Kimberly Clark

Kimberly Clark repeatedly emphasized the company was planning on further price hikes

Kimberly Clark’s CEO said the company had “taken further action to realize additional pricing” which they expected “to fully offset the effects of inflation over time.” “Mike Hsu — Chairman and Chief Executive Officer: We remain committed to recovering and eventually expanding our margins, and thus we’ve taken further action to realize additional pricing and cost savings to mitigate these headwinds. We continue to expect pricing cost savings to fully offset the effects of inflation over time. Based on the strength of our top line, we’re raising our full year organic sales outlook to increase 5% to 7%. We’re maintaining our adjusted EPS guidance. However, based on current conditions, including our updated input cost outlook, we now expect to be in the lower end of that EPS range. We’ll continue to manage our business with discipline as we navigate near-term headwinds based on the pace and breadth of our pricing actions, we anticipate some volume impact over the balance of the year. Still, we’re encouraged by the overall health of our categories and our brands. Our brands remain essential.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CEO: “We have taken additional pricing actions, that’s globally. And we’ve taken a few actions since the beginning of the year. Actually, we announced another action in North America just last week. “ “Mike Hsu — Chairman and Chief Executive Officer: So overall, I’d say it’s a pretty good balance of both volume and price on the organic outlook. And then on the cost front, yeah, we’re going to need it. We have taken additional pricing actions, that’s globally. And we’ve taken a few actions since the beginning of the year. Actually, we announced another action in North America just last week. And so we continue to execute. And again, overall, philosophically, I’ve said in the past that, we expect pricing to generally offset the effects of inflation over time. It gets tougher as the increases come toward the middle or end of the year to kind of catch up to it.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CEO: Overall, we feel like our pricing execution is going very well. We are driving the realization.” Mike Hsu — Chairman and Chief Executive Officer: Yeah. Thanks, Dara. I’ll start and maybe Nelson can provide some additional color. But overall, I think the organic outlook and the increase in the outlook reflects both volume and price. Overall, we feel like our pricing execution is going very well. We are driving the realization. You can see it in the numbers. But the second part of it is also the volume is holding up a little bit better than we originally planned. And I think that reflects, one, what we said before, which is resilience and the consumer overall, but also the strength of our brands. And we feel really great about the commercial execution that we have around the world. And that includes launches of innovation, improvements in product quality, our digital marketing programs, I think the execution we’re driving at shelf. And so overall, that’s still working despite the necessity for us to price our products to recover the costs and the margins.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark told analysts their price hikes were about “prioritizing margin recovery”

Kimberly Clark’s CEO: “we are sensitive to the pricing, but we also do both, I would say, on both sides understand that we need to be able to profitably grow for the long term.”Mike Hsu — Chairman and Chief Executive Officer: And so I think with those two foundational points, we are sensitive to the pricing, but we also do both, I would say, on both sides understand that we need to be able to profitably grow for the long term. And so, again, we’re sensitive to the the pressure that’s out there. We read the similar news reports. We’ve had the discussions with our customers and we have been taking price, but we are doing it, I would say, thoughtfully and planfully. So maybe that’s part one. And then on the D&E question. Yeah, I think overall price, the pricing and volume strength really reflects the consumer resilience. I mean the essential nature of our categories overall. I would say, Dara, that, consumers, appear to be somewhat more resilient in developed markets.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CEO: “ in the near term, we are prioritizing margin recovery and so our pricing is advanced.” “Mike Hsu — Chairman and Chief Executive Officer: And you’re absolutely right. And we think, again, our broad portfolio of premium through value offering enables us to flex with demand. And I pointed out, in the near term, we are prioritizing margin recovery and so our pricing is advanced. And so we are watching the price gaps and we’ll make the appropriate adjustments as we go through the year.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CFO said that “significant” price hikes had allowed the company to increase their margins and “ based on what we know today, we will continue to expand margins.” “Nelson Urdaneta — Chief Financial Officer: Yeah. And adding to that, I mean, Peter, a couple of things. One, we did expand gross margins in Q2 by 40 basis points. I mean, we realized, significant pricing already versus Q1. So we saw that sequential improvement in Q2. And as we head into the back half and we don’t give guidance on quarterly margins, but we remain confident. And based on what we know today, we will continue to expand margins. I mean, the plans are in place. As a reminder, we will continue to realize pricing and based on what we’ve got today and what we saw in Q2, that will play out in the second half. Secondly, we’ve got our FORCE cost savings, which will accelerate in the in the back half versus what we saw in the first half. And that’s the second component. And then, as you said, there is a more subdued year-over-year impact of the commodities in the back half.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CEO said the company is “prioritizing margin recovery in the near term…. We have to get pricing to improve the margins and restore our margins. ““Mike Hsu — Chairman and Chief Executive Officer: I wouldn’t say that yet. I mean, again, overall, the well said, Jason, is I’m prioritizing and Nelson is prioritizing margin recovery in the near term. And what I will tell the teams internally, the conversation is like I’m not after renting hallow share, right. And so, I don’t really want to jerk our teams back and forth. We’re trying to deliver balanced and sustainable growth for the long term. We have to get pricing to improve the margins and restore our margins. That’s part one. We want to grow our shares over the long term sustainably, over a long term and so we’re going to monitor that. But again, I’m not ready to shift back and forth, quite yet.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CEO said the company was surprised sales didn’t decrease “given al the pricing that we’ve taken”

