Business Wire | Jul 30, 2021 06:55AM EDT

P&G Announces Fourth Quarter and Fiscal Year 2021 Results

Jul. 30, 2021

CINCINNATI--(BUSINESS WIRE)--Jul. 30, 2021--The Procter & Gamble Company (NYSE:PG) announces fourth quarter and fiscal year 2021 results. David Taylor, Chairman, President and Chief Executive Officer said, "We delivered another year of strong results with balanced top and bottom-line growth and strong cash generation, exceeding each of our in-going targets. We built strong momentum prior to the pandemic and have strengthened our position further. As we look forward to fiscal 2022, we expect to continue to grow top-line and bottom-line and to deliver another year of strong cash return to shareholders despite a challenging cost and operating environment."

$ billions, except EPS

Fiscal Year

GAAP 2021 2020 % 2021 2020 % Change Non-GAAP* Change

Net $76.1 $71.0 7% Organic n/a n/a 6%Sales Sales

Diluted $5.50 $4.96 11% $5.66 $5.12 11%EPS Core EPS



$ billions, except EPS

Fourth Quarter

GAAP 2021 2020 % 2021 2020 % Change Non-GAAP* Change

Net $18.9 $17.7 7% Organic n/a n/a 4%Sales Sales

Diluted $1.13 $1.07 6% $1.13 $1.16 (3)%EPS Core EPS

* Please refer to Exhibit 1 - Non-GAAP Measures for the definition and reconciliation of these measures to the related GAAP measures.

Fiscal Year 2021 Results

The Company reported fiscal year 2021 net sales of $76.1 billion, an increase of seven percent versus the prior year. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased six percent, driven by a three percent increase in organic volume, a two percent impact from positive mix and one percent from increased pricing. Diluted net earnings per share were $5.50, an increase of 11% versus the prior year primarily due to the increase in net sales and an increase in operating margin. Core earnings per share and currency-neutral core EPS both increased 11% versus the prior year to $5.66.

The Company generated $18.4 billion of operating cash flow in fiscal 2021 with adjusted free cash flow productivity of 107%. The Company returned $19.3 billion of value to shareholders in fiscal 2021 through $8.3 billion in dividend payments and $11 billion of share repurchases.

April-June Quarter Results

The Company reported fourth quarter fiscal year 2021 net sales of $18.9 billion, an increase of seven percent versus the prior year. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased four percent. Diluted net earnings per share were $1.13, an increase of six percent versus the prior year reported EPS and a decrease of three percent versus the prior year Core earnings per share. Operating cash flow was $4.1 billion for the quarter. Free cash flow productivity was 117%.

April-June Quarter Discussion

Net sales in the fourth quarter of fiscal year 2021 were $18.9 billion, an increase of seven percent versus the prior year. Favorable foreign exchange had a three percentage point positive impact on sales for the quarter. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased four percent driven by a one percent increase in shipment volume, a one percent increase in pricing and positive mix impact of one percent. Positive mix was driven by the disproportionate growth of the Health Care segment and the Skin and Personal Care category, both of which have higher than company-average selling prices. The volume increase was driven by strong innovation, partially offset by the higher base period in certain markets and categories due to pandemic-related consumption increases.

* Please refer to Exhibit 1 - Non-GAAP Measures for the definition andreconciliation of these measures to the related GAAP measures.

Fiscal Year 2021 Results

The Company reported fiscal year 2021 net sales of $76.1 billion, an increase of seven percent versus the prior year. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased six percent, driven by a three percent increase in organic volume, a two percent impact from positive mix and one percent from increased pricing. Diluted net earnings per share were $5.50, an increase of 11% versus the prior year primarily due to the increase in net sales and an increase in operating margin. Core earnings per share and currency-neutral core EPS both increased 11% versus the prior year to $5.66.

The Company generated $18.4 billion of operating cash flow in fiscal 2021 with adjusted free cash flow productivity of 107%. The Company returned $19.3 billion of value to shareholders in fiscal 2021 through $8.3 billion in dividend payments and $11 billion of share repurchases.

April-June Quarter Results

The Company reported fourth quarter fiscal year 2021 net sales of $18.9 billion, an increase of seven percent versus the prior year. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased four percent. Diluted net earnings per share were $1.13, an increase of six percent versus the prior year reported EPS and a decrease of three percent versus the prior year Core earnings per share. Operating cash flow was $4.1 billion for the quarter. Free cash flow productivity was 117%.

April-June Quarter Discussion

Net sales in the fourth quarter of fiscal year 2021 were $18.9 billion, an increase of seven percent versus the prior year. Favorable foreign exchange had a three percentage point positive impact on sales for the quarter. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased four percent driven by a one percent increase in shipment volume, a one percent increase in pricing and positive mix impact of one percent. Positive mix was driven by the disproportionate growth of the Health Care segment and the Skin and Personal Care category, both of which have higher than company-average selling prices. The volume increase was driven by strong innovation, partially offset by the higher base period in certain markets and categories due to pandemic-related consumption increases.

April -June 2021 Foreign Organic Organic Volume Price Mix Other NetNet Exchange ^ (2) Sales Volume SalesSales Drivers^(1)

Beauty 1% 5% 4% 1% -% 11% 1% 6%

Grooming 4% 4% 2% -% -% 10% 4% 6%

Health 13% 4% 1% -% -% 18% 13% 14%Care

Fabric &Home 1% 3% -% 1% -% 5% 1% 2%Care

Baby,Feminine (3)% 3% 1% 1% (1)% 1% (3)% (1)%& FamilyCare

Total P& 1% 3% 1% 1% 1% 7% 1% 4%G

(1)

Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.

(2)

Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.

