Kimberly-Clark (KMB) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $5.0 billion, down 4% year-over-year, with 1% organic sales growth driven by pricing actions and productivity gains.

• Adjusted EPS rose 5% to $1.83, and net income attributable to the company was $907 million, up 55% year-over-year; reported EPS was $2.69, including a gain from the PPE business sale.

• Operating profit rose 49% to $1.2 billion, driven by transformation gains and the PPE business sale, with adjusted operating profit up 12% year-to-date.

• The 2024 Transformation Initiative aims to reorganize segments, reduce costs, and optimize the supply chain, with expected pre-tax costs of $1.5 billion and workforce reductions of 4–5%.

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

Financial highlights

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

• Nine-month net sales were $15.1 billion, down 2% year-over-year; organic sales grew 4%.

• Adjusted operating profit for Q3 and nine months increased 5% and 12%, respectively, versus prior year.

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

• 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 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.