Johnson & Johnson · NYSE:JNJ
Johnson & Johnson — Merger or Acquisition (July 2023)
35 slides from Johnson & Johnson's merger presentation, Jul 25, 2023
Slide 1: July 2023 Investor Presentation
July 2023 Investor Presentation
Slide 2: Disclaimer
Disclaimer 2 Forward-Looking Statements This presentation contains certain statements about Johnson & Johnson and Kenvue that are forward-looking statements. Forward-looking statements are based on current expectations and assumptions regarding Johnson & Johnson’s and Kenvue’s respective businesses,
Slide 3: Exchange Offering Summary
Exchange Offering Summary 3 Issuer/Ticker/Exchange: Kenvue, Inc. / KVUE / NYSE Offer to Exchange Up to 1,533,830,450 shares of KVUE common stock for outstanding shares of Johnson & Johnson (JNJ) common stock Target Discount on KVUE: 7% based on the average of the VWAPs of KVUE and JNJ during the Pri
Slide 4: Our leaders presenting today
Our leaders presenting today Thibaut Mongon Chief Executive Officer and Director Tina Romani Head of Investor Relations Paul Ruh Chief Financial Officer
Slide 5: Kenvue at a glance
>$2bn FY2022 Cash Flow3 ~1.2bn People Served $15.4 bn LTM Net Sales1,4 10 Brands ~$400mm or More2 135+ Year History 3 Segments $369bn And Growing TAM2 36 #1 Regional Brand Positions >165 Countries Realize the extraordinary power of everyday care 5 1 LTM Net Sales as of Q2 2023; 2 Euromonitor and Nic
Slide 6: We are positioned for success
We are positioned for success Strategic transformation to accelerate profitable growth 6 • Long-standing roots within Johnson & Johnson but increasingly differentiated business • Global presence and well- established brands • Large and disparate portfolio (broad SKU lineup) • Profitability lagging c
Slide 7: Investment highlights
7 • Efficient cost base supporting gross margin expansion • Significant cash flow and disciplined financial philosophy • Healthy balance sheet management • Focused on driving long-term value creation through sustaining profitable growth • Deep connection with consumers built upon trust and human emp
Slide 8: Global leader at the intersection of healthcare and consumer goods
Global leader at the intersection of healthcare and consumer goods 8 Healthcare Science-backed solutions Effective products with active ingredients Healthcare professional focus on patient needs Focus on safety and efficacy Consumer Goods Everyday needs Consumer-focused innovation Strong role of bra
Slide 9: Large, attractive and growing total addressable market
Large, attractive and growing total addressable market 9 1 Euromonitor and Nicholas Hall as of FY2022; 2 Self Care includes Analgesics, Cough & Cold, Allergy, Smoking Control, Gastrointestinals, Dermatologicals, Eye Care and Lifestyle Consumer Healthcare and excludes Vitamins, Minerals, and Suppleme
Slide 10: Trusted by consumers, backed by science and recommended by healthcare professionals
Trusted by consumers, backed by science and recommended by healthcare professionals World class, differentiated portfolio of iconic brands 10
Slide 11: Longstanding engagement with healthcare professionals reinforces connections to our brands
Longstanding engagement with healthcare professionals reinforces our consumers’ connections to our brands 11 Deep connection with consumers built on trust and human empathy Recommended by healthcare professionals and experts Dermatologists Dermatologist Recommended OTC Sunscreen and Acne Brand in th
Slide 12: Three balanced segments addressing consumer health need states
Three balanced segments that address a broad range of consumer health need states 12 1# Facial Care Brand in the U.S. Neutrogena Sun Care Brand Globally Neutrogena Premium Hair Care Brand in the U.S. OGX 1# Pain Brand Globally Tylenol Allergy Brand Globally Zyrtec Smoking Cessation Brand Globally Ni
Slide 13: Scaled and global footprint providing diversification and balance
Scaled and global footprint providing diversification and balance 13 1 LTM Net Sales as of Q2 2023; 2 Leadership positions are as of 2022; 3 We have provided certain preliminary results because our closing procedures for the fiscal quarter ended July 2, 2023 are not yet complete. Our actual results
Slide 14: Experienced and proven management team
Experienced and proven management team 14 Luani Alvarado Chief People Officer Jan Meurer Chief Growth Officer Ellesha Kirby Global Head, Skin Health & Beauty and Design Manoj Raghunandanan Global Head, Self Care and Consumer Experience Katie Decker Global Head, Essential Health and Customer Engageme
Slide 15: Multiple avenues to drive continued long-term growth
Multiple avenues to drive continued long-term growth 15 Grow brand relevance and salience Increase product availability through omnichannel strategy Deliver consistent cadence of consumer-centric innovation Expand into new product adjacencies and geographic markets Continually evaluate acquisitions
Slide 16: Financial Update
Financial Update 16
Slide 17: Track record of delivering results
$3.1 $3.8 $3.8 $3.6 $3.6 2019 2020 2021 2022 LTM $14.3 $14.5 $15.1 $15.0 $15.4 2019 2020 2021 2022 LTM Track record of delivering results 17 Adjusted EBITDA ($bn)2,3 1 Organic growth excludes the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures; 2
Slide 18: Historical segment performance
Historical segment performance 18 1 Operating income is adjusted to include the impact of changes in allocation. In Q4 2022, Kenvue updated its methodology of allocation for certain selling expenses to align with segment financial results; 2 Adjusted operating income and margin are non- GAAP measure
