Business Wire | Oct 30, 2020 06:55AM EDT

Colgate Announces 3rd Quarter 2020 Results

Oct. 30, 2020

NEW YORK--(BUSINESS WIRE)--Oct. 30, 2020--Colgate-Palmolive Company (NYSE:CL)

* Net sales increased 5.5%, Organic sales* increased 7.5% * GAAP EPS grew 21% to $0.81, Base Business EPS* grew 11% to $0.79 * GAAP Gross profit margin and Base Business Gross profit margin* each increased 220 basis points to 61.2% * Net cash provided by operations was $2,756 million year to date * Colgate's leadership in toothpaste continued with its global market share at 39.9% year to date * Colgate's leadership in manual toothbrushes continued with its global market share at 31.1% year to date * The Company is providing financial guidance for full year 2020

Third Quarter Total Company Results (GAAP)

($ in millions except per share amounts) 2020 2019 Change

Net Sales $4,153 $3,928 +5.5 %

EPS (diluted) $0.81 $0.67 +21 %





Third Quarter Total Company Results (Base Business - Non-GAAP)*

($ in millions except per share amounts) 2020 2019 Change

Organic Sales Growth +7.5 %

Base Business EPS (diluted) $0.79 $0.71 +11 %

*Indicates a non-GAAP financial measure. Please refer to "Non-GAAP FinancialMeasures" later in this release for definitions of non-GAAP financial measuresand to "Table 6 - Geographic Sales Analysis Percentage Changes" and "Table 8 -Non-GAAP Reconciliations" included with this release for a reconciliation ofthese non-GAAP financial measures to the related GAAP measures.

Colgate-Palmolive Company (NYSE:CL) today reported results for third quarter 2020. Noel Wallace, Chairman, President and Chief Executive Officer, commented, "Our performance was strong in the third quarter, with growth accelerating on both the top and bottom lines, despite the many challenges brought on by the COVID-19 pandemic. It is particularly encouraging to see double-digit increases in operating profit, net income and earnings per share.

"Net sales grew 5.5% and organic sales grew 7.5% as we drove volume growth and higher pricing in every division.

"It is rewarding to see the growth strategies we are implementing bear fruit. While we continue to see elevated demand in personal care and home care related to the virus, premium innovation is also driving growth across all of our product categories. We also continue to see strength in eCommerce, led by our Hill's business.

"The very strong gross margin expansion in the quarter allowed us to invest more behind our brands and provides us with the ability to increase that investment in the balance of the year in support of a very full innovation pipeline.

"Looking ahead, while uncertainty related to the impact of the pandemic still exists, including macroeconomic impacts and government actions to stem the virus, we believe we have better visibility for the balance of the year and therefore we are providing annual financial guidance for 2020."

Full Year 2020 Guidance

Based on current spot rates:

* The Company expects 2020 net sales and organic sales to both be up mid-single digits, with organic sales up at the high end of that range. * On a GAAP basis, the Company expects gross margin expansion, increased advertising investment and double-digit earnings-per-share growth. * On a non-GAAP (Base Business) basis, the Company expects gross margin expansion, increased advertising investment and 6% to 7% earnings-per-share growth.

Divisional Performance

The following are comments about divisional performance for third quarter 2020 versus the year ago period. See attached "Table 6 - Geographic Sales Analysis Percentage Changes" and "Table 5 - Segment Information" for additional information on net sales and operating profit by division.

Third Quarter Sales Growth By Division (% change 3Q 2020 vs. 3Q 2019)

Net Organic As Reported Organic Sales Sales* Volume Pricing FX Volume

North America +6.5% +5.0% +3.0% +1.5% +3.5% -%

Latin America -5.0% +11.5% +2.0% +2.0% +9.5% -16.5%

Europe +17.0% +3.0% +12.0% +2.5% +0.5% +4.5%

Asia Pacific +4.5% +4.5% +2.5% +2.5% +2.0% -%

Africa/Eurasia +2.5% +12.0% +6.5% +5.5% +6.5% -10.5%

Hill's +11.0% +11.0% +6.5% +6.5% +4.5% -%



Total Company +5.5% +7.5% +5.0% +3.0% +4.5% -4.0%

*Indicates a non-GAAP financial measure. Please refer to "Non-GAAP FinancialMeasures" later in this release for definitions of non-GAAP financial measuresand to "Table 6 - Geographic Sales Analysis Percentage Changes" included withthis release for a reconciliation of these non-GAAP financial measures to therelated GAAP measures.

The impact of the previously disclosed acquisitions of the Filorga skin healthbusiness, the joint venture in Nigeria and the Hello oral care business on asreported volume was 2% for Total Company and 9.5%, 1.0% and 1.5% for Europe,Africa/Eurasia and North America, respectively.

Third Quarter Operating Profit By Division

($ in millions)

3Q 2020

% Change vs

3Q 2019

% to Net

Sales

Change in basis

points vs 3Q 2019 % to Net Sales

North America

$242

-2%

26.2%

-230

Latin America

$250

6%

29.9%

+320

Europe

$169

10%

23.7%

-150

Asia Pacific

$222

15%

30.7%

+270

Africa/Eurasia

$61

27%

23.9%

+450

Hill's

$196

16%

27.8%

+110

Total Company, As Reported

$1,018

19%

24.5%

+270

Total Company, Base Business*

$1,002

11%

24.1%

+120

*Indicates a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures" later in this release for definitions of non-GAAP financial measures and to "Table 8 - Non-GAAP Reconciliations" included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.