Kimberly Clark’s CEO: “I think we have said that the volumes have come in slightly better than our original expectation, given all the pricing that we’ve taken.”“Mike Hsu — Chairman and Chief Executive Officer: And so that could shift up or down, right. And then the other wildcard probably is the volume side. And again, I think we have said that the volumes have come in slightly better than our original expectation, given all the pricing that we’ve taken. We could do a touch better in the second half, but that remains to be seen.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CFO: “ We were very encouraged by how our pricing came through. Our teams did pretty well in terms of executing the pricing in the second quarter.”“Nelson Urdaneta — Chief Financial Officer: And then lastly, it’s also our pricing. We were very encouraged by how our pricing came through. Our teams did pretty well in terms of executing the pricing in the second quarter, which sequentially was much better than what we had in the first quarter. And that’s the other element that would bear in how we would see the second half playing out.” (Kimberly Clark Q2 2022 Earnings Call, 7/26/2022)

Kimberly Clark’s CEO repeated to analysts that the company aggressively raised prices

Kimberly Clark’s CEO: “we took decisive action to offset the impact of higher costs with significant pricing actions.” “Mike Hsu, CEO: While our overall financial results were disappointing, we took decisive action to offset the impact of higher costs with significant pricing actions. These actions, which began in the first half, helped us deliver organic sales growth and improved net selling prices in the second half of the year, including strong fourth quarter performance.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO said they had “executed multiple rounds of pricing” globally.Mike Hsu, CEO: Yes. Thanks, Lauren. Yes, a couple of things. One, we have executed multiple rounds of pricing. And I would say globally and generally, our pricing is on track. We announced – I’ll just give you an example in North America. I think we announced in March, in August, in November and then I think we may have had another announcement in December as well. So there have been multiple rounds. I will tell you – and that’s happened globally in most markets around the world for us.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO described its pricing increases as “pretty significant moves.” “Andrea Teixeira: And in terms of like when you said mid-single digits on top of like low-single digit, call it, three to four you already implemented, is that the way we should be thinking? But in total, between 2021 and 2022, you are going to hit high single digit price increase? Is that the way to think? Mike Hsu, CEO: Yes, in general. Again, yes, we – again, as I mentioned, we’ve made multiple rounds. And if you could go back and look at our kind of maybe what’s happened in pricing in North America already, pretty significant moves.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO predicted price increases would offset the majority of inflationary impact

Kimberly Clark’s CEO: “We have taken significant pricing actions and expect pricing to offset a majority of the impact of cost inflation.”“Mike Hsu, CEO: We are committed to recovering and eventually expanding our margins and we expect to make progress this year. We have taken significant pricing actions and expect pricing to offset a majority of the impact of cost inflation. We are confident in our ability to restore our margins to pre-pandemic levels over time. We remain confident in the potential of our brands and categories and in our ability to create meaningful shareholder value, while we work to achieve our purpose of Better Care for a Better World.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO reiterated his expectation for pricing to offset inflation, saying it had executed mid to high single digit increases for 60% of its consumer business. “Mike Hsu, CEO: Hey, Dara, yes, just as a policy, though, I’ll just clarify. I’ll talk about the pricing we’ve implemented. I will not talk about any future pricing actions. Although I’ll say, I take as an approach, I do expect pricing to offset a significant portion of inflation. So that’s just kind of a principle that I’ll kind of put out there. But I’ll talk about what’s already occurred, and I’ll focus on North America as a starting point. We announced mid to high single-digit increases in March, largely in our Personal Care business in North America, but in about 60% of our consumer business last March. We took some further action primarily in tissue on count back in August, and that was effective this quarter. And then we took additional actions that were announced in Q4, generally about a mid-single-digit list increase across most North American consumers. So that kind of should give you a sense of kind of what’s been happening in the marketplace, at least in North America. I would say, in the international market, similar, multiple rounds in Europe, multiple rounds, in some cases, monthly in Latin America, unfortunately and of course, in Asia as well. So it’s pretty extensive.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark plans to continue raising prices throughout 2022