* Beauty segment organic sales increased six percent versus year ago. Skin and Personal Care organic sales increased double digits primarily driven by innovation, increased pricing and positive mix impact from the disproportionate growth of the super-premium SK-II brand, due to pandemic-related travel disruptions in the base period. Hair Care organic sales increased low single digits primarily due to increased pricing, partially offset by negative mix from growth in emerging markets. Higher current year volumes in certain markets due to pandemic related shutdowns in the base period were offset by lower volumes in North America due to the impact of pandemic-related inventory restocking in the base period. * Grooming segment organic sales increased six percent versus year ago. Shave Care organic sales increased mid-single digits due to innovation, pricing and increased volume versus a base period that was negatively impacted by pandemic-related consumption decreases. Appliances organic sales increased mid-single digits due to the positive mix impact from the launch of premium products and increased pricing partially offset by lower volumes due to a pandemic-related consumption increase in the base period. * Health Care segment organic sales increased 14% for the quarter. Oral Care organic sales increased mid-teens, primarily due to innovation, increased pricing, positive mix impacts from the disproportionate growth of premium products and, to a lesser extent, lower volumes in the base period due to pandemic related shutdowns. Personal Health Care organic sales increased mid-teens primarily due to innovation and price increases in some markets, partially offset by negative product mix due to the lower relative volumes of premium respiratory products. * Fabric and Home Care segment organic sales increased two percent for the quarter. Fabric Care organic sales increased mid-single digits driven by innovation and positive mix from the disproportionate growth of premium forms like fabric enhancer beads and laundry unit dose. Home Care organic sales decreased low single digits primarily due to unfavorable mix due to volume growth in emerging markets and lower volumes in North America and Western Europe due to pandemic-related consumption increases in the base period. * Baby, Feminine and Family Care segment organic sales decreased one percent versus year ago. Baby Care organic sales increased mid-single digits driven by positive mix impact from the disproportionate growth of premium diaper pant products, higher volumes due to pandemic-related consumption decreases in the base period and devaluation-related price increases. Feminine Care organic sales increased mid-single digits primarily driven by innovation, pandemic related shutdowns in certain regions in the base period and positive mix impact due to the disproportionate growth of premium products including adult incontinence. Family Care organic sales decreased double digits primarily due to lower volumes driven by pandemic-related consumption increases in the base period.

Diluted net earnings per share were $1.13 for the quarter, a six percent increase versus the prior year reported EPS due to a 4% increase in net earnings and a reduction in shares outstanding. The increase in net earnings was primarily driven by the increase in net sales partially offset by a reduction in operating margin. Diluted net EPS decreased three percent versus the prior year Core EPS due to a decrease in operating margin and incremental non-core restructuring charges in the base period, partially offset by the increase in net sales and the reduction in shares outstanding. Currency-neutral net EPS decreased four percent versus the prior year Core EPS.

Reported gross margin decreased 120 basis points versus prior year reported gross margin. Reported gross margin decreased 260 basis points versus the prior year core gross margin due to 140 basis points of non-core restructuring charges in the base period. Foreign exchange had no impact to gross margin. The decrease in gross margin versus the prior year core gross margin was driven by 210 basis points of unfavorable mix, 140 basis points of commodity cost increases, 80 basis points of higher freight costs and 60 basis points of reinvestments and other impacts. These higher costs were partially offset by 180 basis points of productivity savings (100 basis points net of freight cost increases) and 50 basis points of pricing benefit.

Selling, general and administrative expense (SG&A) as a percentage of sales decreased 20 basis points on a reported basis versus the prior year. SG&A as a percentage of sales decreased 30 basis points versus the prior year core SG&A due to approximately 10 basis points of lower non-core restructuring charges in the base period. Foreign exchange increased SG&A by approximately 20 basis points. On a currency-neutral basis, reported SG&A as a percentage of sales decreased approximately 60 basis points versus prior year core SG&A driven by 140 basis points of savings from overhead and marketing expenses, 100 basis points of cost leverage benefit from increased sales and 40 basis points of other benefits. These decreases were partially offset by 170 basis points of increased marketing investments, and 50 basis points of wage inflation, increased incentive compensation and other impacts.

Operating profit margin decreased 100 basis points versus the base period reported operating margin. Reported operating profit margin decreased 230 basis points versus the base period core operating margin due to approximately 130 basis points of non-core restructuring charges in the base period. Unfavorable foreign exchange negatively impacted operating margin by approximately 20 basis points. On a currency-neutral basis, reported operating margin decreased 210 basis points versus the prior year core operating margin. Operating margin included productivity cost savings of 320 basis points (240 basis points net of freight cost increases).

Fiscal Year 2022 Guidance

P&G expects fiscal year 2022 all-in sales growth in the range of two to four percent versus the prior fiscal year. Foreign exchange is expected to be neutral to modestly positive to all-in sales growth. The Company expects organic sales growth also in the range of two to four percent.

P&G expects fiscal 2022 GAAP diluted net earnings per share growth in the range of six to nine percent versus fiscal 2021 GAAP EPS of $5.50. Core earnings per share growth for fiscal 2022 is expected to be in the range of three to six percent versus fiscal 2021 core EPS of $5.66.

The Company said its current outlook estimates headwinds of approximately $1.9 billion after-tax from higher commodity costs and freight costs, partially offset by foreign exchange benefits of approximately $100 million after-tax. The combined impact of commodities, freight and foreign exchange is approximately a $0.70 per share headwind to fiscal year 2022 EPS, or a 12 percentage point headwind to EPS growth.

The Company is not able to reconcile its forward-looking non-GAAP cash flow and tax rate measures without unreasonable efforts because the Company cannot predict the timing and amounts of discrete items, such as acquisitions, divestitures, or impairments, which could significantly impact GAAP results.

P&G said it expects core effective tax rate in the range of 18% to 19% in fiscal 2022.

Capital spending is estimated to be in the range of 4% to 5% of fiscal 2022 net sales.

P&G is targeting adjusted free cash flow productivity of 90% and expects to pay over $8 billion in dividends and repurchase $7 billion to $9 billion of common shares in fiscal 2022.

Forward-Looking Statements

Certain statements in this release or presentation, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law.

Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls and localized volatility; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to affect the expected share repurchases and dividend payments; (3) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (4) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, acts of war or terrorism, or disease outbreaks; (5) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials, and costs of labor, transportation, energy, pension and healthcare; (6) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving digital marketing and selling platform requirements, and technological advances attained by, and patents granted to, competitors; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, supply chain practices, or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third party information and operational technology systems, networks and services, and maintain the security and functionality of such systems, networks and services and the data contained therein; (12) the ability to successfully manage uncertainties related to changing political conditions and potential implications such as exchange rate fluctuations and market contraction; (13) the ability to successfully manage current and expanding regulatory and legal requirements and matters (including, without limitation, those laws and regulations involving product liability, product and packaging composition, intellectual property, labor and employment, antitrust, privacy and data protection, tax, environmental, due diligence, risk oversight, and accounting and financial reporting) and to resolve new and pending matters within current estimates; (14) the ability to manage changes in applicable tax laws and regulations including maintaining our intended tax treatment of divestiture transactions; (15) the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the Company's overall business strategy and financial objectives, without impacting the delivery of base business objectives; (16) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes, while successfully identifying, developing and retaining key employees, including in key growth markets where the availability of skilled or experienced employees may be limited; and (17) the ability to successfully manage the demand, supply, and operational challenges associated with a disease outbreak, including epidemics, pandemics, or similar widespread public health concerns (including the COVID-19 outbreak). For additional information concerning factors that could cause actual results and events to differ materially from those projected herein, please refer to our most recent 10-K, 10-Q and 8-K reports.

