01—Abstract
Summary
Summary of the 10-K filed February 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation's 2023 Annual Report (Form 10-K filed February 8, 2024) reports net sales of $20.4 billiona, up 1 percent from $20.2 billion in 2022, with organic sales up 5 percent, offset by currency (a 3 percent decrease) and exited business (a 1 percent decrease).
Operating profit fell to $2,344 millionb from $2,681 million, driven largely by an $658 million impairment of intangible assets tied to Softex Indonesia and Thinx. Diluted earnings per share were $5.21 versus $5.72 in 2022. Excluding the impairment, the sale of the Brazil tissue and K-C Professional business, and pension settlements, adjusted diluted EPS was $6.57, which the filing says increased 17 percent from $5.63 in 2022.
Adjusted operating profit was $2,958 millionc versus $2,617 million. Cash provided by operations was $3,542 million in 2023, compared with $2,733 million in 2022. Capital spending was $766 million, and the company paid $1.6 billion in dividends and repurchased 1.8 million shares for $225 million.
Total debt was $8.0 billiond at year-end, down from $8.4 billion. The Board approved a 3.4 percent dividend increase for 2024, and the filing cites 2023 as the 51st consecutive annual dividend increase. Capital spending is expected to be approximately $900 million in 2024.
The filing also discloses an ongoing U.S. Department of Justice investigation related to surgical gowns made by the former health care business, Avanos Medical, and a proposed U.S. IRS adjustment on transition tax, along with a Brazilian tax dispute of approximately $50 million. Management states it does not expect these to have a material effect, although the DOJ matter could involve substantial monetary damages.
02—Key points
Key Highlights
- Net sales of $20.4 billion rose 1 percent; organic sales grew 5 percent, while currency decreased sales by 3 percent.
- Reported operating profit fell 13 percent to $2,344 million, mainly due to a $658 million impairment of intangible assets (Softex Indonesia and Thinx).
- Diluted EPS was $5.21 versus $5.72; adjusted diluted EPS was $6.57, which the filing states increased 17 percent.
- Cash provided by operations rose to $3,542 million from $2,733 million.
- Shareholder returns: $1.6 billion in dividends paid and $225 million in share repurchases in 2023; the Board approved a 3.4 percent dividend increase for 2024.
- Portfolio changes: sold Neve tissue brand and related Brazil tissue and K-C Professional assets for $212 million (gain of $74 million pre-tax); acquired the remaining 30 percent of Thinx for $47 million, bringing ownership to 100 percent.
- Total debt declined to $8.0 billion from $8.4 billion; the company maintains a $2.0 billion revolving credit facility and a $750 million facility, both unused.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Kimberly-Clark kept $0.10.
- Revenue$17.15B100.0%
- Cost of revenue−$10.88B63.4%
- Gross profit$6.27B36.6%
- Operating costs−$4.34B25.3%
- Operating income$1.93B11.2%
- Interest, other & tax−$164.0M1.0%
- Net income$1.76B10.3%
Where FY2023 revenue went
$17.15B- Cost of revenue: $10.88B, 63% of revenue
- Other operating costs: $4.04B, 24% of revenue
- Net income: $1.76B, 10% of revenue
- R&D: $303.0M, 1.8% of revenue
- Interest, other & tax: $164.0M, 1.0% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 8, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $17.15B$20.18B | −15.0% |
| Cost of Revenue | $10.88B$13.96B | −22.1% |
| Gross Profit | $6.27B$6.22B | +0.8% |
| R&D Expenses | $303.00M$292.00M | +3.8% |
| Operating Income | $1.93B$2.68B | −28.1% |
| Interest Expense | $293.00M$282.00M | +3.9% |
| Net Income | $1.76B$1.93B | −8.8% |
| EPS (Basic) | $5.22$5.73 | −8.9% |
| EPS (Diluted) | $5.21$5.72 | −8.9% |
| Shares Outstanding (Basic) | 337.80M337.40M | +0.1% |
| Shares Outstanding (Diluted) | 338.80M338.30M | +0.1% |
05—Questions
Frequently Asked Questions
Why did reported operating profit and EPS decline in 2023 even though net sales grew?
The filing attributes the decline mainly to a $658 million impairment of intangible assets related to Softex Indonesia and Thinx, which reduced diluted EPS by $1.36. Higher marketing, research and general expenses, unfavorable foreign currency effects, and higher input costs also weighed on results, partly offset by higher net selling prices and $325 million of FORCE cost savings.
What do the adjusted (non-GAAP) results exclude?
Adjusted results exclude the net benefit from the sale of the Brazil tissue and K-C Professional business, the impairment of intangible assets, and pension settlement charges. Adjusted diluted EPS was $6.57 in 2023 compared with $5.63 in 2022, and the filing provides reconciliations to GAAP figures.
How strong is the company's cash generation and capital return?
Cash provided by operations was $3,542 million in 2023, up from $2,733 million. The company paid $1.6 billion in dividends and repurchased $225 million of stock, with 2024 capital spending expected at approximately $900 million. The filing cites the 51st consecutive annual dividend increase in 2023.
What legal and regulatory risks does the filing highlight?
The filing describes a Department of Justice investigation concerning surgical gowns made by the former health care business, Avanos Medical, and says the company is working toward a potential resolution; unfavorable outcomes could involve substantial monetary damages. It also notes a proposed IRS adjustment to the transition tax and a Brazilian tax dispute of approximately $50 million. Management does not expect these to be material.
What exposure does the company have to Russia and to Walmart?
The filing says Russia represented approximately 1 to 2 percent of net global sales, operating profit and total assets, and that the company manufactures and sells only essential items there. Walmart Inc. represented approximately 13 percent of consolidated net sales in 2023 and 2022, mainly within the Personal Care and Consumer Tissue segments.
06—Continue