01—Abstract
Summary
Summary of the 10-Q filed October 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation reported third-quarter 2024 net sales of $4,952 milliona, down 4% from $5,132 million a year earlier, with organic sales up 1%.
Operating profit rose to $1,154 millionb from $774 million, and Net Income Attributable to Kimberly-Clark Corporation increased to $907 million from $587 million, or $2.69 diluted earnings per share versus $1.73. The filing attributes the higher reported profit largely to a $566 million pre-tax gain on the July 1, 2024 sale of the personal protective equipment (PPE) business, partly offset by $124 million of pre-tax 2024 Transformation Initiative charges and a $97 million pre-tax intangible asset impairment. Excluding these items, adjusted operating profit was $810 million, and adjusted diluted earnings per share were $1.83, a 5% increase.
For the nine months ended September 30, 2024, net sales were $15,130 millionc, down 2% from $15,461 million, while organic sales grew 4%. Diluted earnings per share were $6.21 versus $3.70, and adjusted diluted earnings per share were $5.80, a 15% increase. Cash provided by operations was $2.4 billion, compared with $2.3 billion a year earlier.
The company repurchased 5.4 million shares for $752 milliond and paid $1,220 million in cash dividends, while total debt declined to $7.5 billion from $8.0 billion at year-end 2023. The 2024 Transformation Initiative, announced March 27, 2024, is expected to cost approximately $1.5 billion pre-tax, with about half in cash, primarily for workforce reductions of 4% to 5%. The company expects to complete the transition to its new organizational structure by the end of 2024 and the full initiative by the end of 2026.
Full-year capital spending is anticipated to be approximately $800 million. The filing also discloses a $97 million impairment of Softex and Thinx intangible assets in the Personal Care segment, citing weaker distributor relationship assumptions and changed consumer shopping behavior.
02—Key points
Key Highlights
- Q3 2024 net sales were $4,952 million, down 4% from $5,132 million, with organic sales up 1%; for the nine months, net sales were $15,130 million, down 2%, with organic sales up 4%.
- Q3 2024 operating profit was $1,154 million versus $774 million, boosted by a $566 million pre-tax gain on the PPE business sale; adjusted operating profit was $810 million.
- Diluted EPS was $2.69 for Q3 2024 versus $1.73, and $6.21 for the nine months versus $3.70; adjusted diluted EPS was $1.83 for Q3 (up 5%) and $5.80 for the nine months (up 15%).
- The PPE business sale closed July 1, 2024 for total consideration of $635 million, including Kimtech and KleenGuard products within K-C Professional.
- The 2024 Transformation Initiative is expected to cost about $1.5 billion pre-tax, with targeted total pre-tax savings of $3.0 billion in gross productivity and $200 million in SG&A, to be completed by the end of 2026.
- Cash provided by operations was $2.4 billion for the nine months; the company repurchased $752 million of common stock and reduced total debt to $7.5 billion from $8.0 billion.
- A $97 million pre-tax impairment of Softex and Thinx intangible assets was recorded in Q3 2024 within the Personal Care segment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Kimberly-Clark kept $0.22.
- Revenue$4.14B100.0%
- Cost of revenue−$2.58B62.3%
- Gross profit$1.56B37.7%
- Operating costs−$538.0M13.0%
- Operating income$1.03B24.8%
- Interest, other & tax−$119.0M2.9%
- Net income$907.0M21.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 22, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $4.14B$5.13B | −19.3% |
| Cost of Revenue | $2.58B$3.29B | −21.7% |
| Gross Profit | $1.56B$1.84B | −14.9% |
| Operating Income | $1.03B$774.00M | +32.6% |
| Interest Expense | $67.00M$74.00M | −9.5% |
| Net Income | $907.00M$587.00M | +54.5% |
| EPS (Basic) | $2.70$1.74 | +55.2% |
| EPS (Diluted) | $2.69$1.73 | +55.5% |
| Shares Outstanding (Basic) | 335.70M338.10M | −0.7% |
| Shares Outstanding (Diluted) | 337.20M338.90M | −0.5% |
05—Questions
Frequently Asked Questions
Why did reported operating profit more than rise in the third quarter?
Reported operating profit rose to $1,154 million from $774 million, largely because of a $566 million pre-tax gain recognized in Other (income) and expense, net on the sale of the PPE business. This was partly offset by $124 million of 2024 Transformation Initiative charges and a $97 million impairment of intangible assets. Adjusted operating profit, which excludes these items, was $810 million.
How did the business segments perform in the nine months ended September 30, 2024?
Personal Care net sales were $8,040 million, down 1%, with operating profit of $1,567 million, up 7%. Consumer Tissue net sales were $4,624 million, down 3%, with operating profit of $800 million, up 13%. K-C Professional net sales were $2,431 million, down 6%, with operating profit of $535 million, up 4%.
What are the expected costs and timing of the 2024 Transformation Initiative?
Total costs are anticipated to be approximately $1.5 billion pre-tax, with cash costs expected to be about half of that amount, primarily related to workforce reductions of 4% to 5%. The transition to the new organizational structure is expected by the end of 2024, and the initiative is expected to be completed by the end of 2026. Through September 30, 2024, the company recorded $359 million of pre-tax charges for the nine months.
How much did the company return to shareholders and how is its debt position?
During the nine months ended September 30, 2024, the company repurchased 5.4 million shares for $752 million and paid $1,220 million in cash dividends. Total debt was $7.5 billion as of September 30, 2024, down from $8.0 billion as of December 31, 2023. The company maintains a $2.0 billion revolving credit facility expiring in June 2028 and a $750 million facility expiring in May 2025, both currently unused.
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