North America (22% of Company Sales)

* Organic sales growth was led by the United States. * In the United States, Colgate's share of the toothpaste market is 35.0% year to date and its share of the manual toothbrush market is 40.9% year to date. * The decrease in Operating profit as a percentage of Net sales was primarily due to higher overhead expenses, primarily driven by higher logistics costs, increased advertising investment, an inventory write off and higher raw and packaging material costs, partially offset by cost savings from the Company's funding-the-growth initiatives and higher pricing.

Latin America (20% of Company Sales)

* Organic sales growth was led by Brazil, Argentina, Mexico and Colombia. * The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company's funding-the-growth initiatives, higher pricing and a value added tax matter in Brazil, partially offset by higher raw and packaging material costs, which included foreign exchange transaction costs.

Europe (17% of Company Sales)

* Organic sales growth in France, the Netherlands and Denmark was partially offset by an organic sales decline in the United Kingdom. * The decrease in Operating profit as a percentage of Net sales was primarily due to increased advertising investment, higher overhead expenses, amortization expense related to the Filorga skin health acquisition and higher raw and packaging material costs, partially offset by cost savings from the Company's funding-the-growth initiatives and favorable mix.

Asia Pacific (18% of Company Sales)

* Organic sales growth was led by Australia, India, the Philippines and the Greater China region. * The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company's funding-the-growth initiatives, higher pricing, lower overhead expenses and decreased advertising investment, partially offset by higher raw and packaging material costs.

Africa/Eurasia (6% of Company Sales)

* Organic sales growth was led by Russia, South Africa and Turkey. * The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company's funding-the-growth initiatives, higher pricing, lower overhead expenses and decreased advertising investment, partially offset by higher raw and packaging material costs, which included foreign exchange transaction costs.

Hill's Pet Nutrition (17% of Company Sales)

* Organic sales growth was led by the United States, Europe, Australia and Canada. * The increase in Operating profit as a percentage of Net sales was primarily due to lower overhead expenses, cost savings from the Company's funding-the-growth initiatives and higher pricing, partially offset by increased advertising investment and higher raw and packaging material costs.

Webcast Information

At 8:30 a.m. ET today, Colgate will host a conference call regarding third quarter results. To access this call as a webcast, please go to Colgate's website at www.colgatepalmolive.com.

About Colgate-Palmolive

Colgate-Palmolive Company is a caring, innovative growth company reimagining a healthier future for all people, their pets and our planet. Focused on Oral Care, Personal Care, Home Care and Pet Nutrition and reaching more than 200 countries and territories, Colgate teams are developing and selling health and hygiene products and pet nutrition offerings essential to society through brands such as Colgate, Palmolive, elmex, meridol, Tom's of Maine, hello, Sorriso, Speed Stick, Softsoap, Irish Spring, Protex, Sanex, Filorga, eltaMD, PCA Skin, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill's Science Diet and Hill's Prescription Diet. Colgate seeks to deliver sustainable, profitable growth and superior shareholder returns and to provide Colgate people with an innovative and inclusive work environment. Colgate does this by developing and selling products globally that make people's lives healthier and more enjoyable and by embracing its sustainability, diversity, equity and inclusion and social responsibility strategies across the organization. For more information about Colgate's global business, its efforts to improve the oral health of children through its Bright Smiles, Bright Futures program and how the Company is building a future to smile about, visit www.colgatepalmolive.com. CL-E

Market Share Information

Management uses market share information as a key indicator to monitor business health and performance. References to market share in this press release are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).

Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce and certain club retailers and discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party vendors it uses to provide data are reliable, but it has not verified the accuracy or completeness of the data or any assumptions underlying the data. In certain limited circumstances, the COVID-19 pandemic has impacted the ability of our third-party vendors to provide the Company with reliable updated market share data. In addition, market share information reported by the Company may be different from market share information reported by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.

Cautionary Statement on Forward-Looking Statements

This press release and the related webcast may contain forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (SEC) in its rules, regulations and releases) that set forth anticipated results based on management's current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin growth, earnings per share levels, financial goals, the impact of foreign exchange, the impact of COVID-19, cost-reduction plans, tax rates, new product introductions, commercial investment levels, acquisitions, divestitures, share repurchases, or legal or tax proceedings, among other matters. These statements are made on the basis of the Company's views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of these statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. For more information about factors that could impact the Company's business and cause actual results to differ materially from forward-looking statements, investors should refer to the Company's filings with the SEC (including, but not limited to, the information set forth under the captions "Risk Factors" and "Cautionary Statement on Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q). Copies of these filings may be obtained upon request from the Company's Investor Relations Department or on the Company's website at www.colgatepalmolive.com.