About Procter & Gamble

P&G serves consumers around the world with one of the strongest portfolios of trusted, quality, leadership brands, including Always(r), Ambi Pur(r), Ariel(r), Bounty(r), Charmin(r), Crest(r), Dawn(r), Downy(r), Fairy(r), Febreze(r), Gain(r), Gillette(r), Head & Shoulders(r), Lenor(r), Olay(r), Oral-B(r), Pampers(r), Pantene(r), SK-II(r), Tide(r), Vicks(r), and Whisper(r). The P&G community includes operations in approximately 70 countries worldwide. Please visit http://www.pg.com for the latest news and information about P&G and its brands. For other P&G news, visit us at http://www.pg.com/news.

^ Net sales percentage changes are approximations based on quantitative(1) formulas that are consistently applied.

^ Other includes the sales mix impact from acquisitions and divestitures and(2) rounding impacts necessary to reconcile volume to net sales.

* Beauty segment organic sales increased six percent versus year ago. Skin and Personal Care organic sales increased double digits primarily driven by innovation, increased pricing and positive mix impact from the disproportionate growth of the super-premium SK-II brand, due to pandemic-related travel disruptions in the base period. Hair Care organic sales increased low single digits primarily due to increased pricing, partially offset by negative mix from growth in emerging markets. Higher current year volumes in certain markets due to pandemic related shutdowns in the base period were offset by lower volumes in North America due to the impact of pandemic-related inventory restocking in the base period. * Grooming segment organic sales increased six percent versus year ago. Shave Care organic sales increased mid-single digits due to innovation, pricing and increased volume versus a base period that was negatively impacted by pandemic-related consumption decreases. Appliances organic sales increased mid-single digits due to the positive mix impact from the launch of premium products and increased pricing partially offset by lower volumes due to a pandemic-related consumption increase in the base period. * Health Care segment organic sales increased 14% for the quarter. Oral Care organic sales increased mid-teens, primarily due to innovation, increased pricing, positive mix impacts from the disproportionate growth of premium products and, to a lesser extent, lower volumes in the base period due to pandemic related shutdowns. Personal Health Care organic sales increased mid-teens primarily due to innovation and price increases in some markets, partially offset by negative product mix due to the lower relative volumes of premium respiratory products. * Fabric and Home Care segment organic sales increased two percent for the quarter. Fabric Care organic sales increased mid-single digits driven by innovation and positive mix from the disproportionate growth of premium forms like fabric enhancer beads and laundry unit dose. Home Care organic sales decreased low single digits primarily due to unfavorable mix due to volume growth in emerging markets and lower volumes in North America and Western Europe due to pandemic-related consumption increases in the base period. * Baby, Feminine and Family Care segment organic sales decreased one percent versus year ago. Baby Care organic sales increased mid-single digits driven by positive mix impact from the disproportionate growth of premium diaper pant products, higher volumes due to pandemic-related consumption decreases in the base period and devaluation-related price increases. Feminine Care organic sales increased mid-single digits primarily driven by innovation, pandemic related shutdowns in certain regions in the base period and positive mix impact due to the disproportionate growth of premium products including adult incontinence. Family Care organic sales decreased double digits primarily due to lower volumes driven by pandemic-related consumption increases in the base period.

Diluted net earnings per share were $1.13 for the quarter, a six percent increase versus the prior year reported EPS due to a 4% increase in net earnings and a reduction in shares outstanding. The increase in net earnings was primarily driven by the increase in net sales partially offset by a reduction in operating margin. Diluted net EPS decreased three percent versus the prior year Core EPS due to a decrease in operating margin and incremental non-core restructuring charges in the base period, partially offset by the increase in net sales and the reduction in shares outstanding. Currency-neutral net EPS decreased four percent versus the prior year Core EPS.

Reported gross margin decreased 120 basis points versus prior year reported gross margin. Reported gross margin decreased 260 basis points versus the prior year core gross margin due to 140 basis points of non-core restructuring charges in the base period. Foreign exchange had no impact to gross margin. The decrease in gross margin versus the prior year core gross margin was driven by 210 basis points of unfavorable mix, 140 basis points of commodity cost increases, 80 basis points of higher freight costs and 60 basis points of reinvestments and other impacts. These higher costs were partially offset by 180 basis points of productivity savings (100 basis points net of freight cost increases) and 50 basis points of pricing benefit.

Selling, general and administrative expense (SG&A) as a percentage of sales decreased 20 basis points on a reported basis versus the prior year. SG&A as a percentage of sales decreased 30 basis points versus the prior year core SG&A due to approximately 10 basis points of lower non-core restructuring charges in the base period. Foreign exchange increased SG&A by approximately 20 basis points. On a currency-neutral basis, reported SG&A as a percentage of sales decreased approximately 60 basis points versus prior year core SG&A driven by 140 basis points of savings from overhead and marketing expenses, 100 basis points of cost leverage benefit from increased sales and 40 basis points of other benefits. These decreases were partially offset by 170 basis points of increased marketing investments, and 50 basis points of wage inflation, increased incentive compensation and other impacts.

Operating profit margin decreased 100 basis points versus the base period reported operating margin. Reported operating profit margin decreased 230 basis points versus the base period core operating margin due to approximately 130 basis points of non-core restructuring charges in the base period. Unfavorable foreign exchange negatively impacted operating margin by approximately 20 basis points. On a currency-neutral basis, reported operating margin decreased 210 basis points versus the prior year core operating margin. Operating margin included productivity cost savings of 320 basis points (240 basis points net of freight cost increases).

Fiscal Year 2022 Guidance

P&G expects fiscal year 2022 all-in sales growth in the range of two to four percent versus the prior fiscal year. Foreign exchange is expected to be neutral to modestly positive to all-in sales growth. The Company expects organic sales growth also in the range of two to four percent.

P&G expects fiscal 2022 GAAP diluted net earnings per share growth in the range of six to nine percent versus fiscal 2021 GAAP EPS of $5.50. Core earnings per share growth for fiscal 2022 is expected to be in the range of three to six percent versus fiscal 2021 core EPS of $5.66.

The Company said its current outlook estimates headwinds of approximately $1.9 billion after-tax from higher commodity costs and freight costs, partially offset by foreign exchange benefits of approximately $100 million after-tax. The combined impact of commodities, freight and foreign exchange is approximately a $0.70 per share headwind to fiscal year 2022 EPS, or a 12 percentage point headwind to EPS growth.

The Company is not able to reconcile its forward-looking non-GAAP cash flow and tax rate measures without unreasonable efforts because the Company cannot predict the timing and amounts of discrete items, such as acquisitions, divestitures, or impairments, which could significantly impact GAAP results.

P&G said it expects core effective tax rate in the range of 18% to 19% in fiscal 2022.

Capital spending is estimated to be in the range of 4% to 5% of fiscal 2022 net sales.

P&G is targeting adjusted free cash flow productivity of 90% and expects to pay over $8 billion in dividends and repurchase $7 billion to $9 billion of common shares in fiscal 2022.