Kimberly Clark’s CEO answered affirmatively to the question of whether to expect “pretty broad price increases in 2022 incrementally.”“Dara Mohsenian: Okay. And it sounds like it’s generally broadly across the board. I don’t know if you want to – it sounds like you don’t want to get into too much specifics. But generally, we’re expecting pretty broad increases in 2022 incrementally. Is that fair? Mike Hsu,CEO: Well, yes, I think that’s the case. And we’re expecting that the pricing that we have in the flow through substantively.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark said it expected mid to high single digit increases on pricing over 2022.“Mike Hsu, CEO: Yes. Just on the pricing, Andrea, I would expect over the course of the year, mid to high single-digit increases on pricing. And that could vary a little bit based on conditions. But again, that’s kind of what we are marching against. And thus far, as I mentioned earlier, we’ve executed multiple actions, and they are generally on track. And so we feel good about that progress. And obviously, we’re keeping a close eye on that. In terms of private labels, I think – and maybe I’ll talk to North America differently. I’d still say private labels are still down in most categories. I think it was up a little bit in bath tissue, but down in most of the other categories. It’s something we’re going to continue to be very focused on. But we’re very pleased with our brand momentum.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

The call made clear the price increases were driven by a desire to “restore” their profit margin

Kimberly-Clark’s CEO promised analysts “we are going to restore our margins with both price and cost initiatives. And we expect our teams to cover the majority of inflation with pricing.” “Mike Hsu, CEO: Yes. So Chris, maybe I will just tack on. I mean historically, what we see is a quick reversion in our commodities, like typically, in 2018, right, the big driver of our increase was pulp. And so that quickly receded in 2019 and 2020 to some extent. And so that’s typically what we will see in our categories. We will see reversion. It always happens in our categories. And so I expect – fully expect over time pulp to come down and the resin-based, whether it’s super board absorbents or non-wovens to come back down. But this cycle is a little different, because the peak is higher, it’s broader and it’s longer. And so regardless of what’s happening with the cycle, we are going to restore our margins with both price and cost initiatives. And we expect our teams to cover the majority of inflation with pricing.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO said while they expected a “reversion” in commodity prices, they were not going to wait “for commodities to come down to drive margin recovery.” “Mike Hsu, CEO: Hi Dara, the other thing I will add is the fundamentals would suggest in our core commodities, there is going to be reversion. But I do not want our teams waiting for commodities to come down to drive margin recovery. And so our plan is to work to recover margins. And then if the commodities – when they do revert, then that will affect – that will change the timing and hopefully move it up.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO said margin recovery would allow them to reallocate more cash to shareholders through dividends and buybacks.“Mike Hsu, CEO: Yes. As soon as we have got the excess cash flow that will allow us to do it, so again, we are in the tough part of the cycle here in terms of capital allocation. Nothing on capital allocation, how we think about it has changed. And those steps are to invest in the business, look to grow the dividend, which I am pleased to say we will do again for the 50th consecutive year. And then beyond that, with the remaining cash flow, we are always looking at M&A. But assuming there is nothing there, then it goes to share buybacks. So, when the margins recover – let me start at the top, right. We are expecting strong top line growth in our business. We are expecting the margins to recover. And when those two things happen, we will get back to the cash generation levels that will enable us to do share repurchases. So, we are committed to shareholder-friendly capital allocation practices as we have done in the past. And we are at about – I think we finished with leverage at 2.3x, excluding restructuring. That’s ahead of the kind of the 2.0 that the agencies like to see for the single A rating. And we do remain committed to the single A rating. So, at this point in time, the way the numbers line up, we don’t have the cash within the rating to do buybacks, but I very much look forward to being able to get back to doing so.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO cited the “essential nature” of its products allowing price hikes

Kimberly Clark’s CEO: “I would say the categories – our categories are essential. And I think the demand that we saw in the fourth quarter kind of highlights the essential nature of our categories. And despite the price increases, we are seeing good volume performance.” “Mike Hsu, CEO: That said there is significant pricing in the plan. And so there will be an elasticity impact, which we have estimated. So, we have volume down a little bit, offsetting some of the organic growth that’s being driven by the commercial programming. And so the reality is, thus far, I would say the categories – our categories are essential. And I think the demand that we saw in the fourth quarter kind of highlights the essential nature of our categories. And despite the price increases, we are seeing good volume performance. And so I’d love to see that our elasticity assumptions are a little conservative and potentially, there could be a little upside. Generally, in our categories, if the other – if the market moves in the direction, generally elasticities are a little lower.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO: “The consumer demand reflects the essential nature of our categories…We expect to make progress on recovering our margins.”Mike Hsu, CEO: But as I mentioned to Chris, the consumer demand reflects the essential nature of our categories. And so we expect to make progress on pricing. We expect to make progress on recovering our margins. And as a principle, I would say we are expecting our teams to be able to price to offset the majority of the inflation.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO responded to questions of demand elasticity by saying: “we recognize that we are putting significant pricing out there….we’re seeing the impact of the essential nature of our categories.”Mike Hsu, CEO: Yes. Tough question because the trick of the elasticity modeling is we’re beyond the range of estimation. So that’s the difficult part of it, Steve. And so you’re kind of estimating what’s happened historically and the price points are higher than they have been. That said, our past experience is, in our last round of pricing, elasticities have come back. The market generally moved in a direction, and elasticities were a little less than we initially estimated, and that’s been our kind of recent history. And so that’s what we’re going on. I think the important thing is we’ve got a very strong growth playbook. I’m working hard. We’ve gotten very good commercial programming across both our professional and consumer businesses. And so there is really good underlying brand momentum. And so we expect that to continue. And we recognize that we are putting significant pricing out there. And – but I think as I mentioned earlier, we’re seeing the impact of the essential nature of our categories.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark’s CEO said their personal care business, which had significant price increases, was “up double digits.”“Mike Hsu, CEO: And then our personal care business globally is doing very, very well, as you can see in the fourth quarter, being up double digits. And we are expecting continued growth there. The offset really from us is we are pushing prices at a pretty high level. And so that’s going to have an effect. And we hope that our elasticity assumptions prove to be a little conservative.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark said Personal Care was “half of our company” and “grew operating profit” for the last two quarters. Mike Hsu, CEO: But then going to the profit dollars, I call out in 2021, consumer tissue, for all the reasons that we have talked about, that was 75% of the operating profit decline. So, there were very specific dynamics that caused it. It was the big driver of the profit decline. But if you look at our personal care business, which is half of our company, strong growth, strong market shares. It actually grew operating profit in the fourth quarter. It also grew in the third quarter. So the second half of the year, the Personal Care segment, which is very healthy, is actually growing operating profit and in the near-term, I will take the dollars, recognizing in the long-term I have to get the margin structure to the right place. So, I just thought I would give a little bit more color by segment there.” (Kimberly-Clark Q4 2021 Earnings Results Call, 1/26/2022)

