Colgate-Palmolive(US:CL)2025-08-01 12:32PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for Colgate-Palmolive Company, including income, balance sheet, and cash flow statements Condensed Consolidated Statements of Income Details net sales and income for Q2 and H1 2025, showing slight sales growth in Q2 and income growth across both periods Condensed Consolidated Statements of Income (Unaudited) | (In Millions Except Per Share) | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :---: | :---: | :---: | :---: | | | 2025 | 2024 | 2025 | 2024 | | Net sales | $5,110 | $5,058 | $10,021 | $10,124 | | Cost of sales | 2,041 | 1,992 | 3,965 | 4,019 | | Gross profit | 3,069 | 3,066 | 6,056 | 6,105 | | Selling, general and administrative expenses | 1,963 | 1,939 | 3,861 | 3,855 | | Operating profit | 1,080 | 1,092 | 2,156 | 2,139 | | Income before income taxes | 1,007 | 1,010 | 1,959 | 1,977 | | Net income attributable to Colgate-Palmolive Company | $743 | $731 | $1,433 | $1,414 | | Earnings per common share, basic | $0.92 | $0.89 | $1.77 | $1.72 | | Earnings per common share, diluted | $0.91 | $0.89 | $1.76 | $1.71 | Condensed Consolidated Balance Sheets Presents the company's financial position as of June 30, 2025, showing increases in total assets, liabilities, and equity Condensed Consolidated Balance Sheets (Unaudited) | (In Millions) | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | Total current assets | $5,996 | $5,317 | | Property, plant and equipment, net | 4,529 | 4,422 | | Goodwill | 3,696 | 3,272 | | Total assets | $17,470 | $16,046 | | Total current liabilities | $6,775 | $5,759 | | Long-term debt | 7,144 | 7,289 | | Total liabilities | $16,418 | $15,502 | | Total equity | $1,052 | $544 | | Total liabilities and equity | $17,470 | $16,046 | Condensed Consolidated Statements of Cash Flows Summarizes cash flows for H1 2025, noting decreased operating cash, increased investing cash use, and reduced financing cash use Condensed Consolidated Statements of Cash Flows (Unaudited) | (In Millions) | Six Months Ended June 30, | | :--- | :---: | :---: | | | 2025 | 2024 | | Net cash provided by (used in) operations | $1,484 | $1,671 | | Net cash provided by (used in) investing activities | ($560) | ($304) | | Net cash provided by (used in) financing activities | ($867) | ($1,206) | | Effect of exchange rate changes on Cash and cash equivalents | $62 | ($17) | | Net increase (decrease) in Cash and cash equivalents | $119 | $144 | | Cash and cash equivalents at beginning of the period | $1,096 | $966 | | Cash and cash equivalents at end of the period | $1,215 | $1,110 | Notes to Condensed Consolidated Financial Statements Provides detailed information on accounting policies, acquisitions, restructuring, legal contingencies, and tax matters, including the Prime100 acquisition - On April 30, 2025, the Company acquired Care TopCo Pty Ltd, owner of the Prime100 pet food business, for approximately $301 million in cash. This acquisition provides an entry into the fresh pet food category in Australia for the Hill's Pet Nutrition segment40 - On July 31, 2025, the Board approved a new three-year Productivity Program expected to incur pre-tax charges of $200 to $300 million. The program aims to align organizational structure, optimize the supply chain, and reduce overhead costs44 - The company is involved in several legal contingencies, including Brazilian tax matters (approx. $108 million and $26 million at issue), Talcum powder litigation (384 cases pending), and an ERISA matter which has been settled in principle62666874 - The effective income tax rate for Q2 2025 was 23.2%, down from 24.1% in Q2 2024. The company is evaluating the impact of the new "One Big Beautiful Bill Act" (OBBBA) tax legislation101102 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q2 and H1 2025 performance, covering sales, profitability, and cash flow across product segments and geographies Executive Overview and Outlook Outlines the company's two product segments, anticipates continued macroeconomic challenges, and details strategies including a new Productivity Program - The company operates in two product segments: Oral, Personal and Home Care; and Pet Nutrition. Approximately 45% of Net Sales come from emerging markets109110 - A new three-year "Productivity Program" was approved on July 31, 2025, with projected pre-tax charges of $200 to $300 million to drive future growth and support the 2030 strategy120 - The company expects continued challenges from inflation, high interest rates, and foreign currency volatility. Tariffs are estimated to add approximately $75 million in