Non-GAAP Financial Measures

The following provides definitions and other information regarding the non-GAAP financial measures used in this press release and/or the related webcast, which may not be the same as or comparable to similar measures presented by other companies:

* Base Business: Base Business refers to non-GAAP measures of operating results that exclude certain items. Base Business operating results exclude, as applicable, charges and benefits resulting from the Global Growth and Efficiency Program, a charge related to U.S. tax reform, acquisition-related costs and a benefit related to a recent reorganization of the ownership structure of certain foreign subsidiaries and a new operating structure being implemented within one of the Company's divisions. * Organic sales growth: Net sales growth excluding the impact of foreign exchange, acquisitions and divestments. * Free cash flow before dividends: Net cash provided by operations less Capital expenditures.

This press release discusses Net sales growth (GAAP) and Organic sales growth (non-GAAP). Management believes the organic sales growth measure provides investors and analysts with useful supplemental information regarding the Company's underlying sales trends by presenting sales growth excluding the external factor of foreign exchange as well as the impact from acquisitions and divestments. See "Geographic Sales Analysis Percentage Changes" for the three and nine months ended September 30, 2020 versus 2019 included with this release for a comparison of Organic sales growth to Net sales growth in accordance with GAAP.

Worldwide Gross profit, Gross profit margin, Selling, general and administrative expenses, Selling, general and administrative expenses as a percentage of Net sales, Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, Effective income tax rate, Net income attributable to Colgate-Palmolive Company and Diluted earnings per common share are disclosed on both an as reported (GAAP) and Base Business (non-GAAP) basis. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company's normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, gains and losses from certain divestitures and certain unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company's business performance, and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company's underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. See "Non-GAAP Reconciliations" for the three and nine months ended September 30, 2020 and 2019 included with this release for a reconciliation of these financial measures to the related GAAP measures.

The Company uses these financial measures internally in its budgeting process, to evaluate segment and overall operating performance and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company's underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

As management uses free cash flow before dividends to evaluate the Company's ability to satisfy current and future obligations, repurchase stock, pay dividends and fund future business opportunities, the Company believes that it provides useful information to investors. Free cash flow before dividends is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. See "Condensed Consolidated Statements of Cash Flows" for the nine months ended September 30, 2020 and 2019 for a comparison of free cash flow before dividends to Net cash provided by operations as reported in accordance with GAAP.

(See attached tables for third quarter results.)

Third Quarter Operating Profit By Division ($ in millions)

% Change vs % to Net Change in basis 3Q 2020 3Q 2019 Sales points vs 3Q 2019 % to Net Sales

North America $242 -2% 26.2% -230

Latin America $250 6% 29.9% +320

Europe $169 10% 23.7% -150

Asia Pacific $222 15% 30.7% +270

Africa/Eurasia $61 27% 23.9% +450

Hill's $196 16% 27.8% +110



Total Company, As Reported $1,018 19% 24.5% +270

Total Company, Base Business* $1,002 11% 24.1% +120

*Indicates a non-GAAP financial measure. Please refer to "Non-GAAP FinancialMeasures" later in this release for definitions of non-GAAP financial measuresand to "Table 8 - Non-GAAP Reconciliations" included with this release for areconciliation of these non-GAAP financial measures to the related GAAPmeasures.

North America (22% of Company Sales)

* Organic sales growth was led by the United States. * In the United States, Colgate's share of the toothpaste market is 35.0% year to date and its share of the manual toothbrush market is 40.9% year to date. * The decrease in Operating profit as a percentage of Net sales was primarily due to higher overhead expenses, primarily driven by higher logistics costs, increased advertising investment, an inventory write off and higher raw and packaging material costs, partially offset by cost savings from the Company's funding-the-growth initiatives and higher pricing.

Latin America (20% of Company Sales)

* Organic sales growth was led by Brazil, Argentina, Mexico and Colombia. * The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company's funding-the-growth initiatives, higher pricing and a value added tax matter in Brazil, partially offset by higher raw and packaging material costs, which included foreign exchange transaction costs.

Europe (17% of Company Sales)

* Organic sales growth in France, the Netherlands and Denmark was partially offset by an organic sales decline in the United Kingdom. * The decrease in Operating profit as a percentage of Net sales was primarily due to increased advertising investment, higher overhead expenses, amortization expense related to the Filorga skin health acquisition and higher raw and packaging material costs, partially offset by cost savings from the Company's funding-the-growth initiatives and favorable mix.

Asia Pacific (18% of Company Sales)

* Organic sales growth was led by Australia, India, the Philippines and the Greater China region. * The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company's funding-the-growth initiatives, higher pricing, lower overhead expenses and decreased advertising investment, partially offset by higher raw and packaging material costs.

Africa/Eurasia (6% of Company Sales)

* Organic sales growth was led by Russia, South Africa and Turkey. * The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company's funding-the-growth initiatives, higher pricing, lower overhead expenses and decreased advertising investment, partially offset by higher raw and packaging material costs, which included foreign exchange transaction costs.

Hill's Pet Nutrition (17% of Company Sales)

* Organic sales growth was led by the United States, Europe, Australia and Canada. * The increase in Operating profit as a percentage of Net sales was primarily due to lower overhead expenses, cost savings from the Company's funding-the-growth initiatives and higher pricing, partially offset by increased advertising investment and higher raw and packaging material costs.

