Kimberly-Clark — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the quarter were $4.1 billion, down 0.4% year-over-year; organic sales declined 1.3%.
• Year-to-date net sales were $12.5 billion, up 1.0% year-over-year; organic sales growth was 0.3%.
• Reported gross margin was 34.9% for the quarter (36.0% prior year) and 36.7% year-to-date (36.0% prior year).
• Adjusted gross margin was 35.5% for the quarter (down 130 basis points year-over-year) and 37.4% year-to-date (flat year-over-year).
• Operating profit was $516 million for the quarter (down from $621 million prior year) and $1.9 billion year-to-date (up from $1.8 billion prior year).
• Adjusted operating profit was $677 million for the quarter (down 0.9% year-over-year) and $2.2 billion year-to-date (up 3.0% year-over-year).
• Diluted EPS from continuing operations was $1.19 for the quarter (up from $1.01) and $4.10 year-to-date (up from $3.73).
• Adjusted EPS from continuing operations was $1.70 for the quarter (up 17.2% year-over-year) and $5.10 year-to-date (up 8.5% year-over-year).
• Diluted EPS attributable to Kimberly-Clark was $5.37 for the quarter (up from $1.34) and $8.41 year-to-date (up from $4.57).
• Adjusted EPS attributable to Kimberly-Clark was $1.70 for the quarter (down 6.6% year-over-year) and $5.79 year-to-date (up 2.1% year-over-year).
• Net interest expense was $32 million for the quarter (down from $59 million) and $159 million year-to-date (down from $196 million).
• Effective tax rate was 20.2% for the quarter (down from 45.4%) and 27.5% year-to-date (down from 30.6%); adjusted effective tax rate was 19.5% for the quarter and 22.3% year-to-date.
• Income from discontinued operations was $1.4 billion for the quarter (up from $110 million) and $1.4 billion year-to-date (up from $281 million), driven by a pre-tax gain of approximately $1.4 billion from the IFP Transaction.
• Cash provided by operations for the first nine months was $2.4 billion (up from $1.8 billion).
• Year-to-date capital spending was $1.0 billion (up from $741 million).
• Total debt from continuing operations was $6.5 billion as of September 30, 2026, down from $7.2 billion as of December 31, 2025.
• Cash and cash equivalents were $1.874 billion as of September 30, 2026, up from $688 million as of December 31, 2025.

Guidance and Future Outlook

• 2026 organic sales growth is expected to be approximately 100 basis points below the weighted average category growth of 1.7% on a trailing twelve-month basis.
• The outlook reflects approximately 100 basis points of unfavorable impacts at a total company level from the China social media disruption.
• Adjusted operating profit is expected to grow mid-single digits on a constant-currency basis.
• Adjusted EPS from continuing operations is expected to grow high single digits on a constant-currency basis.
• Adjusted EPS attributable to Kimberly-Clark is expected to see a low single-digit decline on a constant-currency basis.

Business Segments and Product Lines

• North America (NA): Net sales increased 0.9% to $2.7 billion; organic sales grew 0.4% driven by volume-led growth of 2.0%, partially offset by lower pricing and retailer inventory movements. Operating profit increased 2.7% to $657 million.
• International Personal Care (IPC): Net sales decreased 2.8% to $1.4 billion; organic sales declined 4.6% due to a 770 basis point headwind from the China social media disruption, partially offset by growth in South Korea, Indonesia, and Enterprise Markets. Operating profit decreased 32.7% to $144 million.
• Year-to-date, IPC net sales increased 3.4% to $4.4 billion, while organic sales growth was relatively flat (0.1%).
• The company exited its private label diaper business in the US, contributing a 0.5% decline to year-to-date organic sales.
• Sales recognized under supply agreements with the Arbex Joint Venture contributed to net sales growth in both NA and IPC segments.

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 a 130 basis point headwind in the quarter.
• The company competes in categories with a trailing twelve-month growth rate of approximately 1.7%.
• The company is a Dividend Aristocrat, having paid a dividend for 92 consecutive years and increased it for 54 consecutive years.

Risks and Challenges

• Risks include the successful integration of Kenvue, potential delays in realizing synergies, and higher-than-expected integration costs.
• Risks related to the IFP Transaction include significant transaction and separation costs, adverse market reactions, and regulatory challenges.
• Risks include the 2024 Transformation Initiative implementation, including potential disruptions to business or operations.
• Macroeconomic risks include war in Ukraine, war in Iran, government trade actions, pandemics, and fluctuations in foreign currency exchange rates.
• Risks include the company's substantially increased indebtedness following the Kenvue Acquisition and the ability to reduce indebtedness and maintain credit ratings.
• Risks include the potential for impairment of goodwill and intangible assets, particularly those recorded in connection with the Kenvue Acquisition.

Management Commentary and Tone

• CEO Mike Hsu stated the completion of the Kenvue transaction marks a "defining moment" and the team is focused on delivering "better care, in more hands, and enabling smarter health."
• Management described the third quarter results as reflecting a "dynamic operating environment and several discrete impacts" but noted the "underlying momentum of our business remains strong."
• Hsu expressed confidence that the company's "proven growth engine" and "industry-leading productivity gains" will enable continued growth.
• Management highlighted the "generational value creation opportunity" in joining forces with Kenvue colleagues.

Other Key Points

• The company completed the Kenvue acquisition on November 2, 2026.
• The company completed the International Family Care and Professional (IFP) transaction on July 1, 2026, resulting in a pre-tax gain of approximately $1.4 billion recognized in the third quarter.
• The Arbex Joint Venture (formed as part of the IFP Transaction) reported a net loss of $20 million for the quarter, inclusive of acquisition accounting and restructuring charges.
• The company returned $1.3 billion to shareholders through dividends in the first nine months of 2026.
• Cash dividends declared for the quarter were $1.28 per share, up 1.6% from $1.26 in the prior year.
• The company reported $55 million in charges related to the 2024 Transformation Initiative and $106 million related to the Kenvue Acquisition in the third quarter.
• The company reported $52 million of pre-tax separation costs related to the IFP Transaction in the third quarter.
• The company is a large cap growth and value stock and core S&P 500 equity held by more than 400 Exchange Traded Funds.