgate Plax mouthwash.
Products succeeding in other categories include Sanex and Palmolive Aroma Sensations shower gels, Ajax Boost liquid cleaner and
Soupline fabric conditioner.
Asia Pacific (16% of Company Sales)
Asia Pacific Net sales decreased 6.5% during fourth quarter 2018. Unit volume decreased 0.5%, pricing decreased 0.5% and foreign
exchange was negative 5.5%. Volume declines in the Greater China region were partially offset by volume gains in India and
Australia. Organic sales for Asia Pacific decreased 1.0%.
Operating profit in Asia Pacific decreased 20% in fourth quarter 2018 to $157 million, or 440 basis points to 25.0% 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 and increased
advertising investment.
Colgate maintained its toothpaste leadership in the Asia Pacific region during the quarter with market share gains in Australia
and the Philippines. Products succeeding in the region include Colgate Naturals, Colgate Swarna Vedshakti, Colgate Power White,
Colgate Sensitive Pro-Relief and elmex Sensitive toothpastes.
Products succeeding in other categories include Colgate Slim Soft Advanced and Colgate Slim Soft Flex Clean manual toothbrushes,
Palmolive Skin Therapy bar soap, Colgate Plax mouthwash, Palmolive Luminous Oils shower gel and Cuddly Aroma Intense fabric
conditioner.
Africa/Eurasia (6% of Company Sales)
Africa/Eurasia Net sales decreased 5.0% during fourth quarter 2018. Unit volume decreased 3.5%, pricing increased 7.5% and
foreign exchange was negative 9.0%. Volume declines in Turkey and South Africa were partially offset by volume gains in the Gulf
States. Organic sales for Africa/Eurasia increased 4.0%.
Operating profit in Africa/Eurasia decreased 11% in fourth quarter 2018 to $40 million, or 120 basis points to 17.2% of Net
sales. This decrease in Operating profit as a percentage of Net sales was primarily due an increase in Selling, general and
administrative expenses, partially offset by an increase in Gross profit, both as a percentage of Net sales. This increase in Gross
profit was primarily due to cost savings from the Company’s funding-the-growth initiatives and higher pricing, partially offset 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 maintained its toothpaste leadership in Africa/Eurasia during the quarter, with market share gains in Turkey, Saudi
Arabia, United Arab Emirates, Kenya, Kazakhstan and Kuwait. Successful products contributing to sales in the region include Colgate
Ancient Secrets, Colgate Natural Extracts and Colgate Optic White Expert White toothpastes, Colgate 360° Advanced Whole Mouth Clean
and Colgate Slim Soft Advanced manual toothbrushes and Palmolive Gourmet and Palmolive Luminous Oils shower gels.
Hill’s Pet Nutrition (17% of Company Sales)
Hill’s Net sales increased 6.0% during fourth quarter 2018. Unit volume increased 3.5%, pricing increased 4.5% and foreign
exchange was negative 2.0%. Volume gains in the United States and Western Europe were partially offset by volume declines in
Russia. Hill’s organic sales increased 8.0%.
Hill’s Operating profit increased 6% in fourth quarter 2018 to $188 million, while as a percentage of Net sales it decreased 20
basis points to 29.8% 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, largely offset by a decrease in Selling, general and administrative
expenses, 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 and higher pricing. This decrease in
Selling, general and administrative expenses was due to lower overhead expenses partially offset by increased advertising
investment. This increase in Other (income) expense, net was primarily due to the expiration of a foreign sales tax benefit.
Successful products contributing to sales in the U.S. include Hill’s Bioactive Recipe, Hill’s Prescription Diet Metabolic +
Urinary, Hill’s Prescription Diet k/d and k/d + Mobility, Hill’s Prescription Diet k/d Early Support, Hill’s Science Diet Youthful
Vitality, Hill’s Science Diet Kitten and Hill’s Science Diet Perfect Weight.
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, elmex, Tom’s of Maine, Sorriso, Speed Stick, Lady Speed Stick,
Softsoap, Irish Spring, Protex, Sanex, Elta MD, PCA Skin, 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
The Company’s annual meeting of stockholders is currently scheduled for Friday, May 10, 2019.