Kimberly Clark said it was forced to raise prices after boasting of spending billions on stock buybacks and dividends

In March 2021, Kimberly Clark announced it would increase prices in order to “help offset significant commodity cost inflation.” “Kimberly-Clark Corporation (NYSE: KMB) announced today that it is notifying customers in the U.S. and Canada of plans to increase net selling prices across a majority of its North America consumer products business. The increases will be implemented almost entirely through changes in list prices and are necessary to help offset significant commodity cost inflation.  The percentage increases are in the mid-to-high single digits. Nearly all of the increases will be effective in late June and impact the company’s baby and child care, adult care and Scott bathroom tissue businesses.” (Kimberly Clark Press Release, 3/31/2021)

At the beginning of 2021, Kimberly Clark announced a 6.5% increase in its quarterly dividend and authorized a new $5 billion stock buyback program. “On January 25 Kimberly-Clark approved a 6.5% increase in its quarterly dividend, marking is its 49th consecutive annual dividend increase. KMB paid $1.14 to its shareholders for the first quarter of 2021, bringing its forward dividend up to $4.56 and its dividend yield to 3.45%. The company’s board of directors also authorized a new $5 billion share repurchase program a few weeks ago, emphasizing KMB’s efforts to return cash to shareholders.” (Schaeffer’s, 2/17/2021)

Kimberly Clark boasted that it was able to “return” $2.15 billion to shareholders through dividends and stock buybacks in 2020. “Chairman and Chief Executive Officer Mike Hsu said, ‘In 2020, we grew organic sales 6 percent, with healthy underlying performance and increased demand because of COVID-19.  We also significantly increased brand investments and improved our market share positions.  In addition, we achieved $575 million of cost savings and returned $2.15 billion to shareholders through dividends and share repurchases.  Finally, we grew adjusted earnings per share 12 percent, well above our medium-term objective.  I’m extremely proud of what our teams accomplished while staying relentlessly focused on employee health and safety and meeting the needs of our consumers during this unprecedented time period.’” (Kimberly Clark, 1/25/2021)

2020 was the tenth consecutive year that Kimberly Clark returned over $2 billion to shareholders through dividends and buybacks. “Other than paying a hefty dividend, Kimberly Clark returns cash to investors through its share repurchase program. In 2020, the company’s dividends and share repurchases totaled $2.2 billion, marking the 10th consecutive year that Kimberly Clark stock returned at least $2.0 billion to shareholders.” (Income Investors, 7/5/2021)

In July 2021, Kimberly Clark reported planning to spend at least $400 million on stock buybacks for 2021.“Second quarter 2021 share repurchases were 1.2 million shares at a cost of $161 million.  The company now plans for full-year repurchases of $400 to $450 million, below the original target range of $650 to $750 million. Total debt was $9.1 billion at June 30, 2021 and $8.4 billion at the end of 2020.” (Kimberly Clark, 7/23/2021)

YCharts reported that between April 1 2020 and June 30 2021 Kimberly Clark spent $817 million in stock buybacks. (Kimberly Clark, YCharts, accessed 9/15/2021) 

Kimberly Clark’s CEO pay continued to increase during the pandemic while worker wages stagnated 

For 2020, Kimberly Clark reported its CEO total compensation was $13.465 million compared to $47,549 for its median employee or a ratio of 283 to 1. “In accordance with the Dodd-Frank Act and applicable SEC rules, we are providing the following information about the relationship of our Chief Executive Officer’s compensation to the compensation of all our employees. For 2020: the total compensation of our median employee was $47,549; the total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table, was $13,465,320; the ratio of our Chief Executive Officer’s total compensation to the median employee total compensation was 283 to 1.” (Kimberly Clark 2021 Proxy Statement, 3/8/2021) 