Forward-Looking Statements

Certain statements in this release or presentation, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law.

Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls and localized volatility; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to affect the expected share repurchases and dividend payments; (3) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (4) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, acts of war or terrorism, or disease outbreaks; (5) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials, and costs of labor, transportation, energy, pension and healthcare; (6) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving digital marketing and selling platform requirements, and technological advances attained by, and patents granted to, competitors; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, supply chain practices, or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third party information and operational technology systems, networks and services, and maintain the security and functionality of such systems, networks and services and the data contained therein; (12) the ability to successfully manage uncertainties related to changing political conditions and potential implications such as exchange rate fluctuations and market contraction; (13) the ability to successfully manage current and expanding regulatory and legal requirements and matters (including, without limitation, those laws and regulations involving product liability, product and packaging composition, intellectual property, labor and employment, antitrust, privacy and data protection, tax, environmental, due diligence, risk oversight, and accounting and financial reporting) and to resolve new and pending matters within current estimates; (14) the ability to manage changes in applicable tax laws and regulations including maintaining our intended tax treatment of divestiture transactions; (15) the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the Company's overall business strategy and financial objectives, without impacting the delivery of base business objectives; (16) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes, while successfully identifying, developing and retaining key employees, including in key growth markets where the availability of skilled or experienced employees may be limited; and (17) the ability to successfully manage the demand, supply, and operational challenges associated with a disease outbreak, including epidemics, pandemics, or similar widespread public health concerns (including the COVID-19 outbreak). For additional information concerning factors that could cause actual results and events to differ materially from those projected herein, please refer to our most recent 10-K, 10-Q and 8-K reports.

About Procter & Gamble

P&G serves consumers around the world with one of the strongest portfolios of trusted, quality, leadership brands, including Always(r), Ambi Pur(r), Ariel(r), Bounty(r), Charmin(r), Crest(r), Dawn(r), Downy(r), Fairy(r), Febreze(r), Gain(r), Gillette(r), Head & Shoulders(r), Lenor(r), Olay(r), Oral-B(r), Pampers(r), Pantene(r), SK-II(r), Tide(r), Vicks(r), and Whisper(r). The P&G community includes operations in approximately 70 countries worldwide. Please visit http://www.pg.com for the latest news and information about P&G and its brands. For other P&G news, visit us at http://www.pg.com/news.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Consolidated Earnings Information

Three Months Ended June 30 Twelve Months Ended June 30

2021 2020 % Chg 2021 2020 % Chg

NET SALES $ 18,946 $ 17,698 7% $ 76,118 $ 70,950 7%

Cost of 9,791 8,942 9% 37,108 35,250 5%products sold

GROSS PROFIT 9,155 8,756 5% 39,010 35,700 9%

Selling,general and 5,615 5,275 6% 21,024 19,994 5%administrativeexpense

OPERATING 3,540 3,481 2% 17,986 15,706 15%INCOME

Interest (117 ) (157 ) (25)% (502 ) (465 ) 8%expense

Interest 15 22 (32)% 45 155 (71)%income

Othernon-operating 126 115 10% 86 438 (80)%income, net

EARNINGSBEFORE INCOME 3,564 3,461 3% 17,615 15,834 11%TAXES

Income taxes 656 675 (3)% 3,263 2,731 19%

NET EARNINGS 2,908 2,786 4% 14,352 13,103 10%

Less: Netearnings/(loss)attributable 2 (14 ) N/A 46 76 (39)%to noncontrollinginterests

NET EARNINGSATTRIBUTABLE $ 2,906 $ 2,800 4% $ 14,306 $ 13,027 10%TO PROCTER &GAMBLE



EFFECTIVE TAX 18.4 % 19.5 % 18.5 % 17.2 % RATE



NET EARNINGSPER COMMON SHARE: ^(1)

Basic $ 1.16 $ 1.10 5% $ 5.69 $ 5.13 11%

Diluted $ 1.13 $ 1.07 6% $ 5.50 $ 4.96 11%



DIVIDENDS PER $ 0.8698 $ 0.7907 10% $ 3.2419 $ 3.0284 7%COMMON SHARE

DilutedWeightedAverage Common 2,573.1 2,612.1 2,601.0 2,625.8 SharesOutstanding



COMPARISONS AS Basis BasisA % OF NET Pt PtSALES Change Change

Gross margin 48.3 % 49.5 % (120) 51.2 % 50.3 % 90

Selling,general and 29.6 % 29.8 % (20) 27.6 % 28.2 % (60)administrativeexpense

Operating 18.7 % 19.7 % (100) 23.6 % 22.1 % 150margin

Earningsbefore income 18.8 % 19.6 % (80) 23.1 % 22.3 % 80taxes

Net earnings 15.3 % 15.7 % (40) 18.9 % 18.5 % 40

Net earningsattributable 15.3 % 15.8 % (50) 18.8 % 18.4 % 40to Procter &Gamble

(1)

Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.

(1) Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Consolidated Earnings Information

Three Months Ended June 30, 2021

Net Sales

% Change

Versus Year

Ago

Earnings/(Loss) Before

Income Taxes

% Change

Versus Year

Ago

Net Earnings/(Loss)

% Change

Versus Year

Ago

Beauty

$3,510

11%

$873

21%

$702

23%

Grooming

1,666

10%

451

16%

364

17%

Health Care

2,383

18%

405

12%

294

8%

Fabric & Home Care

6,597

5%

1,297

(16)%

996

(17)%

Baby, Feminine & Family Care

4,665

1%

920

(23)%

705

(23)%

Corporate

125

40%

(382)

N/A

(153)

N/A

Total Company

$18,946

7%

$3,564

3%

$2,908

4%

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Consolidated Earnings Information



Three Months Ended June 30, 2021

% % % Change Earnings/ Change Change Net (Loss) Net Sales Versus Before Versus Earnings/ Versus Year Year (Loss) Year Income Taxes Ago Ago Ago

Beauty $3,510 11% $873 21% $702 23%

Grooming 1,666 10% 451 16% 364 17%

Health Care 2,383 18% 405 12% 294 8%

Fabric & Home 6,597 5% 1,297 (16)% 996 (17)%Care

Baby, Feminine & 4,665 1% 920 (23)% 705 (23)%Family Care

Corporate 125 40% (382) N/A (153) N/A

Total Company $18,946 7% $3,564 3% $2,908 4%

Three Months Ended June 30, 2021

(Percent Change vs. Year Ago) (1)

Volume with

Acquisitions &

Divestitures

Volume Excluding

Acquisitions &

Divestitures

Foreign

Exchange

Price

Mix

Other (2)