incremental gross costs in 2025124125 Results of Operations - Three Months Ended June 30, 2025 Analyzes Q2 2025 performance, highlighting 1.0% net sales growth, a 70 basis point decrease in non-GAAP gross profit margin, and a 1% increase in non-GAAP diluted EPS Q2 2025 Net Sales Growth vs. Q2 2024 | Segment | Net Sales Growth (GAAP) | Organic Sales Growth (Non-GAAP) | | :--- | :---: | :---: | | Total Oral, Personal and Home Care | 0.2% | 1.7% | | Pet Nutrition | 3.8% | 2.0% | | Total Company | 1.0% | 1.8% | Q2 2025 vs. Q2 2024 Profitability (Non-GAAP) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :---: | :---: | :---: | | Gross Profit Margin | 60.1% | 60.8% | (70) bps | | Operating Profit | $1,089M | $1,118M | (3)% | | Operating Profit Margin | 21.3% | 22.1% | (80) bps | | Diluted EPS | $0.92 | $0.91 | +1% | - The decrease in non-GAAP Gross Profit Margin was primarily driven by significantly higher raw and packaging material costs (420 bps), partially offset by cost savings (250 bps) and higher pricing (80 bps)141 Results of Operations - Six Months Ended June 30, 2025 Reviews H1 2025 performance, noting a 1.0% decrease in net sales, flat non-GAAP gross profit margin, and a 3% increase in non-GAAP diluted EPS YTD 2025 Net Sales Growth vs. YTD 2024 | Segment | Net Sales Growth (GAAP) | Organic Sales Growth (Non-GAAP) | | :--- | :---: | :---: | | Total Oral, Personal and Home Care | (2.0)% | 1.3% | | Pet Nutrition | 2.6% | 2.5% | | Total Company | (1.0)% | 1.6% | YTD 2025 vs. YTD 2024 Profitability (Non-GAAP) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :---: | :---: | :---: | | Gross Profit Margin | 60.4% | 60.4% | 0 bps | | Operating Profit | $2,181M | $2,202M | (1)% | | Operating Profit Margin | 21.8% | 21.8% | 0 bps | | Diluted EPS | $1.83 | $1.78 | +3% | - Non-GAAP Gross Profit Margin was flat year-over-year, as significantly higher raw and packaging material costs (340 bps) were offset by cost savings (230 bps), higher pricing (70 bps), and favorable mix (30 bps)186 Liquidity and Capital Resources Examines liquidity and capital, noting an 11% decrease in operating cash flow, increased total debt, and a higher quarterly dividend - Net cash provided by operations decreased 11% to $1,484 million in the first six months of 2025, compared to $1,671 million in the same period of 2024225 - In April 2025, the Company issued $500 million of five-year Senior Notes at a fixed coupon rate of 4.20%230 - The quarterly common stock dividend was increased to $0.52 per share from $0.50 per share, effective in the second quarter of 2025233 Item 3. Quantitative and Qualitative Disclosures About Market Risk Reports no material changes in market risk disclosures concerning foreign currency, interest rate, commodity price, and credit exposures - There have been no material changes in market risk disclosures since the last Annual Report on Form 10-K241 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with IT system upgrades not materially impacting internal controls - The CEO and CFO concluded that the Company's disclosure controls and procedures are effective as of June 30, 2025243 - The company is upgrading its enterprise IT system and transitioning to the cloud, but this is not expected to materially affect internal control over financial reporting244 PART II. OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 10 of the Condensed Consolidated Financial Statements for detailed information on legal matters - For information on legal proceedings, the report refers to Note 10, Contingencies to the Condensed Consolidated Financial Statements248 Item 1A. Risk Factors States no material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2024 Annual Report on Form 10-K249 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details the new $5 billion share repurchase program authorized in March 2025 and Q2 2025 repurchase activity - A new $5 billion share repurchase program (the "2025 Program") was authorized on March 20, 2025251 Share Repurchase Activity for Q2 2025 | Month | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining (in millions) | | :--- | :---: | :---: | :---: | | April 2025 | 621,081 | $92.49 | $4,917 | | May 2025 | 722,695 | $90.45 | $4,852 | | June 2025 | 1,216,973 | $89.83 | $4,744 | | Total Q2 | 2,560,749 | $90.65 | $4,744 | Item 5. Other Information Reports the Chief Legal Officer's Rule 10b5-1 trading plan for up to 6,000 shares, with no other similar arrangements by directors or officers - The Chief Legal Officer and Secretary, Jennifer M. Daniels, entered into a Rule 10b5-1 trading plan on May 1, 2025, for the sale of up to 6,000 shares256