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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Colgate Palmolive Co | NYSE:CL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.71 | 1.92% | 91.00 | 92.25 | 89.19 | 91.00 | 7,540,481 | 00:09:06 |
Colgate-Palmolive Company (NYSE:CL)
Third Quarter Total Company Results (GAAP)
($ in millions except per share amounts)
2020
2019
Change
Net Sales
$4,153
$3,928
+5.5
%
EPS (diluted)
$0.81
$0.67
+21
%
Third Quarter Total Company Results (Base Business - Non-GAAP)*
($ in millions except per share amounts)
2020
2019
Change
Organic Sales Growth
+7.5
%
Base Business EPS (diluted)
$0.79
$0.71
+11
%
*Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 6 - Geographic Sales Analysis Percentage Changes” and “Table 8 - Non-GAAP Reconciliations” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.
Colgate-Palmolive Company (NYSE:CL) today reported results for third quarter 2020. Noel Wallace, Chairman, President and Chief Executive Officer, commented, “Our performance was strong in the third quarter, with growth accelerating on both the top and bottom lines, despite the many challenges brought on by the COVID-19 pandemic. It is particularly encouraging to see double-digit increases in operating profit, net income and earnings per share.
“Net sales grew 5.5% and organic sales grew 7.5% as we drove volume growth and higher pricing in every division.
“It is rewarding to see the growth strategies we are implementing bear fruit. While we continue to see elevated demand in personal care and home care related to the virus, premium innovation is also driving growth across all of our product categories. We also continue to see strength in eCommerce, led by our Hill’s business.
“The very strong gross margin expansion in the quarter allowed us to invest more behind our brands and provides us with the ability to increase that investment in the balance of the year in support of a very full innovation pipeline.
“Looking ahead, while uncertainty related to the impact of the pandemic still exists, including macroeconomic impacts and government actions to stem the virus, we believe we have better visibility for the balance of the year and therefore we are providing annual financial guidance for 2020."
Full Year 2020 Guidance
Based on current spot rates:
Divisional Performance
The following are comments about divisional performance for third quarter 2020 versus the year ago period. See attached "Table 6 - Geographic Sales Analysis Percentage Changes" and "Table 5 - Segment Information" for additional information on net sales and operating profit by division.
Third Quarter Sales Growth By Division
(% change 3Q 2020 vs. 3Q 2019)
Net Sales
Organic Sales*
As Reported Volume
Organic
Volume
Pricing
FX
North America
+6.5%
+5.0%
+3.0%
+1.5%
+3.5%
—%
Latin America
-5.0%
+11.5%
+2.0%
+2.0%
+9.5%
-16.5%
Europe
+17.0%
+3.0%
+12.0%
+2.5%
+0.5%
+4.5%
Asia Pacific
+4.5%
+4.5%
+2.5%
+2.5%
+2.0%
—%
Africa/Eurasia
+2.5%
+12.0%
+6.5%
+5.5%
+6.5%
-10.5%
Hill's
+11.0%
+11.0%
+6.5%
+6.5%
+4.5%
—%
Total Company
+5.5%
+7.5%
+5.0%
+3.0%
+4.5%
-4.0%
*Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 6 - Geographic Sales Analysis Percentage Changes” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.
The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 2% for Total Company and 9.5%, 1.0% and 1.5% for Europe, Africa/Eurasia and North America, respectively.
Third Quarter Operating Profit By Division
($ in millions)
3Q 2020
% Change vs
3Q 2019
% to Net
Sales
Change in basis
points vs 3Q 2019 % to Net Sales
North America
$242
-2%
26.2%
-230
Latin America
$250
6%
29.9%
+320
Europe
$169
10%
23.7%
-150
Asia Pacific
$222
15%
30.7%
+270
Africa/Eurasia
$61
27%
23.9%
+450
Hill's
$196
16%
27.8%
+110
Total Company, As Reported
$1,018
19%
24.5%
+270
Total Company, Base Business*
$1,002
11%
24.1%
+120
*Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 8 - Non-GAAP Reconciliations” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.
North America (22% of Company Sales)
Latin America (20% of Company Sales)
Europe (17% of Company Sales)
Asia Pacific (18% of Company Sales)
Africa/Eurasia (6% of Company Sales)
Hill's Pet Nutrition (17% of Company Sales)
Webcast Information
At 8:30 a.m. ET today, Colgate will host a conference call regarding third quarter results. To access this call as a webcast, please go to Colgate’s website at www.colgatepalmolive.com.