Net Sales

Growth

Beauty

1%

1%

5%

4%

1%

-%

11%

Grooming

4%

4%

4%

2%

-%

-%

10%

Health Care

13%

13%

4%

1%

-%

-%

18%

Fabric & Home Care

1%

1%

3%

-%

1%

-%

5%

Baby, Feminine & Family Care

(3)%

(3)%

3%

1%

1%

(1)%

1%

Total Company

1%

1%

3%

1%

1%

1%

7%

Three Months Ended June 30, 2021

(Percent Change vs. Year Ago) ^(1)

Volume with Volume Excluding Net Acquisitions Foreign Other Sales & Acquisitions Price Mix ^(2) & Exchange Growth Divestitures Divestitures

Beauty 1% 1% 5% 4% 1% -% 11%

Grooming 4% 4% 4% 2% -% -% 10%

Health 13% 13% 4% 1% -% -% 18%Care

Fabric & 1% 1% 3% -% 1% -% 5%Home Care

Baby,Feminine (3)% (3)% 3% 1% 1% (1)% 1%& FamilyCare

Total 1% 1% 3% 1% 1% 1% 7%Company

Twelve Months Ended June 30, 2021

Net Sales

% Change

Versus Year

Ago

Earnings/(Loss) Before

Income Taxes

% Change

Versus Year

Ago

Net Earnings/(Loss)

% Change

Versus Year

Ago

Beauty

$14,417

8%

$4,018

17%

$3,210

17%

Grooming

6,440

6%

1,728

7%

1,427

7%

Health Care

9,956

10%

2,398

11%

1,851

12%

Fabric & Home Care

26,014

10%

5,986

10%

4,622

11%

Baby, Feminine & Family Care

18,850

3%

4,723

4%

3,629

5%

Corporate

441

12%

(1,238)

N/A

(387)

N/A

Total Company

$76,118

7%

$17,615

11%

$14,352

10%

Twelve Months Ended June 30, 2021

% % % Change Earnings/ Change Change Net (Loss) Net Sales Versus Before Versus Earnings/ Versus Year Year (Loss) Year Income Taxes Ago Ago Ago

Beauty $14,417 8% $4,018 17% $3,210 17%

Grooming 6,440 6% 1,728 7% 1,427 7%

Health Care 9,956 10% 2,398 11% 1,851 12%

Fabric & Home 26,014 10% 5,986 10% 4,622 11%Care

Baby, Feminine & 18,850 3% 4,723 4% 3,629 5%Family Care

Corporate 441 12% (1,238) N/A (387) N/A

Total Company $76,118 7% $17,615 11% $14,352 10%

Twelve Months Ended June 30, 2021

(Percent Change vs. Year Ago) (1)

Volume with

Acquisitions &

Divestitures

Volume Excluding

Acquisitions &

Divestitures

Foreign

Exchange

Price

Mix

Other (2)

Net Sales

Growth

Beauty

3%

3%

2%

2%

1%

-%

8%

Grooming

3%

3%

-%

2%

1%

-%

6%

Health Care

6%

6%

1%

1%

2%

-%

10%

Fabric & Home Care

5%

5%

1%

1%

3%

-%

10%

Baby, Feminine & Family Care

-%

-%

1%

1%

1%

-%

3%

Total Company

3%

3%

1%

1%

2%

-%

7%

Twelve Months Ended June 30, 2021

(Percent Change vs. Year Ago) ^(1)

Volume with Volume Excluding Net Acquisitions Foreign Other Sales & Acquisitions Price Mix ^(2) & Exchange Growth Divestitures Divestitures

Beauty 3% 3% 2% 2% 1% -% 8%

Grooming 3% 3% -% 2% 1% -% 6%

Health 6% 6% 1% 1% 2% -% 10%Care

Fabric & 5% 5% 1% 1% 3% -% 10%Home Care

Baby,Feminine -% -% 1% 1% 1% -% 3%& FamilyCare

Total 3% 3% 1% 1% 2% -% 7%Company

(1)

Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.

(2)

Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.

^ Net sales percentage changes are approximations based on quantitative(1) formulas that are consistently applied.

^ Other includes the sales mix impact from acquisitions and divestitures and(2) rounding impacts necessary to reconcile volume to net sales.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Consolidated Statements of Cash Flows

Twelve Months Ended June 30

2021

2020

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR

$

16,181

$

4,239

OPERATING ACTIVITIES

Net earnings

14,352

13,103

Depreciation and amortization

2,735

3,013

Loss on early extinguishment of debt

512

-

Share-based compensation expense

540

558

Deferred income taxes

(258

)

(596

)

Loss/(gain) on sale of assets

(16

)

7

Change in accounts receivable

(342

)

634

Change in inventories

(309

)

(637

)

Change in accounts payable, accrued and other liabilities

1,391

1,923

Change in other operating assets and liabilities

(369

)

(710

)

Other

135

108

TOTAL OPERATING ACTIVITIES

18,371

17,403

INVESTING ACTIVITIES

Capital expenditures

(2,787

)

(3,073

)

Proceeds from asset sales

42

30

Acquisitions, net of cash acquired

(34

)

(58

)

Purchases of investment securities

(55

)

-

Proceeds from sales and maturities of investment securities

-

6,151

Change in other investments

-

(5

)

TOTAL INVESTING ACTIVITIES

(2,834

)

3,045

FINANCING ACTIVITIES

Dividends to shareholders

(8,263

)

(7,789

)

Increases/(reductions) in short-term debt

(3,333

)

2,345

Additions to long-term debt

4,417

4,951

Reductions of long-term debt

(4,987

)

(2,447

)

Treasury stock purchases

(11,009

)

(7,405

)

Impact of stock options and other

1,644

1,978

TOTAL FINANCING ACTIVITIES

(21,531

)

(8,367

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH

101

(139

)

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(5,893

)

11,942

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR

$

10,288

$

16,181

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Consolidated Statements of Cash Flows

Twelve Months Ended June 30

2021 2020

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF $ 16,181 $ 4,239 YEAR

OPERATING ACTIVITIES

Net earnings 14,352 13,103

Depreciation and amortization 2,735 3,013

Loss on early extinguishment of debt 512 -

Share-based compensation expense 540 558

Deferred income taxes (258 ) (596 )

Loss/(gain) on sale of assets (16 ) 7

Change in accounts receivable (342 ) 634

Change in inventories (309 ) (637 )

Change in accounts payable, accrued and other 1,391 1,923 liabilities

Change in other operating assets and liabilities (369 ) (710 )

Other 135 108

TOTAL OPERATING ACTIVITIES 18,371 17,403

INVESTING ACTIVITIES

Capital expenditures (2,787 ) (3,073 )

Proceeds from asset sales 42 30

Acquisitions, net of cash acquired (34 ) (58 )

Purchases of investment securities (55 ) -

Proceeds from sales and maturities of investment - 6,151 securities

Change in other investments - (5 )