Webcast Information

At 8:30 a.m. ET today, Colgate will host a conference call regarding third quarter results. To access this call as a webcast, please go to Colgate's website at www.colgatepalmolive.com.

About Colgate-Palmolive

Colgate-Palmolive Company is a caring, innovative growth company reimagining a healthier future for all people, their pets and our planet. Focused on Oral Care, Personal Care, Home Care and Pet Nutrition and reaching more than 200 countries and territories, Colgate teams are developing and selling health and hygiene products and pet nutrition offerings essential to society through brands such as Colgate, Palmolive, elmex, meridol, Tom's of Maine, hello, Sorriso, Speed Stick, Softsoap, Irish Spring, Protex, Sanex, Filorga, eltaMD, PCA Skin, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill's Science Diet and Hill's Prescription Diet. Colgate seeks to deliver sustainable, profitable growth and superior shareholder returns and to provide Colgate people with an innovative and inclusive work environment. Colgate does this by developing and selling products globally that make people's lives healthier and more enjoyable and by embracing its sustainability, diversity, equity and inclusion and social responsibility strategies across the organization. For more information about Colgate's global business, its efforts to improve the oral health of children through its Bright Smiles, Bright Futures program and how the Company is building a future to smile about, visit www.colgatepalmolive.com. CL-E

Market Share Information

Management uses market share information as a key indicator to monitor business health and performance. References to market share in this press release are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).

Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce and certain club retailers and discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party vendors it uses to provide data are reliable, but it has not verified the accuracy or completeness of the data or any assumptions underlying the data. In certain limited circumstances, the COVID-19 pandemic has impacted the ability of our third-party vendors to provide the Company with reliable updated market share data. In addition, market share information reported by the Company may be different from market share information reported by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.

Cautionary Statement on Forward-Looking Statements

This press release and the related webcast may contain forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (SEC) in its rules, regulations and releases) that set forth anticipated results based on management's current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin growth, earnings per share levels, financial goals, the impact of foreign exchange, the impact of COVID-19, cost-reduction plans, tax rates, new product introductions, commercial investment levels, acquisitions, divestitures, share repurchases, or legal or tax proceedings, among other matters. These statements are made on the basis of the Company's views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of these statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. For more information about factors that could impact the Company's business and cause actual results to differ materially from forward-looking statements, investors should refer to the Company's filings with the SEC (including, but not limited to, the information set forth under the captions "Risk Factors" and "Cautionary Statement on Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q). Copies of these filings may be obtained upon request from the Company's Investor Relations Department or on the Company's website at www.colgatepalmolive.com.

Non-GAAP Financial Measures

The following provides definitions and other information regarding the non-GAAP financial measures used in this press release and/or the related webcast, which may not be the same as or comparable to similar measures presented by other companies:

* Base Business: Base Business refers to non-GAAP measures of operating results that exclude certain items. Base Business operating results exclude, as applicable, charges and benefits resulting from the Global Growth and Efficiency Program, a charge related to U.S. tax reform, acquisition-related costs and a benefit related to a recent reorganization of the ownership structure of certain foreign subsidiaries and a new operating structure being implemented within one of the Company's divisions. * Organic sales growth: Net sales growth excluding the impact of foreign exchange, acquisitions and divestments. * Free cash flow before dividends: Net cash provided by operations less Capital expenditures.

This press release discusses Net sales growth (GAAP) and Organic sales growth (non-GAAP). Management believes the organic sales growth measure provides investors and analysts with useful supplemental information regarding the Company's underlying sales trends by presenting sales growth excluding the external factor of foreign exchange as well as the impact from acquisitions and divestments. See "Geographic Sales Analysis Percentage Changes" for the three and nine months ended September 30, 2020 versus 2019 included with this release for a comparison of Organic sales growth to Net sales growth in accordance with GAAP.

Worldwide Gross profit, Gross profit margin, Selling, general and administrative expenses, Selling, general and administrative expenses as a percentage of Net sales, Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, Effective income tax rate, Net income attributable to Colgate-Palmolive Company and Diluted earnings per common share are disclosed on both an as reported (GAAP) and Base Business (non-GAAP) basis. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company's normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, gains and losses from certain divestitures and certain unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company's business performance, and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company's underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. See "Non-GAAP Reconciliations" for the three and nine months ended September 30, 2020 and 2019 included with this release for a reconciliation of these financial measures to the related GAAP measures.

The Company uses these financial measures internally in its budgeting process, to evaluate segment and overall operating performance and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company's underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

As management uses free cash flow before dividends to evaluate the Company's ability to satisfy current and future obligations, repurchase stock, pay dividends and fund future business opportunities, the Company believes that it provides useful information to investors. Free cash flow before dividends is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. See "Condensed Consolidated Statements of Cash Flows" for the nine months ended September 30, 2020 and 2019 for a comparison of free cash flow before dividends to Net cash provided by operations as reported in accordance with GAAP.

(See attached tables for third quarter results.)

