Kenvue Inc. · NYSE:KVUE
Kenvue — Q3 2024 Earnings Presentation
41 slides from Kenvue's earnings presentation, Nov 7, 2024
Slide 1: Third Quarter 2024 Earnings Results
Third Quarter 2024 Earnings Results November 7, 2024
Slide 2: Introduction
Introduction Thibaut Mongon Paul Ruh Sofya Tsinis Chief Executive Officer Chief Financial Officer Vice President of Investor Relations 2
Slide 3: 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’s future operating and financial performance, p
Slide 4: Q3 2024 By the Numbers
Q3 2024 By the Numbers +0.9% y/y Organic growth1 vs. +3.6% PY 60.7% Adjusted gross profit margin1, + 130bps vs. PY +~20% brand activation investment vs. PY $0.28 Adjusted diluted earnings per share1 1 Non-GAAP financial meas ure; refer to reconciliations of non-GAAP financial meas ures included in a
Slide 5: Kenvue Playbook in Action
Kenvue Playbook in Action Strengthen Reach more Amplify in-store presence consumers innovation in and prominence & healthcare relevant ways professionals Powered by increased brand investment Funded by gross margin expansion + Our Vue Forward savings 5
Slide 6: Progress Towards Becoming a Leaner, More Agile Organization
Progress Towards Becoming a Leaner, More Agile Organization On track to invest +~20% vs. PY in brand On track to fully exit Transition Service activation, focus on social media marketing Agreements by mid-2025 powered by analytics and AI Created Kenvue Global Content Factory On track to deliver $350
Slide 7: Q3 2024 Portfolio Performance
Q3 2024 Portfolio Performance Q3 2024 Q3 2024 Net sales Organic growth1 Takeaways +0.9% Total Kenvue $3.9B vs. +3.6% PY +0.7% • Continues to outperform the market and gain share Self Care $1.6B vs. +6.7% PY Skin Health (2.7)% $1.1B • Building the right foundation, seeing early signs of recovery & Be
Slide 8: Self Care
Self Care Continues to outperform the market and gain share +0.7% Key Highlights Q3 Organic growth1 vs. +6.7% PY • Lower level of incidence in Allergy and Pediatric Fever impacting volumes • Outperforming the market with share gains across key brands • Expanding distribution of successful innovation
Slide 9: Essential Health
Essential Health Broad-based growth across all categories and all regions +4.5% Key Highlights Q3 Organic growth1 vs. +3.8% PY • Delivering second consecutive quarter of volume growth • Expanding distribution and enhancing in-store prominence of premium innovations • Increasing media spend and partn
Slide 10: Skin Health & Beauty
Skin Health & Beauty Building the right foundation, seeing early signs of recovery (2.7%) Key Highlights Q3 Organic growth1 • Building a world-class team vs. (0.4)% PY • Launching breakthrough collaboration with world’s most recognizable dermatologists • Activating playbook in Europe and U.S. • Reco
Slide 11: U.S. Neutrogena Recovery Actions
U.S. Neutrogena Recovery Actions Improving in-store presence and prominence Broadening distribution of innovation Reaching more consumers through social media and celebrity campaigns Engaging with dermatologists leading to increased levels of recommendations Launching breakthrough collaboration with
Slide 12: Advancing Our Transformation
Advancing Our Transformation Reaching more consumers Investing more behind our brands Building a culture of performance and impact 12
Slide 13: Q3 2024 Financial Performance
Q3 2024 Financial Performance 13
Slide 14: Reported Net Sales & Organic Growth
Reported Net Sales & Organic Growth1 +0.9% Organic Growth in Q3 2024, On Top of 3.6 % in Q3 2023 2.5% (1.6%) Key Drivers (1.3%) $3.9B $3.9B Value realization2 across all segments Volume declines in Skin Health & Beauty and Self Care, partially offset by volume growth in Essential Health Q3 2023 Valu
Slide 15: Self Care
