The Procter & Gamble Company (NYSE:PG) Q4 2015 Earnings Conference Call - Final Transcript

Jul 30, 2015 • 08:30 am ET


The Procter & Gamble Company (NYSE:PG) Q4 2015 Earnings Conference Call - Final Transcript


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Good morning and welcome to Procter & Gamble' Quarter-end Conference Call.

(Forward-Looking Cautionary Statements)

As required by Regulation G, P&G needs to make you aware that during the call the Company will make a number of references to non-GAAP and other financial measures. Management believes these measures provide investors valuable information on the underlying growth trends of the business.

Organic refers to reported results excluding the impacts of acquisitions and divestitures and foreign exchange where applicable. Adjusted free cash flow represents operating cash flow, less capital expenditures and excluding tax payments for the Pet Care divestiture. Adjusted free cash flow productivity is the ratio of adjusted free cash flow to net earnings adjusted for impairment charges and Venezuela charges.

Any measure described as core refers to the equivalent GAAP measure adjusted for certain items. Currency neutral refers to the equivalent GAAP measure excluding the impact of foreign exchange rate changes. P&G has posted on its website a full reconciliation of non-GAAP and other financial measures.

Now, I will turn the call over to P&G's CFO, Jon Moeller.

Jon Moeller

Good morning. As you know, earlier this week we announced that David Taylor had been elected and appointed as the new CFO of the Company, which becomes effective November 1. Sorry, CEO. And so, joining me this morning is A.G. Lafley.

I'm going to start the discussion with a review of the fiscal year and fourth quarter results, then A.G. will discuss our business strategy and ongoing moves to transform the Company, and I'll close with guidance for fiscal 2016. One reminder before we begin, unless noted otherwise, the organic sales and core earnings results we're reporting today continue to include the beauty categories that we're in the process of exiting. The results of these businesses will be reported as discontinued operations starting with the first quarter of fiscal 2016. In September, we'll provide an informational 8-K presenting historical results of these businesses as discontinued operations.

Another important accounting item to point out before we get started is the decision we've made to move from consolidation accounting to cost method accounting for Venezuela in our GAAP financial statements. While this decision is effective for periods beginning July 1, it entails a one-time non-core write-down of fixed assets, cash and receivables of about $2.1 billion or $0.71 per share that's reflected in our fourth quarter 2015 numbers. We're committed to continue to serve Venezuelan consumers. The change we've made to our accounting simply reflects our continued inability to convert currency or pay dividends.

Now on to our discussion of 2015 results. We accomplished four things in 2015. First, we delivered strong double-digit constant currency core earnings per share growth and very good free cash flow productivity, over 100% on modest organic top-line growth.

Second, we continued to make strong productivity gains across the board, income statement and balance sheet, with many more opportunities still in front of us. Third, we largely completed the reshaping of our portfolio in less than one year, refocusing on