About Colgate-Palmolive
Colgate-Palmolive Company is a caring, innovative growth company reimagining a healthier future for all people, their pets and our planet. Focused on Oral Care, Personal Care, Home Care and Pet Nutrition and reaching more than 200 countries and territories, Colgate teams are developing and selling health and hygiene products and pet nutrition offerings essential to society through brands such as Colgate, Palmolive, elmex, meridol, Tom’s of Maine, hello, Sorriso, Speed Stick, Softsoap, Irish Spring, Protex, Sanex, Filorga, eltaMD, PCA Skin, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet. Colgate seeks to deliver sustainable, profitable growth and superior shareholder returns and to provide Colgate people with an innovative and inclusive work environment. Colgate does this by developing and selling products globally that make people’s lives healthier and more enjoyable and by embracing its sustainability, diversity, equity and inclusion and social responsibility strategies across the organization. For more information about Colgate’s global business, its efforts to improve the oral health of children through its Bright Smiles, Bright Futures program and how the Company is building a future to smile about, visit www.colgatepalmolive.com. CL-E
Market Share Information
Management uses market share information as a key indicator to monitor business health and performance. References to market share in this press release are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).
Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce and certain club retailers and discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party vendors it uses to provide data are reliable, but it has not verified the accuracy or completeness of the data or any assumptions underlying the data. In certain limited circumstances, the COVID-19 pandemic has impacted the ability of our third-party vendors to provide the Company with reliable updated market share data. In addition, market share information reported by the Company may be different from market share information reported by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.
Cautionary Statement on Forward-Looking Statements
This press release and the related webcast may contain forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (SEC) in its rules, regulations and releases) that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin growth, earnings per share levels, financial goals, the impact of foreign exchange, the impact of COVID-19, cost-reduction plans, tax rates, new product introductions, commercial investment levels, acquisitions, divestitures, share repurchases, or legal or tax proceedings, among other matters. These statements are made on the basis of the Company’s views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of these statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. For more information about factors that could impact the Company’s business and cause actual results to differ materially from forward-looking statements, investors should refer to the Company’s filings with the SEC (including, but not limited to, the information set forth under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 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 www.colgatepalmolive.com.
Non-GAAP Financial Measures
The following provides definitions and other information regarding the non-GAAP financial measures used in this press release and/or the related webcast, which may not be the same as or comparable to similar measures presented by other companies:
This press release discusses Net sales growth (GAAP) and Organic sales growth (non-GAAP). Management believes the organic sales growth measure provides investors and analysts with useful supplemental information regarding the Company’s underlying sales trends by presenting sales growth excluding the external factor of foreign exchange as well as the impact from acquisitions and divestments. See “Geographic Sales Analysis Percentage Changes” for the three and nine months ended September 30, 2020 versus 2019 included with this release for a comparison of Organic sales growth to Net sales growth in accordance with GAAP.
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 disclosed on both an as reported (GAAP) and Base Business (non-GAAP) basis. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company’s normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, gains and losses from certain divestitures and certain unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company’s business performance, and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company’s underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. See “Non-GAAP Reconciliations” for the three and nine months ended September 30, 2020 and 2019 included with this release for a reconciliation of these financial measures to the related GAAP measures.
The Company uses these financial measures internally in its budgeting process, to evaluate segment and overall operating performance and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company’s underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.
As management uses free cash flow before dividends to evaluate the Company’s ability to satisfy current and future obligations, 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. See “Condensed Consolidated Statements of Cash Flows” for the nine months ended September 30, 2020 and 2019 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 third quarter results.)
