Q1’24: Net Sales Increased 1.1% to $3.9 Billion
with Organic Growth1 of 1.9%
Q1’24: Diluted Earnings per Share of $0.15;
Adjusted Diluted Earnings per Share1 of $0.28
Reaffirms Fiscal Year 2024 Outlook
Kenvue Inc. (NYSE: KVUE) (“Kenvue”), today announced financial
results for the fiscal first quarter ended March 31, 2024.
“We entered 2024 with clear strategic priorities to reach more
consumers, reinvent our ways of working to invest more behind our
brands, and to foster a culture that rewards performance and
impact,” said Thibaut Mongon, Chief Executive Officer. “We began
executing against these priorities during the quarter, enabling a
solid start to the year and advancing Kenvue forward in our
ambition to become the undisputed leader in consumer health.”
First Quarter 2024 Financial
Results
Net Sales and Organic Growth
First quarter Net sales increased 1.1% on top of a 7.3% increase
in the prior year period. Organic growth1 was 1.9% on top of 11.2%
Organic growth in the prior year period. Increases in Net sales and
Organic growth were primarily driven by sustained momentum in Self
Care on strong consumer demand and growth in Essential Health led
by Oral Care, partially offset by underperformance in Skin Health
and Beauty.
Net sales and Organic growth were comprised of +5.0% value
realization and (3.1%) volume.
Approximately two points of the volume contraction was
attributed to the expected lapping of one-time retailer inventory
re-builds in the first quarter of 2023 and impacts of retailer
inventory reduction in the first quarter of 2024, which the Company
expects to continue through the second quarter of 2024.
Gross Profit Margin and Operating Income
Margin
First quarter Gross profit margin was 57.6% vs 55.2% in the
prior year period. Adjusted gross profit margin1 was 60.2% vs 57.3%
in the prior year period. Gross profit margin expansion of 240
basis points and Adjusted gross profit margin expansion of 290
basis points were primarily driven by value realization, continued
global supply chain efficiency initiatives, and easing net input
cost inflation.
First quarter Operating income margin was 14.1% vs 16.6% in the
prior year period. Operating income margin decrease vs the prior
year period was primarily driven by a $68 million impairment charge
related to the Company’s interim headquarters as well as expenses
related to the Company’s restructuring and optimization
initiatives.
First quarter Adjusted operating income margin1 was 22.0% vs
21.3% in the prior year period as robust Adjusted gross profit
margin expansion was partially offset by increased brand investment
and the absorption of public company costs that were not incurred
in the prior year period.
Interest expense, net and Taxes
First quarter Interest expense, net was $95 million.
The first quarter Effective tax rate was 30.7% vs 23.0% in the
prior year period. The Adjusted effective tax rate1 was 28.3% vs
20.4% in the prior year period. The increase in reported Effective
tax rate and Adjusted effective tax rate was primarily the result
of jurisdictional mix of earnings, prior year release of tax
reserves due to statute of limitations expiring and negative
impacts of stock-based compensation in the current period. In
addition, the reported Effective tax rate was further increased by
a reduction in foreign tax credit benefits when compared to the
prior period.
Net income per share (“Earnings per
share”)
First quarter Diluted earnings per share was $0.15. Adjusted
diluted earnings per share1 was $0.28.
Our Vue Forward
In 2023, Kenvue entered into a transition service agreement
(“TSA”) with Johnson & Johnson to provide certain services to
the Company for varying durations. As part of the Company’s
continued transformation to a fit-for-purpose consumer company
focused on growth, in Q1 2024, management began to enact strategic
initiatives intended to enhance organizational efficiencies and
better position Kenvue for future growth (“Our Vue Forward”). To
further these strategic initiatives, the Company’s Board of
Directors approved an initiative on May 6, 2024, which anticipates
a net reduction of its current global workforce of approximately 4%
and ongoing annualized pre-tax gross cost savings of approximately
$350 million that will be fully realized in 2026, of which a
portion will be reinvested back into the Company’s brands to fuel
growth. To achieve these savings, the Company expects to incur
approximately $275 million of pre-tax restructuring costs in each
of fiscal year 2024 and fiscal year 2025.2
“As we exit services under the TSA, these initiatives will
structurally position Kenvue for success in the future and create
long-term shareholder value,” said Paul Ruh, Chief Financial
Officer. “These initiatives will enable Kenvue to adjust its cost
structure and ways of working to become more competitive while
bolstering our ability to deliver on our long-term algorithm of
profitable growth, robust durable cash flow generation, and
disciplined capital allocation.”
