Kimberly-Clark — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net sales for the quarter were $4.1 billion, down 0.4% year-over-year, while organic sales declined 1.3%.
• Year-to-date net sales for the first nine months were $12.5 billion, up 1.0% year-over-year, with organic sales growth of 0.3%.
• Reported gross margin was 34.9% for the quarter compared to 36.0% in the prior year; adjusted gross margin was 35.5%, a decrease of 130 basis points year-over-year.
• Year-to-date gross margin was 36.7% compared to 36.0% in the prior year; adjusted gross margin was 37.4%, flat year-over-year.
• Reported operating profit was $516 million for the quarter compared to $621 million in the prior year; adjusted operating profit was $677 million, down 0.9% year-over-year.
• Year-to-date operating profit was $1.9 billion compared to $1.8 billion in the prior year; adjusted operating profit was $2.2 billion, up 3.0% year-over-year.
• Diluted EPS from continuing operations was $1.19 for the quarter compared to $1.01 in the prior year; adjusted EPS from continuing operations was $1.70, up 17.2% year-over-year.
• Year-to-date diluted EPS from continuing operations was $4.10 compared to $3.73 in the prior year; adjusted EPS from continuing operations was $5.10, up 8.5% year-over-year.
• Diluted EPS attributable to Kimberly-Clark was $5.37 for the quarter compared to $1.34 in the prior year; adjusted EPS attributable to Kimberly-Clark was $1.70, down 6.6% year-over-year.
• Year-to-date diluted EPS attributable to Kimberly-Clark was $8.41 compared to $4.57 in the prior year; adjusted EPS attributable to Kimberly-Clark was $5.79, up 2.1% year-over-year.
• Net interest expense was $32 million for the quarter compared to $59 million in the prior year.
• The effective tax rate was 20.2% for the quarter compared to 45.4% in the prior year; the adjusted effective tax rate was 19.5% compared to 26.5% in the prior year.
• Year-to-date effective tax rate was 27.5% compared to 30.6% in the prior year; the adjusted effective tax rate was 22.3% compared to 22.6% in the prior year.
• Cash provided by operations for the first nine months was $2.4 billion compared to $1.8 billion in the prior year.
• Year-to-date capital spending was $1.0 billion compared to $741 million in the prior year.
• Total debt from continuing operations was $6.5 billion as of September 30, 2026, down from $7.2 billion as of December 31, 2025.
• The company returned $1.3 billion to shareholders through dividends in the first nine months.

Guidance and Future Outlook:

• The company expects 2026 organic sales growth to be approximately 100 basis points below its weighted average category growth of approximately 1.7% on a trailing twelve-month basis.
• Adjusted operating profit is expected to grow mid-single digits on a constant-currency basis.
• Adjusted earnings per share from continuing operations are expected to grow high single digits on a constant-currency basis.
• Adjusted earnings per share attributable to Kimberly-Clark are expected to see a low single-digit decline on a constant-currency basis.
• The outlook reflects assumptions subject to change given the macro environment.

Business Segments and Product Lines:

• North America (NA): Net sales of $2.7 billion increased 0.9% in the quarter, driven by transactions with the Arbex Joint Venture and organic sales growth of 0.4%. Organic sales benefitted from volume-led growth of 2.0%, offset by lower pricing from increased promotional activity. Year-to-date organic sales increased 0.5%.
• International Personal Care (IPC): Net sales of $1.4 billion decreased 2.8% in the quarter. Organic sales decreased 4.6%, driven by a 770 basis point headwind from the China social media disruption, partially offset by growth in South Korea, Indonesia, and Enterprise Markets. Year-to-date organic sales were relatively flat.
• Operating profit for NA increased 2.7% in the quarter to $657 million, driven by strong productivity savings and lower advertising spend.
• Operating profit for IPC decreased 32.7% in the quarter to $144 million, driven by higher input costs and the China social media disruption headwind.

Market and Competitive Landscape:

• The company faces headwinds from the China social media disruption, which impacted organic sales by approximately 270 basis points in the quarter and 300 basis points year-to-date.
• Retailer year-over-year inventory movements in North America created additional headwinds in the quarter.
• The company exited its private label diaper business in the US, contributing to a 0.5% decline in year-to-date sales.
• The company competes in categories with a weighted average growth rate of approximately 1.7% on a trailing twelve-month basis.

Risks and Challenges:

• Significant discrete unfavorable impacts included charges related to the 2024 Transformation Initiative ($29 million in the quarter, $93 million year-to-date) and the Kenvue Acquisition ($106 million in the quarter, $263 million year-to-date).
• The Arbex Joint Venture reported a net loss of $20 million in the quarter, inclusive of acquisition accounting and restructuring charges.
• Income from discontinued operations included a pre-tax gain of approximately $1.4 billion recognized upon completion of the IFP Transaction, alongside separation costs.
• Risks include potential integration costs for Kenvue, delays in the Kenvue Integration Program, loss of key employees or customers, and risks related to the IFP Transaction.
• Macroeconomic risks include war in Ukraine, government trade actions, pandemics, foreign currency exchange rate fluctuations, and supply chain disruptions.

Management Commentary and Tone:

• Chairman and CEO Mike Hsu stated the completion of the Kenvue transaction marks a defining moment in the company's 154-year history.
• Management described the third quarter results as reflecting a dynamic operating environment with several discrete impacts, but noted the underlying momentum remains strong.
• Hsu expressed confidence that the company's proven growth engine and industry-leading productivity gains will enable continued growth.
• Management emphasized the transition to a combined company focused on delivering better care and enabling smarter health.
• The tone was forward-looking and confident regarding the "generational value creation opportunity" despite current headwinds.

Other Key Points:

• The company completed the Kenvue transaction on November 2, 2026, and the International Family Care and Professional ("IFP") transaction on July 1, 2026.
• The company is a Dividend Aristocrat, having paid a dividend for 92 consecutive years and increasing its dividend in each of the past 54 consecutive years.
• The company's portfolio includes brands such as Huggies, Listerine, Cottonelle, Neutrogena, Depend, Tylenol, Kleenex, Johnson's, Kotex, and Scott.
• The company serves consumers in more than 175 countries.
• The KMB stock is held by more than 400 Exchange Traded Funds.
• The company recognized a pre-tax gain of approximately $1.4 billion upon completion of the IFP Transaction.
• The company recognized charges of $55 million related to the 2024 Transformation Initiative and $106 million related to the Kenvue Acquisition in the third quarter.
• The company recognized $52 million of pre-tax separation costs related to the IFP Transaction in the quarter.