NEW YORK--(BUSINESS WIRE)--Apr. 28, 2023-- Colgate-Palmolive Company (NYSE:CL):

• Net sales increased 8.5%; Organic sales* increased 10.0% with growth in every division and in all four categories
• GAAP EPS declined 32% to $0.45; Base Business EPS* declined 1% to $0.73
• GAAP Gross profit margin and Base Business Gross profit margin* both decreased 160 basis points to 56.9%, including a negative 90 basis point impact from private label sales resulting from the previously disclosed acquisitions of pet food businesses
• Net cash provided by operations was $735 million for the first three months of 2023
• Colgate’s leadership in toothpaste continued with its global market share at 40.2% year to date
• Colgate’s leadership in manual toothbrushes continued with its global market share at 30.6% year to date
• The Company updated its financial guidance for full year 2023

Colgate-Palmolive Company (NYSE:CL) today reported results for first quarter 2023. Noel Wallace, Chairman, President and Chief Executive Officer, commented on the Base Business first quarter results, “Our first quarter results provide further proof that our strategy to accelerate growth is working. We began 2023 with positive momentum, with sequential improvement in net and organic sales growth, gross profit margin, advertising spending, operating profit and free cash flow. Net sales increased 8.5%, and organic sales grew 10.0% with growth in every division and in all four of our categories.

“Despite continued pressure from raw and packaging material costs during the quarter, gross profit margin improved sequentially versus fourth quarter 2022, which helped fund a 14% increase in advertising in support of our pricing and robust innovation across all categories. We expect to drive further gross margin improvement in the balance of the year through continued strong pricing and the benefits from funding-the-growth and other productivity initiatives.

“Looking ahead, while we still see uncertainty in the global operating environment, particularly in the back half of the year, we feel well positioned to deliver on our increased 2023 sales and earnings growth expectations and drive value for our stakeholders.”

Full Year 2023 Guidance

Based on current spot rates:

• The Company now expects net sales growth to be 3% to 6% including the benefit from our acquisitions of pet food businesses and a low-single-digit negative impact from foreign exchange.
• The Company now expects organic sales growth to be 4% to 6%.
• On a GAAP basis, the Company still expects gross profit margin expansion, increased advertising investment and double-digit earnings-per-share growth.
• On a non-GAAP (Base Business) basis, the Company still expects gross profit margin expansion and increased advertising investment and now expects mid-single-digit earnings-per-share growth.

Divisional Performance

The following are comments about divisional performance for first quarter 2023 versus the year ago period. See attached "Table 5 - Geographic Sales Analysis Percentage Changes" and "Table 4 - Segment Information" for additional information on net sales and operating profit by division.

North America (20% of Company Sales)

• Organic sales growth in oral care and personal care was partially offset by organic sales declines in home care, which was impacted by the previously announced voluntary recall of certain Fabuloso multi-purpose cleaners.
• In the United States, Colgate's share of the toothpaste market is 34.3% year to date and its share of the manual toothbrush market is 42.0% year to date.
• The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing, lower overhead expenses and cost savings from the Company’s funding-the-growth initiatives, partially offset by significantly higher raw and packaging material costs and increased advertising investment.

Latin America (23% of Company Sales)

• Organic sales growth was led by Mexico, Argentina, Brazil and Colombia.
• The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing and cost savings from the Company’s funding-the-growth initiatives, partially offset by significantly higher raw and packaging material costs and increased advertising investment.

Europe (14% of Company Sales)

• Organic sales growth was led by Germany, Poland, the Netherlands, France and the United Kingdom, partially offset by organic sales declines in the Filorga business, primarily related to the travel retail business and China.
• The decrease in Operating profit as a percentage of Net sales was primarily due to significantly higher raw and packaging material costs, increased advertising investment and higher overhead expenses, partially offset by higher pricing and cost savings from the Company’s funding-the-growth initiatives.

Asia Pacific (15% of Company Sales)

• Organic sales growth was led by the Greater China region, India, Australia and the Philippines.
• The decrease in Operating profit as a percentage of Net sales was primarily due to significantly higher raw and packaging material costs, partially offset by cost savings from the Company's funding-the-growth initiatives, higher pricing, lower overhead expenses and decreased advertising investment.

Africa/Eurasia (6% of Company Sales)

• Organic sales growth was led by Turkiye and South Africa.
• The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing, cost savings from the Company’s funding-the-growth initiatives, lower overhead expenses and costs incurred in the first quarter of 2022 due to the war in Ukraine, partially offset by significantly higher raw and packaging material costs, which included foreign exchange transaction costs, and increased advertising investment.

Hill's Pet Nutrition (22% of Company Sales)

• Organic sales growth was led by the United States and Europe.
• The decrease in Operating profit as a percentage of Net sales was primarily due to significantly higher raw and packaging material costs, unfavorable mix primarily due to private label sales resulting from the previously disclosed acquisitions of pet food businesses and increased advertising investment, partially offset by higher pricing, lower overhead expenses and cost savings from the Company’s funding-the-growth initiatives.

