Net Sales +7%; Organic
Sales +7%; Diluted Net EPS $1.36, +11%; Core EPS $1.37,
+22%
RAISES SALES, EARNINGS
AND ADJUSTED FREE CASH FLOW PRODUCTIVITY GUIDANCE
The Procter & Gamble Company (NYSE:PG) reported first
quarter fiscal year 2020 net sales of $17.8 billion, an increase of
seven percent versus the prior year. Excluding the net impacts of
foreign exchange, acquisitions and divestitures, organic sales also
increased seven percent. Diluted net earnings per share were $1.36,
up 11% versus the prior year. Core earnings per share increased 22%
to $1.37. Currency-neutral core EPS increased 24% versus the prior
year.
Operating cash flow was $4.2 billion for the quarter. Adjusted
free cash flow productivity was 91%. The Company returned $4.9
billion of cash to shareholders via $1.9 billion of dividend
payments and $3 billion of common stock repurchases.
“We delivered strong top-line growth, profit margin expansion
and cash productivity in the first quarter, enabling us to increase
our outlook for fiscal year results,” said David Taylor, Chairman,
President and Chief Executive Officer. “We will continue executing
our strategies of superiority, productivity, constructive
disruption and improving P&G’s organization and culture to
deliver balanced top-line and bottom-line growth along with strong
cash generation in a challenging competitive and macroeconomic
environment.”
July - September Quarter Discussion
Net sales in the first quarter of fiscal year 2020 were $17.8
billion, up seven percent versus the prior year. Unfavorable
foreign exchange negatively impacted sales by two percentage points
for the quarter. Excluding the impacts of foreign exchange,
acquisitions and divestitures, organic sales also increased seven
percent driven by a four percent increase in organic shipment
volume, one percentage point of increased pricing and two
percentage points of positive mix impact. Positive mix was driven
by the disproportionate growth of the Personal Health Care and Skin
and Personal Care categories and strong growth in Japan all of
which have higher than average selling prices. Sales growth in
Japan was largely driven by an increase in retailer inventories
ahead of a planned VAT increase in October 2019, contributing
approximately 40 basis points to overall Company growth in the
quarter, which primarily benefitted the Beauty, Fabric and Home
Care and Baby businesses.
July - September
2019
Volume
Foreign
Exchange
Price
Mix
Other (1)
Net
Sales (2)
Organic
Volume
Organic
Sales
Net Sales
Drivers (1)
Beauty
3%
(2)%
3%
4%
—%
8%
3%
10%
Grooming
(1)%
(2)%
1%
—%
—%
(2)%
(1)%
1%
Health Care
17%
(2)%
1%
2%
2%
20%
6%
9%
Fabric & Home Care
6%
(1)%
—%
1%
—%
6%
6%
8%
Baby, Feminine & Family Care
2%
(1)%
2%
1%
—%
4%
2%
5%
Total P&G
5%
(2)%
1%
2%
1%
7%
4%
7%
(1)
Other includes the sales mix
impact from acquisitions and divestitures and rounding impacts
necessary to reconcile volume to net sales.
(2)
Net sales percentage changes are
approximations based on quantitative formulas that are consistently
applied.
- Beauty segment organic sales increased ten percent versus year
ago. Skin and Personal Care organic sales increased mid-teens
driven by premium innovation, positive product mix, primarily from
the disproportionate growth of the super-premium SK-II brand and
China Olay, and increased pricing. Hair Care organic sales
increased mid-single digits driven by innovation and
devaluation-driven price increases.
- Grooming segment organic sales increased one percent versus
year ago. Shave Care organic sales was unchanged as the benefit of
devaluation-driven price increases were offset by related unit
volume declines and competitive activity. Appliances organic sales
increased low single digits as increased pricing and positive mix
impact from the disproportionate growth of premium products were
partially offset by volume decreases due to category contraction
and retailer inventory reduction.