2024 Outlook
Based on current spot rates, Kenvue reaffirmed its outlook for
2024 as follows:
Net sales and Organic growth
Kenvue expects full year 2024 reported Net sales growth to be in
the range of 1.0% to 3.0%. Foreign exchange is expected to be a
headwind of approximately one percentage point to reported Net
sales growth. The Company continues to expect full year 2024
Organic growth in the range of 2.0% to 4.0%.
Adjusted operating income margin and
Adjusted diluted earnings per share
Kenvue continues to expect full year 2024 Adjusted operating
income margin to be slightly below 2023 as strong gross margin
progression is offset by the impact of absorbing a full year of
public company costs and approximately 50 basis points of foreign
currency headwinds.
Kenvue continues to expect full year 2024 Adjusted diluted
earnings per share to be in the range of $1.10 - $1.20.
This range assumes a full year 2024 diluted weighted average
share count of 1.92 billion.
Reported Interest expense, net
For full year 2024, Kenvue continues to expect reported Interest
expense, net to be approximately $400 million.
Reported and Adjusted effective tax
rate
For full year 2024, Kenvue continues to expect an Effective tax
rate between 26.5% to 27.5%, and an Adjusted effective tax rate
between 25.5% to 26.5%.
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
given the unpredictability of the timing and amounts of discrete
items such as foreign exchange, acquisitions, or divestitures.
Webcast Information
As previously announced, Kenvue will host a conference call with
investors to discuss its first quarter results at 8:30 a.m. Eastern
Time. The conference call can be accessed by dialing 888-672-2415
from the United States or +1 646-307-1952 from international
locations. The conference ID for all callers is 14840. A
simultaneous webcast of the call for investors and other interested
parties may be accessed by visiting the Investors section of the
Company’s website. A replay will be available after the live
event.
About Kenvue
Kenvue is the world’s largest pure-play consumer health company
by revenue. Built on more than a century of heritage, our iconic
brands, including Aveeno®, BAND-AID® Brand, Johnson’s®, Listerine®,
Neutrogena®, and Tylenol®, are science-backed and recommended by
healthcare professionals around the world. At Kenvue, we believe in
the extraordinary power of everyday care and our teams work every
day to put that power in consumers’ hands and earn a place in their
hearts and homes. Learn more at www.kenvue.com.
1Non-GAAP
Financial Measures
The Company uses certain non-GAAP financial measures to
supplement the financial measures prepared in accordance with U.S.
GAAP. There are limitations to the use of the non-GAAP financial
measures presented herein. These non-GAAP financial measures are
not prepared in accordance with U.S. GAAP nor do they have any
standardized meaning under U.S. GAAP. In addition, other companies
may use similarly titled non-GAAP financial measures that are
calculated differently from the way the Company calculates such
measures. Accordingly, the non-GAAP financial measures may not be
comparable to such similarly titled non-GAAP financial measures
used by other companies. The Company cautions you not to place
undue reliance on these non-GAAP financial measures, but instead to
consider them with the most directly comparable U.S. GAAP measure.
These non-GAAP financial measures have limitations as analytical
tools and should not be considered in isolation. These non-GAAP
financial measures should be considered supplements to, not
substitutes for, or superior to, the corresponding financial
measures calculated in accordance with U.S. GAAP.
The Company believes the presentation of these measures is
relevant and useful for investors because it allows investors to
view performance in a manner similar to the method used by
management. The Company believes these measures help improve
investors’ ability to understand the Company’s operating
performance and makes it easier to compare the Company’s results
with other companies. In addition, the Company believes these
measures are also among the primary measures used externally by the
Company’s investors, analysts, and peers in its industry for
purposes of valuation and comparing the operating performance of
the Company to other companies in our industry.
