- Q4 Net Sales Decreased 0.1% to $3.7 Billion; Organic Sales1
Grew 1.7%
- Q4 Diluted EPS was $0.15; Adjusted Diluted EPS1 was $0.26
- FY’24 Net Sales Increased 0.1% to $15.5 Billion; Organic Sales1
Grew 1.5%
- FY’24 Gross Profit Margin Improved 200 Basis Points and Our Vue
Forward Savings Supported Increased Marketing Investment to Fuel
Growth
- FY’24 Diluted EPS was $0.54; Adjusted Diluted EPS1 was
$1.14
- Provides Outlook for FY’25
Kenvue Inc. (NYSE: KVUE), today announced financial results for
the full year and fiscal fourth quarter ended December 29,
2024.
“We delivered on our 2024 profit commitments despite headwinds
that resulted in softer than expected sales growth and we enter
2025 as a more competitive company with stronger foundations,” said
Thibaut Mongon, Chief Executive Officer. “We remain focused on
leveraging our increased brand investments to accelerate growth and
deliver long-term value creation centered around profitable growth,
durable cash flow generation, and disciplined capital
allocation.”
Fourth Quarter 2024 Financial
Results
Net Sales and Organic
Sales
Fourth quarter Net sales decreased 0.1%, reflecting Organic
sales1 growth of 1.7% and a foreign currency headwind of 1.8%.
Organic sales growth was driven by 1.0% value realization (price
and mix) and 0.7% volume growth.
Value realization was favorable across each segment and was
primarily driven by price actions taken in 2024. Volume growth in
both Skin Health and Beauty and Self Care was partially offset by a
decline in Essential Health. In Self Care, weak incidences of cold,
cough & flu led to a significant decline in the pediatric pain
franchise. In addition, go-to-market disruption in Asia Pacific
impacted the Company’s results, with an outsized impact on
Essential Health.
Gross Profit Margin and Operating
Income Margin
Fourth quarter Gross profit margin expanded 80 basis points to
56.5% from 55.7% in the prior year period, as Separation-related
costs and amortization of intangible assets declined
year-over-year. Adjusted gross profit margin1 decreased 80 basis
points to 58.7% from 59.5% in the prior year period, which included
non-recurring separation related benefits. The year-over-year
change in both measures also reflects the impact from net input
cost inflation and unfavorable mix, as well as the benefit from
productivity gains and value realization.
Fourth quarter Operating income margin was 13.2% vs 12.5% in the
prior year period. Fourth quarter Adjusted operating income margin1
was 19.2% vs 21.8% in the prior year period. The year-over-year
changes in Operating income margin and Adjusted operating income
margin reflect the year-over-year change in Gross profit margin and
Adjusted gross profit margin, respectively, as well as an increase
in brand investment and the benefit from savings from Our Vue
Forward.
Interest Expense, Net and
Taxes
Fourth quarter Interest expense, net was $95 million vs $96
million in the prior year period.
The fourth quarter Effective tax rate was 15.3% vs 8.4% in the
prior year period. The Adjusted effective tax rate1 was 17.7% vs
15.8% in the prior year period. Both measures were driven by
changes to the jurisdictional mix of income and reduced benefits
derived from the separation from our former parent company offset
by remeasurement of the Company’s deferred taxes and the release of
a valuation allowance.
Net Income Per Share (“Earnings Per
Share”)
Fourth quarter Diluted earnings per share were $0.15 vs $0.17 in
the prior year period and Adjusted diluted earnings per share1 were
$0.26 vs $0.31 in the prior year period.
Full Year 2024 Financial
Results
Net Sales and Organic
Sales
Full year 2024 Net sales increased 0.1%, reflecting Organic
sales growth of 1.5% and foreign currency headwind of 1.4%. Organic
sales growth was driven by 2.7% value realization, partially offset
by 1.2% volume decline.
Value realization was favorable across each segment and was
driven by a combination of carry-over pricing from 2023 and price
actions taken in 2024. The volume decline was driven by Skin Health
and Beauty and Self Care, which offset slight volume growth in
Essential Health.
Gross Profit Margin and Operating
Income Margin
Full year 2024 Gross profit margin expanded 200 basis points to
58.0% from 56.0% in the prior year period. Adjusted gross profit
margin also expanded 200 basis points to 60.4% from 58.4% in the
prior year period. The year-over-year improvement in both measures
primarily reflects productivity gains attributable to our global
supply chain efficiency initiatives and benefits from value
realization.