- Health Care segment organic sales increased nine percent. Oral
Care organic sales increased high single digits due to volume
growth and positive mix driven by premium toothpaste and toothbrush
innovation and increased pricing. Personal Health Care organic
sales increased double digits primarily due to innovation, higher
retailer inventory build versus the base period for the cough and
cold season, increased pricing and positive mix due to strong
growth in North America which has higher than average selling
prices. Personal Health Care all-in sales increased over 50% versus
the base period due to the addition of the Merck OTC business.
- Fabric and Home Care segment organic sales increased eight
percent for the quarter. Fabric Care organic sales increased high
single digits driven by innovation and market growth. Home Care
organic sales increased high single digits driven by innovation and
devaluation related price increases.
- Baby, Feminine and Family Care segment organic sales increased
five percent versus year ago. Baby Care organic sales increased low
single digits due to innovation, devaluation related price
increases and positive mix from premium innovation, partially
offset by competitive activity and category contraction in some
markets. Feminine Care organic sales increased high single digits
driven by innovation, positive product mix due to the
disproportionate growth of premium products and increased pricing.
Family Care organic sales increased high single digits due to
innovation and increased pricing.
Diluted net earnings per share were $1.36, an 11% increase
versus the prior year, as the increase in net sales and operating
margin were partially offset by the base period gain on the
dissolution of the PGT Healthcare partnership. Core earnings per
share were $1.37, a 22% increase versus the prior year, driven
primarily by the increase in net sales and operating margin.
Currency-neutral core earnings per share increased 24% for the
quarter.
Reported gross margin increased 180 basis points, including
approximately 10 basis points of higher non-core restructuring
charges versus the prior year. Core gross margin increased 190
basis points versus the prior year, including 10 basis points of
negative foreign exchange impacts. On a currency-neutral basis,
core gross margin increased 200 basis points driven by 90 basis
points of productivity savings, 70 basis points of pricing benefit,
40 basis points help from commodity cost decreases and 50 basis
points of fixed cost leverage and other benefits, partially offset
by 50 basis points of unfavorable product mix.
Selling, general and administrative expense (SG&A) as a
percentage of sales decreased 100 basis points on a reported basis
versus the prior year, including a 30 basis-point help from a
year-on-year decrease in non-core restructuring charges. Core
SG&A as a percentage of sales decreased 70 basis points versus
the prior year, including 10 basis points of positive foreign
exchange impacts. On a currency-neutral basis, core SG&A as a
percentage of sales decreased 60 basis points as 180 basis points
of sales leverage benefit and 70 basis points of savings from
overhead and marketing expenses were partially offset by 120 basis
points of marketing investments and 70 basis points of inflation
and other impacts, including increased digital investments and
incentive compensation costs.
Operating profit margin increased 280 basis points versus the
base period on a reported basis including approximately 20 basis
points help from lower non-core restructuring charges. Core and
currency-neutral operating margin increased 260 basis points
including total productivity cost savings of 160 basis points for
the quarter. Foreign exchange was neutral to operating margin for
the quarter.
Fiscal Year 2020 Guidance
The Company raised its outlook for fiscal 2020 all-in sales
growth from a range of three to four percent to a range of three to
five percent growth versus the prior fiscal year. This estimate
includes a modest negative impact from foreign exchange, largely
offset by a modest positive impact from acquisitions and
divestitures. The Company increased its guidance for organic sales
growth from a range of three to four percent to a range of three to
five percent growth.
The Company increased its guidance range for fiscal 2020 all-in
GAAP diluted net earnings per share growth to 225% to 243%, noting
that the comparison period is significantly depressed by the
Gillette Shave Care impairment adjustments in fiscal 2019. P&G
raised its fiscal 2020 guidance for core earnings per share growth
from a range of four to nine percent to a range of five to ten
percent growth versus fiscal 2019.
The Company is not able to reconcile its forward-looking
non-GAAP cash flow measure without unreasonable efforts because the
Company cannot predict the timing and amounts of discrete cash
items, such as acquisitions, divestitures, or impairments, which
could significantly impact GAAP results. The Company increased its
estimate for fiscal 2020 adjusted free cash flow productivity from
90% to 95%.