Table 1

Colgate-Palmolive Company



Condensed Consolidated Statements of Income



For the Three Months Ended September 30, 2020 and 2019



(Dollars in Millions Except Per Share Amounts) (Unaudited)



2020 2019



Net sales $ 4,153 $ 3,928



Cost of sales 1,613 1,612



Gross profit 2,540 2,316



Gross profit margin 61.2 % 59.0 %



Selling, general and administrative expenses 1,518 1,429



Other (income) expense, net 4 31



Operating profit 1,018 856



Operating profit margin 24.5 % 21.8 %



Non-service related postretirement costs 15 27



Interest (income) expense, net 36 35



Income before income taxes 967 794



Provision for income taxes 222 167



Effective tax rate 23.0 % 21.0 %



Net income including noncontrolling interests 745 627



Less: Net income attributable to noncontrolling 47 49 interests



Net income attributable to Colgate-Palmolive Company $ 698 $ 578



Earnings per common share

Basic $ 0.81 $ 0.67

Diluted $ 0.81 $ 0.67



Supplemental Income Statement Information

Average common shares outstanding

Basic 859.0 858.7

Diluted 861.8 861.2



Advertising $ 476 $ 423

Table 2

Colgate-Palmolive Company



Condensed Consolidated Statements of Income



For the Nine Months Ended September 30, 2020 and 2019



(Dollars in Millions Except Per Share Amounts) (Unaudited)



2020 2019



Net sales $ 12,147 $ 11,678



Cost of sales 4,773 4,767



Gross profit 7,374 6,911



Gross profit margin 60.7 % 59.2 %



Selling, general and administrative expenses 4,386 4,163



Other (income) expense, net 72 125



Operating profit 2,916 2,623



Operating profit margin 24.0 % 22.5 %



Non-service related postretirement costs 56 79



Interest (income) expense, net 107 113



Income before income taxes 2,753 2,431



Provision for income taxes 585 586



Effective tax rate 21.2 % 24.1 %



Net income including noncontrolling interests 2,168 1,845



Less: Net income attributable to noncontrolling 120 121 interests



Net income attributable to Colgate-Palmolive Company $ 2,048 $ 1,724



Earnings per common share

Basic^(1) $ 2.39 $ 2.00

Diluted^(1) $ 2.38 $ 2.00



Supplemental Income Statement Information

Average common shares outstanding

Basic 857.7 860.1

Diluted 859.5 862.4



Advertising $ 1,399 $ 1,268

Note: (1) Basic and diluted earnings per share are computed independently for each quarter and any year-to-date period presented. As a result of changes in shares outstanding during the year and rounding, the sum of the quarters' earnings per share may not equal the earnings per share for any year-to-date period.

Table 3

Colgate-Palmolive Company



Condensed Consolidated Balance Sheets



As of September 30, 2020, December 31, 2019 and September 30, 2019



(Dollars in Millions) (Unaudited)



September December September 30, 31, 30,

2020 2019 2019

Cash and cash equivalents $ 989 $ 883 $ 948

Receivables, net 1,292 1,440 1,495

Inventories 1,578 1,400 1,371

Other current assets 508 456 535

Property, plant and equipment, net 3,506 3,750 3,689

Goodwill 3,711 3,508 3,532

Other intangible assets, net 2,838 2,667 2,535

Other assets 1,044 930 921

Total assets $ 15,466 $ 15,034 $ 15,026



Total debt $ 7,236 $ 7,847 $ 8,151

Other current liabilities 4,216 3,524 3,726

Other non-current liabilities 2,941 3,105 2,975

Total liabilities 14,393 14,476 14,852

Total Colgate-Palmolive Company 653 117 (324) shareholders' equity

Noncontrolling interests 420 441 498

Total liabilities and equity $ 15,466 $ 15,034 $ 15,026



Supplemental Balance Sheet Information

Debt less cash, cash equivalents and $ 6,167 $ 6,941 $ 7,094 marketable securities^(1)

Working capital % of sales (5.7) % (1.6) % (2.8) %

Note: (1) Marketable securities of $80, $23 and $109 as of September 30, 2020, December 31, 2019 and September 30, 2019, respectively, are included in Other current assets.

Table 4

Colgate-Palmolive Company



Condensed Consolidated Statements of Cash Flows



For the Nine Months Ended September 30, 2020 and 2019



(Dollars in Millions) (Unaudited)



2020 2019

Operating Activities

Net income including noncontrolling interests $ 2,168 $ 1,845

Adjustments to reconcile Net income includingnoncontrolling interests to Net cash provided by operations:

Depreciation and amortization 400 386

Restructuring and termination benefits, net of cash (66) 11

Stock-based compensation expense 85 83

Deferred income taxes (124) 79

Voluntary benefit plan contributions - (113)

Cash effects of changes in:

Receivables 62 (65)

Inventories (214) (69)

Accounts payable and other accruals 468 (52)

Other non-current assets and liabilities (23) 58

Net cash provided by operations 2,756 2,163



Investing Activities

Capital expenditures (249) (226)

Purchases of marketable securities and investments (109) (152)

Proceeds from sale of marketable securities and 42 14 investments

Payment for acquisitions, net of cash acquired (352) (1,711)

Net cash used in investing activities (668) (2,075)



Financing Activities

Principal payments on debt (3,269) (4,184)