Below are definitions and the reconciliation to the most closely
related GAAP measures for the non-GAAP measures used in this press
release and the related prepared materials and webcast.
Adjusted diluted earnings per
share: We define Adjusted diluted earnings per share as
Adjusted net income divided by the weighted average number of
diluted shares outstanding. Management views this non-GAAP measure
as useful to investors as it provides a supplemental measure of the
Company’s performance over time.
Adjusted EBITDA margin: We define
the non-GAAP measure EBITDA as U.S. GAAP Net income adjusted for
interest, provision for taxes, and depreciation and amortization.
We define Adjusted EBITDA, another non-GAAP financial measure, as
EBITDA adjusted for restructuring and operating model optimization
initiatives, costs incurred in connection with our establishment as
a standalone public company (“Separation-related costs”),
conversion of stock-based awards, stock-based awards granted to
individuals employed by Kenvue as of October 2, 2023 (“Founder
Shares”), impairment of fixed assets, the impact of the deferred
transfer of certain assets and liabilities from Johnson &
Johnson in certain jurisdictions (the “Deferred Markets”), and
losses on investments. We define Adjusted EBITDA margin, as
Adjusted EBITDA as a percentage of Net sales. Management believes
this non-GAAP measure is useful to investors as it provides a
supplemental perspective to the Company’s operating efficiency over
time.
Adjusted effective tax rate: We
define Adjusted effective tax rate as U.S. GAAP Effective tax rate
adjusted for the tax effects of amortization, restructuring and
operating model optimization initiatives, Separation-related costs,
conversion of stock-based awards, Founder Shares, impairment of
fixed assets, and losses on investments (i.e. special items) and
taxes related to the Deferred Markets. We also exclude certain
one-time tax only adjustments which include the removal of tax
effects from the carve-out methodology, and the impact of the
interest expense from the debt issuance, which reduced the
Company’s capacity to utilize foreign tax credits against U.S.
foreign source income. Management believes this non-GAAP measure is
useful to investors as it provides a supplemental measure of the
Company’s performance over time.
Adjusted gross profit margin: We
define Adjusted gross profit margin as U.S. GAAP Gross profit
margin adjusted for amortization, Separation-related costs,
conversion of stock-based awards, Founder Shares, and operating
model optimization initiatives. Management believes this non-GAAP
measure is useful to investors as it provides a supplemental
perspective to the Company’s operating efficiency over time.
Adjusted net income: We define
Adjusted net income as U.S. GAAP Net income adjusted for
amortization, restructuring and operating model optimization
initiatives, Separation-related costs, conversion of stock-based
awards, Founder Shares, impairment of fixed assets, the impact of
the Deferred Markets, losses on investments, and their related tax
impacts (i.e. special items). Adjusted net income excludes the
impact of items that may obscure trends in our underlying
performance. Management believes this non-GAAP measure is useful to
investors as the Company uses Adjusted net income for strategic
decision making, forecasting future results, and evaluating current
performance.
Adjusted operating income: We
define Adjusted operating income as U.S. GAAP Operating income
adjusted for amortization, restructuring and operating model
optimization initiatives, Separation-related costs, conversion of
stock-based awards, Founder Shares, impairment of fixed assets, and
the impact of the Deferred Markets. Management believes this
non-GAAP measure is useful to investors as management uses Adjusted
operating income to assess the Company’s financial performance.
Adjusted operating income margin:
We define Adjusted operating income margin as Adjusted operating
income as a percentage of Net sales. Management believes this
non-GAAP measure is useful to investors as it provides a
supplemental perspective to the Company’s operating efficiency over
time.
Free cash flow: We define Free cash
flow as U.S. GAAP Net cash flows from operating activities adjusted
for Purchases of property, plant, and equipment. Management
believes this non-GAAP measure is useful to investors as it
provides a view of the Company’s liquidity after deducting capital
expenditures, which are considered a necessary component of our
ongoing operations.