The Company expects to pay over $7.5 billion in dividends and
repurchase $6 billion to $8 billion of common shares in fiscal
2020.
Forward-Looking Statements
Certain statements in this release or presentation, other than
purely historical information, including estimates, projections,
statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements
are based, are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements generally
are identified by the words “believe,” “project,” “expect,”
“anticipate,” “estimate,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,”
“will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and
assumptions, which are subject to risks and uncertainties that may
cause results to differ materially from those expressed or implied
in the forward-looking statements. We undertake no obligation to
update or revise publicly any forward-looking statements, whether
because of new information, future events or otherwise.
Risks and uncertainties to which our forward-looking statements
are subject include, without limitation: (1) the ability to
successfully manage global financial risks, including foreign
currency fluctuations, currency exchange or pricing controls and
localized volatility; (2) the ability to successfully manage local,
regional or global economic volatility, including reduced market
growth rates, and to generate sufficient income and cash flow to
allow the Company to affect the expected share repurchases and
dividend payments; (3) the ability to manage disruptions in credit
markets or changes to our credit rating; (4) the ability to
maintain key manufacturing and supply arrangements (including
execution of supply chain optimizations and sole supplier and sole
manufacturing plant arrangements) and to manage disruption of
business due to factors outside of our control, such as natural
disasters and acts of war or terrorism; (5) the ability to
successfully manage cost fluctuations and pressures, including
prices of commodities and raw materials, and costs of labor,
transportation, energy, pension and healthcare; (6) the ability to
stay on the leading edge of innovation, obtain necessary
intellectual property protections and successfully respond to
changing consumer habits and technological advances attained by,
and patents granted to, competitors; (7) the ability to compete
with our local and global competitors in new and existing sales
channels, including by successfully responding to competitive
factors such as prices, promotional incentives and trade terms for
products; (8) the ability to manage and maintain key customer
relationships; (9) the ability to protect our reputation and brand
equity by successfully managing real or perceived issues, including
concerns about safety, quality, ingredients, efficacy or similar
matters that may arise; (10) the ability to successfully manage the
financial, legal, reputational and operational risk associated with
third-party relationships, such as our suppliers, contract
manufacturers, distributors, contractors and external business
partners; (11) the ability to rely on and maintain key company and
third party information technology systems, networks and services,
and maintain the security and functionality of such systems,
networks and services and the data contained therein; (12) the
ability to successfully manage uncertainties related to changing
political conditions (including the United Kingdom’s decision to
leave the European Union) and potential implications such as
exchange rate fluctuations and market contraction; (13) the ability
to successfully manage regulatory and legal requirements and
matters (including, without limitation, those laws and regulations
involving product liability, product and packaging composition,
intellectual property, antitrust, data protection, tax,
environmental, and accounting and financial reporting) and to
resolve pending matters within current estimates; (14) the ability
to manage changes in applicable tax laws and regulations including
maintaining our intended tax treatment of divestiture transactions;
(15) the ability to successfully manage our ongoing acquisition,
divestiture and joint venture activities, in each case to achieve
the Company’s overall business strategy and financial objectives,
without impacting the delivery of base business objectives; and
(16) the ability to successfully achieve productivity improvements
and cost savings and manage ongoing organizational changes, while
successfully identifying, developing and retaining key employees,
including in key growth markets where the availability of skilled
or experienced employees may be limited. For additional information
concerning factors that could cause actual results and events to
differ materially from those projected herein, please refer to our
most recent 10-K, 10-Q and 8-K reports.