Table 1
Colgate-Palmolive Company
Condensed Consolidated Statements of Income
For the Three Months Ended September 30, 2020 and 2019
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2020
2019
Net sales
$
4,153
$
3,928
Cost of sales
1,613
1,612
Gross profit
2,540
2,316
Gross profit margin
61.2
%
59.0
%
Selling, general and administrative expenses
1,518
1,429
Other (income) expense, net
4
31
Operating profit
1,018
856
Operating profit margin
24.5
%
21.8
%
Non-service related postretirement costs
15
27
Interest (income) expense, net
36
35
Income before income taxes
967
794
Provision for income taxes
222
167
Effective tax rate
23.0
%
21.0
%
Net income including noncontrolling interests
745
627
Less: Net income attributable to noncontrolling interests
47
49
Net income attributable to Colgate-Palmolive Company
$
698
$
578
Earnings per common share
Basic
$
0.81
$
0.67
Diluted
$
0.81
$
0.67
Supplemental Income Statement Information
Average common shares outstanding
Basic
859.0
858.7
Diluted
861.8
861.2
Advertising
$
476
$
423
Table 2
Colgate-Palmolive Company
Condensed Consolidated Statements of Income
For the Nine Months Ended September 30, 2020 and 2019
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2020
2019
Net sales
$
12,147
$
11,678
Cost of sales
4,773
4,767
Gross profit
7,374
6,911
Gross profit margin
60.7
%
59.2
%
Selling, general and administrative expenses
4,386
4,163
Other (income) expense, net
72
125
Operating profit
2,916
2,623
Operating profit margin
24.0
%
22.5
%
Non-service related postretirement costs
56
79
Interest (income) expense, net
107
113
Income before income taxes
2,753
2,431
Provision for income taxes
585
586
Effective tax rate
21.2
%
24.1
%
Net income including noncontrolling interests
2,168
1,845
Less: Net income attributable to noncontrolling interests
120
121
Net income attributable to Colgate-Palmolive Company
$
2,048
$
1,724
Earnings per common share
Basic(1)
$
2.39
$
2.00
Diluted(1)
$
2.38
$
2.00
Supplemental Income Statement Information
Average common shares outstanding
Basic
857.7
860.1
Diluted
859.5
862.4
Advertising
$
1,399
$
1,268
Note: (1) Basic and diluted earnings per share are computed independently for each quarter and any year-to-date period presented. As a result of changes in shares outstanding during the year and rounding, the sum of the quarters' earnings per share may not equal the earnings per share for any year-to-date period.
Table 3
Colgate-Palmolive Company
Condensed Consolidated Balance Sheets
As of September 30, 2020, December 31, 2019 and September 30, 2019
(Dollars in Millions) (Unaudited)
September 30,
December 31,
September 30,
2020
2019
2019
Cash and cash equivalents
$
989
$
883
$
948
Receivables, net
1,292
1,440
1,495
Inventories
1,578
1,400
1,371
Other current assets
508
456
535
Property, plant and equipment, net
3,506
3,750
3,689
Goodwill
3,711
3,508
3,532
Other intangible assets, net
2,838
2,667
2,535
Other assets
1,044
930
921
Total assets
$
15,466
$
15,034
$
15,026
Total debt
$
7,236
$
7,847
$
8,151
Other current liabilities
4,216
3,524
3,726
Other non-current liabilities
2,941
3,105
2,975
Total liabilities
14,393
14,476
14,852
Total Colgate-Palmolive Company shareholders’ equity
653
117
(324)
Noncontrolling interests
420
441
498
Total liabilities and equity
$
15,466
$
15,034
$
15,026
Supplemental Balance Sheet Information
Debt less cash, cash equivalents and marketable securities(1)
$
6,167
$
6,941
$
7,094
Working capital % of sales
(5.7)
%
(1.6)
%
(2.8)
%
Note: (1) Marketable securities of $80, $23 and $109 as of September 30, 2020, December 31, 2019 and September 30, 2019, respectively, are included in Other current assets.