Full year 2024 Operating income margin was 11.9% vs 16.3% in the
prior year period, with the current year figure impacted by
non-cash charges related to asset impairments. Full year 2024
Adjusted operating income margin was 21.5% vs 22.4% in the prior
year period. The year-over-year change in both measures reflects
the impact of higher brand investment, which more than offset the
benefit from Gross profit margin expansion and savings from Our Vue
Forward.
Interest Expense, Net and
Taxes
Full year 2024 Interest expense, net was $378 million vs $250
million in the prior year period.
Full year Effective tax rate was 27.2% vs 24.0% in the prior
year period. The Adjusted effective tax rate was 25.5% vs 23.4% in
the prior year period. Both measures were driven by changes to the
jurisdictional mix of income and reduced benefits derived from the
separation from our former parent company offset by remeasurement
of the Company’s deferred taxes and the release of a valuation
allowance.
Net Income Per Share (“Earnings Per
Share”)
Full year 2024 Diluted earnings per share were $0.54 vs $0.90 in
the prior year period and Adjusted diluted earnings per share were
$1.14 vs $1.29 in the prior year period.
2025 Outlook
“As Kenvue enters our next chapter, we expect to accelerate
performance throughout the year, while navigating the dynamic
external environment contemplated within our outlook,” said Paul
Ruh, Chief Financial Officer. “We expect to drive further
productivity and operational efficiency gains, which will fund our
planned increase in brand investments, positioning us to grow
adjusted operating margin for the year."
Based on current spot rates, Kenvue initiated the following
outlook for Full year 2025. The Company expects:
- Net sales change of -1% to +1% year-over-year, with Organic
sales growth of +2% to +4% and a ~3% headwind from foreign currency
translation.
- Adjusted operating income margin improvement
year-over-year.
- Flat to +2% year-over-year Adjusted diluted earnings per share
growth, including a mid-single-digit unfavorable impact from
foreign currency.
This outlook does not include any potential impacts from tariffs
introduced in 2025.
Kenvue is not able to provide the most directly comparable GAAP
measures or reconcile Adjusted operating income margin or Adjusted
diluted earnings per share 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 fourth quarter and full year results on
Thursday, February 6, 2025 at 8:00 a.m. Eastern Time. The
conference call can be accessed by dialing 877-407-8835 from the
U.S. or +1 201-689-8779 from international locations. A live
webcast of the conference call can also be accessed at investors.kenvue.com, with a replay made available
after the live event.
About Kenvue
Kenvue Inc. 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
EBITDA as U.S. GAAP Net income adjusted for interest, provision for
taxes, and depreciation and amortization. We define Adjusted EBITDA
as EBITDA adjusted for restructuring expenses 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 charges, the impact of the deferred
transfer of certain assets and liabilities from Johnson &
Johnson in certain jurisdictions (the “Deferred Markets”),
litigation (income) expense, losses on investments, and tax
indemnification releases. We define Adjusted EBITDA margin as
Adjusted EBITDA as a percentage of U.S. GAAP 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 on special item adjustments including
amortization of intangible assets, restructuring expenses and
operating model optimization initiatives, Separation-related costs,
conversion of stock-based awards, Founder Shares, impairment
charges other than the Dr.Ci:Labo® asset impairment, litigation
(income) expense, losses on investments, interest income from a
related party note, and tax indemnification releases. We also
exclude taxes related to the Deferred Markets, taxes related to the
Dr.Ci:Labo® asset impairment charges, certain one-time tax only
adjustments which includes 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 (also referred to as “Adjusted
gross margin”) as U.S. GAAP Gross profit margin adjusted for
amortization of intangible assets, 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 of intangible assets, restructuring expenses and
operating model optimization initiatives, Separation-related costs,
conversion of stock-based awards, Founder Shares, impairment
charges, the impact of the Deferred Markets, litigation (income)
expense, losses on investments, interest income from a related
party note, tax indemnification releases, 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 of intangible assets, restructuring
expenses and operating model optimization initiatives,
Separation-related costs, conversion of stock-based awards, Founder
Shares, impairment charges, the impact of the Deferred Markets, and
litigation (income) expense. 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 (also referred to as
“Adjusted operating margin”) as Adjusted operating income as a
percentage of U.S. GAAP 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 sales: We define Organic
sales as U.S. GAAP Net sales excluding the impact of changes in
foreign currency exchange rates and the impact of acquisitions and
divestitures. We report changes in Organic sales on a
period-over-period basis. We previously referred to this non-GAAP
financial metric as “Organic growth”. Management believes reporting
period-over-period changes in Organic sales 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.