About Procter & Gamble
P&G serves consumers around the world with one of the
strongest portfolios of trusted, quality, leadership brands,
including Always®, Ambi Pur®, Ariel®, Bounty®, Charmin®, Crest®,
Dawn®, Downy®, Fairy®, Febreze®, Gain®, Gillette®, Head &
Shoulders®, Lenor®, Olay®, Oral-B®, Pampers®, Pantene®, SK-II®,
Tide®, Vicks®, and Whisper®. The P&G community includes
operations in approximately 70 countries worldwide. Please visit
http://www.pg.com for the latest news and information about P&G
and its brands.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except
Per Share Amounts)
Consolidated Earnings
Information
Three Months Ended September
30
2019
2018
% Chg
NET SALES
$
17,798
$
16,690
7%
Cost of products sold
8,723
8,484
3%
GROSS PROFIT
9,075
8,206
11%
Selling, general and administrative
expense
4,785
4,652
3%
OPERATING INCOME
4,290
3,554
21%
Interest expense
(108
)
(129
)
(16)%
Interest income
58
53
9%
Other non-operating income, net
103
462
(78)%
EARNINGS BEFORE INCOME TAXES
4,343
3,940
10%
Income taxes
726
729
—%
NET EARNINGS
3,617
3,211
13%
Less: Net earnings attributable to
noncontrolling interests
24
12
100%
NET EARNINGS ATTRIBUTABLE TO PROCTER
& GAMBLE
$
3,593
$
3,199
12%
EFFECTIVE TAX RATE
16.7
%
18.5
%
NET EARNINGS PER SHARE (1)
Basic
$
1.41
$
1.26
12%
Diluted
$
1.36
$
1.22
11%
DIVIDENDS PER COMMON SHARE
$
0.7459
$
0.7172
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,647.5
2,612.1
COMPARISONS AS A % OF NET SALES
Basis Pt Chg
Gross profit
51.0%
49.2%
180
Selling, general and administrative
expense
26.9%
27.9%
(100)
Operating income
24.1%
21.3%
280
Earnings before income taxes
24.4%
23.6%
80
Net earnings
20.3%
19.2%
110
Net earnings attributable to Procter &
Gamble
20.2%
19.2%
100
(1)
Basic net earnings per share and
Diluted net earnings per share are calculated on Net earnings
attributable to Procter & Gamble.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES (Amounts in Millions) Consolidated
Earnings Information
Three Months Ended September
30, 2019
Net Sales
% Change
Versus Year
Ago
Earnings/(Loss) Before
Income Taxes
% Change
Versus Year
Ago
Net Earnings
% Change
Versus Year
Ago
Beauty
$3,552
8%
$1,092
15%
$874
15%
Grooming
1,531
(2)%
426
2%
353
4%
Health Care
2,221
20%
540
23%
401
21%
Fabric & Home Care
5,832
6%
1,338
17%
1,028
17%
Baby, Feminine & Family Care
4,567
4%
1,134
26%
871
26%
Corporate
95
N/A
(187)
N/A
90
N/A
Total Company
$17,798
7%
$4,343
10%
$3,617
13%
Three Months Ended September
30, 2019
Volume
Organic
Volume
Foreign
Exchange
Price
Mix
Other (1)
Net Sales (2)
Beauty
3%
3%
(2)%
3%
4%
—%
8%
Grooming
(1)%
(1)%
(2)%
1%
—%
—%
(2)%
Health Care
17%
6%
(2)%
1%
2%
2%
20%
Fabric & Home Care
6%
6%
(1)%
—%
1%
—%
6%
Baby, Feminine & Family Care
2%
2%
(1)%
2%
1%
—%
4%
Total Company
5%
4%
(2)%
1%
2%
1%
7%
(1)
Other includes the sales mix
impact from acquisitions and divestitures and rounding impacts
necessary to reconcile volume to net sales.