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, net selling price increases, organic sales growth, profit or profit margin growth, earnings per share
levels, 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 twelve months ended December 31, 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 and charges related to U.S. tax reform (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
twelve months ended December 31, 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 twelve months ended December 31, 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 fourth quarter results.)
|
|
|
|
Table 1 |
| Colgate-Palmolive Company |
| |
| Condensed Consolidated Statements of Income |
| |
| For the Three Months Ended December 31, 2018 and 2017 |
| |
| (Dollars in Millions Except Per Share Amounts) (Unaudited) |
|
|
|
|
|
|
|
2018 |
|
2017(1)
|
|
|
|
|
|
| Net sales |
|
$ |
3,811 |
|
|
$ |
3,892 |
|
|
|
|
|
|
| Cost of sales |
|
1,558 |
|
|
1,564 |
|
|
|
|
|
|
| Gross profit |
|
2,253 |
|
|
2,328 |
|
|
|
|
|
|
| Gross profit margin |
|
59.1 |
% |
|
59.8 |
% |
|
|
|
|
|
| Selling, general and administrative expenses |
|
1,328 |
|
|
1,345 |
|
|
|
|
|
|
| Other (income) expense, net |
|
34 |
|
|
23 |
|
|
|
|
|
|
| Operating profit |
|
891 |
|
|
960 |
|
|
|
|
|
|
| Operating profit margin |
|
23.4 |
% |
|
24.7 |
% |
|
|
|
|
|
| Non-service related postretirement costs |
|
22 |
|
|
36 |
|
|
|
|
|
|
| Interest (income) expense, net |
|
37 |
|
|
28 |
|
|
|
|
|
|
| Income before income taxes |
|
832 |
|
|
896 |
|
|
|
|
|
|
| Provision for income taxes |
|
189 |
|
|
543 |
|
|
|
|
|
|
| Effective tax rate |
|
22.7 |
% |
|
60.6 |
% |
|
|
|
|
|
| Net income including noncontrolling interests |
|
643 |
|
|
353 |
|
|
|
|
|
|
| Less: Net income attributable to noncontrolling interests |
|
37 |
|
|
30 |
|
|
|
|
|
|
| Net income attributable to Colgate-Palmolive Company |
|
$ |
606 |
|
|
$ |
323 |
|
|
|
|
|
|
| Earnings per common share |
|
|
|
|
| Basic |
|
$ |
0.70 |
|
|
$ |
0.37 |
|
| Diluted |
|
$ |
0.70 |
|
|
$ |
0.37 |
|
|
|
|
|
|
| Average common shares outstanding |
|
|
|
|
| Basic |
|
866.6 |
|
|
878.0 |
|
| Diluted |
|
867.5 |
|
|
883.3 |
|
|
|
| Note: |
|
| (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 Twelve Months Ended December 31, 2018 and 2017 |
| |
| (Dollars in Millions Except Per Share Amounts) (Unaudited) |
|
|
|
|
|
|
|
2018 |
|
2017(1)
|
|
|
|
|
|
| Net sales |
|
$ |
15,544 |
|
|
$ |
15,454 |
|
|
|
|
|
|
| Cost of sales |
|
6,313 |
|
|
6,174 |
|
|
|
|
|
|
| Gross profit |
|
9,231 |
|
|
9,280 |
|
|
|
|
|
|
| Gross profit margin |
|
59.4 |
% |
|
60.0 |
% |
|
|
|
|
|
| Selling, general and administrative expenses |
|
5,389 |
|
|
5,400 |
|
|
|
|
|
|
| Other (income) expense, net |
|
148 |
|
|
173 |
|
|
|
|
|
|
| Operating profit |
|
3,694 |
|
|
3,707 |
|
|
|
|
|
|
| Operating profit margin |
|
23.8 |
% |
|
24.0 |
% |
|
|
|
|
|
| Non-service related postretirement costs |
|
87 |
|
|
118 |
|
|
|
|
|
|
| Interest (income) expense, net |
|
143 |
|
|
102 |
|
|
|
|
|
|
| Income before income taxes |
|
3,464 |
|
|
3,487 |
|
|
|
|
|
|
| Provision for income taxes |
|
906 |
|
|
1,313 |
|
|
|
|
|
|
| Effective tax rate |
|
26.2 |
% |
|
37.7 |
% |
|
|
|
|
|
| Net income including noncontrolling interests |
|
2,558 |
|
|
2,174 |
|
|
|
|
|
|
| Less: Net income attributable to noncontrolling interests |
|
158 |
|
|