In 2020 the average compensation for Kimberly Clark’s top six executives decreased by 2%, but the compensation for its DEO increased by a further 12%. “In 2020, six executives at Kimberly-Clark received on average a compensation package of $6.7M, a 2% decrease compared to previous year. Michael D. Hsu, Chief Executive Officer, received $13M in total, which increased by 12% compared to 2019. 45% of Hsu’s compensation, or $6M, was in stock awards. Hsu also received $3.4M in non-equity incentive plan, $2.3M in option awards, $1.3M in salary, as well as $498K in other compensation.” (Kimberly Clark 2021 Proxy Statement, 3/8/2021) 

For 2019 Kimberly Clark reported its CEO total compensation was $12 million compared to its median employee of $47,328, a ratio of 254 to 1. “In accordance with the Dodd-Frank Act and applicable SEC rules, we are providing the following information about the relationship of our Chief Executive Officer’s compensation to the compensation of all our employees. For 2019: the total compensation of our median employee was $47,328; the total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table, was $12,028,120; the ratio of our Chief Executive Officer’s total compensation to the median employee total compensation was 254 to 1.” (Kimberly Clark 2020 Proxy Statement, 3/6/2020) 

In 2019, the average compensation for Kimberly Clark’s top five executives increased 22% while its CEO’s compensation increased 77%. “In 2019, five executives at Kimberly-Clark received on average a compensation package of $6.8M, a 22% increase compared to previous year. Michael D. Hsu, Chief Executive Officer, received $12M in total, which increased by 77% compared to 2018. 50% of Hsu’s compensation, or $6M, was in stock awards. Hsu also received $2.7M in non-equity incentive plan, $1.7M in option awards, $1.3M in salary, as well as $328K in other compensation.” (ExecPay, 3/6/2020)

Kimberly Clark previously blamed inflation for price increases in 2018, claiming customers would “understand” 

Kimberly Clark previously announced price increases in 2018 in order to offset “significant commodity cost inflation.” “Kleenex tissues, Cottonelle toilet paper and Huggies diapers will be more expensive as parent company Kimberly-Clark raises prices on most of its products to combat higher pulp costs. The Dallas, Texas-based company announced Wednesday it plans to raise prices on most paper products by the “mid-to-high single digits” later this year to offset “significant commodity cost inflation.” The price hikes will also affect Scott bathroom tissue, Viva paper towels and Pull-Ups training pants, the company said in a press release.” (CNBC, 8/15/2018)

On an earnings call, Kimberly Clark’s COO said “…I think our customers understand that. And we do have to recover and improve our net revenue realization. “When you have a commodity impact as large and significant as it is right now, I think our customers understand that. And we do have to recover and improve our net revenue realization. And so we are going to take the appropriate actions,” Kimberly Clark’s Chief Operating Officer told analysts in a recent earnings call.” (CNBC, 8/15/2018)