Slide 19: Q2
Q2 Earnings Update 19
Slide 20: Preliminary Q2 2023 Financial Highlights
20 1 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in accompanying schedules; 2 Based on Q2 2023 basic and diluted weighted average common shares of 1,838mm (as of July 2, 2023, there were 1,915mm common shares outstanding); 3 We have provided certain p
Slide 21: Q2 2023 Net sales and organic growth
Q2 20233 Net sales and organic growth 21 1 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in accompanying schedules; 2 Value Realization reflects Price/Mix; 3 We have provided certain preliminary results because our closing procedures for the fiscal quar
Slide 22: Q2 2023 Net sales and organic growth by segment
Q2 20233 Net sales and organic growth 22 1 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in accompanying schedules; 2 Value Realization reflects Price/Mix; 3 We have provided certain preliminary results because our closing procedures for the fiscal quar
Slide 23: Q2 2023 EBITDA margin
Q2 20233 EBITDA margin 23 1 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in accompanying schedules; 2 Value Realization reflects Price/Mix; 3 We have provided certain preliminary results because our closing procedures for the fiscal quarter ended July
Slide 24: Q2 2023 Net income and earnings per share
Q2 20234 Net income and earnings per share 24 1 No interest expense in Q2 2022; 2 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in accompanying schedules; 3 Based on Q2 2023 basic and diluted weighted average common shares of 1,838mm (as of July 2, 2023
Slide 25: Commitment to disciplined capital stewardship
25 Commitment to disciplined capital stewardship Robust durable cash flow Invest in our iconic brands to grow profitably • Offset dilution from stock-based compensation • Evaluate opportunistically over time Share repurchases • Strong liquidity position and A1/A credit rating • Prudent management of
Slide 26: Our commitment to long-term value creation
Our commitment to long-term value creation 26 Compelling total shareholder return Durable top- line growth Strong profitability Reliable cash flow generation Prudent financial policy Organic revenue growth competitive with category growth of 3 – 4%1 Adjusted earnings growth outpacing organic revenue
Slide 27: Appendix
Appendix Presentation footer if required
Slide 28: Reconciliation of Net cash flows from operating activities to Cash flow
Reconciliation of Net cash flows from operating activities to Cash flow 28 Fiscal Year (Dollars in Millions) 2022 2021 2020 Net cash flows from operating activities $2,525 $334 $3,397 Purchases of property, plant, and equipment (375) (295) (229) Cash flow (non-GAAP) $2,150 $39 $3,168
Slide 29: Reconciliation of Gross profit to Adjusted gross profit
Reconciliation of Gross profit to Adjusted gross profit 29 Fiscal Year Fiscal Three Months Ended1 Fiscal Six Months Ended1 (Dollars in Millions) 2022 2021 2020 2019 July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Gross profit $8,285 $8,419 $7,848 $7,662 $2,225 $2,158 $4,350 $4,114 Adjustments to
Slide 30: Reconciliation of Net income (loss) to Adjusted EBITDA
Reconciliation of Net income (loss) to Adjusted EBITDA 30 Fiscal Year Fiscal Three Months Ended1 Fiscal Six Months Ended1 (Dollars in Millions) 2022 2021 2020 2019 July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Net income (loss) $2,087 $2,031 $(879) $1,435 $430 $604 $760 $1,132 Interest expense
Slide 31: Reconciliation of the change in Net sales to Organic growth
Reconciliation of the change in Net sales to Organic growth 31 Reported net sales change Impact of foreign currency Acquisitions and divestitures Organic growth 2022 vs. 2021 (Dollars in Millions) Amount Percent Amount Amount Amount Percent Self Care $387 6.9% $226 — $613 10.9% Skin Health and Beaut
Slide 32: Reconciliation of segment level Adjusted operating income
Reconciliation of segment level Adjusted operating income 32 As reported adjusted operating income (Dollars in Millions) 2022 2021 2020 2019 Self Care $2,088 $1,952 $1,858 $1,501 Skin Health and Beauty 708 878 889 956 Essential Health 1,111 1,224 1,250 1,051 Total adjusted operating income $3,907 $4
Slide 33: Reconciliation of segment level Adjusted operating income
Reconciliation of segment level Adjusted operating income 33 Fiscal Three Months Ended2 Fiscal Six Months Ended2 (Dollars in Millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Segment Net Sales Self Care $1,661 $1,481 $3,301 $2,946 Skin Health and Beauty 1,147 1,126 2,258 2,138 Essential
Slide 34: Reconciliation of Adjusted net income
Reconciliation of Adjusted net income 34 Fiscal Three Months Ended1 Fiscal Six Months Ended1 (Dollars in Millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Net income $430 $604 $760 $1,132 Adjustments: Restructuring expense — 24 — 38 Amortization of intangible asset 80 101 161 194 Unreali
Slide 35: Reconciliation of Adjusted earnings per share
Reconciliation of Adjusted earnings per share 35 Fiscal Three Months Ended1 July 2, 2023 Earnings per share2 $0.23 Adjustments: Separation-related costs 0.06 Amortization and impairment of intangible assets 0.04 Interest income from related party note (0.02) Other 0.01 Adjusted earnings per share (n
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