TOTAL INVESTING ACTIVITIES (2,834 ) 3,045

FINANCING ACTIVITIES

Dividends to shareholders (8,263 ) (7,789 )

Increases/(reductions) in short-term debt (3,333 ) 2,345

Additions to long-term debt 4,417 4,951

Reductions of long-term debt (4,987 ) (2,447 )

Treasury stock purchases (11,009 ) (7,405 )

Impact of stock options and other 1,644 1,978

TOTAL FINANCING ACTIVITIES (21,531 ) (8,367 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH 101 (139 )EQUIVALENTS AND RESTRICTED CASH

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (5,893 ) 11,942

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR $ 10,288 $ 16,181

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Condensed Consolidated Balance Sheets

June 30, 2021

June 30, 2020

Cash and cash equivalents

$

10,288

$

16,181

Accounts receivable

4,725

4,178

Inventories

5,983

5,498

Prepaid expenses and other current assets

2,095

2,130

TOTAL CURRENT ASSETS

23,091

27,987

PROPERTY, PLANT AND EQUIPMENT, NET

21,686

20,692

GOODWILL

40,924

39,901

TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET

23,642

23,792

OTHER NONCURRENT ASSETS

9,964

8,328

TOTAL ASSETS

$

119,307

$

120,700

Accounts payable

$

13,720

$

12,071

Accrued and other liabilities

10,523

9,722

Debt due within one year

8,889

11,183

TOTAL CURRENT LIABILITIES

33,132

32,976

LONG-TERM DEBT

23,099

23,537

DEFERRED INCOME TAXES

6,153

6,199

OTHER NONCURRENT LIABILITIES

10,269

11,110

TOTAL LIABILITIES

72,653

73,822

TOTAL SHAREHOLDERS' EQUITY

46,654

46,878

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

119,307

$

120,700

The Procter & Gamble Company

Exhibit 1: Non-GAAP Measures

In accordance with the SEC's Regulation G, the following provides definitions of the non-GAAP measures used in Procter & Gamble's July 30, 2021 earnings release and the reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective on underlying business trends (i.e., trends excluding non-recurring or unusual items) and results and provide a supplemental measure of year-on-year results. The non-GAAP measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These measures are also used to evaluate senior management and are a factor in determining their at-risk compensation. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measure, but rather as supplemental information to our business results. These non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.

The Core earnings measures included in the following reconciliation tables refer to the equivalent GAAP measures adjusted as applicable for the following items:

Early debt extinguishment charges: During fiscal year 2021, the Company recorded after tax charges of $427 million ($512 million before tax) due to early extinguishment of certain long-term debt. These charges represent the difference between the reacquisition price and the par value of the debt extinguished.

Incremental Restructuring: The Company has had and continues to have an ongoing level of restructuring activities. Such activities have resulted in ongoing annual restructuring related charges of approximately $250 - $500 million before tax. In 2012, the Company began a $10 billion strategic productivity and cost savings initiative that included incremental restructuring activities through fiscal 2020. The adjustment to Core earnings includes only the restructuring costs above what we believe are the normal recurring level of restructuring costs. In fiscal 2021, the Company incurred restructuring costs within our historical ongoing level.

We do not view the above items to be part of our sustainable results and their exclusion from Core earnings measures provides a more comparable measure of year-on-year results. These items are also excluded when evaluating senior management in determining their at-risk compensation.

Organic sales growth*: Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. Management believes this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis.

Core operating profit margin*: Core operating profit margin is a measure of the Company's operating margin adjusted for items as indicated. Management believes this non-GAAP measure provides a supplemental perspective to the Company's operating efficiency over time.

Core gross margin: Core gross margin is a measure of the Company's gross margin adjusted for items as indicated. Management believes this non-GAAP measure provides a supplemental perspective to the Company's operating efficiency over time.

Core selling, general and administrative (SG&A) expense as a percentage of net sales: Core SG&A expense as a percentage of net sales is a measure of the Company's selling, general and administrative expenses adjusted for items as indicated. Management believes this non-GAAP measure provides a supplemental perspective to the Company's operating efficiency over time.

Core EPS and currency-neutral Core EPS*: Core earnings per share, or Core EPS, is a measure of the Company's diluted net earnings per share adjusted as indicated. Currency-neutral Core EPS is a measure of the Company's Core EPS excluding the incremental current year impact of foreign exchange. Management views these non-GAAP measures as a useful supplemental measure of Company performance over time.

Free cash flow and adjusted free cash flow: Free cash flow is defined as operating cash flow less capital spending. Adjusted free cash flow is defined as operating cash flow less capital spending and adjusted for the payment of the transitional tax resulting from the comprehensive U.S. legislation commonly referred to as the Tax Cuts and Jobs Act in December 2017 (the "U.S. Tax Act"). Adjusted free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. Management views adjusted free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments.

Free cash flow productivity and adjusted free cash flow productivity*: Free cash flow productivity is defined as the ratio of free cash flow to net earnings. Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the charges for early debt extinguishment (which are not considered part of our ongoing operations). Management views adjusted free cash flow productivity as a useful measure to help investors understand P&G's ability to generate cash. Adjusted free cash flow productivity is used by management in making operating decisions, in allocating financial resources and for budget planning purposes. The Company's long-term target is to generate annual adjusted free cash flow productivity at or above 90%.

* Measure is used to evaluate senior management and is a factor in determining their at-risk compensation.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Condensed Consolidated Balance Sheets

June 30, 2021 June 30, 2020

Cash and cash equivalents $ 10,288 $ 16,181

Accounts receivable 4,725 4,178

Inventories 5,983 5,498

Prepaid expenses and other current assets 2,095 2,130

TOTAL CURRENT ASSETS 23,091 27,987

PROPERTY, PLANT AND EQUIPMENT, NET 21,686 20,692

GOODWILL 40,924 39,901

TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET 23,642 23,792

OTHER NONCURRENT ASSETS 9,964 8,328

TOTAL ASSETS $ 119,307 $ 120,700



Accounts payable $ 13,720 $ 12,071

Accrued and other liabilities 10,523 9,722

Debt due within one year 8,889 11,183

TOTAL CURRENT LIABILITIES 33,132 32,976

LONG-TERM DEBT 23,099 23,537

DEFERRED INCOME TAXES 6,153 6,199

OTHER NONCURRENT LIABILITIES 10,269 11,110

TOTAL LIABILITIES 72,653 73,822

TOTAL SHAREHOLDERS' EQUITY 46,654 46,878

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 119,307 $ 120,700

The Procter & Gamble Company

Exhibit 1: Non-GAAP Measures

In accordance with the SEC's Regulation G, the following provides definitions of the non-GAAP measures used in Procter & Gamble's July 30, 2021 earnings release and the reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective on underlying business trends (i.e., trends excluding non-recurring or unusual items) and results and provide a supplemental measure of year-on-year results. The non-GAAP measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These measures are also used to evaluate senior management and are a factor in determining their at-risk compensation. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measure, but rather as supplemental information to our business results. These non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.