(2)
Net sales percentage changes are
approximations based on quantitative formulas that are consistently
applied.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per
Share Amounts)
Consolidated Statements of
Cash Flows
Three Months Ended September
30
Amounts in
millions
2019
2018
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
$
4,239
$
2,569
OPERATING ACTIVITIES
Net earnings
3,617
3,211
Depreciation and amortization
723
643
Share-based compensation expense
110
102
Deferred income taxes
(586
)
34
Gain on sale of assets
(2
)
(361
)
Changes in:
Accounts receivable
(261
)
(475
)
Inventories
(549
)
(494
)
Accounts payable, accrued and other
liabilities
1,151
933
Other operating assets and liabilities
(35
)
(84
)
Other
1
58
TOTAL OPERATING ACTIVITIES
4,169
3,567
INVESTING ACTIVITIES
Capital expenditures
(1,079
)
(1,080
)
Proceeds from asset sales
6
9
Acquisitions, net of cash acquired
—
(237
)
Purchases of short-term investments
—
(158
)
Proceeds from sales and maturities of
investment securities
6,151
649
Change in other investments
1
(48
)
TOTAL INVESTING ACTIVITIES
5,079
(865
)
FINANCING ACTIVITIES
Dividends to shareholders
(1,932
)
(1,853
)
Change in short-term debt
(61
)
24
Treasury stock purchases
(3,000
)
(1,252
)
Impact of stock options and other
875
425
TOTAL FINANCING ACTIVITIES
(4,118
)
(2,656
)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(65
)
(70
)
CHANGE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
5,065
(24
)
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
9,304
$
2,545
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per
Share Amounts)
Condensed Consolidated Balance
Sheets
September 30,
2019
June 30, 2019
Cash and cash equivalents
$
9,304
$
4,239
Available-for-sale investment
securities
—
6,048
Accounts receivable
5,143
4,951
Inventories
5,465
5,017
Prepaid expenses and other current
assets
2,013
2,218
TOTAL CURRENT ASSETS
21,925
22,473
Property, plant and equipment, net
20,901
21,271
Goodwill
39,605
40,273
Trademarks and other intangible assets,
net
24,002
24,215
Other noncurrent assets
7,625
6,863
TOTAL ASSETS
$
114,058
$
115,095
Accounts payable
$
10,951
$
11,260
Accrued and other liabilities
9,950
9,054
Debt due within one year
9,352
9,697
TOTAL CURRENT LIABILITIES
30,253
30,011
Long-term debt
20,161
20,395
Deferred income taxes
6,325
6,899
Other noncurrent liabilities
10,335
10,211
TOTAL LIABILITIES
67,074
67,516
TOTAL SHAREHOLDERS' EQUITY
46,984
47,579
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
114,058
$
115,095
The Procter & Gamble Company
Exhibit 1: Non-GAAP Measures
In accordance with the SEC's Regulation G, the following
provides definitions of the non-GAAP measures used in Procter &
Gamble's October 22, 2019 earnings release and the reconciliation
to the most closely related GAAP measure. We believe that these
measures provide useful perspective on underlying business results
and trends (i.e., trends excluding non-recurring or unusual items)
and provide a supplemental measure of year-on-year results. The
non-GAAP measures described below are used by management in making
operating decisions, allocating financial resources and for
business strategy purposes. These measures may be useful to
investors as they provide supplemental information about business
performance and provide investors a view of our business results
through the eyes of management. These measures are also used to
evaluate senior management and are a factor in determining their
at-risk compensation. These non-GAAP measures are not intended to
be considered by the user in place of the related GAAP measure, but
rather as supplemental information to our business results. These
non-GAAP measures may not be the same as similar measures used by
other companies due to possible differences in method and in the
items or events being adjusted.
The Core earnings measures included in the following
reconciliation tables refer to the equivalent GAAP measures
adjusted as applicable for the following items:
Incremental Restructuring: The
Company has had and continues to have an ongoing level of
restructuring activities. Such activities have resulted in ongoing
annual restructuring related charges of approximately $250 - $500
million before tax. In 2012, the Company began a $10 billion
strategic productivity and cost savings initiative that included
incremental restructuring activities. In 2017, we communicated
details of an additional multi-year productivity and cost savings
plan. This results in incremental restructuring charges to
accelerate productivity efforts and cost savings. The adjustment to
Core earnings includes only the restructuring costs above what we
believe are the normal recurring level of restructuring costs.
Gain on Dissolution of PGT Healthcare
Partnership: The Company finalized the dissolution of our
PGT Healthcare partnership, a venture between the Company and Teva
Pharmaceuticals Industries, Ltd. (Teva) in the OTC consumer
healthcare business, in the quarter ended September 30, 2018. The
transaction was accounted for as a sale of the Teva portion of the
PGT business; the Company recognized an after-tax gain on the
dissolution of $353 million.
