Kimberly-Clark (NYSE:KMB) 2026 Conference February 19, 2026 11:00 AM ET Company ParticipantsCraig Slavtcheff - Chief R&D OfficerMike Hsu - Chairman and CEOPatricia Corsi - Chief Growth OfficerRuss Torres - President and COONone - Video NarratorOperatorHi, everyone. Our next presenter is Kimberly-Clark, which is currently in the midst of one of the largest transactions and biggest corporate transformations in CPG history. The team is led by Chairman and CEO, Mike Hsu. Since taking the helm as CEO in 2019, Mi ...

Group 1: Chevron - Chevron offers a reliable dividend yield of 4% and has increased its dividend for 37 consecutive years, making it a strong candidate for passive income [4][6] - The company has outlined a plan to grow free cash flow (FCF) and earnings per share by at least 10% when Brent crude oil prices are at $70, with a breakeven point at $50 per barrel [5] - Chevron's solid balance sheet provides a cushion during downturns, allowing it to maintain its dividend even if oil prices fall below $50 [5] Group 2: Kimberly Clark - Kimberly Clark, known for brands like Kleenex and Huggies, is currently priced below $100 a share, which is a 12-year low, presenting a potential buying opportunity [9] - The company announced the acquisition of Kenvue, aiming for billions in annual cost synergies and expecting to grow earnings in the second year post-acquisition [9][10] - Kimberly Clark has a 5.2% dividend yield and a forward price-to-earnings ratio of 13.1, positioning it as a strong value stock for passive income [12]

Core Viewpoint - Kenvue shareholders are set to vote on Kimberly-Clark's $48.7 billion acquisition proposal, which aims to create a significant consumer health and wellness entity by merging well-known brands [1] Group 1: Acquisition Details - The merger deal offers Kenvue shareholders $21.01 per share, which is a substantial premium compared to the current trading price of around $17, although Kenvue stock is trading approximately 18% below the deal price [2] - The proposed merger would combine two consumer goods giants, serving nearly half of the global population, with Kimberly-Clark expecting to achieve around $2.1 billion in synergies while maintaining strong margins [3] Group 2: Kenvue's Financial Performance - Kenvue has faced operational challenges, reporting a 3.5% decline in net sales and a 4.4% drop in organic sales in the third quarter, continuing a trend of weakness throughout 2025 [5] - The company experienced a 4% drop in volume and a 0.4% decrease in pricing power, affecting all business segments, including a 5.3% decline in Self-Care and a 4.2% drop in Essential Health [6] Group 3: Market Dynamics - Low seasonal incidences of allergies and flu have negatively impacted demand for products like Zyrtec and Tylenol, compounded by inventory reductions at major retailers and shipment timing issues in China, indicating deeper distribution challenges [7] - Despite market share gains for flagship brands like Zyrtec and Tylenol, these successes have not translated into sales growth, raising concerns about Kenvue's ability to recover independently [8]

Core Insights - Kimberly-Clark has been successfully growing volumes in a challenging consumer environment by focusing on delivering superior product propositions and accelerating innovation across its portfolio [1][3] - The company reported its eighth consecutive quarter of solid volume-plus-mix performance and gained enterprise-weighted market share [2][5] - Management anticipates continued consumer pressure and a focus on value, leading to strategic adjustments in pricing and product offerings [6][12] Financial Performance - In Q4 2025, Kimberly-Clark achieved strong productivity, marking the strongest quarter of the year [2][3] - The company expects largely flat costs for 2026, with a productivity target of approximately 6% and aims for margin expansion [4][17] - Long-term targets include achieving at least 40% adjusted gross margin and 18-20% operating margin before 2030 [4][17] Strategic Initiatives - The planned acquisition of Kenvue is expected to enhance Kimberly-Clark's position in higher growth, higher-margin personal care categories [4][15] - Management is focused on maintaining healthy investment levels across the value chain while adapting to consumer trends [1][6] Market Dynamics - The company anticipates a partial loss of diaper distribution in the North American club channel starting in Q1, which is expected to impact full-year results by approximately 60 basis points [5][13] - Despite this, Kimberly-Clark reported global share gains in diapers across several markets, including a 100 basis point increase in North America in Q4 [14] Category Growth Expectations - The global category growth outlook for 2026 is projected to be around ±2%, with some recent fluctuations noted [7][16] - The company expects organic growth to accelerate in the second half of 2026, supported by innovation and brand initiatives [16] Pricing and Consumer Behavior - Management noted that promotional activity remains below category levels, and the company intends to maintain pricing discipline while growing volume and mix profitably [12][18] - Shifts in consumer purchasing behavior, including a move towards larger pack sizes and club channels, are influencing pricing strategies [11][6]

