Kenvue Inc. · NYSE:KVUE
Kenvue — Q4 2023 Earnings Presentation
45 slides from Kenvue's earnings presentation, Feb 8, 2024
Slide 1: Aveen
a Aveen Daily Moisturizing lore Invensely Nowrishes onsen FLEXIBLE FABRIC ge BAND-AID
Slide 2: Fourth Quarter and Full Year 2023 Earnings Results
Fourth Quarter and Full Year 2023 Earnings Results February 8, 2024 B€ kenvue
Slide 3: Introduction
Introduction ’ Thibaut Mongon Paul Ruh Tina Romani Chief Executive Chief Financial Head of Investor Officer Officer Relations B€ kenvue
Slide 4: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements This presentation contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements about management’s expectations of Kenvue Inc.’s (“Kenvue”) future operating and financia
Slide 5: 2023 A Transformational Year
Slide 6: 2024 Strategic Priorities
2024 Strategic Priorities ( >) Reach more consumers with a stronger focus on our 15 priority brands Free up resources & invest in our brands |v Foster a culture of performance & impact Ne 7 K ene Our 15 Priority Brands TYLENOL So Neutrogena’ LISTERINE Motrin 1ARBEES Aveeno. foheens Gea) Ons _ 7 BAND
Slide 7: Our Commitment to Long-Term Value Creation
Our Commitment to Long-Term Value Creation K ene 7 Durable top-line growth ~\ (— >) Strong profitability a Reliable cash flow generation \ Va Disciplined financial policy ~\ Organic growth! competitive with category growth of 3-4%2 Ne 7 Earnings growth outpacing organic growth! Ne w, Durable cash fl
Slide 8: Broad Based Growth Across All Segments, Regions
Broad Based Growth Across All Segments, Regions e Ce ) lero FY 2023 Organic growth! sSTORE ENAMEL, '99-9% OF GERMS” Self Care sustained momentum and delivered strong revenue growth and share gains nicorette 00 Essential Health grew ahead of our ° long-term expectations and continued to drive margin
Slide 9: 2023 Full Year Highlights
2023 Full Year Highlights $15.4B Net Sales nicorete yspray * mou 100s cating a oa r 58.4% 1.29 e o e Adjusted Gross Adjusted Diluted Profit Margin' Earnings per Share’ XR $2.7B Free Cash Flow! BH kenvve 1 on-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in
Slide 10: Skin Health & Beauty
Skin Health & Beauty Clear Strengths & Opportunities to Improve (— >) NA oO 04 -8.0% 0.4% eee coal 6.2% missteps Successful innovation & quarter over quarter organic growth! improvement FY 1.8% APAC LATAM -6.5% 9 Soft consumer 25.5% demand in China Continued double-digit organic growth! Organic grow
Slide 11: Taking Action to Stabilize U.S. Skin Health & Beauty
Taking Action to Stabilize U.S. Skin Health & Beauty G) Increasing in-store presence and prominence ©) Elevating consumer & healthcare professional engagement Neutrogena: Hydro Boost ‘S) Amplifying innovation
Slide 12: Self Care
Self Care Sustained revenue growth & share gains Va eeeerr- ever? . 04 =2.0% Organic growth! ry 8.4%! , vee Organic growth! Lower cough, cold & flu incidences vs. prior year \ w, H€ kenvve 1 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in accompanying
Slide 13: Essential Health
Essential Health Executing value realization & premiumization strategies Va . a4 2.5% Organic growth! Fy 3.6% Organic growth! Performance led by Oral Care & Women’s Health Ne ) H€ kenvve 1 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures included in accompanying sc
Slide 14: 2024 Strategic Priorities
2024 Strategic Priorities ( >) Reach more consumers with a stronger focus on our 15 priority brands Free up resources & invest in our brands Nv Foster a culture of |v performance & impact Ne 7 K ene Our 15 Priority Brands TYLENOL So Neutrogena’ LISTERINE Motrin 1ARBEES Aveeno. foheens Gea) Ons _ 7 B
Slide 15: Helping People Realize the Extraordinary Power of Everyday Care
: Helping People SS Realize the ’ Extraordinary Power of Everyday Care K€ kenvue
Slide 16: Q4 & Full Year 2023 Financial Results
© Q4 & Full Year 2023 Financial Results
Slide 17: Q4 2023 Reported Net Sales & Organic Growth
Q4 2023 Reported Net Sales & Organic Growth (2.4%) Organic Growth’ +5.8% —— = $3.7B [_ Lopping OTC season (~3%) Product disc. (~1%) Trade inventory (~1%) Q4 2022 Net Sales Value Realization Volume Foreign Exchange Q4 2023 Net Sales H€ kenvue 1 Non-GAAP financial measure; refer to reconciliations of