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;
inflation and other 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 maintain satisfactory
credit ratings and access capital markets, 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
or cost-saving 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 the Israel-Hamas War), 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 most recent Annual Report on Form 10-K 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; Dollars In Millions,
Except Per Share Data; Shares In Millions)
Fiscal Three Months
Ended
Fiscal Twelve Months
Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Net sales
$
3,662
$
3,666
$
15,455
$
15,444
Cost of sales
1,592
1,623
6,496
6,801
Gross profit
2,070
2,043
8,959
8,643
Selling, general and administrative
expenses
1,525
1,586
6,329
6,141
Restructuring expenses
65
—
185
—
Impairment charges
—
—
578
—
Other operating (income) expense, net
(3
)
(3
)
26
(10
)
Operating income
483
460
1,841
2,512
Other expense, net
42
7
48
72
Interest expense, net
95
96
378
250
Income before taxes
346
357
1,415
2,190
Provision for taxes
53
30
385
526
Net income
$
293
$
327
$
1,030
$
1,664
Net income per share
Basic
$
0.15
$
0.17
$
0.54
$
0.90
Diluted
$
0.15
$
0.17
$
0.54
$
0.90
Weighted-average number of shares
outstanding
Basic
1,916
1,915
1,915
1,846
Diluted
1,929
1,919
1,923
1,850
Non-GAAP Financial Information
Organic Sales Change
The following tables present a reconciliation of the change in
Net sales, as reported, to the change in Organic sales for the
periods presented:
Fiscal Three Months Ended
December 29, 2024 vs December 31, 2023(1)
Reported Net sales
change
Impact of foreign
currency
Organic sales change
(Unaudited; Dollars in
Millions)
Amount
Percent
Amount
Amount
Percent
Self Care
$
32
2.1
%
$
(12
)
$
44
2.9
%
Skin Health and Beauty
10
1.0
(16
)
26
2.6
Essential Health
(46
)
(4.1
)
(38
)
(8
)
(0.7
)
Total
$
(4
)
(0.1
)%
$
(66
)
$
62
1.7
%
Fiscal Three Months Ended
December 29, 2024 vs December 31, 2023(1)
(Unaudited)
Reported Net sales
change
Impact of foreign
currency
Organic sales change
Price/Mix(2)
Volume
Self Care
2.1
%
(0.8
)%
1.2
%
1.7
%
Skin Health and Beauty
1.0
(1.6
)
0.5
2.1
Essential Health
(4.1
)
(3.4
)
1.2
(1.9
)
Total
(0.1
)%
(1.8
)%
1.0
%
0.7
%
Fiscal Twelve Months Ended
December 29, 2024 vs December 31, 2023(1)
Reported Net sales
change
Impact of foreign
currency
Organic sales change
(Unaudited; Dollars in
Millions)
Amount
Percent
Amount
Amount
Percent
Self Care
$
76
1.2
%
$
(44
)
$
120
1.9
%
Skin Health and Beauty
(138
)
(3.2
)
(57
)
(81
)
(1.9
)
Essential Health
73
1.6
(118
)
191
4.1
Total
$
11
0.1
%
$
(219
)
$
230
1.5
%
Fiscal Twelve Months Ended
December 29, 2024 vs December 31, 2023(1)
(Unaudited)
Reported Net sales
change
Impact of foreign
currency
Organic sales change
Price/Mix(2)
Volume
Self Care
1.2
%
(0.7
)%
2.5
%
(0.6
)%
Skin Health and Beauty
(3.2
)
(1.3
)
1.6
(3.5
)
Essential Health
1.6
(2.5
)
3.9
0.2
Total
0.1
%
(1.4
)%
2.7
%
(1.2
)%
(1) Acquisitions and divestitures did not materially impact the
reported Net sales change. (2) Price/Mix reflects value
realization.