150 |
|
|
|
|
|
|
| Net income attributable to Colgate-Palmolive Company |
|
$ |
2,400 |
|
|
$ |
2,024 |
|
|
|
|
|
|
| Earnings per common share |
|
|
|
|
|
Basic(2)
|
|
$ |
2.76 |
|
|
$ |
2.30 |
|
|
Diluted(2)
|
|
$ |
2.75 |
|
|
$ |
2.28 |
|
|
|
|
|
|
| Average common shares outstanding |
|
|
|
|
| Basic |
|
870.6 |
|
|
881.8 |
|
| Diluted |
|
873.0 |
|
|
887.8 |
|
|
|
|
|
| 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 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 December 31, 2018 and December 31, 2017 |
| |
| (Dollars in Millions) (Unaudited) |
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
| Cash and cash equivalents |
|
$ |
726 |
|
|
$ |
1,535 |
|
| Receivables, net |
|
1,400 |
|
|
1,480 |
|
| Inventories |
|
1,250 |
|
|
1,221 |
|
| Other current assets |
|
417 |
|
|
403 |
|
| Property, plant and equipment, net |
|
3,881 |
|
|
4,072 |
|
| Other assets, including goodwill and intangibles |
|
4,487 |
|
|
3,965 |
|
| Total assets |
|
$ |
12,161 |
|
|
$ |
12,676 |
|
|
|
|
|
|
| Total debt |
|
$ |
6,366 |
|
|
$ |
6,577 |
|
| Other current liabilities |
|
3,329 |
|
|
3,397 |
|
| Other non-current liabilities |
|
2,269 |
|
|
2,459 |
|
| Total liabilities |
|
11,964 |
|
|
12,433 |
|
| Total Colgate-Palmolive Company shareholders’ equity |
|
(102 |
) |
|
(60 |
) |
| Noncontrolling interests |
|
299 |
|
|
303 |
|
| Total liabilities and equity |
|
$ |
12,161 |
|
|
$ |
12,676 |
|
|
|
|
|
|
| Supplemental Balance Sheet Information |
|
|
|
|
|
Debt less cash, cash equivalents and marketable securities(1)
|
|
$ |
5,630 |
|
|
$ |
5,024 |
|
| Working capital % of sales |
|
(1.7 |
)% |
|
(2.0 |
)% |
| Note: |
| (1) Marketable securities of $10 and $18 as of December 31, 2018 and 2017,
respectively, are included in Other current assets. |
| Table 4 |
| Colgate-Palmolive Company |
| |
| Condensed Consolidated Statements of Cash Flows |
| |
| For the Twelve Months Ended December 31, 2018 and 2017 |
| |
| (Dollars in Millions) (Unaudited) |
|
|
|
|
|
|
|
2018 |
|
2017 |
| Operating Activities |
|
|
|
|
| Net income including noncontrolling interests |
|
$ |
2,558 |
|
|
$ |
2,174 |
|
| Adjustments to reconcile net income including noncontrolling interests to net cash
provided by operations: |
|
|
| Depreciation and amortization |
|
511 |
|
|
475 |
|
| Restructuring and termination benefits, net of cash |
|
(7 |
) |
|
91 |
|
| Stock-based compensation expense |
|
109 |
|
|
127 |
|
| Charge for U.S. tax reform |
|
80 |
|
|
275 |
|
| Deferred income taxes |
|
27 |
|
|
108 |
|
| Voluntary benefit plan contributions |
|
(67 |
) |
|
(81 |
) |
| Cash effects of changes in: |
|
|
|
|
| Receivables |
|
(79 |
) |
|
(15 |
) |
| Inventories |
|
(58 |
) |
|
(8 |
) |
| Accounts payable and other accruals |
|
18 |
|
|
(96 |
) |
| Other non-current assets and liabilities |
|
(36 |
) |
|
4 |
|
| Net cash provided by operations |
|
3,056 |
|
|
3,054 |
|
|
|
|
|
|
| Investing Activities |
|
|
|
|
| Capital expenditures |
|
(436 |
) |
|
(553 |
) |
| Sale of property and non-core products |
|
1 |
|
|
44 |
|
| Purchases of marketable securities and investments |
|
(169 |
) |
|
(347 |
) |
| Proceeds from sale of marketable securities and investments |
|
156 |
|
|
391 |
|
| Payment for acquisitions, net of cash acquired |
|
(728 |
) |
|
— |
|
| Other |
|
6 |
|
|
(6 |
) |
| Net cash used in investing activities |
|
(1,170 |
) |
|