Table 4
Colgate-Palmolive Company
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2020 and 2019
(Dollars in Millions) (Unaudited)
2020
2019
Operating Activities
Net income including noncontrolling interests
$
2,168
$
1,845
Adjustments to reconcile Net income including noncontrolling interests to Net cash provided by operations:
Depreciation and amortization
400
386
Restructuring and termination benefits, net of cash
(66)
11
Stock-based compensation expense
85
83
Deferred income taxes
(124)
79
Voluntary benefit plan contributions
—
(113)
Cash effects of changes in:
Receivables
62
(65)
Inventories
(214)
(69)
Accounts payable and other accruals
468
(52)
Other non-current assets and liabilities
(23)
58
Net cash provided by operations
2,756
2,163
Investing Activities
Capital expenditures
(249)
(226)
Purchases of marketable securities and investments
(109)
(152)
Proceeds from sale of marketable securities and investments
42
14
Payment for acquisitions, net of cash acquired
(352)
(1,711)
Net cash used in investing activities
(668)
(2,075)
Financing Activities
Principal payments on debt
(3,269)
(4,184)
Proceeds from issuance of debt
2,500
6,008
Dividends paid
(1,162)
(1,140)
Purchases of treasury shares
(578)
(1,024)
Proceeds from exercise of stock options
640
490
Purchases of non-controlling interests in subsidiaries
(99)
—
Net cash provided by (used in) financing activities
(1,968)
150
Effect of exchange rate changes on Cash and cash equivalents
(14)
(16)
Net increase (decrease) in Cash and cash equivalents
106
222
Cash and cash equivalents at beginning of the period
883
726
Cash and cash equivalents at end of the period
$
989
$
948
Supplemental Cash Flow Information
Free cash flow before dividends (Net cash provided by operations less Capital expenditures)
Net cash provided by operations
$
2,756
$
2,163
Less: Capital expenditures
(249)
(226)
Free cash flow before dividends
$
2,507
$
1,937
Income taxes paid
$
606
$
669
Table 5
Colgate-Palmolive Company
Segment Information
For the Three and Nine Months Ended September 30, 2020 and 2019
(Dollars in Millions) (Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Net Sales
Oral, Personal and Home Care
North America
$
923
$
869
$
2,801
$
2,568
Latin America
837
881
2,531
2,700
Europe
712
607
2,004
1,798
Asia Pacific
722
690
1,980
2,035
Africa/Eurasia
255
248
736
732
Total Oral, Personal and Home Care
3,449
3,295
10,052
9,833
Pet Nutrition
704
633
2,095
1,845
Total Net Sales
$
4,153
$
3,928
$
12,147
$
11,678
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Operating Profit
Oral, Personal and Home Care
North America
$
242
$
248
$
753
$
750
Latin America
250
235
728
718
Europe
169
153
482
452
Asia Pacific
222
193
559
557
Africa/Eurasia
61
48
174
141
Total Oral, Personal and Home Care
944
877
2,696
2,618
Pet Nutrition
196
169
588
501
Corporate(1)
(122)
(190)
(368)
(496)
Total Operating Profit
$
1,018
$
856
$
2,916
$
2,623
Note: (1) Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs and gains and losses on sales of non-core product lines and assets.
Corporate Operating profit (loss) for the three months ended September 30, 2020 included benefits of $16 resulting from the Global Growth and Efficiency Program. Corporate Operating profit (loss) for the three months ended September 30, 2019 included charges of $26 resulting from the Global Growth and Efficiency Program, which ended on December 31, 2019, and acquisition-related costs of $18.
Corporate Operating profit (loss) for the nine months ended September 30, 2020 included a charge for acquisition-related costs of $6 and benefits of $16 resulting from the Global Growth and Efficiency Program. Corporate Operating profit (loss) for the nine months ended September 30, 2019 included charges of $94 resulting from the Global Growth and Efficiency Program, which ended on December 31, 2019, and acquisition-related costs of $18.
Table 6
Colgate-Palmolive Company
Geographic Sales Analysis Percentage Changes
For the Three Months Ended September 30, 2020 vs. 2019
(Unaudited)
COMPONENTS OF SALES CHANGE
Pricing
Coupons
Sales
Consumer &
Change
Organic
As Reported
Organic
Trade
Foreign
Region
As Reported
Sales Change
Volume
Volume
Incentives
Exchange
Total Company(1)
5.5
%
7.5
%
5.0
%
3.0
%
4.5
%
(4.0)
%
North America(1)
6.5
%
5.0
%
3.0
%
1.5
%
3.5
%
—
%
Latin America
(5.0)
%
11.5
%
2.0
%
2.0
%
9.5
%
(16.5)
%
Europe(1)
17.0
%
3.0
%
12.0
%
2.5
%
0.5
%
4.5
%
Asia Pacific
4.5
%
4.5
%
2.5
%
2.5
%
2.0
%
—
%
Africa/Eurasia(1)
2.5
%
12.0
%
6.5
%
5.5
%
6.5
%
(10.5)
%
Total CP Products(1)
4.5
%
6.5
%
4.5
%
2.0
%
4.5
%
(4.5)
%
Hill’s
11.0
%
11.0
%
6.5
%
6.5
%
4.5
%
—
%
Emerging Markets(2)
(1.0)
%
8.5
%
2.5
%
2.5
%
6.0
%
(9.5)
%
Developed Markets(2)
12.0
%
6.5
%
7.0
%
3.5
%
3.0
%
2.0
%
Notes: (1) The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 2% for Total Company and 1.5%, 9.5%, 1.0% and 2.5% for North America, Europe, Africa/Eurasia and Total CP Products, respectively.
(2) Emerging Markets include Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe. The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 0.0% for Emerging Markets and 3.5% for Developed Markets.