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
Fiscal Twelve Months
Ended
(Unaudited; Dollars in
Millions)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Self Care
$
1,569
$
1,537
$
6,527
$
6,451
Skin Health and Beauty
1,011
1,001
4,240
4,378
Essential Health
1,082
1,128
4,688
4,615
Total segment net sales
$
3,662
$
3,666
$
15,455
$
15,444
Adjusted Operating
Income
Fiscal Three Months
Ended
Fiscal Twelve Months
Ended
(Unaudited; Dollars in
Millions)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Self Care Adjusted operating income
$
481
$
537
$
2,173
$
2,299
Skin Health and Beauty Adjusted operating
income
105
149
607
679
Essential Health Adjusted operating
income
248
275
1,162
1,011
Total(1)
$
834
$
961
$
3,942
$
3,989
Reconciliation to Adjusted operating
income (non-GAAP):
Depreciation(2)
91
94
329
305
General corporate/unallocated expenses
56
77
314
296
Other operating (income) expense, net
(3
)
(3
)
26
(10
)
Other—impact of Deferred Markets
(12
)
(1
)
(59
)
(34
)
Litigation (expense) income
—
(5
)
4
(25
)
Adjusted operating income
(non-GAAP)
$
702
$
799
$
3,328
$
3,457
Reconciliation to Income before taxes:
Amortization of intangible assets
57
80
269
322
Separation-related costs(3)
65
135
296
468
Restructuring and operating model
optimization initiatives
75
29
221
32
Conversion of stock-based awards
5
80
39
55
Other—impact of Deferred Markets
12
1
59
34
Founder Shares
5
9
29
9
Litigation expense (income)
—
5
(4
)
25
Impairment charges
—
—
578
—
Operating income
$
483
$
460
$
1,841
$
2,512
Other expense, net
42
7
48
72
Interest expense, net
95
96
378
250
Income before taxes
$
346
$
357
$
1,415
$
2,190
(1) Effective in the fiscal three months ended September 29,
2024, the Company adjusted the allocation for certain brand
marketing expenses within Selling, general, and administrative
expenses to align with segment financial results as measured by the
Company, including the chief operating decision maker (the “CODM”).
Accordingly, the Company has updated its segment disclosures to
reflect the updated presentation in all prior periods. Total
Adjusted operating income did not change as a result of this
update. (2) Depreciation includes the amortization of integration
and development costs capitalized in connection with cloud
computing arrangements. (3) Separation-related costs includes
depreciation expense on Separation-related assets for the fiscal
three and twelve months ended December 29, 2024.
The following tables present reconciliations of GAAP to Non-GAAP
for the periods presented:
Fiscal Three Months Ended
December 29, 2024
(Unaudited; Dollars in
Millions)
As Reported
Adjustments
Reference
As Adjusted
Net sales
$
3,662
—
$
3,662
Gross profit
$
2,070
81
(a)
$
2,151
Gross profit margin
56.5
%
58.7
%
Operating income
$
483
219
(a)-(c)
$
702
Operating income margin
13.2
%
19.2
%
Net income
$
293
206
(a)-(e)
$
499
Net income margin
8.0
%
13.6
%
Interest expense, net
$
95
Provision for taxes
$
53
Depreciation and amortization
$
148
EBITDA (non-GAAP)
$
589
203
(b)-(d), (f)
$
792
EBITDA margin (non-GAAP)
16.1
%
21.6
%
Detail of
Adjustments
Cost of sales
SG&A/Restructuring
expenses
Other operating (income)
expense, net
Other expense, net
Provision for taxes
Total
Amortization of intangible assets
$
57
$
—
$
—
$
—
$
—
$
57
Restructuring expenses
—
65
—
—
—
65
Operating model optimization
initiatives
8
2
—
—
—
10
Separation-related costs (including
conversion of stock-based awards and Founder Shares)
16
59
—
—
—
75
Impact of Deferred Markets—minority
interest expense
—
—
4
—
—
4
Impact of Deferred Markets—provision for
taxes
