Kimberly-Clark (KMB) Q3 2024 earnings summary

Executive summary

• Achieved 1% organic sales growth in Q3 2024 and 4% year-to-date, with net sales for Q3 at $5.0 billion, down 4% year-over-year, driven by pricing actions and productivity gains.

• Adjusted operating profit rose 5% in Q3 and 12% year-to-date, with adjusted EPS up 5% to $1.83 in Q3 and $5.80 year-to-date.

• Operating profit surged 49% to $1.2 billion in Q3, aided by a $565 million gain from the PPE business sale and transformation initiatives.

• Transformation Initiative launched to reorganize segments, reduce costs, and optimize supply chain, with expected pre-tax costs of $1.5 billion and workforce reductions of 4–5%.

• New operating model and digital infrastructure implemented October 1, 2024, focusing on agility, competitiveness, and portfolio optimization.

Financial highlights

• Q3 gross margin was 36.0% (reported) and 36.7% (adjusted), up 90 bps year-over-year; year-to-date gross margin averaged 37%.

• Q3 net income attributable to Kimberly-Clark was $907 million, up 55% year-over-year; diluted EPS was $2.69 (reported), $1.83 (adjusted).

• Year-to-date net sales were $15.1 billion, down 2%, but organic sales grew 4%.

• Cash provided by operations for the nine months was $2.4 billion, up from $2.3 billion last year.

• On track to exceed $2B in free cash flow for 2024.

Outlook and guidance

• Organic net sales growth for 2024 expected at 3–4%, revised from mid-single digit, due to retail inventory headwinds.

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

• Reported results to be negatively impacted by ~400 bps from currency translation and ~120 bps from divestitures.

• Transformation Initiative expected to deliver $3.0 billion in gross productivity savings and $200 million in SG&A savings by 2026.

• Full-year capital spending anticipated at approximately $800 million, including transformation-related investments.