Core Insights - Heartland Mid Cap Value Fund's portfolio underperformed in Q4 2025, losing 1.92% compared to the Russell Midcap® Value Index's return of 1.42% [1] - The widening valuation gaps in the market are attributed to high-quality value stocks underperforming against speculative and low-quality stocks [1] Company Analysis - Kimberly-Clark Corporation (NASDAQ:KMB) is highlighted as a significant holding in the fund, known for its consumer staples products like Huggies, Cottonelle, and Kleenex [3] - As of January 12, 2026, Kimberly-Clark's stock closed at $98.27, with a one-month return of -4.16% and a 52-week loss of 22.12% [2] - The company has approximately 69.96 million shares outstanding, resulting in a market capitalization of $32.615 billion [2]

Core Insights - Dividend Kings are companies that have consistently increased their dividends for at least 50 years, showcasing strong financial profiles and growth prospects [1] Company Summaries Coca-Cola - Coca-Cola has raised its dividend for 63 consecutive years, with a recent increase of 5.2% in early 2025, yielding 2.9%, which is more than double the S&P 500 average [4][6] - The company targets organic revenue growth of 4%-6% annually and aims for mid-to-high single-digit earnings-per-share growth, supported by significant capital investments [5] - Coca-Cola's strong balance sheet allows for strategic acquisitions, contributing to earnings growth from brands like Fairlife and BodyArmor [6] Kimberly Clark - Kimberly Clark has paid dividends for 91 years, increasing its payout for 53 consecutive years, with a recent 3.3% increase in January 2025, yielding 5% [7][8] - The company plans to invest over $2 billion in expanding U.S. manufacturing capacity to drive growth and innovation [8] - Kimberly Clark's acquisition of Kenvue for $48.7 billion is expected to add significant brands and deliver $2.1 billion in annual synergies, supporting continued dividend growth [9] Johnson & Johnson - Johnson & Johnson has a dividend growth streak of 63 years, with a 4.8% increase in 2025 [8]

Core Insights - PepsiCo has made significant acquisitions, including full ownership of Sabra, Obela, Siete Foods, and Poppi, marking a major diversification effort in its portfolio [1] - The company is undergoing a portfolio transformation and cost reduction strategy to enhance operations and respond to the growing demand for wellness and healthy snacks [2] - The consumer staples sector, including PepsiCo, has faced challenges due to rising living costs, inflation, and a weakening job market, leading to decreased foot traffic and demand for snacks and beverages [3][4] Company-Specific Summaries - **PepsiCo**: The company is focusing on diversifying its product offerings through acquisitions that do not overlap with its existing brands, aiming to adapt to changing consumer preferences [2][7] - **Procter & Gamble (P&G)**: P&G is demonstrating strong pricing power and modest earnings growth, with international markets helping to offset weaknesses in North America [8] - **Colgate-Palmolive**: Colgate is primarily focused on oral and home care products, maintaining a strong position in the toothpaste market, and has a high-margin pet nutrition segment [9][10][11] - **Kimberly-Clark**: The company is facing challenges following its acquisition of Kenvue, but it maintains strong brands in the diaper and tissue markets, which are resilient during economic downturns [12][14][15] - **Target**: Target is struggling to compete on price but is improving its in-store experience and e-commerce capabilities, still generating sufficient cash flow to support its dividend [16] Market Performance and Valuation - The consumer staples sector, including Dividend Kings like PepsiCo, P&G, and Colgate, has seen a decline in stock performance, with many companies trading at attractive valuations based on forward earnings projections [17][18] - Kimberly-Clark is noted for trading at a significant discount to its historical average, although this may change post-acquisition of Kenvue [18] - The current market conditions present a compelling opportunity for long-term investors to consider these Dividend Kings, particularly those with strong cash flow and dividend reliability [19]

