Kenvue (US:KVUE)2024-11-07 11:48Financial Performance - Net sales decreased by 0.4% to $3.9 billion, with organic growth of 0.9% and a foreign currency headwind of 1.3%[1][3] - Gross profit margin expanded by 100 basis points to 58.5%, while adjusted gross profit margin increased by 130 basis points to 60.7%[6] - Operating income margin was 16.8%, down from 18.1% in the prior year, with adjusted operating income margin at 22.1%, down from 23.3%[7] - Diluted earnings per share were $0.20, compared to $0.23 in the prior year, and adjusted diluted earnings per share were $0.28, down from $0.31[9] - Net income for the three months ended September 29, 2024, was $383 million, compared to $438 million for the same period last year, a decrease of 12.6%[35] - The diluted net income per share for the three months ended September 29, 2024, was $0.20, down from $0.23 in the same period last year[35] - Net income was reported at $737 million, translating to a net income margin of 6.2%[56] Sales and Segment Performance - Volume decline was primarily driven by Skin Health and Beauty and Self Care, partially offset by growth in Essential Health[4] - The Self Care segment reported net sales of $1,625 million for the three months ended September 29, 2024, an increase of 0.7% from $1,613 million in the same period last year[46] - The Essential Health segment achieved net sales of $1,202 million for the three months ended September 29, 2024, reflecting a growth of 1.6% compared to $1,183 million last year[46] - The Skin Health and Beauty segment saw a decline in net sales to $1,072 million for the three months ended September 29, 2024, down 4.2% from $1,119 million in the same period last year[46] Cost and Expenses - The company incurred restructuring expenses of $31 million in the three months ended September 29, 2024, compared to no such expenses in the same period last year[35] - Adjusted operating income for the fiscal three months ended September 29, 2024, was $860 million, a decrease of 5.9% from $914 million in the prior year[47] - Depreciation and amortization expenses for the fiscal three months ended September 29, 2024, totaled $160 million[50] - Research and development expenses for the fiscal three months ended September 29, 2024, increased to $97 million from $78 million in the same period last year[67] Tax and Interest - The effective tax rate increased to 33.6% from 25.1% in the prior year, impacting net income[8] - The effective tax rate for the fiscal three months ended September 29, 2024, was 33.6%[62] - The adjusted effective tax rate (non-GAAP) for the fiscal nine months ended September 29, 2024, was 27.6%[62] - The company forecasts an effective tax rate for fiscal year 2024 between 28.5% and 29.0%[63] - Interest expense for the third quarter was $96 million[8] - Interest expense for the fiscal three months ended September 29, 2024, was $96 million[50] - The company reported interest expense of $283 million for the fiscal nine months ended September 29, 2024[56] Future Outlook - For 2024, the company expects net sales growth and organic growth toward the low end of its outlook of 1.0%-3.0% and 2.0%-4.0%, respectively[10] - Future outlook includes a focus on new product development and market expansion strategies[56] Cash Flow and Debt - Free cash flow (non-GAAP) for the fiscal nine months ended September 29, 2024, was $0.7 billion, down from $2.0 billion for the same period in 2023[65] - Cash and cash equivalents as of September 29, 2024, were $1.1 billion, down from $1.4 billion as of December 31, 2023[67] - Total debt increased to $8.7 billion as of September 29, 2024, compared to $8.3 billion as of December 31, 2023[67] - Net debt as of September 29, 2024, was $(7.6) billion, compared to $(6.9) billion as of December 31, 2023[67] Geographic Performance - North America net sales for the fiscal nine months ended September 29, 2024, were $5.737 billion, down from $5.848 billion in the same period last year[66] - Europe, Middle East, and Africa net sales for the fiscal three months ended September 29, 2024, increased to $913 million from $864 million in the same period last year[66] - Asia Pacific net sales for the fiscal nine months ended September 29, 2024, were $2.339 billion, slightly down from $2.357 billion in the same period last year[66]