Proceeds from issuance of debt 2,500 6,008

Dividends paid (1,162) (1,140)

Purchases of treasury shares (578) (1,024)

Proceeds from exercise of stock options 640 490

Purchases of non-controlling interests in subsidiaries (99) -

Net cash provided by (used in) financing activities (1,968) 150



Effect of exchange rate changes on Cash and cash (14) (16) equivalents

Net increase (decrease) in Cash and cash equivalents 106 222

Cash and cash equivalents at beginning of the period 883 726

Cash and cash equivalents at end of the period $ 989 $ 948



Supplemental Cash Flow Information

Free cash flow before dividends (Net cash provided by operations less Capital expenditures)

Net cash provided by operations $ 2,756 $ 2,163

Less: Capital expenditures (249) (226)

Free cash flow before dividends $ 2,507 $ 1,937





Income taxes paid $ 606 $ 669

Table 5

Colgate-Palmolive Company



Segment Information



For the Three and Nine Months Ended September 30, 2020 and 2019



(Dollars in Millions) (Unaudited)



Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Net Sales

Oral, Personal and Home Care



North America $ 923 $ 869 $ 2,801 $ 2,568

Latin America 837 881 2,531 2,700

Europe 712 607 2,004 1,798

Asia Pacific 722 690 1,980 2,035

Africa/Eurasia 255 248 736 732



Total Oral, Personal and 3,449 3,295 10,052 9,833 Home Care



Pet Nutrition 704 633 2,095 1,845



Total Net Sales $ 4,153 $ 3,928 $ 12,147 $ 11,678





Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Operating Profit

Oral, Personal and Home Care



North America $ 242 $ 248 $ 753 $ 750

Latin America 250 235 728 718

Europe 169 153 482 452

Asia Pacific 222 193 559 557

Africa/Eurasia 61 48 174 141



Total Oral, Personal and 944 877 2,696 2,618 Home Care



Pet Nutrition 196 169 588 501

Corporate^(1) (122) (190) (368) (496)



Total Operating Profit $ 1,018 $ 856 $ 2,916 $ 2,623

Note: (1) Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs and gains and losses on sales of non-core product lines and assets.

Corporate Operating profit (loss) for the three months ended September 30, 2020 included benefits of $16 resulting from the Global Growth and Efficiency Program. Corporate Operating profit (loss) for the three months ended September 30, 2019 included charges of $26 resulting from the Global Growth and Efficiency Program, which ended on December 31, 2019, and acquisition-related costs of $18.

Corporate Operating profit (loss) for the nine months ended September 30, 2020 included a charge for acquisition-related costs of $6 and benefits of $16 resulting from the Global Growth and Efficiency Program. Corporate Operating profit (loss) for the nine months ended September 30, 2019 included charges of $94 resulting from the Global Growth and Efficiency Program, which ended on December 31, 2019, and acquisition-related costs of $18.

Table 6

Colgate-Palmolive Company



Geographic Sales Analysis Percentage Changes



For the Three Months Ended September 30, 2020 vs. 2019



(Unaudited)



COMPONENTS OF SALES CHANGE



Pricing

Coupons

Sales Consumer &

Change Organic As Organic Trade Foreign Reported

Region As Sales Volume Volume Incentives Exchange Reported Change



Total Company^ 5.5 % 7.5 % 5.0 % 3.0 % 4.5 % (4.0) %(1)



North America^ 6.5 % 5.0 % 3.0 % 1.5 % 3.5 % - %(1)



Latin America (5.0) % 11.5 % 2.0 % 2.0 % 9.5 % (16.5) %



Europe^(1) 17.0 % 3.0 % 12.0 % 2.5 % 0.5 % 4.5 %



Asia Pacific 4.5 % 4.5 % 2.5 % 2.5 % 2.0 % - %



Africa/Eurasia 2.5 % 12.0 % 6.5 % 5.5 % 6.5 % (10.5) %^(1)



Total CP 4.5 % 6.5 % 4.5 % 2.0 % 4.5 % (4.5) %Products^(1)



Hill's 11.0 % 11.0 % 6.5 % 6.5 % 4.5 % - %





Emerging (1.0) % 8.5 % 2.5 % 2.5 % 6.0 % (9.5) %Markets^(2)



Developed 12.0 % 6.5 % 7.0 % 3.5 % 3.0 % 2.0 %Markets^(2)

Notes: (1) The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 2% for Total Company and 1.5%, 9.5%, 1.0% and 2.5% for North America, Europe, Africa/Eurasia and Total CP Products, respectively.

(2) Emerging Markets include Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe. The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 0.0% for Emerging Markets and 3.5% for Developed Markets.