Core Viewpoint - The article argues that the aggressive regulatory approach to corporate mergers under the Biden administration has stifled innovation and competition, leading to negative outcomes for companies and consumers [2][3][4]. Group 1: Impact of Regulatory Environment - The Biden administration's stance on mergers has led to significant consequences, such as the collapse of Spirit Airlines' merger with JetBlue, resulting in bankruptcy and loss of market share [3]. - iRobot's acquisition by Amazon was blocked due to regulatory threats, leading to substantial workforce reductions and weakening the company [4]. Group 2: Positive Examples of Mergers - Kimberly-Clark's $48.7 billion acquisition of Kenvue is highlighted as a beneficial merger that combines complementary strengths without threatening competition, enhancing the company's global competitiveness [6]. - The merger supports domestic manufacturing, with Kimberly-Clark committing an additional $2 billion to expand U.S. operations, thereby creating more jobs and increasing American production [7]. Group 3: Future Outlook - A shift towards a more market-oriented regulatory philosophy could lead to increased innovation, competitiveness, and economic growth, suggesting that the U.S. economy is poised for a surge if regulatory barriers are reduced [8].

Market Overview - Stocks are trading lower, continuing a recent struggle to find stability, with concerns about stretched valuations in the technology sector and debt-driven spending on data centers and AI impacting market performance [1] - Amazon is seeking to raise $15 billion through a bond sale, its first in three years, which will benefit large banks managing the sale, including Goldman Sachs, JPMorgan, and Morgan Stanley [1] Sector Analysis - The consumer staples sector is currently the worst-performing sector year to date, but may see a return of interest due to concerns about tech valuations and a slowing economy [1] - The household products group is favored over the food and beverage category due to the accelerating adoption of GLP-1s, which could introduce uncertainty in the food and beverage space [1] Company Insights - Kimberly-Clark announced the acquisition of Kenvue, valuing the consumer health company at approximately $49 billion, which initially led to a 14% drop in Kimberly-Clark's shares [1] - Concerns regarding the acquisition include the high price paid for Kenvue amid Tylenol and talc-related lawsuits, as well as the strategic fit of a toilet paper company entering healthcare [1] - The merger is expected to create a company with ten $1 billion brands and generate $2.4 billion in potential value through $1.9 billion in cost savings and $500 million in revenue synergies [1] - Kimberly-Clark is trading at less than 14 times 2026 earnings-per-share estimates, offering a 4.8% dividend yield [1] Additional Company Developments - Johnson & Johnson has seen a strong performance in 2025, with shares gaining about 38%, driven by its oncology portfolio, which is expected to grow from $21 billion in sales for 2024 to over $50 billion by 2030 [1] - The company announced the acquisition of Halda Therapeutics, a clinical-stage biotechnology firm, and is in the process of separating its orthopedics business to focus on high-growth segments [1] - Johnson & Johnson is trading for less than 20 times earnings, indicating a potentially attractive valuation [1]

分组1 - The company Kraft Heinz is set to split into two separate entities by 2026, focusing on sauces and spreads, and North American staples [2][6] - In Q3, Kraft Heinz reported a net sales decline of 2.3% to $6,237 million, with adjusted operating income down 16.9% year-over-year to $1,106 million [1] - The stock has dropped 19% this year, currently trading at $24.67, which is at its 52-week low [2] 分组2 - Kraft Heinz has a market cap of $29.20 billion and is the highest-yielding dividend stock in the Nasdaq Composite with a yield of 6.49% [3] - The company has a payout ratio of 57.97% and has maintained consecutive dividend payments for 12 years [3] 分组3 - PepsiCo reported a 1.3% rise in organic revenue in Q3, while adjusted earnings per share fell by 2% due to inflationary pressures and tariffs [15] - The stock is currently trading at $145.08, down 3.4% in 2025, presenting a potential buying opportunity [16] - PepsiCo is recognized as a dividend aristocrat with a yield of 3.92% [14]