Kimberly Clark CEO’s called their products “essential” and said “if you look at our results in the quarter, price realization is — our execution is very effective right now, and the volume is trending better.” “Mike Hsu — Chairman and Chief Executive Officer: No. Well, Kevin, overall — thanks for the question. Look, two big changes since our January update. I mean, one was, obviously, if you look at our results in the quarter, price realization is — our execution is very effective right now, and the volume is trending better, I think, than we initially thought. So that’s one part. But certainly, as you saw in our release, inflation is significantly worse. And so I would say those two big changes largely offset. I do think our strong top line, Kevin, reflects the essential nature of our categories and the strength of our brands.” (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark CEO: “we recognize at the price levels we’re putting into the market, they will create stress on the consumer…I’d say the pricing environment has been largely constructive and I think we’re on track with what we thought the pricing would do.” “Mike Hsu — Chairman and Chief Executive Officer: I mean we have been working over the last several years to really improve our brand fundamentals with strong innovation, great commercial execution. And as I mentioned in my remarks, we’re really proud of our local agility. So I would say, overall, we’re cautiously optimistic. Certainly, we recognize at the price levels we’re putting into the market, they will create stress on the consumer. And so our approach is we’re going to be very thoughtful about balancing growth, margin, and share. And we’ll be very responsive and agile to the needs in the marketplace. But right now, I’d say the pricing environment has been largely constructive and I think we’re on track with what we thought the pricing would do.” (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark CEO: “ I would expect our teams to offset input cost inflation with pricing over time. ““Mike Hsu — Chairman and Chief Executive Officer: Yeah. Well, just as a principle, I would say, generally, I would expect our teams to offset input cost inflation with pricing over time. It may not occur within the year, but over time. And so that’s our general principle. Obviously, we’ll also deploy cost savings and productivity against that problem as well. But again, that’s kind of our overall principle. We have taken further action. We announced a suite of actions at the beginning of the year. And then we’ve taken further actions since we talked last January. And again, I think our teams have been very responsive to what’s happening in the marketplace.” (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark CEO: “ I would say we’ve implemented multiple rounds of pricing. “ “Mike Hsu — Chairman and Chief Executive Officer: OK. Yeah. Chris, maybe I’ll start, and then maybe Maria will provide some additional color, too. But overall, I’ll just give you a sense of our pricing execution overall is on track. Volumes have been solid. I would say trending a little bit better than we initially thought. But as I mentioned earlier, we’re going to be very alert in monitoring our price gaps carefully. I would say we’ve implemented multiple rounds of pricing. (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark’s CEO said the company was “prioritizing margin recovery.” “Mike Hsu — Chairman and Chief Executive Officer: Yeah, Jason, maybe I’ll start here. Overall, I think we’re very pleased with our D&E growth overall. Personal care growth continue to be very strong behind what I mentioned earlier under Lauren’s question, strong innovation, really strong local execution. Organic was up 11% in the quarter. High single digit on price, low single digit on mix. And then yes, as you mentioned, a 1% volume decline overall. I’d say it’s kind of mixed across markets — and maybe the one area that I’d point out is in Latin America. For us, a little softer on volume and a little softer on share. The big driver of that is, Jason, as you’re well aware with our previous discussions, we’re prioritizing margin recovery, but we want to be balanced and holistic about it. And so we’re trying to balance margin recovery, organic growth and share. And I would say we’re probably faster on pricing in a number of our key markets, including Latin America. And so that’s probably had an impact on both volume and share. (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark CEO: “Obviously, a key component of that margin recovery plan is price, which we’ve executed very, very well, and we’re encouraged with our start.”“Mike Hsu — Chairman and Chief Executive Officer: Yeah. Overall, Jason, I will say we’re encouraged by the professional demand improving. Organic was up 6% in the quarter. And to your point, not back to where it was, but mid-single-digit growth in North American and high single digit in the rest of the world. Washroom demands recovering was up 30% in the quarter and now back to 90% of our pre-pandemic levels. I think we do know enough. And I agree with you that I don’t think it’s going to go back to where it was. I think our team is making the right plans to size the business appropriately and recognize this is the reality of where we are. And so we need to go from there. And so they’ve got a margin recovery plan and a cost plan and are diligently working on that. Obviously, a key component of that margin recovery plan is price, which we’ve executed very, very well, and we’re encouraged with our start. I will point out, we do expect better volume performance. (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark CEO: “I think we’ve taken price and recognize that our price realization has to increase. We’ve done that in a number of ways, either through pack counts, list price, and also promotion reductions.” “Mike Hsu — Chairman and Chief Executive Officer: Yeah. Andrea, maybe I’ll just piggyback on that what Maria was saying, is that we remain committed to delivering balanced and sustainable growth. And so our priorities are to accelerate growth and also recover the margins. But right now, I would tell you, our brands are strong, our categories are healthy, and we’re going to continue to invest to build our categories, our brands, and our markets. So as I mentioned earlier, we’re taking a very holistic approach to balance — to mitigate the inflationary pressure. We’re going to balance price, volume, and share. I think we — to your second part of your question, I think we’ve taken price and recognize that our price realization has to increase. We’ve done that in a number of ways, either through pack counts, list price, and also promotion reductions.” (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark’s CEO told analysts the company had “suppressed” promotions in North America. “Mike Hsu — Chairman and Chief Executive Officer: I would — I don’t know that I would say it’s uniform across markets. We’re relying on our markets to be agile and to respond to what the local situation requires. But in general, as you can observe overall, the overall pricing has gone up. In some markets, our promotions have come down and in some markets — and that’s been a way to deliver price. And in some markets, it’s gone a little bit up. North America, I would say, has gone up slightly because we were suppressed on the promotion front for a couple of years. I’d say our promotional depth is still lower than it was three years ago overall. But again, that’s — it’s just an artifact of kind of what are you comparing against. (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark CEO: “I think part of that is we definitely expect strong progress on price realization and you’re seeing it. I’m confident we’ll be able to restore our margins and eventually expand them.”“Mike Hsu — Chairman and Chief Executive Officer: Yeah. And let me piggyback on that, Peter, because I think part of that is we definitely expect strong progress on price realization and you’re seeing it. I’m confident we’ll be able to restore our margins and eventually expand them, OK? I think the big factor that Maria says, we can’t predict exactly when it is because the core assumption is what happens with inflation. And so the reality is I expect reversion in the commodities.” (Kimberly Clark Q1 2022 Earnings Call, 4/22/2022)

Kimberly Clark’s CEO repeatedly noted the company increased prices beyond inflation in 2022