Table 7

Colgate-Palmolive Company



Geographic Sales Analysis Percentage Changes



For the Nine Months Ended September 30, 2020 and 2019



(Unaudited)



COMPONENTS OF SALES CHANGE



Pricing

Coupons

Sales Consumer &

Change Organic As Organic Trade Foreign Reported

Region As Sales Volume Volume Incentives Exchange Reported Change



Total Company^ 4.0 % 6.5 % 5.5 % 3.5 % 3.0 % (4.5) %(1)



North America^ 9.0 % 8.0 % 8.5 % 7.0 % 1.0 % (0.5) %(1)



Latin America (6.0) % 8.5 % 0.5 % 0.5 % 8.0 % (14.5) %



Europe^(1) 11.5 % 2.5 % 12.0 % 3.0 % (0.5) % - %



Asia Pacific (2.5) % (1.0) % (3.0) % (3.0) % 2.0 % (1.5) %



Africa/Eurasia 0.5 % 7.5 % 5.5 % 4.0 % 3.5 % (8.5) %^(1)



Total CP 2.0 % 5.5 % 4.5 % 2.5 % 3.0 % (5.5) %Products^(1)



Hill's 13.5 % 14.5 % 10.0 % 10.0 % 4.5 % (1.0) %





Emerging (4.5) % 4.5 % (0.5) % (0.5) % 5.0 % (9.0) %Markets^(2)



Developed 12.0 % 9.0 % 10.5 % 7.5 % 1.5 % - %Markets^(2)

Notes: (1) The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 2.0% for Total Company and 1.5%, 9.0%, 1.5% and 2.0% for North America, Europe, Africa/Eurasia and Total CP Products, respectively.

(2) Emerging Markets include Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe. The impact of the previously disclosed acquisitions of the Filorga skin health business, the joint venture in Nigeria and the Hello oral care business on as reported volume was 0.0% for Emerging Markets and 3.0% for Developed Markets.

Table 8

Colgate-Palmolive Company



Non-GAAP Reconciliations



For the Three Months Ended September 30, 2020 and 2019



(Dollars in Millions Except Per Share Amounts) (Unaudited)



Gross Profit 2020 2019

Gross profit, GAAP $ 2,540 $ 2,316

Global Growth and Efficiency Program - 1

Gross profit, non-GAAP $ 2,540 $ 2,317



Basis Point

Gross Profit Margin 2020 2019 Change

Gross profit margin, GAAP 61.2 % 59.0 % 220

Global Growth and Efficiency Program - % - %

Gross profit margin, non-GAAP 61.2 % 59.0 % 220





Selling, General and Administrative Expenses 2020 2019

Selling, general and administrative $ 1,518 $ 1,429 expenses, GAAP

Global Growth and Efficiency Program ^(1) 3 (28)

Selling, general and administrative $ 1,521 $ 1,401 expenses, non-GAAP



Basis Point

Selling, General and Administrative Expenses 2020 2019 Changeas a Percentage of Net Sales

Selling, general and administrative expenses 36.6 % 36.4 % 20 as a percentage of Net sales, GAAP

Global Growth and Efficiency Program - % (0.7) %

Selling, general and administrative expenses 36.6 % 35.7 % 90 as a percentage of Net sales, non-GAAP





Other (Income) Expense, Net 2020 2019

Other (income) expense, net, GAAP $ 4 $ 31

Global Growth and Efficiency Program ^(1) 13 3

Acquisition-related costs - (18)

Other (income) expense, net, non-GAAP $ 17 $ 16





Operating Profit 2020 2019 % Change

Operating profit, GAAP $ 1,018 $ 856 19 %

Global Growth and Efficiency Program ^(1) (16) 26

Acquisition-related costs - 18

Operating profit, non-GAAP $ 1,002 $ 900 11 %



Basis Point

Operating Profit Margin 2020 2019 Change

Operating profit margin, GAAP 24.5 % 21.8 % 270

Global Growth and Efficiency Program ^(1) (0.4) % 0.7 %

Acquisition-related costs - % 0.4 %

Operating profit margin, non-GAAP 24.1 % 22.9 % 120





Non-Service Related Postretirement Costs 2020 2019

Non-service related postretirement costs, $ 15 $ 27 GAAP

Global Growth and Efficiency Program - (1)

Non-service related postretirement costs, $ 15 $ 26 non-GAAP

Table 8

Continued

Colgate-Palmolive Company



Non-GAAP Reconciliations



For the Three Months Ended September 30, 2020 and 2019



(Dollars in Millions Except Per Share Amounts) (Unaudited)



2020

Provision Effective Income For Net Income Net Income Diluted Before Including Attributable To Income Earnings Income Income Noncontrolling Colgate-Palmolive Per Share Taxes Taxes^(2) Interests Company Tax Rate^ (3)

As Reported GAAP $ 967 $ 222 $ 745 $ 698 23.0 % $ 0.81

Global Growth andEfficiency Program ^ (16) (3) (13) (13) - % (0.02) (1)

Non-GAAP $ 951 $ 219 $ 732 $ 685 23.0 % $ 0.79





2019

Provision Effective Income For Net Income Net Income Diluted Before Including Attributable To Income Earnings Income Income Noncontrolling Colgate-Palmolive Per Share Taxes Taxes^(2) Interests Company Tax Rate^ (3)

As Reported GAAP $ 794 $ 167 $ 627 $ 578 21.0 % $ 0.67

Global Growth and 27 5 22 22 (0.1) % 0.03 Efficiency Program

Acquisition-related 18 4 14 14 0.1 % 0.01 costs

Non-GAAP $ 839 $ 176 $ 663 $ 614 21.0 % $ 0.71

The impact of non-GAAP adjustments may not necessarily equal the difference between "GAAP" and "non-GAAP" as a result of rounding.

