10-QPeriod: Q2 FY2019

COLGATE PALMOLIVE CO Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 26, 2019For Securities:CL

Summary

Colgate-Palmolive Company reported its financial results for the second quarter and first half of 2019. For the second quarter, net sales saw a slight decrease of 0.5% year-over-year to $3.866 billion, with organic sales growing 4.0%. Diluted earnings per share (EPS) decreased to $0.68 from $0.73 in the prior year period. The decrease in EPS was influenced by higher selling, general, and administrative expenses, partly due to increased advertising investment and overhead costs, as well as ongoing restructuring charges from the "Global Growth and Efficiency Program". For the first half of 2019, net sales decreased by 2.0% to $7.750 billion, with organic sales growing 3.5%. Diluted EPS for the first half also declined to $1.33 from $1.45 in the same period last year. The company continues to focus on its core segments: Oral, Personal and Home Care, and Pet Nutrition. A significant event announced post-quarter was the agreement to acquire the skin care business "Laboratoires Filorga Cosmétiques" for approximately $1.690 billion, expected to close in the third quarter of 2019. The company reaffirmed its commitment to driving efficiency, innovation, and shareholder returns.

Financial Highlights

50 data points
Beta

Revenue

$3.87B

59.7% Gross Margin

Net Income

$586.00M

15.2% Net Margin

EPS (Diluted)

$0.68

Total Assets

$13.15B

Cash & Equivalents

$863.00M

Free Cash Flow

$644.00M

Financial Statements
Beta
Revenue$3.87B
Cost of Revenue$1.56B
Gross Profit$2.31B
SG&A Expenses$1.37B
Operating Income$888.00M
Net Income$586.00M
EPS (Basic)$0.68
EPS (Diluted)$0.68
Shares Outstanding (Basic)859.40M
Shares Outstanding (Diluted)861.90M

Key Highlights

  • 1Net sales for Q2 2019 were $3.866 billion, a 0.5% decrease compared to Q2 2018, while organic sales grew by 4.0%.
  • 2Diluted earnings per share (EPS) for Q2 2019 decreased to $0.68 from $0.73 in Q2 2018.
  • 3For the first six months of 2019, net sales were $7.750 billion, down 2.0% year-over-year, with organic sales up 3.5%.
  • 4Diluted EPS for the first six months of 2019 decreased to $1.33 from $1.45 in the prior year period.
  • 5The company announced a significant agreement to acquire the "Laboratoires Filorga Cosmétiques" skin care business for approximately $1.690 billion, expected to close in Q3 2019.
  • 6The "Global Growth and Efficiency Program" is in its final year, with anticipated full program charges estimated between $1.820 billion and $1.870 billion pre-tax.
  • 7Operating profit margin for Q2 2019 decreased by 130 basis points to 23.0% (GAAP) compared to the prior year period.

Frequently Asked Questions

The primary driver of the decrease in net sales for the quarter was negative foreign exchange impact, which more than offset volume growth and net selling price increases. Specifically, negative foreign exchange accounted for a 4.5% decrease in net sales for Q2 2019.

The "Global Growth and Efficiency Program" resulted in pre-tax charges of $42 million and after-tax costs of $31 million for the three months ended June 30, 2019. These charges are reflected in the financial statements and impacted operating profit and net income. The program is in its final year and is expected to contribute to future cost savings and efficiency.

The planned acquisition of Laboratoires Filorga Cosmétiques (Filorga) for approximately $1.690 billion represents a strategic move to expand Colgate-Palmolive's presence in the growing skin care market. The transaction is expected to close in the third quarter of 2019 and will be financed through a combination of debt and cash.

The Hill's Pet Nutrition segment showed positive performance, with net sales increasing by 3.5% to $613 million in the second quarter of 2019. Organic sales for the segment increased by 6.0%, driven by growth in the Prescription Diet and Advanced Nutrition categories.