We do not view the above items to be part of our sustainable
results and their exclusion from Core earnings measures provides a
more comparable measure of year-on-year results. These items are
also excluded when evaluating senior management in determining
their at-risk compensation.
Organic sales growth: Organic sales
growth is a non-GAAP measure of sales growth excluding the impacts
of acquisitions and divestitures and foreign exchange from
year-over-year comparisons. We believe this measure provides
investors with a supplemental understanding of underlying sales
trends by providing sales growth on a consistent basis. This
measure is used in assessing achievement of management goals for
at-risk compensation.
Core operating profit margin: Core
operating profit margin is a measure of the Company's operating
margin adjusted for items as indicated. Management believes this
non-GAAP measure provides a supplemental perspective to the
Company’s operating efficiency over time.
Core gross margin: Core gross
margin is a measure of the Company's gross margin adjusted for
items as indicated. Management believes this non-GAAP measure
provides a supplemental perspective to the Company’s operating
efficiency over time.
Core selling, general and administrative
(SG&A) expense as a percentage of net sales: Core
SG&A expense as a percentage of net sales is a measure of the
Company's selling, general and administrative expenses adjusted for
items as indicated. Management believes this non-GAAP measure
provides a supplemental perspective to the Company’s operating
efficiency over time.
Core EPS and currency-neutral Core
EPS: Core earnings per share, or Core EPS, is a measure of
the Company's diluted net earnings per share adjusted as indicated.
Currency-neutral Core EPS is a measure of the Company's Core EPS
excluding the incremental current year impact of foreign exchange.
Management views these non-GAAP measures as useful supplemental
measures of Company performance over time. These measures are also
used when evaluating senior management in determining their at-risk
compensation.
Adjusted free cash flow: Adjusted
free cash flow is defined as operating cash flow less capital
spending and excluding payments for the transitional tax resulting
from the comprehensive U.S. legislation commonly referred to as the
Tax Cuts and Jobs Act enacted in December 2017 (the U.S. Tax Act).
Adjusted free cash flow represents the cash that the Company is
able to generate after taking into account planned maintenance and
asset expansion. Management views adjusted free cash flow as an
important measure because it is one factor used in determining the
amount of cash available for dividends, share repurchases,
acquisitions and other discretionary investments.
Adjusted free cash flow
productivity: Adjusted free cash flow productivity is
defined as the ratio of adjusted free cash flow to net earnings.
Management views adjusted free cash flow productivity as a useful
measure to help investors understand P&G’s ability to generate
cash. Adjusted free cash flow productivity is used by management in
making operating decisions, allocating financial resources and for
budget planning purposes. This measure is also used in assessing
the achievement of management goals for at-risk compensation. The
Company's long-term target is to generate annual adjusted free cash
flow productivity at or above 90 percent.
THE PROCTER & GAMBLE COMPANY
AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts)
Reconciliation of Non-GAAP Measures
Three Months Ended September
30, 2019
AS REPORTED
(GAAP)
INCREMENTAL
RESTRUCTURING
ROUNDING
NON-GAAP
(CORE)
COST OF PRODUCTS SOLD
$
8,723
$
(52
)
$
—
$
8,671
GROSS PROFIT
9,075
52
—
9,127
GROSS MARGIN
51.0
%
0.3
%
—
%
51.3
%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE
4,785
22
—
4,807
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
26.9
%
0.1
%
—
%
27.0
%
OPERATING INCOME
4,290
30
—
4,320
OPERATING PROFIT MARGIN
24.1
%
0.2
%
—
%
24.3
%
NET EARNINGS ATTRIBUTABLE TO
P&G
3,593
31
(1
)
3,623
Core EPS
DILUTED NET EARNINGS PER COMMON SHARE
(1)
$
1.36
$
0.01
$
—
$
1.37
CURRENCY IMPACT TO CORE
EARNINGS
0.02
CURRENCY-NEUTRAL CORE EPS
$
1.39
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,647.5
COMMON SHARES OUTSTANDING - SEPTEMBER
30, 2019
2,493.8
(1) Diluted net earnings per share are calculated on Net
earnings attributable to Procter & Gamble.