Organic growth: We define Organic
growth as the period-over-period change in U.S. GAAP Net sales
excluding the impact of changes in foreign currency exchange rates
and the impact of acquisitions and divestitures. Management
believes Organic growth provides investors with additional,
supplemental information that is useful in assessing the Company’s
results of operations by excluding the impact of certain items that
we believe do not directly reflect our underlying operations.
The non-GAAP measures as presented herein have been prepared as
if our operations had been conducted independently from Johnson
& Johnson prior to May 4, 2023, the date Kenvue’s common stock
began trading on the New York Stock Exchange, and therefore they
include certain Johnson & Johnson corporate and shared costs
allocated to us. Management believes the cost allocations are a
reasonable reflection of the utilization of services provided to,
or the benefit derived by, us during the periods presented, though
the allocations may not be indicative of the actual costs that
would have been incurred if we had been operating as a standalone
company.
2The Company’s estimates of the costs of the initiative and the
expected benefits are preliminary estimates and are subject to a
number of assumptions, including local law requirements in various
jurisdictions. Actual charges may differ, possibly materially, from
the estimates provided above.
Cautions Concerning Forward-Looking
Statements
This press release 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, product development, market position and business
strategy. Forward-looking statements may be identified by the use
of words such as “plans,” “expects,” “will,” “anticipates,”
“estimates” and other words of similar meaning. The reader is
cautioned not to rely on these forward-looking statements. These
statements are based on current expectations of future events. If
underlying assumptions prove inaccurate or known or unknown risks
or uncertainties materialize, actual results could vary materially
from the expectations and projections of Kenvue and its affiliates.
Risks and uncertainties include, but are not limited to: the
inability to execute on Kenvue’s business development strategy;
economic factors, such as interest rate and currency exchange rate
fluctuations; the ability to successfully manage local, regional or
global economic volatility, including reduced market growth rates,
and to generate sufficient income and cash flow to allow Kenvue to
effect any expected share repurchases and dividend payments;
Kenvue’s ability to access capital markets and maintain
satisfactory credit ratings, which could adversely affect its
liquidity, capital position and borrowing costs; competition,
including technological advances, new products and intellectual
property attained by competitors; challenges inherent in new
product research and development; uncertainty of commercial success
for new and existing products and digital capabilities; challenges
to intellectual property protections including counterfeiting; the
ability of Kenvue to successfully execute strategic plans,
including Our Vue Forward and other restructuring initiatives; the
impact of business combinations and divestitures, including any
ongoing or future transactions; manufacturing difficulties or
delays, internally or within the supply chain; product efficacy or
safety concerns resulting in product recalls or regulatory action;
significant adverse litigation or government action, including
related to product liability claims; changes to applicable laws and
regulations and other requirements imposed by stakeholders; changes
in behavior and spending patterns of consumers; natural disasters,
acts of war (including the Russia-Ukraine War and recent conflicts
in the Middle East) or terrorism, catastrophes, or epidemics,
pandemics, or other disease outbreaks; financial instability of
international economies and legal systems and sovereign risk; the
inability to realize the benefits of the separation from Kenvue’s
former parent, Johnson & Johnson; and the risk of disruption or
unanticipated costs in connection with the separation. A further
list and descriptions of these risks, uncertainties and other
factors can be found in Kenvue’s filings with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for
the fiscal year ended December 31, 2023 and subsequent Quarterly
Reports on Form 10-Q and other filings, available at www.kenvue.com
or on request from Kenvue. Any forward-looking statement made in
this release speaks only as of the date of this release. Kenvue
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or
developments or otherwise.
