Kimberly-Clark(US:KMB)2025-08-01 15:16PART I – FINANCIAL INFORMATION Item 1. Financial Statements Kimberly-Clark Corporation's financial statements for the quarter ended June 30, 2025, reflect a decline in net sales and net income attributable to the corporation, despite an increase in comprehensive income driven by positive currency translation adjustments. The company reclassified its International Family Care and Professional (IFP) Business as discontinued operations due to a planned joint venture, impacting segment reporting and financial presentation. The ongoing 2024 Transformation Initiative incurred significant charges. The balance sheet shows increased total assets and stockholders' equity, while cash provided by operations decreased, and cash used for financing increased due to debt repayments and share repurchases. The notes detail accounting policies, fair value measurements, EPS calculations, and derivative strategies Consolidated Income Statement Highlights (Unaudited) | Metric (In millions, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net Sales | $4,163 | $4,231 | $8,217 | $8,557 | | Gross Profit | $1,456 | $1,594 | $2,965 | $3,280 | | Operating Profit | $592 | $539 | $1,223 | $1,254 | | Net Income Attributable to K-C Corp | $509 | $544 | $1,076 | $1,191 | | Diluted Earnings per Share | $1.53 | $1.61 | $3.23 | $3.52 | Consolidated Comprehensive Income Highlights (Unaudited) | Metric (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net Income | $512 | $553 | $1,085 | $1,211 | | Unrealized currency translation adjustments | $224 | $(48) | $372 | $(197) | | Comprehensive Income Attributable to K-C Corp | $636 | $566 | $1,334 | $1,141 | Consolidated Balance Sheet Highlights (Unaudited) | Metric (In millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total Assets | $16,771 | $16,546 | | Total Stockholders' Equity | $1,403 | $975 | Consolidated Cash Flow Highlights (Unaudited) | Metric (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Cash Provided by Operations | $1,097 | $1,459 | | Cash Used for Investing | $(312) | $(376) | | Cash Used for Financing | $(1,183) | $(998) | | Change in Cash and Cash Equivalents | $(364) | $70 | - The IFP Business is reclassified as discontinued operations effective Q2 2025 due to a planned joint venture with Suzano S.A., where Kimberly-Clark will sell a 51% interest for approximately $1.7 billion and retain 49%. The transaction is expected to close in mid-2026171830 - Cumulative pre-tax charges for the 2024 Transformation Initiative were $656 million ($511 million after-tax) through June 30, 2025. Total costs are anticipated to be approximately $1.5 billion pre-tax by the end of 202625 - Income from discontinued operations, net of income taxes, was $68 million for the three months ended June 30, 2025, and $171 million for the six months ended June 30, 2025, including $33 million in separation costs for the three-month period31 - The company settled a qui tam legal matter related to its former health care business in Q2 2025, with the payment not expected to materially affect its financial position, results of operations, or cash flows77 Condensed Consolidated Statements of Income Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Cash Flows Notes to the Interim Condensed Consolidated Financial Statements Note 1. Accounting Policies Note 2. 2024 Transformation Initiative Note 3. Discontinued Operations Note 4. Fair Value Information Note 5. Earnings Per Share Note 6. Stockholders' Equity Note 7. Objectives and Strategies for Using Derivatives Note 8. Segment Reporting Note 9. Supplemental Balance Sheet Data Note 10. Legal Matters Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Kimberly-Clark's MD&A highlights a decline in consolidated net sales and net income for the three and six months ended June 30, 2025, primarily due to divestitures, business exits, and unfavorable currency, partially offset by organic sales growth. The company is undergoing a 2024 Transformation Initiative with significant costs and is reclassifying its IFP Business as discontinued operations. Segment results show mixed performance, with North America experiencing organic growth but declining operating profit, and International Personal Care facing significant operating profit declines. Liquidity remains adequate, with cash from operations decreasing but capital spending increasing, and the company anticipates favorable tax impacts from recent legislation - Kimberly-Clark operates globally with manufacturing in 30 countries and products sold in over 175, under brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex, and Depend. The company estimates incremental costs of new tariffs to be approximately $170 million in 2025, mostly impacting the North America segment. Operations in Russia continue with essential items, but face high input costs, supply chain complexities, and reduced demand due to the war in Ukraine798086 - The IFP Business has been reclassified as discontinued operations due to a joint venture with Suzano S.A., where Kimberly-Clark will sell a 51% interest for approximately $1.7 billion and retain 49%82 - The 2024 Transformation Initiative aims to accelerate innovation, optimize margin structure through supply chain improvements, and enhance organizational agility. It is expected to be completed by the end of 2026, with workforce reductions of 4% to 5% and total pre-tax costs of approximately $1.5 billion. Cumulative pre-tax charges were $656 million through June 30, 20258485 Consolidated Financial Performance (Continuing Operations) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (3M) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (6M) | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------ | :------------------------------- | :------------------------------- | :------------ | | Net Sales | $4,163 | $4,231 | (1.6)% | $8,217 | $8,557 | (4.0)% | | Organic Sales Growth | 3.9% | N/A | N/A | 1.2% | N/A | N/A | | Gross Profit | $1,456 | $1,594 | (8.7)% | $2,965 | $3,280 | (9.6)% | | Adjusted Gross Margin | 36.9% | 38.8% | (180bps) | 37.7% | 38.9% | (120bps) | | Operating Profit | $592 | $539 | 9.8% | $1,223 | $1,254 | (2.5)% | | Adjusted Operating Profit | $713 | $729 | (2.2)% | $1,419 | $1,489 | (4.7)% | | Diluted EPS (Continuing Operations) | $1.33 | $1.35 | (1.5)% | $2.72 | $2.96 | (8.1)% | | Adjusted Diluted EPS | $1.63 | $1.70 | (4.1)% | $3.25 | $3.41 | (4.7)% | | Effective Tax Rate | 22.6% | 13.0% | 9.6% | 23.1% | 18.8% | 4.3% | Segment Net Sales Growth (Percent Change) | Segment | Period | Volume | Mix/Other | Net Price | Divestitures and Business Exits | Currency Translation | Total | Organic | | :------------------- | :----- | :----- | :-------- | :-------- | :------------------------------ | :------------------- | :---- | :------ | | NA | 3M | 5.2 | (0.7) | (0.4) | (5.7) | (0.2) | (1.9) | 4.3 | | NA | 6M | 2.6 | (0.3) | (0.5) | (4.3) | (0.3) | (2.9) | 1.8 | | IPC | 3M | 4.8 | 1.2 | (2.7) | (0.3) | (2.6) | 0.4 | 3.3 | | IPC | 6M | 2.0 | 0.7 | (2.6) | (0.3) | (4.3) | (4.5) | 0.1 | Segment Operating Profit Change (Percent Change) | Segment | Period | Volume | Net Price | Input Costs | Other Manufacturing Costs | Currency Translation | Other | Total | | :------------------- | :----- | :----- | :-------- | :---------- | :------------------------ | :------------------- | :---- | :---- | | NA | 3M | 3.3 | (1.8) | (4.9) | (1.8) | (0.1) | 1.3 | (4.0) | | NA | 6M | 0.2 | (2.1) | (3.6) | 0.0 | (0.3) | 4.5 | (1.3) | | IPC | 3M | 15.2 | (18.4) | (20.8) | 7.6 | (1.1) | 4.6 | (12.9)| | IPC | 6M | 5.4 | (16.5) | (14.4) | 9.7 | (3.1) | 2.2 | (16.7)| - Cash provided by operations was $1.1 billion for the six months ended June 30, 2025, down from $1.5 billion in the prior year. Capital spending was $401 million, with full-year capital spending anticipated to be $1.0 to $1.2 billion. Cash used for financing increased to $1.2 billion, primarily due to debt repayments. The company repurchased 915 thousand shares of common stock for $120 million111112113 - Total debt from continuing operations was $7.2 billion as of June 30, 2025. The company maintains $2.75 billion in unused revolving credit facilities. The recently enacted One Big Beautiful Bill Act (OBBBA) is expected to have favorable cash tax impacts, and the impact of Pillar 2 global minimum tax rules is deemed immaterial115116117 Introduction Overview of Business and Recent Developments Consolidated Results Segment Results Liquidity and Capital Resources Information Concerning Forward-Looking Statements Summary of Non-GAAP Financial Measures Item 4. Controls and Procedures Management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective. No material changes in internal control over financial reporting occurred during the quarter covered by this report - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025133 - No material changes in internal control over financial reporting occurred during the quarter133 PART II – OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference the legal proceedings discussed in Note 10 to the financial statements, which primarily relate to the former health care business, Avanos Medical, Inc., including a recently settled qui tam matter and an ongoing Department of Justice investigation - Legal proceedings are detailed in Note 10 of the financial statements, concerning the former health care business, Avanos Medical, Inc134 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Kimberly-Clark repurchased 457,891 shares of common stock during the three months ended June 30, 2025, at an average price of $130.14 per share, under its publicly announced 2021 share repurchase program. As of June 30, 2025, 30,954,753 shares remain available for repurchase under this program Share Repurchases During Three Months Ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs | | :------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | April 1 to April 30 | 135,211 | $138.42 | 8,722,567 | 31,277,433 | | May 1 to May 31 | — | — | 8,722,567 | 31,277,433 | | June 1 to June 30 | 322,680 | $130.14 | 9,045,247 | 30,954,753 | | Total | 457,891 | | | | - Share repurchases were made pursuant to the 2021 Program, which allows for the repurchase of 40 million shares in an amount not to exceed $5 billion. As of June 30, 2025, 30,954,753 shares remain available for repurchase137 Item 5. Other Information No new Rule 10b5-1(c) trading arrangements or other plans for the purchase or sale of shares by directors and officers were adopted or terminated during the three months ended June 30, 2025 - No new or terminated Rule 10b5-1(c) trading arrangements or other plans for share purchases/sales by directors and officers occurred during the three months ended June 30, 2025138 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including various award agreements under the 2021 Equity Participation Plan, the Equity and Asset Purchase Agreement for the IFP Transaction, and certifications from the CEO and CFO as required by SEC rules - Exhibits include award agreements for restricted stock units under the 2021 Equity Participation Plan, the Equity and Asset Purchase Agreement for the IFP Transaction, and CEO/CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 1350)139140141142 Signatures The report is duly signed on behalf of Kimberly-Clark Corporation by Andrew Scribner, Vice President and Controller (Principal Accounting Officer), on August 1, 2025, affirming compliance with the Securities Exchange Act of 1934 requirements - The report was signed by Andrew Scribner, Vice President and Controller (Principal Accounting Officer) on August 1, 2025144