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Mar 31, 2023
Colgate Q1 2023 Earnings Report
Net sales and organic sales increased, while GAAP EPS declined due to pressure from raw and packaging material costs.
Key Takeaways
Colgate-Palmolive reported an 8.5% increase in net sales and a 10.0% increase in organic sales for Q1 2023. GAAP EPS decreased by 32% to $0.45, while Base Business EPS declined by 1% to $0.73. The company's strategy to accelerate growth is showing positive momentum, with improvements in net and organic sales growth, gross profit margin, advertising spending, operating profit, and free cash flow.
Net sales increased by 8.5% and organic sales grew by 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.
Revenue by Segment
Forward Guidance
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.
Positive Outlook
- Net sales growth expected to be 3% to 6% including the benefit from acquisitions of pet food businesses.
- Organic sales growth expected to be 4% to 6%.
- Gross profit margin expansion is still expected on a GAAP basis.
- Increased advertising investment is still expected on a GAAP basis.
- Double-digit earnings-per-share growth is still expected on a GAAP basis.
Challenges Ahead
- Low-single-digit negative impact from foreign exchange is expected.
- Uncertainty in the global operating environment, particularly in the back half of the year.
Revenue & Expenses
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Historical Earnings Impact
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Avg. Return Before/After Earnings
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