Slide 18: Full Year 2023 Reported Net Sales & Organic Growth
Full Year 2023 Reported Net Sales & 5.0% Organic Growth Organic Growth la +7.7% $15.0B (2.7%) Product discontinuations and Russia suspension (~2%) $15.4B (1.7%) FY 2022 Net Sales Value Realization Volume Foreign Exchange FY 2023 Net Sales XN I kenvwe 1 Non-GAAP financial measure; refer to reconcilia
Slide 19: Q4 2023 Gross Profit Margin
Q4 2023 Gross Profit Margin Va Ne 2.4% 57.3% (0.7%) ‘ct Transactional Value realization foreign exchange Productivity initiatives Easing of inflation in logistics, resins, agrochemicals Wage inflation 00 000 Energy input costs 0.5% [| © Non-recurring items 59.5% Q4 2022 Adjusted Gross Profit Margin’
Slide 20: Full Year 2023 Gross Profit Margin
Full Year 2023 Gross Profit Margin Va 1.3% co1% on 55.4% © Vatue realization (1.1%) © Non-recurring items © Productivity initiatives Transactional foreign exchange © Net input cost inflation FY 2023 Adjusted FY 2022 Adjusted Gross Profit Margin’ Gross Profit Margin’ Reported Gross Profit Margin 55.4
Slide 21: Q4 2023 Operating Income Margin
Q4 2023 Operating Income Margin ( » 1.6% 1.8% © operating leverage (1.5%) @ Non-recurring items (—} Standalone public company costs (~$50- 60M) Q4 2022 Adjusted Q4 2023 Adjusted Operating Income Margin’ Operating Income Margin’ Reported Operating Income Margin 14.1% Reported Operating Income Margin
Slide 22: Full Year 2023 Operating Income Margin
Full Year 2023 Operating Income Margin ( >) 22.4% at 0.7% 22.4% © Operating overage Pe (1.1%) © Non-recurting items © Stondalone public company costs (~$150-180M) FY 2022 Adjusted FY 2023 Adjusted Operating Income Margin! Operating Income Margin’ Reported Operating Income Margin 17.9% Reported Opera
Slide 23: Q4 & Full Year Net Income and Earnings Per Share
Q4 & Full Year Net Income and Earnings Per Share Q4 FY K ene Reported Net Income, in mitions ~ Adjusted Net Income in mitions Earnings per Share puted 0.17 dite’ =$0.31 ~\ ~ va Earnings per Share $361 $327 Q4 2022 Q4 2023 Reported Net Income, in mitions $2,064 $1,664 FY 2022 FY 2023 XX $501 $586 Q4
Slide 24: 2023 Capital Allocation
2023 Capital Allocation Strengthened balance sheet, reduced leverage, initiated dividend program (— >) Leverage reduction NX 2.2x 2.5x 64% Dividend payout ratio! At Debt Issuance 2023 Gross Leverage Ratio! K kenvue 1 Non-GAAP financial measure; refer to reconciliations of non-GAAP financial measures
Slide 25: Kenvue
kenyue
Slide 26: Full Year 2024 Guidance Summary
Full Year 2024 Guidance Summary K ene 7 Full Year 2024 Reported Net Sales Growth 1.0% - 3.0% Organic Growth’ 2.0% - 4.0% Adjusted Operating Income Margin’ Slightly below 2023 Reported Interest Expense, Net ~$400M Adjusted Effective Tax Rate’ 25.5% - 26.5% Adjusted Diluted Earnings per share’2 $1.10
Slide 27: 2024 Adjusted Diluted EPS Considerations
2024 Adjusted Diluted EPS’ Considerations va $(0.02) Standalone $(0.04) $(0.04) Public Co Interest Normalized Costs Expense Tax Rate 2024 vs 2023 Like-for-Like View Midpoint $(0.04) $1.10 Share Count 2023 Adjusted DilutedEPS' Ne 2024 Adjusted Diluted EPS' 2024 Adjusted Diluted EPS' Guidance Mid-Poin
Slide 28: 2024 Strategic Priorities
2024 Strategic Priorities ( >) Reach more consumers with a stronger focus on our 15 priority brands Free up resources & invest in our brands Nv Fosteraculture |v of performance & impact Ne 7 K ene Our 15 Priority Brands TYLENOL So Neutrogena’ LISTERINE Motrin 1ARBEES Aveeno. foheens Gea) Ons _ 7 BAN
Slide 29: Thibaut Mongon, Paul Ruh, Tina Romani
Thibaut Mongon Paul Ruh Tina Romani Chief Executive Chief Financial Head of Investor Officer Officer Relations B€ kenvue
Slide 30: Appendix
APPENDIX
Slide 31: 2023 Organic Growth Considerations
2023 Organic Growth! Considerations Qv23 Q2’23 Q3’23 Q423.—Ct« +) Higher incidences of cough, cold and — flu outside the U.S. (+) Retailer inventory re-build, following Q4’22 demand surge Delayed season and lower incidence levels 15.3% 14.2% 6.7% (2.0%) @ Petailer inventory re-build, following suppl
Slide 32: Organic Growth