Kimberly Clark’s CEO boasted “we’re making strong progress on margin recovery” crediting “broad pricing actions.” “Mike Hsu — Chairman and Chief Executive Officer: Theme number two, we’re making strong progress on margin recovery. Over the past two years, we faced unprecedented inflation worth over $3 billion, a roughly 1,500 basis-point headwind to gross margin. Our teams have done an excellent job mitigating this impact. Our product leadership, commercial agility, and cost discipline enabled us to rapidly implement broad pricing actions and generate over $700 million in cost savings. The successful implementation of revenue growth management actions drove an inflection in our profitability in the second half of the year. Gross margin stabilized in Q3 and increased year over year in Q4 by over 200 basis points. This was our first major improvement in the last eight quarters. Collectively, these actions enabled us to fully offset inflation and currency headwinds in 2022 on a dollar basis.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly-Clark’s CEO said the price of inputs was decreasing but “revenue management actions will continue.” “Mike Hsu — Chairman and Chief Executive Officer: Recently, market prices of some inputs have begun to ease, although they remain elevated relative to pre-pandemic levels. While we’re encouraged by this, it will take time for these benefits to work through our contracts and flow through the P&L. Nevertheless, we’ll continue to leverage our scale to improve efficiency and reduce costs. At the same time, we expect our revenue management efforts will continue to positively impact this year. This will aid ongoing gross margin recovery while also enabling us to continue investing in our business. At the midpoint of our 2023 guidance range, we plan to improve operating margin by approximately 80 basis points. With incremental headwinds below the line, this translates to 2% to 6% growth in earnings per share in 2023. We also intend to increase our dividend for the 51st consecutive year.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark’s CEO: “pricing exceeded input costs and inflation for the full year. So, we fully offset inflation and FX for the full year last year.” “Mike Hsu — Chairman and Chief Executive Officer: Yes. Chris, I definitely feel like it’s a realistic, you know, goal. And I think we’ll get there. And my view is we’ve turned the corner on our margin recovery program. Obviously, we saw in the fourth quarter continued strong organic performance. But, you know, for the — I said this in my prepared remarks, pricing exceeded input costs and inflation for the full year. So, we fully offset inflation and FX for the full year last year. So, I think the teams did a great job there. And our operating margin, you know, as I said, stabilized in Q3 and expanded by 200 basis points in Q4. In terms of the cost outlook, so I think we’re making great progress there. And let me say this about costs. You know, one, from my seat, I’ll say there’s — I see green shoots, OK? But even though we still see cost headwinds coming into the year, there are green shoots, and we have seen selected commodities start to ease.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark’s CFO: “We had three quarters in a row where we actually expanded gross margin. And as Mike pointed out, for the first time in Q4, we grew gross margin year over year versus the last time we ever did that was back in mid-2020.” “Nelson Urdaneta — Chief Financial Officer: Just to add a little flavor on the gross margin, too, Chris. A couple of things. We had three quarters in a row where we actually expanded gross margin. And as Mike pointed out, for the first time in Q4, we grew gross margin year over year versus the last time we ever did that was back in mid-2020. So, it had been a few quarters. That had not been the case. And that reinforces Mike’s point that what we have been talking about since July of really remaining committed and having line of sight to recovery in the margins is going to happen. As we stare at this year, our plan calls for year-over-year margin expansion in gross margin every quarter.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark’s CFO: “for the year, we’re going to be realizing positive pricing net of commodity and forex. Whereas, last year, we were pretty much neutral.” “Nelson Urdaneta — Chief Financial Officer: So, Steve, I think a few things that — just to add a little bit of color or how we get there on the math. So, I think the important thing to take into account is, you know, we’re staring right now at about $250 million of commodity costs at the midpoint, as we’ve guided. We have about — you know, in terms of currency, about $350 million at the midpoint in currency. And then, in other costs, we have around $200 million. So, when you add it all up, you know, we will be, for another year in a row, having a significant revenue growth management realization that we’ve planned for, which, by the way, around two-thirds of that is solely carry over from 2022. So, what happens at the end is, for the year, we’re going to be realizing positive pricing net of commodity and forex. Whereas, last year, we were pretty much neutral. We were able to fully offset the $1.7 billion.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark’s CEO: “ we have taken significant pricing.” “Mike Hsu — Chairman and Chief Executive Officer: And so, we have a broad offering, and we want to make sure we support our consumers effectively along that. But for the most part, yeah, you know, we have taken significant pricing. We are managing our promotions with discipline, and we’ll continue to do that. I don’t know if that answers exactly what you’re looking for, Kevin?” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark predicted further price hikes in 2023

Kimberly’s Clark CEO told analysts “we’ve moved fast on pricing the last couple of years” and that more pricing actions were coming. “Mike Hsu — Chairman and Chief Executive Officer: OK. Thanks, Steve. Yes. First of all, we’ve moved fast on pricing the last couple of years, right? And so, you know, I’m really proud of the team and their ability to fully offset inflation on a dollar basis in 2022. But for the plan this year, I would say, the majority of our pricing is like — is going to be carryover, but we have taken new actions. Some list pricing, which is, in general, across most markets, are already been announced into the marketplaces. But there are additional RGM actions we’ve taken as well that you might say, whether it’s, you know, promotional changes or productivity around trade spending. So, those are the more typical that are kind of evergreen programs that we’re going to have in place.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark executives told an analuys that “additional pricing actions” were going to taker place in Q1 2023.