The Core earnings measures included in the following reconciliation tables refer to the equivalent GAAP measures adjusted as applicable for the following items:

Early debt extinguishment charges: During fiscal year 2021, the Company recorded after tax charges of $427 million ($512 million before tax) due to early extinguishment of certain long-term debt. These charges represent the difference between the reacquisition price and the par value of the debt extinguished.

Incremental Restructuring: The Company has had and continues to have an ongoing level of restructuring activities. Such activities have resulted in ongoing annual restructuring related charges of approximately $250 - $500 million before tax. In 2012, the Company began a $10 billion strategic productivity and cost savings initiative that included incremental restructuring activities through fiscal 2020. The adjustment to Core earnings includes only the restructuring costs above what we believe are the normal recurring level of restructuring costs. In fiscal 2021, the Company incurred restructuring costs within our historical ongoing level.

We do not view the above items to be part of our sustainable results and their exclusion from Core earnings measures provides a more comparable measure of year-on-year results. These items are also excluded when evaluating senior management in determining their at-risk compensation.

Organic sales growth*: Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. Management believes this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis.

Core operating profit margin*: Core operating profit margin is a measure of the Company's operating margin adjusted for items as indicated. Management believes this non-GAAP measure provides a supplemental perspective to the Company's operating efficiency over time.

Core gross margin: Core gross margin is a measure of the Company's gross margin adjusted for items as indicated. Management believes this non-GAAP measure provides a supplemental perspective to the Company's operating efficiency over time.

Core selling, general and administrative (SG&A) expense as a percentage of net sales: Core SG&A expense as a percentage of net sales is a measure of the Company's selling, general and administrative expenses adjusted for items as indicated. Management believes this non-GAAP measure provides a supplemental perspective to the Company's operating efficiency over time.

Core EPS and currency-neutral Core EPS*: Core earnings per share, or Core EPS, is a measure of the Company's diluted net earnings per share adjusted as indicated. Currency-neutral Core EPS is a measure of the Company's Core EPS excluding the incremental current year impact of foreign exchange. Management views these non-GAAP measures as a useful supplemental measure of Company performance over time.

Free cash flow and adjusted free cash flow: Free cash flow is defined as operating cash flow less capital spending. Adjusted free cash flow is defined as operating cash flow less capital spending and adjusted for the payment of the transitional tax resulting from the comprehensive U.S. legislation commonly referred to as the Tax Cuts and Jobs Act in December 2017 (the "U.S. Tax Act"). Adjusted free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. Management views adjusted free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments.

Free cash flow productivity and adjusted free cash flow productivity*: Free cash flow productivity is defined as the ratio of free cash flow to net earnings. Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the charges for early debt extinguishment (which are not considered part of our ongoing operations). Management views adjusted free cash flow productivity as a useful measure to help investors understand P&G's ability to generate cash. Adjusted free cash flow productivity is used by management in making operating decisions, in allocating financial resources and for budget planning purposes. The Company's long-term target is to generate annual adjusted free cash flow productivity at or above 90%.

* Measure is used to evaluate senior management and is a factor in determining their at-risk compensation.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Reconciliation of Non-GAAP Measures

Three Months Ended Three Months Ended June 30, 2020

June 30, 2021

AS AS INCREMENTAL REPORTED REPORTED ROUNDING NON-GAAP RESTRUCTURING (CORE) (GAAP) (GAAP)

COST OF PRODUCTS $ 9,791 $ 8,942 $ (246 ) $ - $ 8,696 SOLD

GROSS PROFIT 9,155 8,756 246 - 9,002

GROSS MARGIN 48.3 % 49.5 % 1.4 % - % 50.9 %

SELLING, GENERAL,AND ADMINISTRATIVE 5,615 5,275 8 1 5,284 EXPENSE

SELLING, GENERALAND ADMINISTRATIVE 29.6 % 29.8 % - % 0.1 % 29.9 %EXPENSE AS A % OFNET SALES

OPERATING INCOME 3,540 3,481 238 (1 ) 3,718

OPERATING PROFIT 18.7 % 19.7 % 1.3 % - % 21.0 %MARGIN

NET EARNINGSATTRIBUTABLE TO P& 2,906 2,800 226 - 3,026 G

Core EPS:

DILUTED NETEARNINGS PER $ 1.13 $ 1.07 $ 0.09 $ - $ 1.16 COMMON SHARE ^(1)

CURRENCY IMPACT TO $ (0.02 ) EARNINGS

CURRENCY-NEUTRAL $ 1.11 EPS

DILUTED WEIGHTEDAVERAGE COMMON 2,573.1 2,612.1 SHARES OUTSTANDING

COMMON STOCKOUTSTANDING AS OF 2,429.7 JUNE 30, 2021

(1)

Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

(1) Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

CHANGE IN CURRENT YEAR REPORTED (GAAP) MEASURES VERSUS PRIOR YEAR NON-GAAP (CORE) MEASURES (1)

GROSS MARGIN (1)

(260)

BPS

SELLING GENERAL & ADMINISTRATIVE EXPENSE AS A % OF NET SALES (1)

(30)

BPS

OPERATING PROFIT MARGIN (1)

(230)

BPS

EPS

(3)

%

CURRENCY-NEUTRAL EPS

(4)

%

CHANGE IN CURRENT YEAR REPORTED (GAAP) MEASURES VERSUS PRIOR YEAR NON-GAAP(CORE) MEASURES ^(1)

GROSS MARGIN ^(1) (260) BPS

SELLING GENERAL & ADMINISTRATIVE EXPENSE AS A % OF NET SALES ^(1) (30) BPS

OPERATING PROFIT MARGIN^ (1) (230) BPS

EPS (3) %

CURRENCY-NEUTRAL EPS (4) %

(1)

Change versus year ago is calculated based on As Reported (GAAP) values for the three months ended June 30, 2021 versus the Non-GAAP (Core) values for the three months ended June 30,2020.