Table 7
Colgate-Palmolive Company
Geographic Sales Analysis Percentage Changes
For the Nine Months Ended September 30, 2020 and 2019
(Unaudited)
COMPONENTS OF SALES CHANGE
Pricing
Coupons
Sales
Consumer &
Change
Organic
As Reported
Organic
Trade
Foreign
Region
As Reported
Sales Change
Volume
Volume
Incentives
Exchange
Total Company(1)
4.0
%
6.5
%
5.5
%
3.5
%
3.0
%
(4.5)
%
North America(1)
9.0
%
8.0
%
8.5
%
7.0
%
1.0
%
(0.5)
%
Latin America
(6.0)
%
8.5
%
0.5
%
0.5
%
8.0
%
(14.5)
%
Europe(1)
11.5
%
2.5
%
12.0
%
3.0
%
(0.5)
%
—
%
Asia Pacific
(2.5)
%
(1.0)
%
(3.0)
%
(3.0)
%
2.0
%
(1.5)
%
Africa/Eurasia(1)
0.5
%
7.5
%
5.5
%
4.0
%
3.5
%
(8.5)
%
Total CP Products(1)
2.0
%
5.5
%
4.5
%
2.5
%
3.0
%
(5.5)
%
Hill’s
13.5
%
14.5
%
10.0
%
10.0
%
4.5
%
(1.0)
%
Emerging Markets(2)
(4.5)
%
4.5
%
(0.5)
%
(0.5)
%
5.0
%
(9.0)
%
Developed Markets(2)
12.0
%
9.0
%
10.5
%
7.5
%
1.5
%
—
%
Notes: (1) The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 2.0% for Total Company and 1.5%, 9.0%, 1.5% and 2.0% for North America, Europe, Africa/Eurasia and Total CP Products, respectively.
(2) Emerging Markets include Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe. The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 0.0% for Emerging Markets and 3.0% for Developed Markets.
Table 8
Colgate-Palmolive Company
Non-GAAP Reconciliations
For the Three Months Ended September 30, 2020 and 2019
(Dollars in Millions Except Per Share Amounts) (Unaudited)
Gross Profit
2020
2019
Gross profit, GAAP
$
2,540
$
2,316
Global Growth and Efficiency Program
—
1
Gross profit, non-GAAP
$
2,540
$
2,317
Basis Point
Gross Profit Margin
2020
2019
Change
Gross profit margin, GAAP
61.2
%
59.0
%
220
Global Growth and Efficiency Program
—
%
—
%
Gross profit margin, non-GAAP
61.2
%
59.0
%
220
Selling, General and Administrative Expenses
2020
2019
Selling, general and administrative expenses, GAAP
$
1,518
$
1,429
Global Growth and Efficiency Program (1)
3
(28)
Selling, general and administrative expenses, non-GAAP
$
1,521
$
1,401
Basis Point
Selling, General and Administrative Expenses as a Percentage of Net Sales
2020
2019
Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP
36.6
%
36.4
%
20
Global Growth and Efficiency Program
—
%
(0.7)
%
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP
36.6
%
35.7
%
90
Other (Income) Expense, Net
2020
2019
Other (income) expense, net, GAAP
$
4
$
31
Global Growth and Efficiency Program (1)
13
3
Acquisition-related costs
—
(18)
Other (income) expense, net, non-GAAP
$
17
$
16
Operating Profit
2020
2019
% Change
Operating profit, GAAP
$
1,018
$
856
19
%
Global Growth and Efficiency Program (1)
(16)
26
Acquisition-related costs
—
18
Operating profit, non-GAAP
$
1,002
$
900
11
%
Basis Point
Operating Profit Margin
2020
2019
Change
Operating profit margin, GAAP
24.5
%
21.8
%
270
Global Growth and Efficiency Program (1)
(0.4)
%
0.7
%
Acquisition-related costs
—
%
0.4
%
Operating profit margin, non-GAAP
24.1
%
22.9
%
120
Non-Service Related Postretirement Costs
2020
2019
Non-service related postretirement costs, GAAP
$
15
$
27
Global Growth and Efficiency Program
—
(1)
Non-service related postretirement costs, non-GAAP
$
15
$
26
Table 8
Continued
Colgate-Palmolive Company
Non-GAAP Reconciliations
For the Three Months Ended September 30, 2020 and 2019
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2020
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
$
967
$
222
$
745
$
698
23.0
%
$
0.81
Global Growth and Efficiency Program (1)
(16)
(3)
(13)
(13)
—
%
(0.02)
Non-GAAP
$
951
$
219
$
732
$
685
23.0
%
$
0.79
2019
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
$
794
$
167
$
627
$
578
21.0
%
$
0.67
Global Growth and Efficiency Program
27
5
22
22
(0.1)
%
0.03
Acquisition-related costs
18
4
14
14
0.1
%
0.01
Non-GAAP
$
839
$
176
$
663
$
614
21.0
%
$
0.71
The impact of non-GAAP adjustments may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.