(471 |
) |
|
|
|
|
|
| Financing Activities |
|
|
|
|
| Principal payments on debt |
|
(7,355 |
) |
|
(4,808 |
) |
| Proceeds from issuance of debt |
|
7,176 |
|
|
4,779 |
|
| Dividends paid |
|
(1,591 |
) |
|
(1,529 |
) |
| Purchases of treasury shares |
|
(1,238 |
) |
|
(1,399 |
) |
| Proceeds from exercise of stock options |
|
329 |
|
|
507 |
|
| Net cash used in financing activities |
|
(2,679 |
) |
|
(2,450 |
) |
|
|
|
|
|
| Effect of exchange rate changes on Cash and cash equivalents |
|
(16 |
) |
|
87 |
|
| Net increase (decrease) in Cash and cash equivalents |
|
(809 |
) |
|
220 |
|
| Cash and cash equivalents at beginning of the period |
|
1,535 |
|
|
1,315 |
|
| Cash and cash equivalents at end of the period |
|
$ |
726 |
|
|
$ |
1,535 |
|
|
|
|
|
|
| Supplemental Cash Flow Information |
|
|
|
|
| Free cash flow before dividends (Net cash provided by operations less Capital
expenditures) |
|
|
|
|
| Net cash provided by operations |
|
$ |
3,056 |
|
|
$ |
3,054 |
|
| Less: Capital expenditures |
|
(436 |
) |
|
(553 |
) |
| Free cash flow before dividends |
|
$ |
2,620 |
|
|
$ |
2,501 |
|
|
|
|
|
|
|
|
|
|
|
| Income taxes paid |
|
$ |
847 |
|
|
$ |
1,037 |
|
| Table 5 |
| Colgate-Palmolive Company |
| |
| Segment Information |
| |
| For the Three and Twelve Months Ended December 31, 2018 and 2017 |
| |
| (Dollars in Millions) (Unaudited) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| Net Sales |
|
|
|
|
|
|
|
|
| Oral, Personal and Home Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| North America |
|
$ |
839 |
|
|
$ |
798 |
|
|
$ |
3,348 |
|
|
$ |
3,117 |
|
| Latin America |
|
887 |
|
|
976 |
|
|
3,605 |
|
|
3,887 |
|
| Europe |
|
594 |
|
|
610 |
|
|
2,502 |
|
|
2,394 |
|
| Asia Pacific |
|
628 |
|
|
670 |
|
|
2,734 |
|
|
2,781 |
|
| Africa/Eurasia |
|
233 |
|
|
245 |
|
|
967 |
|
|
983 |
|
|
|
|
|
|
|
|
|
|
| Total Oral, Personal and Home Care |
|
3,181 |
|
|
3,299 |
|
|
13,156 |
|
|
13,162 |
|
|
|
|
|
|
|
|
|
|
| Pet Nutrition |
|
630 |
|
|
593 |
|
|
2,388 |
|
|
2,292 |
|
|
|
|
|
|
|
|
|
|
| Total Net Sales |
|
$ |
3,811 |
|
|
$ |
3,892 |
|
|
$ |
15,544 |
|
|
$ |
15,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2018 |
|
2017(1)
|
|
2018 |
|
2017(1)
|
| Operating Profit |
|
|
|
|
|
|
|
|
| Oral, Personal and Home Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| North America |
|
$ |
257 |
|
|
$ |
277 |
|
|
$ |
1,037 |
|
|
$ |
1,043 |
|
| Latin America |
|
238 |
|
|
288 |
|
|
995 |
|
|
1,171 |
|
| Europe |
|
154 |
|
|
154 |
|
|
634 |
|
|
605 |
|
| Asia Pacific |
|
157 |
|
|
197 |
|
|
777 |
|
|
842 |
|
| Africa/Eurasia |
|
40 |
|
|
45 |
|
|
173 |
|
|
180 |
|
|
|
|
|
|
|
|
|
|
| Total Oral, Personal and Home Care |
|
846 |
|
|
961 |
|
|
3,616 |
|
|
3,841 |
|
|
|
|
|
|
|
|
|
|
| Pet Nutrition |
|
188 |
|
|
178 |
|
|
680 |
|
|
677 |
|
|
Corporate(2)
|
|
(143 |
) |
|
(179 |
) |
|
(602 |
) |
|
(811 |
) |
|
|
|
|
|
|
|
|
|
| Total Operating Profit |
|
$ |
891 |
|
|
$ |
960 |
|
|
$ |
3,694 |
|
|
$ |
3,707 |
|
| 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 and twelve months ended December 31,
2018 includes charges of $45 and $152, respectively, related to the Global Growth and Efficiency Program. Corporate Operating
profit (loss) for the three and twelve months ended December 31, 2017 includes charges of $80 and $313, respectively, related
to the Global Growth and Efficiency Program.