Self Care Continues to outperform the market and gain share $1.6B Net Sales Organic Growth1 Drivers Reported Value Realization2 0.7% vs +6.4% PY vs +5.5% PY Organic Growth1 Volume 0.7% vs +6.7% PY vs +1.2% PY 1 Non-GAAP financial meas ure; refer to reconciliations of non-GAAP financial meas ures inc
Slide 16: Essential Health
Essential Health $1.2B Net Sales Organic Growth1 Drivers Reported Value Realization2 +1.6% vs +3.0% PY vs +10.0% PY Organic Growth1 Volume +4.5% vs +3.8% PY vs (6.2)% PY 1 Non-GAAP financial meas ure; refer to reconciliations of non-GAAP financial meas ures included in accompanying s chedules to thi
Slide 17: Skin Health & Beauty
Skin Health & Beauty $1.1B Net Sales Organic Growth1 Drivers Reported Value Realization2 (4.2)% vs +(0.4)% PY vs +6.4% PY Organic Growth1 Volume (2.7)% vs (0.4)% PY vs (6.8)% PY 1 Non-GAAP financial meas ure; refer to reconciliations of non-GAAP financial meas ures included in accompanying s chedule
Slide 18: Adjusted Gross Profit and Operating Income Margins
Adjusted Gross Profit and Operating Income Margins1 Q3 2023 Q3 2024 Key Drivers Adjusted Gross +130 bps y/y 60.7% Profit Margin1 Strong productivity 59.4% and continued supply chain efficiencies Execution of TSA exits and Our Vue Forward on track Adjusted Operating -120 bps y/y Higher y/y brand Inco
Slide 19: Q3 2024 Net Income and Earnings Per Share
Q3 2024 Net Income and Earnings Per Share Reported Net Income Adjusted Net Income 1 Diluted Earnings Per Share $590M $542M $0.20 Reported $438M $383M $0.28 Adjusted1 Q3 2023 Q3 2024 Q3 2023 Q3 2024 1 Non-GAAP financial meas ure; refer to reconciliations of non-GAAP financial meas ures included in ac
Slide 20: 2024 Guidance Summary
2024 Guidance Summary Current Prior Reported Net 1.0% - 3.0% 1.0% - 3.0% Sales Growth • Tracking toward low end of range • Assuming FX headwind ~1% y/y Organic Growth1 2.0% - 4.0% 2.0% - 4.0% Adjusted Operating • Unchanged; productivity and efficiency gains offset 21% - 22% 21% - 22% Income Margin1
Slide 21: Q&A
Q&A 21
Slide 22: Kenvue
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Slide 23: Appendix
Appendix 23
Slide 24: 2023 Organic Growth Considerations
2023 Organic Growth1 Considerations Q1’23 Q2’23 Q3’23 Q4’23 Higher incidences of cough, Delayed season and lower cold and flu outside the U.S. incidence levels Self-Care Retailer inventory re-build, following Q4’22 demand surge Organic Growth 15.3% 14.2% 6.7% (2.0%) Retailer inventory re-build, Cons
Slide 25: Organic Growth
Organic Growth Fiscal Three Months Ended September 29, 2024 vs October 1, 2023 (1) Reported Net sales change Impact of foreign currency Organic growth(2) (Unaudited; Dollars in Millions) Amount Percent Amount Amount Percent Self Care $ 12 0.7 % $ 1 $ 11 0.7 % Skin Health and Beauty (47) (4.2) (17) (
Slide 26: Organic Growth
Organic Growth Fiscal Three Months Ended October 1, 2023 vs October 2, 2022(1) Reported Net sales change Impact of foreign currency Organic growth(2) (Unaudited; Dollars in Millions) Amount Percent Amount Amount Percent Self Care $ 97 6.4 % $ (4) $ 101 6.7 % Skin Health and Beauty (5) (0.4) — (5) (0
Slide 27: Organic Growth
Organic Growth Fiscal Nine Months Ended September 29, 2024 vs October 1, 2023(1) Reported Net sales change Impact of foreign currency Organic growth(2) (Unaudited; Dollars in Millions) Amount Percent Amount Amount Percent Self Care $ 44 0.9 % $ (32) $ 76 1.5 % Skin Health and Beauty (148) (4.4) (41)
Slide 28: Organic Growth
Organic Growth Fiscal Nine Months Ended October 1, 2023 vs October 2, 2022 (1) Reported Net sales change Impact of foreign currency Organic growth(2) (Unaudited; Dollars in Millions) Amount Percent Amount Amount Percent Self Care $ 452 10.1 % $ (84) $ 536 12.0 % Skin Health and Beauty 115 3.5 (52) 1
Slide 29: Total Segment Net Sales