CHANGE VERSUS YEAR AGO
CORE GROSS MARGIN
190
BPS
CORE SELLING GENERAL &
ADMINISTRATIVE EXPENSE AS A % OF NET SALES
(70
)
BPS
CORE OPERATING PROFIT MARGIN
260
BPS
CORE EFFECTIVE TAX RATE
(340
)
BPS
CORE EPS
22
%
CURRENCY-NEUTRAL CORE EPS
24
%
THE PROCTER & GAMBLE COMPANY
AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts)
Reconciliation of Non-GAAP Measures
Three Months Ended September
30, 2018
AS REPORTED
(GAAP)
INCREMENTAL
RESTRUCTURING
GAIN ON
DISSOLUTION
OF PGT
PARTNERSHIP
ROUNDING
NON-GAAP
(CORE)
COST OF PRODUCTS SOLD
$
8,484
$
(46
)
—
$
—
$
8,438
GROSS PROFIT
8,206
46
—
—
8,252
GROSS MARGIN
49.2
%
0.3
%
—
%
(0.1
)%
49.4
%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE
4,652
(28
)
—
1
4,625
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
27.9
%
(0.2
)%
—
%
—
%
27.7
%
OPERATING INCOME
3,554
74
—
(1
)
3,627
OPERATING PROFIT MARGIN
21.3
%
0.4
%
—
%
—
%
21.7
%
NET EARNINGS ATTRIBUTABLE TO
P&G
3,199
69
(353
)
—
2,915
Core EPS:
DILUTED NET EARNINGS PER COMMON SHARE
(1)
$
1.22
$
0.03
(0.14
)
$
0.01
$
1.12
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,612.1
(1) Diluted net earnings per share are calculated on Net earnings
attributable to Procter & Gamble.
Organic sales growth:
July -
September 2019
Net
Sales Growth
Foreign
Exchange
Impact
Acquisition &
Divestiture
Impact/Other (1)
Organic
Sales
Growth
Beauty
8%
2%
—%
10%
Grooming
(2)%
2%
1%
1%
Health Care
20%
2%
(13)%
9%
Fabric & Home Care
6%
1%
1%
8%
Baby, Feminine & Family Care
4%
1%
—%
5%
Total P&G
7%
2%
(2)%
7%
Total
P&G
Net
Sales Growth
Combined
Foreign Exchange &
Acquisition/Divestiture Impact/Other (1)
Organic
Sales Growth
FY 2020
(Estimate)
+3% to +5%
-%
+3% to +5%
(1)
Includes rounding impacts
necessary to reconcile net sales to organic sales.
Core EPS:
Total
P&G
Diluted
EPS
Growth
Impact
of Incremental Non-Core Items (1)
Core EPS
Growth
FY 2020
(Estimate)
+225% to +243%
(220)% to (233)%
+5% to +10%
(1)
Includes the gain on the
dissolution of the PGT Healthcare partnership and Shave Care
impairment in fiscal 2019 and year-over-year changes in incremental
non-core restructuring charges.
Adjusted free cash flow (dollar amounts in
millions):
Three Months Ended September
30, 2019
Operating Cash Flow
Capital
Spending
U.S. Tax
Act Payments
Adjusted
Free Cash Flow
$4,169
$(1,079)
$215
$3,305
Adjusted free cash flow productivity
(dollar amounts in millions):
Three Months Ended September
30, 2019
Adjusted
Free Cash Flow
Net
Earnings
Free
Cash Flow Productivity
$3,305
$3,617
91%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191022005570/en/
P&G Media Contacts:
Damon Jones, 513.983.0190 Jennifer Corso, 513.983.2570
P&G Investor Relations
Contact: John Chevalier, 513.983.9974
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