|
| Table 6 |
| Colgate-Palmolive Company |
| |
| Geographic Sales Analysis Percentage Changes |
| |
| For the Three Months Ended December 31, 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) |
|
(2.0)% |
|
2.0% |
|
0.5% |
|
(0.5)% |
|
0.5% |
|
2.5% |
|
(5.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Europe |
|
(2.5)% |
|
1.0% |
|
2.0% |
|
2.0% |
|
2.0% |
|
(1.0)% |
|
(3.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Latin America |
|
(9.0)% |
|
1.0% |
|
(3.5)% |
|
(3.5)% |
|
(3.5)% |
|
4.5% |
|
(10.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asia Pacific |
|
(6.5)% |
|
(1.0)% |
|
(0.5)% |
|
(0.5)% |
|
(0.5)% |
|
(0.5)% |
|
(5.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Africa/Eurasia |
|
(5.0)% |
|
4.0% |
|
(3.5)% |
|
(3.5)% |
|
(3.5)% |
|
7.5% |
|
(9.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total International |
|
(6.5)% |
|
1.0% |
|
(1.5)% |
|
(1.5)% |
|
(1.5)% |
|
2.5% |
|
(7.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| North America(1) |
|
5.0% |
|
0.5% |
|
3.0% |
|
(2.0)% |
|
3.0% |
|
2.5% |
|
(0.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total CP Products |
|
(3.5)% |
|
0.5% |
|
(0.5)% |
|
(2.0)% |
|
(0.5)% |
|
2.5% |
|
(5.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hill’s |
|
6.0% |
|
8.0% |
|
3.5% |
|
3.5% |
|
3.5% |
|
4.5% |
|
(2.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Emerging Markets(2) |
|
(7.0)% |
|
1.5% |
|
(2.0)% |
|
(2.0)% |
|
(2.0)% |
|
3.5% |
|
(8.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Developed Markets |
|
2.5% |
|
2.0% |
|
2.5% |
|
0.5% |
|
2.5% |
|
1.5% |
|
(1.5)% |
| Notes: |
|
(1) The impact of the previously disclosed professional skin care acquisitions on as reported volume
was 1.0% for Total Company and 5.0% 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 Twelve Months Ended December 31, 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) |
|
0.5% |
|
0.5% |
|
1.0% |
|
—% |
|
1.0% |
|
0.5% |
|
(1.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Europe |
|
4.5% |
|
0.5% |
|
2.5% |
|
2.5% |
|
2.5% |
|
(2.0)% |
|
4.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Latin America |
|
(7.5)% |
|
(1.0)% |
|
(2.5)% |
|
(2.5)% |
|
(2.5)% |
|
1.5% |
|
(6.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asia Pacific |
|
(1.5)% |
|
(1.5)% |
|
(1.5)% |
|
(1.5)% |
|
(1.5)% |
|
—% |
|
—% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Africa/Eurasia |
|
(1.5)% |
|
2.5% |
|
(1.0)% |
|
(1.0)% |
|
(1.0)% |
|
3.5% |
|
(4.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total International |
|
(2.5)% |
|
(0.5)% |
|
(1.0)% |
|
(1.0)% |
|
(1.0)% |
|
0.5% |
|
(2.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| North America(1) |
|
7.5% |
|
2.5% |
|
6.5% |
|
1.5% |
|
6.5% |
|
1.0% |
|
—% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total CP Products |
|
—% |
|
—% |
|
1.0% |
|
(0.5)% |
|
1.0% |
|
0.5% |
|
(1.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hill’s |
|
4.0% |
|
3.5% |
|
1.5% |
|
1.5% |
|
1.5% |
|
2.0% |
|
0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Emerging Markets(2) |
|
(4.0)% |
|
(0.5)% |
|
(2.0)% |
|
(2.0)% |
|
(2.0)% |
|
1.5% |
|
(3.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Developed Markets |