Prepared Materials and Webcast Information

At approximately 7:00 a.m. ET today, Colgate will post its prepared materials (in PDF format) regarding first quarter results to the Investor Center section of its website at https://investor.colgatepalmolive.com/events-and-presentations.

At 8:30 a.m. ET today, Colgate will host a conference call regarding first quarter results. To access this call as a webcast, please go to Colgate’s website at www.colgatepalmolive.com.

About Colgate-Palmolive

Colgate-Palmolive Company is a caring, innovative growth company that is reimagining a healthier future for all people, their pets and our planet. Focused on Oral Care, Personal Care, Home Care and Pet Nutrition, we sell our products in more than 200 countries and territories under brands such as Colgate, Palmolive, elmex, hello, meridol, Sorriso, Tom’s of Maine, EltaMD, Filorga, Irish Spring, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet. The Company is recognized for its leadership and innovation in promoting sustainability and community wellbeing, including its achievements in decreasing plastic waste and promoting recyclability, saving water, conserving natural resources and improving children’s oral health through the Colgate Bright Smiles, Bright Futures program, which has reached more than 1.6 billion children since 1991. For more information about Colgate’s global business and how the Company is building a future to smile about, visit www.colgatepalmolive.com. CL-E

Market Share Information

Management uses market share information as a key indicator to monitor business health and performance. References to market share in this press release are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).

Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce and certain club retailers and discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party vendors it uses to provide data are reliable, but it has not verified the accuracy or completeness of the data or any assumptions underlying the data. In addition, market share information reported by the Company may be different from market share information reported by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.

Cautionary Statement on Forward-Looking Statements

This press release and the related webcast may contain forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (SEC) in its rules, regulations and releases) that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin levels, earnings per share levels, financial goals, the impact of foreign exchange, the impact of COVID-19, the impact of the war in Ukraine, cost-reduction plans (including the 2022 Global Productivity Initiative), tax rates, interest rates, new product introductions, digital capabilities, commercial investment levels, acquisitions, divestitures, share repurchases or legal or tax proceedings, among other matters. These statements are made on the basis of the Company’s views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of these statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. For more information about factors that could impact the Company’s business and cause actual results to differ materially from forward-looking statements, investors should refer to the Company’s filings with the SEC (including, but not limited to, the information set forth under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent filings with the SEC). Copies of these filings may be obtained upon request from the Company’s Investor Relations Department or on the Company’s website at www.colgatepalmolive.com.

Non-GAAP Financial Measures

The following provides definitions and other information regarding the non-GAAP financial measures used in this press release and the related prepared materials and webcast, which may not be the same as or comparable to similar measures presented by other companies:

• Base Business: Base Business refers to non-GAAP measures of operating results that exclude certain items. Base Business operating results exclude, as applicable, charges related to an ERISA litigation matter, product recall costs and charges related to the 2022 Global Productivity Initiative.
• Organic sales growth: Net sales growth excluding the impact of foreign exchange, acquisitions and divestments.
• Free cash flow before dividends: Net cash provided by operations less Capital expenditures.

This press release discusses Net sales growth (GAAP) and Organic sales growth (non-GAAP). Management believes the organic sales growth measure provides investors and analysts with useful supplemental information regarding the Company’s underlying sales trends by presenting sales growth excluding the external factor of foreign exchange as well as the impact from acquisitions and divestments. See “Geographic Sales Analysis Percentage Changes” for the three months ended March 31, 2023 versus 2022 included with this release for a comparison of Organic sales growth to Net sales growth in accordance with GAAP.

Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, Effective income tax rate, Net income attributable to Colgate-Palmolive Company and Diluted earnings per common share are disclosed on both an as reported (GAAP) and Base Business (non-GAAP) basis. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company’s normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, acquisition-related costs, gains and losses from certain divestitures and certain other unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company’s business performance, and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company’s underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. See “Non-GAAP Reconciliations” for three months ended March 31, 2023 and 2022 included with this release for a reconciliation of these financial measures to the related GAAP measures.

The Company uses these financial measures internally in its budgeting process, to evaluate segment and overall operating performance and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company’s underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

As management uses free cash flow before dividends to evaluate the Company’s ability to satisfy current and future obligations, pay dividends, fund future business opportunities and repurchase stock, the Company believes that it provides useful information to investors. Free cash flow before dividends is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. See “Condensed Consolidated Statements of Cash Flows” for the three months ended March 31, 2023 and 2022 for a comparison of free cash flow before dividends to Net cash provided by operations as reported in accordance with GAAP.

(See attached tables for first quarter results.)

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Source: Colgate-Palmolive Company