Kenvue Inc. Condensed
Consolidated Statement of Operations (Unaudited; Millions
Except Per Share Data)
Fiscal Three Months
Ended
March 31, 2024
April 2, 2023
Net sales
$
3,894
$
3,852
Cost of sales
1,652
1,727
Gross profit
2,242
2,125
Selling, general and administrative
expenses
1,573
1,502
Restructuring expenses
41
—
Other operating expense (income), net
78
(17
)
Operating income
550
640
Other expense, net
28
30
Interest expense, net
95
1
Income before taxes
427
609
Provision for taxes
131
140
Net income
$
296
$
469
Net income per share
Basic
$
0.15
$
0.27
Diluted
$
0.15
$
0.27
Weighted average number of shares
outstanding
Basic
1,915
1,716
Diluted
1,920
1,716
Non-GAAP Financial Information
Organic Growth
The following tables present a reconciliation of the change in
Net sales, as reported, to Organic growth for the periods
presented:
Fiscal Three Months Ended
March 31, 2024 vs April 2, 2023(1)
Reported Net sales
change
Impact of foreign
currency
Organic growth(2)
(Unaudited; Dollars in
Millions)
Amount
Percent
Amount
Amount
Percent
Self Care
$
58
3.5
%
$
(11
)
$
69
4.2
%
Skin Health and Beauty
(57
)
(5.1
)
(7
)
(50
)
(4.5
)
Essential Health
41
3.7
(13
)
54
4.9
Total
$
42
1.1
%
$
(31
)
$
73
1.9
%
Fiscal Three Months Ended
March 31, 2024 vs April 2, 2023(1)
(Unaudited)
Reported Net sales
change
Impact of foreign
currency
Organic growth(2)
Price/Mix(3)
Volume
Self Care
3.5
%
(0.7
)%
5.6
%
(1.4
)%
Skin Health and Beauty
(5.1
)
(0.6
)
2.4
(6.9
)
Essential Health
3.7
(1.2
)
6.8
(1.9
)
Total
1.1
%
(0.8
)%
5.0
%
(3.1
)%
Fiscal Three Months Ended
April 2, 2023 vs April 3, 2022(1)
Reported Net sales
change
Impact of foreign
currency
Organic growth(2)
(Unaudited; Dollars in
Millions)
Amount
Percent
Amount
Amount
Percent
Self Care
$
175
11.9
%
$
(50
)
$
225
15.3
%
Skin Health and Beauty
99
9.8
(34
)
133
13.2
Essential Health
(12
)
(1.1
)
(57
)
45
4.0
Total
$
262
7.3
%
$
(141
)
$
403
11.2
%
Fiscal Three Months Ended
April 2, 2023 vs April 3, 2022(1)
(Unaudited)
Reported Net sales
change
Impact of foreign
currency
Organic growth(2)
Price/Mix(3)
Volume
Self Care
11.9
%
(3.4
)%
8.2
%
7.1
%
Skin Health and Beauty
9.8
(3.4
)
8.9
4.3
Essential Health
(1.1
)
(5.1
)
9.4
(5.4
)
Total
7.3
%
(3.9
)%
8.7
%
2.5
%
(1)
Acquisitions and divestitures did not
materially impact the reported Net sales change.
(2)
Non-GAAP financial measure. Excludes the
impact of foreign currency exchange and the impact of Acquisitions
and divestitures.
(3)
Price/Mix reflects value realization.
Organic Growth by Segment
Self Care:
- Organic growth of 4.2% was comprised of 5.6% value realization
partially offset by (1.4)% volume. Winning in-store presence and
prominence, category leading consumer and healthcare professional
engagement, and science backed innovation drove broad-based
strength across the portfolio.
Skin Health and Beauty:
- Organic growth decreased (4.5)%, comprised of 2.4% value
realization offset by (6.9)% volume. In line with the Company’s
expectations, underperformance in commercial U.S. in-store
execution, more than offset strength across the Skin Health and
Beauty outside the U.S.
Essential Health:
- Organic growth of 4.9% was comprised of 6.8% value realization,
partially offset by (1.9)% volume. Strength in Essential Health was
led by global growth in Oral Care as continued momentum in
healthcare professional endorsements and innovation fueled
growth.