|
5.0% |
|
1.5% |
|
3.5% |
|
1.5% |
|
3.5% |
|
—% |
|
1.5% |
| Notes: |
|
(1) The impact of the previously disclosed professional skin care acquisitions on as reported volume
was 1.0% for Total Company and 5.0% 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 December 31, 2018 and 2017 |
| |
| (Dollars in Millions Except Per Share Amounts) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross Profit |
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
| Gross profit, GAAP |
|
|
|
|
|
|
|
$ |
2,253 |
|
|
$ |
2,328 |
|
|
|
|
| Global Growth and Efficiency Program |
|
|
|
|
|
|
|
12 |
|
|
24 |
|
|
|
|
| Gross profit, non-GAAP |
|
|
|
|
|
|
|
$ |
2,265 |
|
|
$ |
2,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Point |
| Gross Profit Margin |
|
|
|
|
|
|
|
2018 |
|
2017 |
|
Change |
| Gross profit margin, GAAP |
|
|
|
|
|
|
|
59.1 |
% |
|
59.8 |
% |
|
(70 |
) |
| Global Growth and Efficiency Program |
|
|
|
|
|
|
|
0.3 |
% |
|
0.6 |
% |
|
|
|
| Gross profit margin, non-GAAP |
|
|
|
|
|
|
|
59.4 |
% |
|
60.4 |
% |
|
(100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, General and Administrative
Expenses |
|
|
|
2018 |
|
2017(1) |
|
|
|
| Selling, general and administrative expenses, GAAP |
|
$ |
1,328 |
|
|
$ |
1,345 |
|
|
|
|
| Global Growth and Efficiency Program |
|
|
|
|
|
(9 |
) |
|
(26 |
) |
|
|
|
| Selling, general and administrative expenses,
non-GAAP |
|
$ |
1,319 |
|
|
$ |
1,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
34.8 |
% |
|
34.6 |
% |
|
20 |
| Global Growth and Efficiency Program |
|
|
|
|
|
|
|
(0.2 |
)% |
|
(0.7 |
)% |
|
|
| Selling, general and administrative expenses as
a percentage of Net sales, non-GAAP |
|
34.6 |
% |
|
33.9 |
% |
|
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (Income) Expense, Net |
|
|
|
|
|
|
|
2018 |
|
2017(1) |
|
|
|
| Other (income) expense, net, GAAP |
|
$ |
34 |
|
|
$ |
23 |
|
|
|
|
| Global Growth and Efficiency Program |
|
(24 |
) |
|
(30 |
) |
|
|
|
| Other (income) expense, net, non-GAAP |
|
$ |
10 |
|
|
$ |
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Profit (Loss) |
|
|
|
|
|
|
|
2018 |
|
2017(1) |
|
% Change |
| Operating profit (loss), GAAP |
|
$ |
891 |
|
|
$ |
960 |
|
|
(7 |
)% |
| Global Growth and Efficiency Program |
|
45 |
|
|
80 |
|
|
|
|
| Operating profit, non-GAAP |
|
$ |
936 |
|
|
$ |
1,040 |
|
|
(10 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Point |
| Operating Profit Margin |
|
|
|
|
|
|
|
2018 |
|
2017(1) |
|
Change |
| Operating profit margin, GAAP |
|
|
|
|
|
|
|
23.4 |
% |
|
24.7 |
% |
|
(130 |
) |
| Global Growth and Efficiency Program |
|
|
|
|
|
|
|
1.2 |
% |
|
2.0 |
% |
|
|
|
| Operating profit margin, non-GAAP |
|
|
|
|
|
24.6 |
% |
|
26.7 |
% |
|
(210 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-Service Related Postretirement Costs |
|
|
|
|
2018 |
|
2017(1) |
|
|
|
| Non-service related postretirement costs, GAAP |
|
|
|
|
$ |
22 |
|
|
$ |
36 |
|
|
|
|
| Global Growth and Efficiency Program |
|
|
|
(1 |
) |
|
(7 |
) |
|
|
|
| Non-service related postretirement costs,
non-GAAP |
|
|
|
|
$ |
21 |
|
|
$ |
29 |
|
|
|
|
| Table 8 |
| Continued |
| Colgate-Palmolive Company |
| |
| Non-GAAP Reconciliations |