Notes: (1) During the three months ended September 30, 2020, the Company adjusted the accrual balances related to certain projects approved prior to the conclusion of the Global Growth and Efficiency Program, which ended on December 31, 2019, resulting in a reduction of $16 ($13 aftertax). No new restructuring projects were approved for implementation during the nine months ended September 30, 2020.

(2) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.

(3) The impact of non-GAAP items on the Company's effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment on Income before income taxes and Provision for income taxes.

Table 9

Colgate-Palmolive Company



Non-GAAP Reconciliations



For the Nine Months Ended September 30, 2020 and 2019



(Dollars in Millions Except Per Share Amounts) (Unaudited)



Gross Profit 2020 2019

Gross profit, GAAP $ 7,374 $ 6,911

Acquisition-related costs 4 -

Global Growth and Efficiency Program - 9

Gross profit, non-GAAP $ 7,378 $ 6,920



Basis Point

Gross Profit Margin 2020 2019 Change

Gross profit margin, GAAP 60.7 % 59.2 % 150

Global Growth and Efficiency Program - % 0.1 %

Gross profit margin, non-GAAP 60.7 % 59.3 % 140





Selling, General and Administrative Expenses 2020 2019

Selling, general and administrative $ 4,386 $ 4,163 expenses, GAAP

Global Growth and Efficiency Program ^(1) 3 (42)

Selling, general and administrative $ 4,389 $ 4,121 expenses, non-GAAP



Basis Point

Selling, General and Administrative Expenses 2020 2019 Changeas a Percentage of Net Sales

Selling, general and administrative expenses 36.1 % 35.6 % 50 as a percentage of Net sales, GAAP

Global Growth and Efficiency Program - % (0.3) %

Selling, general and administrative expenses 36.1 % 35.3 % 80 as a percentage of Net sales, non-GAAP





Other (Income) Expense, Net 2020 2019

Other (income) expense, net, GAAP $ 72 $ 125

Global Growth and Efficiency Program ^(1) 13 (43)

Acquisition-related costs (2) (18)

Other (income) expense, net, non-GAAP $ 83 $ 64





Operating Profit 2020 2019 % Change

Operating profit, GAAP $ 2,916 $ 2,623 11 %

Global Growth and Efficiency Program ^(1) (16) 94

Acquisition-related costs 6 18

Operating profit, non-GAAP $ 2,906 $ 2,735 6 %



Basis Point

Operating Profit Margin 2020 2019 Change

Operating profit margin, GAAP 24.0 % 22.5 % 150

Global Growth and Efficiency Program ^(1) (0.1) % 0.8 %

Acquisition-related costs - % 0.1 %

Operating profit margin, non-GAAP 23.9 % 23.4 % 50





Non-Service Related Postretirement Costs 2020 2019

Non-service related postretirement costs, $ 56 $ 79 GAAP

Global Growth and Efficiency Program - (4)

Non-service related postretirement costs, $ 56 $ 75 non-GAAP

Table 9

Continued

Colgate-Palmolive Company



Non-GAAP Reconciliations



For the Nine Months Ended September 30, 2020 and 2019



(Dollars in Millions Except Per Share Amounts) (Unaudited)



2020

Provision Effective Income For Net Income Net Income Diluted Before Including Attributable To Income Earnings Income Income Noncontrolling Colgate-Palmolive Per Share Taxes Taxes^(2) Interests Company Tax Rate^ (3)

As Reported GAAP $ 2,753 $ 585 $ 2,168 $ 2,048 21.2 % $ 2.38

Global Growth and (16) (3) (13) (13) - % (0.02) Efficiency Program ^(1)

Subsidiary and operating - 71 (71) (71) 2.7 % (0.08) structure initiatives

Acquisition-related costs 6 2 4 4 - % 0.01

Non-GAAP $ 2,743 $ 655 $ 2,088 $ 1,968 23.9 % $ 2.29





2019

Provision Effective Income For Net Income Net Income Diluted Before Including Attributable To Income Earnings Income Income Noncontrolling Colgate-Palmolive Per Share Taxes Taxes^(2) Interests Company Tax Rate^ (3)

As Reported GAAP $ 2,431 $ 586 $ 1,845 $ 1,724 24.1 % $ 2.00

Global Growth and 98 23 75 75 - % 0.09 Efficiency Program

U.S. tax reform 18 4 14 14 - % 0.01

Non-GAAP $ 2,547 $ 613 $ 1,934 $ 1,813 24.1 % $ 2.10

The impact of non-GAAP adjustments may not necessarily equal the difference between "GAAP" and "non-GAAP" as a result of rounding.

Notes: (1) During the nine months ended September 30, 2020, the Company adjusted the accrual balances related to certain projects approved prior to the conclusion of the Global Growth and Efficiency Program, which ended on December 31, 2019, resulting in a reduction of $16 ($13 aftertax). No new restructuring projects were approved for implementation during the nine months ended September 30, 2020.

(2) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.

(3) The impact of non-GAAP items on the Company's effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment on Income before income taxes and Provision for income taxes.

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