Kenvue Inc. Q1 FY2024 earnings call

• Strategic Priorities: Reaching more consumers, freeing up resources to invest for growth, fostering a culture of performance and impact. - Self Care: Strong performance, brand growth, with initiatives like Tylenol Easy to Swallow and Zyrtec Oral Dissolve Tablets. - Essential Health: Growth driven by category expansion, e.g., Listerine Clinical Solutions and baby category expansion. - Skin Health and Beauty: U.S. team working on increasing in-store presence, consumer/dermatologist engagement, and amplifying innovation. - Our Vue Forward: Program to optimize geographic footprint, eliminate redundancies, implement new systems/automation, and leverage procurement partnerships, with expected annualized benefit of ~$350M by 2026. - Culture and ESG: Bringing in high-performing talent, affirming ESG commitments, and near-term GHG emissions targets validated by Science-based Targets Initiative.

Self Care: Grew 4.2% this quarter on top of 15.3% growth last year. Volumes affected by shorter cough, cold, flu season and U.S. retailer inventory reduction. Tylenol, Zyrtec, etc. showed growth. Essential Health: Grew 4.9% this quarter on top of 4% last year. Oral Care, baby category saw growth. Listerine, Johnson's Baby, Aveeno Baby performing well. Skin Health and Beauty: Declined 4.5% in the quarter with a 6.9% volume decline. U.S. team working on a 3-pronged approach but early stages.

• Organic growth expected in the range of 2% to 4% and earnings per share in the range of $1.10 to $1.20. - Q2 expected to have low single-digit negative growth in Self Care due to factors like retail inventory reduction and softer allergy season. - Back half of the year expected to see acceleration as compares ease and plans take hold.

• Impact of retail inventory reduction on Self Care volumes. - Volatility in macroeconomic factors affecting consumer confidence. - Execution risks in the turnaround of Skin Health and Beauty business, as it will take time to see significant impact.

Q: Andrea Teixeira asked about Skin Health and Beauty sequential improvement and impact of inventory.

A: Thibaut Mongon said inventory impact in Self Care Q2 expected to continue but not beyond first half, and Skin Health and Beauty recovery plan is in place with teams executing but takes time.

Q: Steve Powers inquired about Our Vue Forward program reactions and reinvestment.

A: Thibaut Mongon said everyone is mobilized for transformation, and Paul Ruh mentioned $275M investment in '24 and '25 for streamlining operations and IT infrastructure upgrade.

Q: Nik Modi asked about Q1 upside source and Skin Health leadership.

A: Paul Ruh said Q1 outperformance driven by price and volume in some regions, and Thibaut Mongon said new Skin Health leader will have experience in dynamic skin care and global megabrands.

Q: Anna Lizzul asked about brand investment split and Skin Health volume in China.

A: Paul Ruh said investment is digital-first ROI-driven, focusing on 15 priority brands, and Thibaut Mongon said China business growing nicely with Self Care strong but some non-Self Care part seeing deceleration.

Q: Filippo Falorni asked about hyperinflation impact and segment expectations.

A: Paul Ruh said hyperinflation in some regions had minimal earnings impact, and Thibaut Mongon discussed Q2 dynamics in Self Care and back half acceleration expectations.

Q: Korinne Wolfmeyer asked about gross margin drivers.

A: Paul Ruh said gross margin driven by pricing, operational efficiencies, and moderating inflation, with confidence in reaching 59% goal this year.