| |
| For the Three Months Ended December 31, 2018 and 2017 |
| |
| (Dollars in Millions Except Per Share Amounts) (Unaudited) |
| |
| |
|
|
2018 |
|
|
Income Before
Income Taxes |
|
Provision For
Income Taxes(2) |
|
Net Income
Including
Non-controlling
Interests |
|
Less: Income
Attributable To
Non-controlling
Interests |
|
Net Income
Attributable To
Colgate-
Palmolive
Company |
|
Effective Income
Tax Rate(3) |
|
Diluted Earnings
Per Share |
| As Reported GAAP |
|
$832
|
|
$ |
189 |
|
$ |
643 |
|
|
$ |
37 |
|
$ |
606 |
|
22.7% |
|
$ |
0.70 |
| Global Growth and Efficiency Program |
|
46 |
|
|
12 |
|
|
34 |
|
|
|
2 |
|
|
32 |
|
0.2% |
|
|
0.04 |
| Non-GAAP |
|
$878 |
|
$ |
201 |
|
$ |
677 |
|
|
$ |
39 |
|
$ |
638 |
|
22.9% |
|
$ |
0.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
Income Before
Income Taxes |
|
Provision For
Income Taxes(2) |
|
Net Income Including
Non-controlling
Interests |
|
Net Income
Attributable To
Colgate-
Palmolive
Company |
|
Effective Income
Tax Rate(3) |
|
Diluted Earnings
Per Share |
| As Reported GAAP |
|
$896
|
|
$ |
543 |
|
|
$ |
353 |
|
$ |
323 |
|
60.6% |
|
$ |
0.37 |
| Global Growth and Efficiency Program |
|
87
|
|
|
26 |
|
|
|
61 |
|
|
61 |
|
(2.7)% |
|
|
0.07 |
| U.S. tax reform |
|
—
|
|
|
(275 |
) |
|
|
275 |
|
|
275 |
|
(28.0)% |
|
|
0.31 |
| Non-GAAP |
|
$983
|
|
$ |
294 |
|
|
$ |
689 |
|
$ |
659 |
|
29.9% |
|
$ |
0.75 |
|
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 Twelve Months Ended December 31, 2018 and 2017 |
| |
| (Dollars in Millions Except Per Share Amounts) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross Profit |
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
| Gross profit, GAAP |
|
|
|
|
|
|
|
$ |
9,231 |
|
|
$ |
9,280 |
|
|
|
| Global Growth and Efficiency Program |
|
|
|
|
|
|
|
31 |
|
|
75 |
|
|
|
| Gross profit, non-GAAP |
|
|
|
|
|
|
|
$ |
9,262 |
|
|
$ |
9,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Point |
| Gross Profit Margin |
|
|
|
|
|
|
|
2018 |
|
2017 |
|
Change |
| Gross profit margin, GAAP |
|
|
|
|
|
|
|
59.4 |
% |
|
60.0 |
% |
|
(60 |
) |
| Global Growth and Efficiency Program |
|
|
|
|
|
|
|
0.2 |
% |
|
0.5 |
% |
|
|
| Gross profit margin, non-GAAP |
|
|
|
|
|
|
|
59.6 |
% |
|
60.5 |
% |
|
(90 |
) |
|
|
|
|
|
|
|
|
|
| Selling, General and Administrative Expenses |
|
|
|
2018 |
|
2017(1) |
|
|
| Selling, general and administrative expenses, GAAP |
|
$ |
5,389 |
|
|
$ |
5,400 |
|
|
|
| Global Growth and Efficiency Program |
|
|
|
(33 |
) |
|
(86 |
) |
|
|
| Selling, general and administrative expenses, non-GAAP |
|
$ |
5,356 |
|
|
$ |
5,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
34.7 |
% |
|
34.9 |
% |
|
(20 |
) |
| Global Growth and Efficiency Program |
|
|
|
(0.2 |
)% |
|
(0.5 |
)% |
|
|
| Selling, general and administrative expenses as
a percentage of Net sales, non-GAAP |
|
|
|
34.5 |
% |
|
34.4 |
% |
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (Income) Expense, Net |
|
|
|
|
|
|
|
2018 |
|
2017(1) |
|
|
| Other (income) expense, net, GAAP |
|
|
|
$ |
148 |
|
|
$ |
173 |
|
|
|
| Global Growth and Efficiency Program |
|
|
|
(88 |
) |
|
(152 |
) |
|
|
| Other (income) expense, net, non-GAAP |
|
|
|
$ |
60 |
|
|
$ |
