01—Abstract
Summary
Summary of the 10-Q filed July 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation reported net sales of $5.0 billiona for the second quarter of 2024, a 2 percent decrease from the prior year, while organic sales grew 4 percent.
Operating profit rose to $655 millionb from $113 million, and net income attributable to Kimberly-Clark Corporation increased to $544 million from $102 million. Diluted earnings per share were $1.61 compared with $0.30. Results in 2024 include $190 million of pre-tax charges related to the 2024 Transformation Initiative, while the prior-year period included an $658 million impairment of intangible assets.
Excluding these items, adjusted operating profit was $845 millionc, a 16 percent increase, and adjusted diluted earnings per share were $1.96, a 19 percent increase. By segment, Personal Care operating profit increased 14 percent and Consumer Tissue operating profit increased 23 percent for the quarter, while K-C Professional operating profit decreased 1 percent. The 2024 Transformation Initiative, announced March 27, 2024, is intended to reorganize the company into three new business segments and reduce its structural cost base.
The company expects total costs of approximately $1.5 billiond pre-tax, with cash costs of about half that amount, and expects to complete the initiative by the end of 2026. Expected total pre-tax savings are $3.0 billion in gross productivity and $200 million in selling, general and administrative expenses.
Cash provided by operations was $1.5 billion for the six months ended June 30, 2024, and total debt was $8.0 billion at June 30, 2024. On July 1, 2024, the company completed the sale of its personal protective equipment business within K-C Professional for $640 million, subject to post-closing adjustments, and expects to recognize a gain in the third quarter of 2024.
02—Key points
Key Highlights
- Net sales were $5.0 billion for the quarter, down 2 percent, while organic sales grew 4 percent, driven by net selling prices and volume.
- Diluted EPS was $1.61 versus $0.30 a year earlier; adjusted diluted EPS was $1.96, a 19 percent increase.
- Operating profit was $655 million, including $190 million of pre-tax 2024 Transformation Initiative charges; adjusted operating profit was $845 million, up 16 percent.
- Personal Care operating profit rose 14 percent and Consumer Tissue operating profit rose 23 percent, while K-C Professional operating profit fell 1 percent in the quarter.
- The 2024 Transformation Initiative targets approximately $1.5 billion of pre-tax total costs, with $3.0 billion of expected gross productivity savings, and completion by the end of 2026.
- Full-year capital spending is expected to be approximately $800 million, including incremental spending from the transformation initiative.
- The company repurchased 1.2 million shares for $159 million in the first six months of 2024 and declared dividends of $1.22 per share in the second quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Kimberly-Clark kept $0.13.
- Revenue$4.23B100.0%
- Cost of revenue−$2.64B62.3%
- Gross profit$1.59B37.7%
- Operating costs−$1.05B24.9%
- Operating income$539.0M12.7%
- Interest, other & tax$5.0M0.1%
- Net income$544.0M12.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 23, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $4.23B$5.13B | −17.6% |
| Cost of Revenue | $2.64B$3.40B | −22.5% |
| Gross Profit | $1.59B$1.73B | −7.9% |
| Operating Income | $539.00M$113.00M | +377.0% |
| Interest Expense | $72.00M$76.00M | −5.3% |
| Net Income | $544.00M$102.00M | +433.3% |
| EPS (Basic) | $1.61$0.30 | +436.7% |
| EPS (Diluted) | $1.61$0.30 | +436.7% |
| Shares Outstanding (Basic) | 337.10M338.00M | −0.3% |
| Shares Outstanding (Diluted) | 338.00M338.90M | −0.3% |
05—Questions
Frequently Asked Questions
What drove the change in Kimberly-Clark's second-quarter 2024 operating profit?
Operating profit was $655 million compared with $113 million a year earlier. The prior-year period included a $658 million impairment of intangible assets and a net benefit from the sale of the Brazil tissue and K-C Professional business. The 2024 results include $190 million of pre-tax Transformation Initiative charges. Excluding these items, adjusted operating profit was $845 million, a 16 percent increase, which the filing attributes to higher gross profit from higher organic sales and gross supply chain productivity savings of approximately $135 million, partially offset by input cost inflation, supply chain investments, unfavorable currency effects and higher marketing, research and general expenses.
What is the 2024 Transformation Initiative and what does it cost?
Announced March 27, 2024, the initiative is intended to improve focus on growth and reduce the structural cost base by reorganizing into three new business segments, making corporate and regional overhead more efficient, and optimizing the global supply chain. Total costs are expected to be approximately $1.5 billion pre-tax, with cash costs about half that amount, mainly for workforce reductions. Workforce reductions are expected to be in the range of 4 to 5 percent. Total pre-tax savings are expected to be $3.0 billion in gross productivity and $200 million in selling, general and administrative expenses. The transition to the new structure is expected by the end of 2024, and the initiative by the end of 2026.
How did the business segments perform in the quarter?
Personal Care net sales were $2.7 billion, consistent with the prior year, with operating profit of $540 million, up 14 percent. Consumer Tissue net sales were $1.5 billion, down 4 percent, with operating profit of $245 million, up 23 percent. K-C Professional net sales were $841 million, down 5 percent, with operating profit of $186 million, down 1 percent. Organic sales were flat for K-C Professional in the quarter and declined 2 percent for Consumer Tissue.
What significant events occurred after the quarter ended?
On July 1, 2024, Kimberly-Clark completed the sale of its personal protective equipment business within K-C Professional for $640 million, subject to certain post-closing adjustments. The business includes Kimtech and KleenGuard branded products. The assets have been reclassified to Other current assets as of June 30, 2024, and the company expects to recognize a gain in Other (income) and expense, net in the third quarter of 2024.
How is the company's liquidity and capital position?
Cash provided by operations was $1.5 billion for the six months ended June 30, 2024, compared with $1.4 billion a year earlier. Capital spending was $352 million for the six months. Total debt was $8.0 billion at June 30, 2024 and December 31, 2023. The company maintains a $2.0 billion revolving credit facility expiring in June 2028 and a $750 million revolving credit facility expiring in May 2025, both currently unused. The company believes its cash generation and debt capacity are adequate to fund its working capital, transformation payments, capital spending, pension contributions and dividends for the foreseeable future.
06—Continue