Change versus year ago is calculated based on As Reported (GAAP) values(1) for the three months ended June 30, 2021 versus the Non-GAAP (Core) values for the three months ended June 30,2020.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Reconciliation of Non-GAAP Measures

Twelve Months Ended June 30, 2021

Twelve Months Ended June 30, 2020

AS REPORTED

(GAAP)

EARLY DEBT

EXTINGUISHMENT

NON-GAAP

(CORE)

AS REPORTED

(GAAP)

INCREMENTAL

RESTRUCTURING

ROUNDING

NON-GAAP

(CORE)

COST OF PRODUCTS SOLD

$

37,108

$

-

$

37,108

$

35,250

$

(519

)

$

-

$

34,731

GROSS PROFIT

39,010

-

39,010

35,700

519

-

36,219

GROSS MARGIN

51.2

%

-

%

51.2

%

50.3

%

0.7

%

-

%

51.0

%

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE

21,024

-

21,024

19,994

81

1

20,076

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE AS A % OF NET SALES

27.6

%

-

%

27.6

%

28.2

%

0.1

%

-

%

28.3

%

OPERATING INCOME

17,986

-

17,986

15,706

438

1

16,143

OPERATING PROFIT MARGIN

23.6

%

-

%

23.6

%

22.1

%

0.6

%

0.1

%

22.8

%

NET EARNINGS ATTRIBUTABLE TO P&G

14,306

427

14,733

13,027

415

-

13,442

Core EPS:

Core EPS:

DILUTED NET EARNINGS PER COMMON SHARE (1)

$

5.50

$

0.16

$

5.66

$

4.96

$

0.16

$

-

$

5.12

CURRENCY IMPACT TO CORE EARNINGS

$

0.04

CURRENCY-NEUTRAL CORE EPS

$

5.70

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

2,601.0

2,625.8

COMMON STOCK OUTSTANDING AS OF JUNE 30, 2021

2,429.7

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Reconciliation of Non-GAAP Measures

Twelve Months Ended June 30, 2021 Twelve Months Ended June 30, 2020

AS EARLY DEBT NON-GAAP AS INCREMENTAL NON-GAAP REPORTED REPORTED ROUNDING EXTINGUISHMENT (CORE) RESTRUCTURING (CORE) (GAAP) (GAAP)

COST OF $ 37,108 $ - $ 37,108 $ 35,250 $ (519 ) $ - $ 34,731 PRODUCTS SOLD

GROSS PROFIT 39,010 - 39,010 35,700 519 - 36,219

GROSS MARGIN 51.2 % - % 51.2 % 50.3 % 0.7 % - % 51.0 %

SELLING,GENERAL, AND 21,024 - 21,024 19,994 81 1 20,076 ADMINISTRATIVEEXPENSE

SELLING,GENERAL ANDADMINISTRATIVE 27.6 % - % 27.6 % 28.2 % 0.1 % - % 28.3 %EXPENSE AS A %OF NET SALES

OPERATING 17,986 - 17,986 15,706 438 1 16,143 INCOME

OPERATING 23.6 % - % 23.6 % 22.1 % 0.6 % 0.1 % 22.8 %PROFIT MARGIN

NET EARNINGSATTRIBUTABLE 14,306 427 14,733 13,027 415 - 13,442 TO P&G

Core EPS: Core EPS:

DILUTED NETEARNINGS PER $ 5.50 $ 0.16 $ 5.66 $ 4.96 $ 0.16 $ - $ 5.12 COMMON SHARE ^(1)

CURRENCY IMPACT TO CORE $ 0.04 EARNINGS

CURRENCY-NEUTRAL CORE EPS $ 5.70

DILUTEDWEIGHTEDAVERAGE COMMON 2,601.0 2,625.8 SHARESOUTSTANDING

COMMON STOCKOUTSTANDING AS 2,429.7 OF JUNE 30,2021

(1)

Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

(1) Diluted net earnings per share are calculated on Net earnings attributable to Procter & Gamble.

CHANGE VERSUS YEAR AGO

CORE EPS

11

%

CURRENCY NEUTRAL CORE EPS

11

%

Organic sales growth:

The reconciliation of reported sales growth to organic sales is as follows:

CHANGE VERSUS YEAR AGO

CORE EPS 11 %

CURRENCY NEUTRAL CORE EPS 11 %

Organic sales growth:

The reconciliation of reported sales growth to organic sales is as follows:

Acquisition Foreign & Organic Net Sales SalesApril - June 2021 Exchange Divestiture Growth Growth Impact Impact/ Other*

Beauty 11% (5)% -% 6%

Grooming 10% (4)% -% 6%

Health Care 18% (4)% -% 14%

Fabric & Home Care 5% (3)% -% 2%

Baby, Feminine & Family 1% (3)% 1% (1)%Care

Total Company 7% (3)% -% 4%

FY 2021

Net Sales

Growth

Foreign

Exchange

Impact

Acquisition &

Divestiture

Impact/Other*

Organic Sales

Growth

Total Company

7%

(1)%

-%

6%

Foreign Acquisition & Net Sales Organic SalesFY 2021 Exchange Divestiture Growth Growth Impact Impact/Other*

Total Company 7% (1)% -% 6%

*

Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.

* Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.

Total Company

Net Sales Growth

Combined Foreign Exchange &

Acquisition/Divestiture Impact

Organic Sales Growth

FY 2022 (Estimate)

+2% to +4%

-

+2% to +4%

Core EPS:

Combined Foreign Exchange Net Sales & Organic SalesTotal Company Growth Growth Acquisition/Divestiture Impact

FY 2022 +2% to +4% - +2% to +4%(Estimate)

Core EPS:

Diluted Core EPSTotal Company EPS Impact of Change in Non-Core Items* Growth Growth

FY 2022 +6% to +9% (3)% +3% to +6%(Estimate)

*

Includes impact of charges for early debt extinguishment in fiscal 2021.

Adjusted free cash flow (dollars in millions):

* Includes impact of charges for early debt extinguishment in fiscal 2021.

Adjusted free cash flow (dollars in millions):

Three Months Ended June 30, 2021

Operating Cash Flow Capital Spending Free Cash Flow

$4,121 $(714) $3,407

Twelve Months Ended June 30, 2021

Operating Cash Flow

Capital Spending

U.S. Tax Act Payments

Adjusted Free Cash Flow

$18,371

$(2,787)

$225

$15,809

Adjusted free cash flow productivity (dollars in millions):

Twelve Months Ended June 30, 2021

Operating Cash Capital U.S. Tax Act Adjusted Free CashFlow Spending Payments Flow

$18,371 $(2,787) $225 $15,809

Adjusted free cash flow productivity (dollars in millions):

Three Months Ended June 30, 2021

Free Cash Flow Net Earnings Free Cash Flow Productivity

$3,407 $2,908 117%

Twelve Months Ended June 30, 2021

Adjusted Free

Cash Flow

Net Earnings

Early Debt

Extinguishment Charges

Net Earnings Excluding

Adjustments

Adjusted Free Cash

Flow Productivity

$15,809

$14,352

$427

$14,779

107%

Category: PG-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20210730005259/en/

CONTACT: P&G Media Contacts: Erica Noble, 513.271.1793 Jennifer Corso, 513.983.2570

CONTACT: P&G Investor Relations Contact: John Chevalier, 513.983.9974