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Profit |
|
|
|
|
|
|
|
2018 |
|
2017(1) |
|
% Change |
| Operating profit, GAAP |
|
|
|
$ |
3,694 |
|
|
$ |
3,707 |
|
|
— |
% |
| Global Growth and Efficiency Program |
|
|
|
152 |
|
|
313 |
|
|
|
| Operating profit, non-GAAP |
|
|
|
$ |
3,846 |
|
|
$ |
4,020 |
|
|
(4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Point |
| Operating Profit Margin |
|
|
|
|
|
|
|
2018 |
|
2017(1) |
|
Change |
| Operating profit margin, GAAP |
|
|
|
23.8 |
% |
|
24.0 |
% |
|
(20 |
) |
| Global Growth and Efficiency Program |
|
|
|
0.9 |
% |
|
2.0 |
% |
|
|
| Operating profit margin, non-GAAP |
|
|
|
24.7 |
% |
|
26.0 |
% |
|
(130 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-Service Related Postretirement Costs |
|
|
|
|
2018 |
|
2017(1) |
|
|
| Non-service related postretirement costs, GAAP |
|
|
|
|
$ |
87 |
|
|
$ |
118 |
|
|
|
| Global Growth and Efficiency Program |
|
|
|
(9 |
) |
|
(20 |
) |
|
|
| Non-service related postretirement costs,
non-GAAP |
|
|
|
|
$ |
78 |
|
|
$ |
98 |
|
|
|
| Table 9 |
| Continued |
| Colgate-Palmolive Company |
| |
| Non-GAAP Reconciliations |
| |
| For the Twelve Months Ended December 31, 2018 and 2017 |
| |
| (Dollars in Millions Except Per Share Amounts) (Unaudited) |
|
|
|
|
|
|
|
|
2018 |
|
|
Income
Before
Income
Taxes
|
|
Provision
For
Income
Taxes(2)
|
|
Net Income
Including
Non-controlling
Interests
|
|
Less:
Income
Attributable To
Non-controlling
Interests
|
|
Net Income
Attributable To
Colgate-
Palmolive
Company
|
|
Effective Income
Tax Rate(3) |
|
Diluted Earnings
Per Share |
| As Reported GAAP |
|
$ |
3,464 |
|
|
$ |
906 |
|
|
$ |
2,558 |
|
|
$ |
158 |
|
|
$ |
2,400 |
|
|
26.2 |
% |
|
$ |
2.75 |
|
| Global Growth and Efficiency Program |
|
161 |
|
|
37 |
|
|
124 |
|
|
(1 |
) |
|
125 |
|
|
(0.1 |
)% |
|
0.15 |
|
| Benefit from a foreign tax matter |
|
— |
|
|
15 |
|
|
(15 |
) |
|
— |
|
|
(15 |
) |
|
0.4 |
% |
|
(0.02 |
) |
|
U.S. tax reform
|
|
— |
|
|
(80 |
) |
|
80 |
|
|
— |
|
|
80 |
|
|
(2.3 |
)% |
|
0.09 |
|
| Non-GAAP |
|
$ |
3,625 |
|
|
$ |
878 |
|
|
$ |
2,747 |
|
|
$ |
157 |
|
|
$ |
2,590 |
|
|
24.2 |
% |
|
$ |
2.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
Income Before
Income Taxes |
|
Provision
For
Income
Taxes(2)
|
|
Net Income
Including
Non-controlling
Interests |
|
Net Income
Attributable To
Colgate-
Palmolive
Company |
|
Effective Income
Tax Rate(3) |
|
Diluted Earnings
Per Share |
| As Reported GAAP |
|
$ |
3,487 |
|
|
$ |
1,313 |
|
|
$ |
2,174 |
|
|
$ |
2,024 |
|
|
37.7 |
% |
|
$ |
2.28 |
|
| Global Growth and Efficiency Program |
|
333 |
|
|
87 |
|
|
246 |
|
|
246 |
|
|
(1.0 |
)% |
|
0.28 |
|
| U.S. tax reform |
|
— |
|
|
(275 |
) |
|
275 |
|
|
275 |
|
|
(7.2 |
)% |
|
0.31 |
|
| Non-GAAP |
|
$ |
3,820 |
|
|
$ |
1,125 |
|
|
$ |
2,695 |
|
|
$ |
2,545 |
|
|
29.5 |
% |
|
$ |
2.87 |
|
|
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. |
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| (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. |
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| (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. |
John Faucher 212-310-3653
Hope Spiller 212-310-2291
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