—
—
8
—
(8
)
—
Losses on investments
—
—
—
41
—
41
Tax impact on special item adjustments
—
—
—
—
(46
)
(46
)
Total
$
81
$
126
$
12
$
41
$
(54
)
$
206
(a)
(b)
(c)
(d)
(e)
Cost of sales less amortization
$
24
(f)
Fiscal Three Months Ended
December 31, 2023
(Unaudited; Dollars in
Millions)
As Reported
Adjustments
Reference
As Adjusted
Net sales
$
3,666
—
$
3,666
Gross profit
$
2,043
139
(a)
$
2,182
Gross profit margin
55.7
%
59.5
%
Operating income
$
460
339
(a)-(c)
$
799
Operating income margin
12.5
%
21.8
%
Net income
$
327
259
(a)-(d)
$
586
Net income margin
8.9
%
16.0
%
Interest expense, net
$
96
Provision for taxes
$
30
Depreciation and amortization
$
174
EBITDA (non-GAAP)
$
627
259
(b)-(c), (e)
$
886
EBITDA margin (non-GAAP)
17.1
%
24.2
%
Detail of
Adjustments
Cost of sales
SG&A/Restructuring
expenses
Other operating (income)
expense, net
Provision for taxes
Total
Amortization of intangible assets
$
80
$
—
$
—
$
—
$
80
Operating model optimization
initiatives
20
9
—
—
29
Separation-related costs (including
conversion of stock-based awards and Founder Shares)
39
185
—
—
224
Impact of Deferred Markets—provision for
taxes
—
—
1
(1
)
—
Litigation expense
—
—
5
—
5
Tax impact on special item adjustments
—
—
—
(79
)
(79
)
Total
$
139
$
194
$
6
$
(80
)
$
259
(a)
(b)
(c)
(d)
Cost of sales less amortization
$
59
(e)
Fiscal Twelve Months Ended
December 29, 2024
(Unaudited; Dollars in
Millions)
As Reported
Adjustments
Reference
As Adjusted
Net sales
$
15,455
—
$
15,455
Gross profit
$
8,959
369
(a)
$
9,328
Gross profit margin
58.0
%
60.4
%
Operating income
$
1,841
1,487
(a)-(d)
$
3,328
Operating income margin
11.9
%
21.5
%
Net income
$
1,030
1,169
(a)-(f)
$
2,199
Net income margin
6.7
%
14.2
%
Interest expense, net
$
378
Provision for taxes
$
385
Depreciation and amortization
$
598
EBITDA (non-GAAP)
$
2,391
1,269
(b)-(e), (g)
$
3,660
EBITDA margin (non-GAAP)
15.5
%
23.7
%
Detail of
Adjustments
Cost of sales
SG&A/Restructuring
expenses
Impairment charges
Other operating (income)
expense, net
Other expense, net
Provision for taxes
Total
Amortization of intangible assets
$
269
$
—
$
—
$
—
$
—
$
—
$
269
Restructuring expenses
—
185
—
—
—
—
185
Operating model optimization
initiatives
27
9
—
—
—
—
36
Separation-related costs (including
conversion of stock-based awards and Founder Shares)
73
291
—
—
—
—
364
Impairment charges
—
—
578
—
—
(151
)
427
Impact of Deferred Markets—minority
interest expense
—
—
—
24
—
—
24
Impact of Deferred Markets—provision for
taxes
—
—
—
35
—
(35
)
—
Litigation income
—
—
—
(4
)
—
—
(4
)
Losses on investments
—
—
—
—
72
—
72
Tax indemnification release
—
—
—
—
(21
)
—
(21
)
Tax impact on special item adjustments
—
—
—
—
—
(183
)
(183
)
Total
$
369
$
485
$
578
$
55
$
51
$
(369
)
$
1,169
(a)
(b)
(c)
(d)
(e)
(f)
Cost of sales less amortization
$
100
(g)
Fiscal Twelve Months Ended
December 31, 2023
(Unaudited; Dollars in
Millions)
As Reported
Adjustments
Reference
As Adjusted
Net sales
$
15,444
—
$
15,444
Gross profit
$
8,643
375
(a)
$
9,018
Gross profit margin
56.0
%
58.4
%
Operating income
$
2,512
945
(a)-(c)
$
3,457
Operating income margin
16.3
%
22.4
%
Net income
$
1,664
719
(a)-(f)
$
2,383
Net income margin
10.8
%
15.4
%
Interest expense, net
$
250
Provision for taxes
$
526
Depreciation and amortization
$
627
EBITDA (non-GAAP)
$
3,067
630
(b)-(d), (g)
$
3,697
EBITDA margin (non-GAAP)
19.9
%
23.9
%
Detail of
Adjustments
Cost of sales
SG&A/Restructuring
expenses
Other operating (income)
expense, net
Other expense, net
Interest expense, net
Provision for taxes
Total
Amortization of intangible assets
$
322
$
—
$
—
$
—