Total Segment Net Sales Net Sales Net Sales Fiscal Three Months Ended Fiscal Nine Months Ended (Unaudited; Dollars in Millions) September 29, 2024 October1, 2023 September 29, 2024 October 1, 2023 Self Care 1,625 1,613 4,958 4914 Skin Health and Beauty 1,072 1g 3,229 3,377 1,202 1183 3,606 Essential
Slide 30: Total Segment Adjusted Operating Income
Total Segment Adjusted Operating Income Adjusted Operating Income Adjusted Operating Income Fiscal Three Months Ended Fiscal Nine Months Ended (Unaudited; Dollars in Millions) September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023 Self Care Adjusted operating income 557 604 1,692 1,76
Slide 31: Non-GAAP Reconciliations (Q3 2024)
Non-GAAP Reconciliations (Q3 2024) Fiscal Three Months Ended September 29, 2024 (Unaudited; Dollars in Millions) As Reported Adjustments Reference As Adjusted Net sales $ 3,899 — $ 3,899 Gross profit $ 2,282 86 (a) $ 2,368 Gross profit margin 58.5 % 60.7 % Operating income $ 654 206 (a)-(c) $ 860 Op
Slide 32: Non-GAAP Reconciliations (Q3 2023)
Non-GAAP Reconciliations (Q3 2023) Fiscal Three Months Ended October 1, 2023 (Unaudited; Dollars in Millions) As Reported Adjustments Reference As Adjusted Net sales $ 3,915 — $ 3,915 Gross profit $ 2,250 75 (a) $ 2,325 Gross profit margin 57.5 % 59.4 % Operating income $ 710 204 (a)-(c) $ 914 Opera
Slide 33: Non-GAAP Reconciliations (Nine Months 2024)
Non-GAAP Reconciliations (Q3 2024) Fiscal Nine Months Ended September 29, 2024 (Unaudited; Dollars in Millions) As Reported Adjustments Reference As Adjusted Net sales $ 11,793 — $ 11,793 Gross profit $ 6,889 288 (a) $ 7,177 Gross profit margin 58.4 % 60.9 % Operating income $ 1,358 1,268 (a)-(d) $
Slide 34: Non-GAAP Reconciliations (Nine Months 2023)
Non-GAAP Reconciliations (Q3 2023) Fiscal Nine Months Ended October 1, 2023 (Unaudited; Dollars in Millions) As Reported Adjustments Reference As Adjusted Net sales $ 11,778 — $ 11,778 Gross profit $ 6,600 236 (a) $ 6,836 Gross profit margin 56.0 % 58.0 % Operating income $ 2,052 606 (a)-(c) $ 2,658
Slide 35: Adjusted Effective Tax Rate
Adjusted Effective Tax Rate Fiscal Three Months Ended Fiscal Nine Months Ended (Unaudited) September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023 Effective tax rate 33.6 % 25.1 % 31.1 % 27.1 % Adjustments: Tax-effect on special item adjustments (5.2) (3.1) (4.8) (3.0) Dr.Ci:Labo® Impa
Slide 36: Adjusted Effective Tax Rate
Adjusted Effective Tax Rate Fiscal Year 2024 (Unaudited) Forecast Effective tax rate 28.5% - 29.0% Adjustments: Tax-effect on special item adjustments (2.5) Taxes related to Deferred Markets 0.5 Adjusted Effective tax rate (non-GAAP) 26.5% - 27.0% 36
Slide 37: Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings Per Share Fiscal Three Months Ended Fiscal Nine Months Ended (Unaudited) September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023 Diluted earnings per share $ 0.20 $ 0.23 $ 0.38 $ 0.73 Adjustments: Separation-related costs 0.04 0.07 0.12 0.18 Conversion of stoc
Slide 38: Free Cash Flow
Free Cash Flow Fiscal Nine Months Ended (Unaudited; Dollars in Billions) September 29, 2024 October 1, 2023 Net cash flows from operating activities $ 1.0 $ 2.2 Purchases of property, plant, and equipment (0.3) (0.2) Free cash flow (non-GAAP) $ 0.7 $ 2.0 38
Slide 39: 2024 Guidance Non-GAAP Reconciliations
2024 Guidance Non-GAAP Reconciliations Kenvue is not able to provide the most directly comparable GAAP measures or reconcile Adjusted diluted earnings per share, Adjusted operating income margin, or Organic growth to comparable GAAP measures on a forward-looking basis without unreasonable efforts gi
Slide 40: Research and Development
Research and Development Fiscal Three Months Ended Fiscal Nine Months Ended (Unaudited; Dollars in Millions) September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023 Research & Development $ 97 $ 78 $ 302 $ 266 40
Slide 41: Kenvue
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