Kimberly-Clark(KMB) - 2024 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited interim condensed consolidated financial statements for Kimberly-Clark Corporation for the three and nine months ended September 30, 2024, and 2023, including statements of income, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes Condensed Consolidated Statements of Income Net Sales decreased to $4,952 million in Q3 2024, while Operating Profit significantly increased to $1,154 million, leading to higher Net Income Attributable to Kimberly-Clark and Diluted EPS Consolidated Statements of Income Highlights (in millions, except per share amounts) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $4,952 | $5,132 | $15,130 | $15,461 | | Gross Profit | $1,784 | $1,838 | $5,505 | $5,295 | | Operating Profit | $1,154 | $774 | $2,662 | $1,674 | | Net Income Attributable to K-C | $907 | $587 | $2,098 | $1,255 | | Diluted EPS | $2.69 | $1.73 | $6.21 | $3.70 | Condensed Consolidated Balance Sheets Total Assets slightly decreased to $17,165 million as of September 30, 2024, while Total Liabilities decreased, and Total Stockholders' Equity increased to $1,444 million Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $5,847 | $5,703 | | Total Assets | $17,165 | $17,344 | | Total Current Liabilities | $7,066 | $6,930 | | Long-Term Debt | $6,882 | $7,417 | | Total Stockholders' Equity | $1,444 | $1,068 | Condensed Consolidated Statements of Cash Flows Cash provided by operations increased to $2,417 million for the nine months ended September 30, 2024, with investing activities providing cash and financing activities using more cash due to repurchases and debt repayments Cash Flow Summary (in millions) | Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Cash Provided by Operations | $2,417 | $2,327 | | Cash Provided by (Used for) Investing | $94 | $(266) | | Cash Used for Financing | $(2,480) | $(1,620) | | Change in Cash and Cash Equivalents | $18 | $387 | | Cash and Cash Equivalents - End of Period | $1,111 | $814 | Notes to the Unaudited Interim Condensed Consolidated Financial Statements Notes detail the 2024 Transformation Initiative charges, the PPE business sale gain, intangible asset impairment, and segment operating profit increases across Personal Care, Consumer Tissue, and K-C Professional - Announced the 2024 Transformation Initiative, expected to be completed by the end of 2026 with total anticipated pre-tax costs of approximately $1.5 billion. For the nine months ended Sep 30, 2024, total charges were $359 million pre-tax[29][30][31] - Completed the sale of the personal protective equipment (PPE) business on July 1, 2024, for $635 million, recognizing a pre-tax gain of $566 million[35] - Recognized a pre-tax impairment charge of $97 million in Q3 2024 on intangible assets related to the Softex and Thinx businesses within the Personal Care segment[38] Segment Operating Profit (in millions) | Segment | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | % Change | | :--- | :--- | :--- | :--- | | Personal Care | $1,567 | $1,461 | +7% | | Consumer Tissue | $800 | $707 | +13% | | K-C Professional | $535 | $514 | +4% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 2024 net sales decrease to $5.0 billion, offset by 1% organic growth, and an increase in adjusted operating profit, detailing the Transformation Initiative, PPE sale impact, and segment performance Overview of Third Quarter 2024 Results Q3 2024 net sales decreased 4% to $5.0 billion, with 1% organic growth, while operating profit rose to $1.2 billion and diluted EPS increased to $2.69, impacted by special items - Net sales of $5.0 billion decreased 4% compared to the prior year[81] - Organic sales grew 1% year-over-year[81] - Diluted earnings per share were $2.69, compared to $1.73 in the prior year, with results impacted by transformation charges, a gain on the sale of the PPE business, and impairment charges[81][79] Analysis of Consolidated Results Q3 2024 consolidated net sales decreased 4% due to currency and divestitures, despite 1% organic growth, with adjusted operating profit increasing 5% driven by supply chain productivity savings Percent Change in Net Sales - Q3 2024 | Component | Consolidated | North America | D&E Markets | Developed Markets | | :--- | :--- | :--- | :--- | :--- | | Organic | 1% | (1)% | 8% | (2)% | | Currency Translation | (3)% | 0% | (12)% | (1)% | | Divestitures/Exits | (1)% | (2)% | (1)% | (1)% | | Total | (4)% | (3)% | (4)% | (4)% | - Adjusted operating profit for Q3 2024 was $810 million, a 5% increase from the prior year, and $2.6 billion for the nine-month period, a 12% increase[96] - Results benefited from gross supply chain productivity savings of approximately $130 million in Q3 and $385 million for the nine months ended Sep 30, 2024[96] Results by Business Segments Q3 2024 saw net sales declines across all segments, but nine-month operating profit increased for Personal Care (+7%), Consumer Tissue (+13%), and K-C Professional (+4%) Q3 2024 Net Sales and Operating Profit by Segment | Segment | Net Sales (in millions) | % Change (YoY) | Organic % Change | Operating Profit (in millions) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Personal Care | $2,635 | -2% | +3% | $482 | -4% | | Consumer Tissue | $1,539 | -2% | -1% | $265 | -1% | | K-C Professional | $767 | -10% | -1% | $161 | -4% | - For the nine months ended Sep 30, 2024, operating profit increased 7% in Personal Care, 13% in Consumer Tissue, and 4% in K-C Professional compared to the prior year[103][108][114] Liquidity and Capital Resources Cash from operations was $2.4 billion for the first nine months of 2024, with investing activities providing cash, financing activities using $2.5 billion, and total debt decreasing to $7.5 billion - Cash provided by operations was $2.4 billion for the nine months ended Sep 30, 2024[115] - Repurchased 5.4 million shares of common stock for a total cost of $752 million during the first nine months of 2024[117] - Total debt stood at $7.5 billion as of September 30, 2024, down from $8.0 billion at the end of 2023[118] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[126] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[126] PART II – OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details Q3 2024 share repurchases of over 4.1 million shares under the 2021 Program, with average prices ranging from $139.77 to $143.75 per share Share Repurchases for Q3 2024 | Period (2024) | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July | 723,792 | $139.77 | | August | 1,864,673 | $141.56 | | September | 1,591,765 | $143.75 | - Share repurchases were made pursuant to the 2021 Program, which authorizes the repurchase of up to 40 million shares not to exceed $5 billion[128] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans or other similar arrangements during the third quarter of 2024 - During the three months ended September 30, 2024, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or other similar arrangements[130] Item 6. Exhibits This section lists filed exhibits, including CEO and CFO certifications required by Sarbanes-Oxley and interactive data files in XBRL format - Lists required certifications from the Chief Executive Officer and Chief Financial Officer[132] - Includes XBRL instance documents and related taxonomy files for interactive data[132]