Total Segment Net Sales and Adjusted Operating Income
Segment Net sales and Adjusted operating income for the periods
presented were as follows:
Net Sales
Fiscal Three Months
Ended
(Unaudited; Dollars in
Millions)
March 31, 2024
April 2, 2023
Self Care
$
1,698
$
1,640
Skin Health and Beauty
1,054
1,111
Essential Health
1,142
1,101
Total segment net sales
$
3,894
$
3,852
Adjusted Operating
Income
Fiscal Three Months
Ended
(Unaudited; Dollars in
Millions)
March 31, 2024
April 2, 2023
Self Care Adjusted operating income
$
606
$
582
Skin Health and Beauty Adjusted operating
income
149
150
Essential Health Adjusted operating
income
256
210
Total
$
1,011
$
942
Depreciation
(75
)
(71
)
General corporate/unallocated expenses
(87
)
(69
)
Other operating (expense) income, net
(78
)
17
Other—impact of Deferred Markets(1)
16
—
Fixed asset impairment
68
—
Adjusted operating income
(non-GAAP)
$
855
$
819
Reconciliation to Income before taxes:
Amortization
74
81
Separation-related costs(2)
67
98
Restructuring and operating model
optimization initiatives
50
—
Fixed asset impairment
68
—
Conversion of stock-based awards
22
—
Other—impact of Deferred Markets(1)
16
—
Founder Shares
8
—
Operating income
$
550
$
640
Other expense, net
28
30
Interest expense, net
95
1
Income before taxes
$
427
$
609
(1) Includes the provision for taxes and
minority interest expense related to Deferred Markets recognized
within Other operating expense (income), net, which are payable to
Johnson & Johnson through interim agreements until these
Deferred Markets can be transferred to the Company. Deferred
Markets are local businesses in certain non-U.S. jurisdictions in
which the transfer from Johnson & Johnson of certain assets and
liabilities were deferred in order to ensure compliance with
applicable law, to obtain necessary governmental approvals and
other consents, and for other business reasons. (2) Costs incurred
in connection with our establishment as a standalone public company
are defined as “Separation-related costs.”
The following tables present reconciliations of GAAP to Non-GAAP
for the periods presented:
Fiscal Three Months Ended
March 31, 2024
(Unaudited; Dollars in
Millions)
As Reported
Adjustments
Reference
As Adjusted
Net sales
$
3,894
—
$
3,894
Gross profit
$
2,242
103
(a)
$
2,345
Gross profit margin
57.6
%
60.2
%
Operating income
$
550
305
(a)-(c)
$
855
Operating income margin
14.1
%
22.0
%
Net Income
$
296
251
(a)-(e)
$
547
Net income margin
7.6
%
14.0
%
Interest expense, net
$
95
Provision for taxes
$
131
Depreciation and amortization
$
149
EBITDA (non-GAAP)
$
671
262
(b)-(d), (f)
$
933
EBITDA margin
17.2
%
24.0
%
Detail of
Adjustments
Cost of sales
SG&A/Restructuring
expenses
Other operating expense
(income), net
Other expense, net
Provision for taxes
Total
Amortization
$
74
$
—
$
—
$
—
$
—
$
74
Restructuring and operating model
optimization initiatives
6
44
—
—
—
50
Separation-related costs (including
conversion of stock-based awards and Founder Shares)
23
74
—
—
—
97
Fixed asset impairment
—
—
68
—
—
68
Impact of Deferred Markets—minority
interest expense
—
—
7
—
—
7
Impact of Deferred Markets—provision for
taxes
—
—
9
—
(9
)
—
Losses on investments
—
—
—
31
—
31
Tax impact on special item adjustments
—
—
—
—
(76
)
(76
)
Total
$
103
$
118
$
84
$
31
$
(85
)
$
251
(a)
(b)
(c)
(d)
(e)
Cost of sales less amortization
$
29
(f)
Fiscal Three Months Ended
April 2, 2023
(Unaudited; Dollars in
Millions)
As Reported
Adjustments
Reference
As Adjusted
Net sales
$
3,852
—
$
3,852
Gross profit
$
2,125
81
(a)
$
2,206
Gross profit margin
55.2
%
57.3
%
Operating income
$
640
179
(a)-(c)
$
819
Operating income margin
16.6
%
21.3
%
Net Income
$
469
164
(a)-(e)
$
633
Net income margin
12.2
%
16.4
%
Interest expense, net
