Kimberly-Clark (KMB) Q2 2024 Prepared Remarks earnings summary

Executive summary

• Q2 2024 net sales were $5.0 billion, down 2% year-over-year, but organic sales grew 4–5% driven by innovation, volume, and pricing actions.

• Adjusted operating profit grew 16% in Q2 and 15% in the first half; adjusted EPS rose 19% in Q2 and 20% in the first half year-over-year.

• Net income attributable to the company in Q2 was $544 million, up from $102 million a year ago.

• Transformation initiatives included supply chain integration, portfolio streamlining, and a new operating model set to launch October 1, 2024.

• Raised 2024 earnings outlook, expecting mid-single-digit organic net sales growth and mid-to-high teens constant-currency adjusted EPS growth.

Financial highlights

• Q2 adjusted operating profit: $845 million, up from $727 million in Q2 2023; Q2 adjusted EPS: $1.96, up from $1.65.

• Year-to-date sales were $10.2 billion, down 1%, with organic sales up 5% and adjusted operating profit up 15%.

• Gross margin improved to 36.0% reported and 36.9% adjusted, up 290 basis points year-over-year.

• Delivered $1.1 billion in adjusted free cash flow in the first half, on track for at least $2 billion in 2024.

• Cash conversion cycle improved to -6.8 days in Q2, over six days better than Q2 2023.

Outlook and guidance

• Expect mid-single-digit organic net sales growth for 2024, with reported net sales negatively impacted by 400–700 bps from currency and 120–180 bps from divestitures.

• Adjusted operating profit and EPS now expected to grow at a mid- to high-teens rate on a constant-currency basis.

• 2024 Transformation Initiative targets $3.0 billion in gross productivity savings and $200 million in SG&A savings by 2026, with $1.5 billion in pre-tax costs.

• Free cash flow target for 2024 set at $2 billion+; $1.1 billion achieved year-to-date.

• Full-year capital spending anticipated at approximately $800 million.