Notes: (1) During the three months ended September 30, 2020, the Company adjusted the accrual balances related to certain projects approved prior to the conclusion of the Global Growth and Efficiency Program, which ended on December 31, 2019, resulting in a reduction of $16 ($13 aftertax). No new restructuring projects were approved for implementation during the nine months ended September 30, 2020.
(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 Nine Months Ended September 30, 2020 and 2019
(Dollars in Millions Except Per Share Amounts) (Unaudited)
Gross Profit
2020
2019
Gross profit, GAAP
$
7,374
$
6,911
Acquisition-related costs
4
—
Global Growth and Efficiency Program
—
9
Gross profit, non-GAAP
$
7,378
$
6,920
Basis Point
Gross Profit Margin
2020
2019
Change
Gross profit margin, GAAP
60.7
%
59.2
%
150
Global Growth and Efficiency Program
—
%
0.1
%
Gross profit margin, non-GAAP
60.7
%
59.3
%
140
Selling, General and Administrative Expenses
2020
2019
Selling, general and administrative expenses, GAAP
$
4,386
$
4,163
Global Growth and Efficiency Program (1)
3
(42)
Selling, general and administrative expenses, non-GAAP
$
4,389
$
4,121
Basis Point
Selling, General and Administrative Expenses as a Percentage of Net Sales
2020
2019
Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP
36.1
%
35.6
%
50
Global Growth and Efficiency Program
—
%
(0.3)
%
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP
36.1
%
35.3
%
80
Other (Income) Expense, Net
2020
2019
Other (income) expense, net, GAAP
$
72
$
125
Global Growth and Efficiency Program (1)
13
(43)
Acquisition-related costs
(2)
(18)
Other (income) expense, net, non-GAAP
$
83
$
64
Operating Profit
2020
2019
% Change
Operating profit, GAAP
$
2,916
$
2,623
11
%
Global Growth and Efficiency Program (1)
(16)
94
Acquisition-related costs
6
18
Operating profit, non-GAAP
$
2,906
$
2,735
6
%
Basis Point
Operating Profit Margin
2020
2019
Change
Operating profit margin, GAAP
24.0
%
22.5
%
150
Global Growth and Efficiency Program (1)
(0.1)
%
0.8
%
Acquisition-related costs
—
%
0.1
%
Operating profit margin, non-GAAP
23.9
%
23.4
%
50
Non-Service Related Postretirement Costs
2020
2019
Non-service related postretirement costs, GAAP
$
56
$
79
Global Growth and Efficiency Program
—
(4)
Non-service related postretirement costs, non-GAAP
$
56
$
75
Table 9
Continued
Colgate-Palmolive Company
Non-GAAP Reconciliations
For the Nine Months Ended September 30, 2020 and 2019
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2020
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
$
2,753
$
585
$
2,168
$
2,048
21.2
%
$
2.38
Global Growth and Efficiency Program (1)
(16)
(3)
(13)
(13)
—
%
(0.02)
Subsidiary and operating structure initiatives
—
71
(71)
(71)
2.7
%
(0.08)
Acquisition-related costs
6
2
4
4
—
%
0.01
Non-GAAP
$
2,743
$
655
$
2,088
$
1,968
23.9
%
$
2.29
2019
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
$
2,431
$
586
$
1,845
$
1,724
24.1
%
$
2.00
Global Growth and Efficiency Program
98
23
75
75
—
%
0.09
U.S. tax reform
18
4
14
14
—
%
0.01
Non-GAAP
$
2,547
$
613
$
1,934
$
1,813
24.1
%
$
2.10
The impact of non-GAAP adjustments may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.
Notes: (1) During the nine months ended September 30, 2020, the Company adjusted the accrual balances related to certain projects approved prior to the conclusion of the Global Growth and Efficiency Program, which ended on December 31, 2019, resulting in a reduction of $16 ($13 aftertax). No new restructuring projects were approved for implementation during the nine months ended September 30, 2020.
(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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