Organic Growth Fiscal Three Months Ended December 31, 2023 vs January 1, 2023 Impact of foreign Reported Net sales change currency Organic growth@ (Unaudited; Dollars in Millions) Amount Percent Amount Amount Percent Self Care $ (31) (2.0)% $ — $ (31) (2.0) % Skin Health and Beauty (87) (8.0) - (87)
Slide 33: Organic Growth
Organic Growth Fiscal Three Months Ended January 1, 2023 vs January 2, 20221) Impact of foreign Reported Net Sales change currency Organic growth@ (Unaudited; Dollars in Millions) Amount Percent Amount Amount Percent Self Care $ 120 8.3% $ (73) $ 193 13.3 % Skin Health and Beauty 4 0.4 (54) 58 5A Es
Slide 34: Organic Growth
Organic Growth Fiscal Twelve Months Ended December 31, 2023 vs January 1, 2023() Impact of foreign Reported Net sales change currency Organic growth@ (Unaudited; Dollars in Millions) Amount Percent Amount Amount Percent Self Care $ 421 7.0 % $ (84) $ 505 84 % Skin Health and Beauty 28 0.6 (52) 80. 1
Slide 35: Organic Growth
Organic Growth Fiscal Twelve Months Ended January 1, 2023 vs January 2, 2022 Reported Net Sales change Impact of foreign Ae pisitions and Organic growth™ (Unaudited; Dollars in Millions) Amount Percent Amount Amount Amount Percent Self Care $ 387 6.9 % $ (226) $ — $ 613 10.9 % Skin Health and Beauty
Slide 36: Total Segment Net Sales and Total Adjusted Operating Income
Total Segment Net Sales and Total Adjusted Operating Income Net Sales Net Sales Fiscal Three Months Ended Fiscal Twelve Months Ended (Unaudited; Dollars in Millions) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Self Care 1,537 1,568 6,451 6,030 Skin Health and Beauty 1,001 1,0
Slide 37: Non-GAAP Reconciliations (Q4'23)
Non-GAAP Reconciliations (Q4’23) (a) (b) (c) (d) Ce) w (g) Ch) (o} @ (k) (Unaudited; Dollars in Millions) Net sales Gross profit Gross profit margin Operating income Operating income margin Net Income Net income margin Interest expense, net Provision for taxes Depreciation and amortization EBITDA (n
Slide 38: Non-GAAP Reconciliations (Q4'22)
Non-GAAP Reconciliations (Q4’22) Fiscal Three Months Ended January 1, 2023 (Unaudited; Dollars in Millions) As Reported Adjustments Reference As Adjusted Net sales $ 3,767. $ - $ 3,767 Gross profit $ 2,046 $ ™ ~~ (a),(b) $ 2,157 Gross profit margin 54.3 % 57.3 % Operating income $ 531 $ 218 (a)-(d)
Slide 39: Non-GAAP Reconciliations (FY'23)
Non-GAAP Reconciliations (FY’23) (a) (b) (c) (d) (e) o) (g) Ch) (0) 0) (k) iO} (m) (n) (Unaudited; Dollars in Millions) Net sales Gross profit Gross profit margin Operating income Operating income margin Net Income Net income margin Interest expense, net Provision for taxes Depreciation and amortiza
Slide 40: Non-GAAP Reconciliations (FY'22)
(a) (b) (c) (d) (e) cA) Non-GAAP Reconciliations (FY’22) (Unaudited; Dollars in Millions) Net sales Gross profit Gross profit margin Operating income Operating income margin Net Income Net income margin Provision for taxes Depreciation and amortization EBITDA (non-GAAP) EBITDA margin Detail of Adjus
Slide 41: Adjusted Effective Tax Rate
Adjusted Effective Tax Rate (Unaudited) Effective tax rate Adjustments: Tax-effect on special item adjustments Removal of tax benefits from carve out methodology Taxes related to Deferred Markets Valuation allowance on foreign tax credits due to interest expense Other K kenvue Fiscal Three Months En
Slide 42: Free Cash Flow
Free Cash Flow Fiscal Twelve Months Ended (Unaudited; Dollars in Billions) December 31, 2023 Net cash flows from operating activities $ 3.2 Purchases of property, plant, and equipment (0.5) K€ cenvue
Slide 43: Dividend Payout and Gross Leverage Ratios
Dividend Payout and Gross Leverage Ratios (Unaudited; Dollars in Millions) Fiscal Twelve Months Ended December 31, 2023 Adjusted net income Dividend payout ratio Dividends paid Annualized dividends™ (Non-GAAP) (Non-GAAP) $766 $1,532 $2,383 64% (Unaudited; Dollars in Millions) 2023 Adjusted EBITDA®)
Slide 44: Forward-looking non-GAAP measures not reconciled
Kenvue is not able to provide GAAP measures or reconcile certain non-GAAP financial measures to comparable GAAP measures on a forward-looking basis without unreasonable efforts given the unpredictability of the timing and amounts of discrete items such as acquisitions or divestitures.
Slide 45: Kenvue
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