$
—
$
—
$
322
Operating model optimization
initiatives
21
11
—
—
—
—
32
Separation-related costs (including
conversion of stock-based awards and Founder Shares)
32
500
—
—
—
—
532
Impact of Deferred Markets—minority
interest expense
—
—
10
—
—
—
10
Impact of Deferred Markets—provision for
taxes
—
—
24
—
—
(24
)
—
Litigation expense
—
—
25
—
—
—
25
Losses on investments
—
—
—
7
—
—
7
Interest income from related party
note
—
—
—
—
(33
)
—
(33
)
Tax impact on special item adjustments
—
—
—
—
—
(176
)
(176
)
Total
$
375
$
511
$
59
$
7
$
(33
)
$
(200
)
$
719
(a)
(b)
(c)
(d)
(e)
(f)
Cost of sales less amortization
$
53
(g)
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
Fiscal Twelve Months
Ended
(Unaudited)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Effective tax rate
15.3
%
8.4
%
27.2
%
24.0
%
Adjustments:
Tax-effect on special item adjustments
1.7
7.9
(2.6
)
(1.0
)
Dr.Ci:Labo® Impairment
—
—
0.3
—
Removal of tax benefits from carve out
methodology
—
—
—
2.0
Taxes related to Deferred Markets
0.7
0.5
0.7
0.5
Valuation allowance on foreign tax credits
due to interest expense
—
(0.6
)
—
(2.4
)
Other
—
(0.4
)
(0.1
)
0.3
Adjusted Effective tax rate
(non-GAAP)
17.7
%
15.8
%
25.5
%
23.4
%
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 2025:
Fiscal Year 2025
(Unaudited)
Forecast
Effective tax rate
28.0% - 29.0%
Adjustments:
Tax-effect on special item adjustments
(3.2)
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
Fiscal Twelve Months
Ended
(Unaudited)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Diluted earnings per share
$
0.15
$
0.17
$
0.54
$
0.90
Adjustments:
Separation-related costs
0.03
0.07
0.15
0.25
Conversion of stock-based awards
—
0.04
0.02
0.03
Restructuring and operating model
optimization initiatives
0.04
0.02
0.11
0.02
Impairment charges
—
—
0.30
—
Amortization of intangible assets
0.03
0.04
0.14
0.17
Losses on investments
0.02
—
0.04
—
Interest income from related party
note
—
—
—
(0.02
)
Tax impact on special item adjustments
(0.02
)
(0.04
)
(0.17
)
(0.10
)
Other
0.01
0.01
0.01
0.04
Adjusted diluted earnings per share
(non-GAAP)
$
0.26
$
0.31
$
1.14
$
1.29
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 Twelve Months
Ended
(Unaudited; Dollars in
Billions)
December 29, 2024
December 31, 2023
Net cash flows from operating
activities
$
1.7
$
3.2
Purchases of property, plant, and
equipment
(0.4
)
(0.5
)
Free cash flow (non-GAAP)
$
1.3
$
2.7
Other Supplemental Financial Information
The following table presents the Company’s Net sales by
geographic region for the periods presented:
Fiscal Three Months
Ended
Fiscal Twelve Months
Ended
(Unaudited; Dollars in
Millions)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Net sales by geographic region
North America
$
1,842
$
1,762
$
7,579
$
7,610
Europe, Middle East, and Africa
863
822
3,559
3,388
Asia Pacific
635
750
2,974
3,107
Latin America
322
332
1,343
1,339
Total Net sales by geographic
region
$
3,662
$
3,666
$
15,455
$
15,444
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
Fiscal Twelve Months
Ended
(Unaudited; Dollars in
Millions)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Research & Development
$
106
$
133
$
408
$
399
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)
December 29, 2024
December 31, 2023
Cash and cash equivalents
$
1.1
$
1.4
Total debt
(8.6
)
(8.3
)
Net debt
$
(7.5
)
$
(6.9
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250206360285/en/
Contacts Investor
Relations: Sofya Tsinis Kenvue_IR@kenvue.com
Media Relations: Melissa Witt media@kenvue.com
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