10-QPeriod: Q3 FY2019

COLGATE PALMOLIVE CO Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 1, 2019For Securities:CL

Summary

Colgate-Palmolive Co. reported net sales of $3,928 million for the third quarter of 2019, a 2.0% increase year-over-year, driven by volume growth and net selling price increases, partially offset by unfavorable foreign exchange. Organic sales, excluding these impacts, grew by 4.5%. For the nine-month period, net sales slightly decreased by 0.5% to $11,678 million, with organic sales growing 3.5%. The company successfully completed the acquisition of Laboratoires Filorga Cosmétiques (Filorga) for approximately $1.7 billion, bolstering its premium skin health portfolio. Profitability showed mixed results. While gross profit increased slightly for the quarter, operating profit saw a modest decrease due to increased selling, general, and administrative expenses, particularly higher advertising investment. Net income attributable to Colgate-Palmolive Company rose to $578 million from $523 million in the prior year quarter, with diluted EPS increasing to $0.67 from $0.60. The company continues to manage costs through its Global Growth and Efficiency Program, which is expected to achieve significant annual savings upon completion.

Financial Highlights

50 data points
Beta

Revenue

$3.93B

59.0% Gross Margin

Net Income

$578.00M

14.7% Net Margin

EPS (Diluted)

$0.67

Total Assets

$15.03B

Cash & Equivalents

$948.00M

Free Cash Flow

$914.00M

Financial Statements
Beta
Revenue$3.93B
Cost of Revenue$1.61B
Gross Profit$2.32B
SG&A Expenses$1.43B
Operating Income$856.00M
Net Income$578.00M
EPS (Basic)$0.67
EPS (Diluted)$0.67
Shares Outstanding (Basic)858.70M
Shares Outstanding (Diluted)861.20M

Key Highlights

  • 1Net sales increased by 2.0% to $3,928 million for the third quarter of 2019, with organic sales up 4.5%.
  • 2Acquired the premium skin health business, Laboratoires Filorga Cosmétiques (Filorga), for approximately $1.7 billion.
  • 3Net income attributable to Colgate-Palmolive Company increased to $578 million ($0.67 diluted EPS) in Q3 2019, up from $523 million ($0.60 diluted EPS) in Q3 2018.
  • 4The Global Growth and Efficiency Program is on track to achieve substantial annual savings, with an expanded estimated pretax charge range of $1,865-$1,875 million.
  • 5Operating profit margin (non-GAAP) decreased by 50 basis points to 22.9% in Q3 2019, impacted by higher raw material costs and increased SG&A expenses.
  • 6Hill's Pet Nutrition segment showed strong growth with Net sales up 8.5% and organic sales up 10.0% in Q3 2019.
  • 7The company repurchased approximately $5.0 billion in shares during the nine months ended September 30, 2019.

Frequently Asked Questions

Colgate-Palmolive reported a 2.0% increase in net sales, reaching $3,928 million for the third quarter of 2019, compared to $3,845 million in the same period of 2018. Organic sales, which exclude foreign exchange, acquisitions, and divestitures, increased by a stronger 4.5%.

The acquisition of Filorga, completed on September 19, 2019, for approximately $1.7 billion, is part of Colgate-Palmolive's strategy to expand its premium skin health portfolio. While the acquisition was significant, Filorga's results of operations since the acquisition date were not material to the consolidated results for the third quarter of 2019.

Gross profit increased to $2,316 million in Q3 2019 from $2,269 million in Q3 2018. However, operating profit decreased by 2% to $856 million due to increased selling, general, and administrative expenses, particularly higher advertising investment and raw material costs, which impacted operating profit margin. On a non-GAAP basis, operating profit margin decreased by 50 basis points.

The Global Growth and Efficiency Program is on track for completion by December 31, 2019. The program has been expanded, and total pretax charges are now estimated between $1,865 million and $1,875 million. Upon full implementation, the program is expected to deliver annual pretax savings of $640-$660 million, contributing to future cash flows and improved margins.