http://www.morningstar.com/earnings/34573184-kimberlyclark-corp-kmb-q4-2011.aspx

Kimberly-Clark Corp KMB
Q4 2011 Earnings Call Transcript

Transcript Call Date 01/24/2012

Operator: Ladies and gentlemen, thank you for your patience in holding. We now have your speakers in conference. Please be aware each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the lines for your questions. At that time, instructions will be given as to the procedure to follow, if you'd like to ask a question.

It is now my pleasure to introduce today's first speaker, Mr. Paul Alexander.

Paul J. Alexander - VP, IR: Thanks, David and good morning, everyone. Welcome to our Year End Earnings Conference Call. Here with me today in Dallas are Tom Falk, Chairman and CEO; Mark Buthman, Senior VP and CFO; and Mike Azbell, Vice President and Controller.

Here is the agenda for our call. Mark will begin with the review of our fourth quarter results, followed by an update on pulp and tissue restructuring. Tom will then provide his perspectives on our full year results and our 2012 outlook. We'll finish with Q&A.

As usual, we have a presentation of today's materials in the Investors section of our website. This morning's presentation also includes an appendix with the details of our 2012 planning assumptions.

Before we begin, let me remind you, we'll be making forward-looking statements today. There can be no assurance that future events will occur as anticipated or that our results will be as estimated. Please see the Risk Factors section of our latest Annual Report on Form 10-K for a further discussion of forward-looking statements.

I'd also like to point out that we will be referring to adjusted results and outlook, both of which exclude certain items described in this morning's news release.

For further information on these adjustments and reconciliations to comparable financial measures determined in accordance with GAAP, please see today's news release and additional information on our website.

With that I'll turn it over to Mark.

Mark A. Buthman - SVP and CFO: Thanks Paul. Good morning. I'll start with the headlines. First, we achieved organic sales growth of 3%, highlighted by 7% growth in K-C International. Second, we generated solid improvements in both adjusted gross and operating margins; and third, we delivered adjusted earnings per share of $1.28, that's a 7% increase compared to the prior year.

Now, let's cover the details of the quarter. Overall sales increased 2% to $5.2 billion. Organic sales rose 3%, driven by higher net selling prices of 2% and increased sales volumes of 1%. On the other hand, lost sales in conjunction with the divestiture combined with the impact of our pulp and tissue restructuring reduced sales by 1%.

Moving down the P&L, adjusted gross margin was 32.6%. That's up 20 basis points year-on-year. The improvement was driven by higher selling prices and $70 million of FORCE cost savings. These items more than offset cost inflation of $55 million and the negative impact of lower production volumes. Fourth quarter adjusted operating profit rose 9% and adjusted operating margin was 14.7%. That's up 90 basis points compared to the prior year. In addition to the gross margin improvement, adjusted operating margin benefited from flat between the line spending and higher other income.

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