“Andrea Teixeira — JPMorgan Chase and Company — Analyst: That’s helpful. Just as one clarification that’s missing on that. When you said two-thirds of the — correct me if I’m wrong, I understood, it’s like everything that you have in plan in terms of pricing is about two-thirds carryover. So, it implies that you have another one-third of pricing to come through in the plan?

Mike Hsu — Chairman and Chief Executive Officer: Yeah. And I said earlier, I can’t remember, maybe it was with Steve, but yeah, we have a significant portion of carryover pricing that was launched last year that still carries over into this year. And then, we’ve taken additional pricing actions since then. And so, we’ve generally announced pricing actions across markets that are taking effect this quarter. And so, that’s also factored in the plan.

Nelson Urdaneta — Chief Financial Officer Yeah, they go into effect in the biggest markets at the end of Q1.”

(Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark cited the “essential nature” of their goods when discussing price hikes, specifying hikes in both diapers and bath tissue

Kimberly Clark’s CEO said demand was still strong despite price hikes because of the “essential nature of our categories.” “Mike Hsu — Chairman and Chief Executive Officer: OK, Lauren, I knew you were going to ask this, and so Russ and I were on the phone last night working through this. And so, anyways, here’s a couple things. You know, one, let me just say in North America, and I would say globally overall, we’re seeing a resilient consumer. And I think that does reflect the essential nature of our categories. Generally, as you know, our POS or consumption volume where the POS Nielsen sales is in line with expectations. As I mentioned, our shipment volatility has been a little higher just because of some of these discrete items that we’ve worked through. This is the thing Russ and I were looking at last night. I definitely would say, observed elasticity was slightly higher or the elasticity impact on volume was a little bit higher in the second half than the first half but remains, I would say, far below what’s modeled. And I think that does reflect the nature of our categories as being essential. And I’ll throw a couple numbers at you. And these are category numbers, so not brand, and they’re public anyways so not proprietary to us.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark’s CEO specified that prices were up 7% on diapers and 11% for bath tissue in Q4 2022.“Mike Hsu — Chairman and Chief Executive Officer: But in Q4, you know, pricing was up 7% in diapers. So, that was diapers. And then, the bath tissue, yeah, for the fourth quarter price was up 11 for the category, and volume was down seven. And recognize, you know, I might factor in, you know, three or four points of that seven is likely to be sheet count changes. And then, adult care of the outlier because, you know, price was up eight, and then volume was still up, right, up two. And the delta, I think those were all fourth quarter numbers. And the reason I say the elasticities kind of seems like the impact has increased slightly in the second half is, in the first half, you know, pricing was up mid to high single digit, and volume continue to be up. And so, there is a difference. I think the consumer environment was different.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kinmberly Clark CEO: “I do think there is more pressure on the consumer, but I still think, you know, the category remains very resilient because of the essential nature of the category.” “Mike Hsu — Chairman and Chief Executive Officer: I do think there is more pressure on the consumer, but I still think, you know, the category remains very resilient because of the essential nature of the category. So, I’ll pause there, Lauren.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

When questioned if he was “taking too much pricing,” Kimberly Clark’s CEO noted that both personal care and tissue sales grew 7%.

Javier Escalante — Evercore ISI — Analyst: The branded competitor and inclusive of private label because you are talking about price increases in addition to whatever carryover comes from this year. And we wonder to what extent you are taking too much pricing and whether you can keep it.

Mike Hsu — Chairman and Chief Executive Officer: Well, you know, all I’ll say is the underlying category growth in the fourth quarter was 7% for both personal care and tissue.

(Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark’s CEO pushed back on worries about their competitors or retail partners regarding their price hikes

Kimberly Clarks’s CEO called the promotion environment “constructive” when discussing competitors trying to underprice them. “Mike Hsu — Chairman and Chief Executive Officer: That’s why I said it’s softened in Q4. But we’ll get it back on the right track. I do think — you know, I feel really good about our plans for this year and feel confident in our commercial activation in North America, and then in nearly all markets around the world when we have a few discrete items we’re working across in international markets. In terms of the pricing environment, I would say the promotion environment right now remains, you know, competitive but, you know, I would say overall constructive.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)

Kimberly Clark’s CEO admitted their retail partners were “not the biggest fans of all these price increases.” “Mike Hsu — Chairman and Chief Executive Officer: Yes. We’ll, yes. I’ll say yes, we’ll cross that bridge when we get there. You’ll have to — my personal bias is I’m not a fan of driving the business through promotion. I don’t — you know, I can — we can do it effectively because we know our ROIs on trade promotion, as well as we know our advertising ROIs. And so — and frankly, now, the returns, you know, on both are OK. I like the advertising ones better. And so, that’s kind of my go-to. And I think it’s better for the long-term health of the brand. And frankly, Kevin, this is related to the question you’re asking, our customers expect it. I mean, you know, they’re concerned about value for their shoppers. And so, you know, they’re not the biggest fans of all these price increases.” (Kimberly Clark Q4 2022 Earnings Call Transcript, 1/25/2023)