$
1
Provision for taxes
$
140
Depreciation and amortization
$
152
EBITDA (non-GAAP)
$
762
105
(b)-(d)
$
867
EBITDA margin
19.8
%
22.5
%
Detail of
Adjustments
Cost of sales
SG&A/Restructuring
expenses
Other operating expense
(income), net
Other expense, net
Provision for taxes
Total
Amortization
$
81
$
—
$
—
$
—
$
—
$
81
Separation-related costs
—
98
—
—
—
98
Losses on investments
—
—
—
7
—
7
Tax impact on special item adjustments
—
—
—
—
(22
)
(22
)
Total
$
81
$
98
$
—
$
7
$
(22
)
$
164
(a)
(b)
(c)
(d)
(e)
The following tables present reconciliations of the Effective
tax rate, as reported, to Adjusted effective tax rate for the
periods presented:
Fiscal Three Months
Ended
(Unaudited)
March 31, 2024
April 2, 2023
Effective tax rate
30.7
%
23.0
%
Adjustments:
Tax-effect on special item adjustments
(3.1
)
1.1
Removal of tax benefits from carve out
methodology
—
5.4
Taxes related to Deferred Markets
0.7
—
Valuation allowance on foreign tax credits
due to interest expense
—
(9.1
)
Adjusted Effective tax rate
(non-GAAP)
28.3
%
20.4
%
The following table presents a reconciliation of Effective tax
rate, as forecasted on a U.S. GAAP basis, to forecasted Adjusted
effective tax rate for fiscal year 2024:
Fiscal Year 2024
(Unaudited)
Forecast
Effective tax rate
26.5% - 27.5%
Adjustments:
Tax-effect on special item adjustments
(1.7)
Taxes related to Deferred Markets
0.7
Adjusted Effective tax rate
(non-GAAP)
25.5% - 26.5%
The following table presents a reconciliation of Diluted
earnings per share, as reported, to Adjusted diluted earnings per
share for the periods presented:
Fiscal Three Months
Ended
(Unaudited)
March 31, 2024
April 2, 2023
Diluted earnings per share
$
0.15
$
0.27
Adjustments:
Separation-related costs
0.03
0.06
Restructuring and operating model
optimization initiatives
0.03
—
Fixed asset impairment
0.04
—
Amortization
0.04
0.05
Losses on investments
0.02
—
Tax impact on special item adjustments
(0.04
)
(0.01
)
Other
0.01
—
Adjusted diluted earnings per share
(non-GAAP)
$
0.28
$
0.37
The following table presents a reconciliation of Net cash flows
from operating activities, as reported, and Purchases of property,
plant, and equipment, as reported, to Free cash flow for the
periods presented:
Fiscal Three Months
Ended
(Unaudited; Dollars in
Billions)
March 31, 2024
April 2, 2023
Net cash flows from operating
activities
$
0.3
$
0.8
Purchases of property, plant, and
equipment
(0.2
)
(0.1
)
Free cash flow (non-GAAP)
$
0.1
$
0.7
Other Supplemental Financial Information
The following table presents the Company’s Net sales by
Geographic Region for the periods presented:
Fiscal Three Months
Ended
(Unaudited; Dollars in
Millions)
March 31, 2024
April 2, 2023
Net sales by geographic region
North America
$
1,873
$
1,941
Europe, Middle East and Africa
905
838
Asia Pacific
766
768
Latin America
350
305
Total Net sales by geographic
region
$
3,894
$
3,852
The following table presents the Company’s Research and
development expenses for the periods presented. Research and
development expenses are included within Selling, general, and
administrative expenses.
Fiscal Three Months
Ended
(Unaudited; Dollars in
Millions)
March 31, 2024
April 2, 2023
Research & Development
$
100
$
89
The following table presents the Company’s Cash and cash
equivalents, Total debt and Net debt balance as of the periods
presented:
(Unaudited; Dollars in
Billions)
March 31, 2024
December 31, 2023
Cash and cash equivalents
$
1.2
$
1.4
Total debt
(8.6
)
(8.3
)
Net debt
$
(7.4
)
$
(6.9
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240507637168/en/
Investor Relations: Tina Romani Kenvue_IR@kenvue.com
Media Relations: Melissa Witt media@kenvue.com
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