Core Viewpoint - Kenvue Inc. has been downgraded by Jefferies from Buy to Hold, with a reduced price target of $18, reflecting concerns over limited upside potential and litigation risks following the approval of its merger with Kimberly-Clark [1][7]. Group 1: Merger Approval - Shareholders of both Kimberly-Clark and Kenvue have overwhelmingly approved the merger, with approximately 96% of Kimberly-Clark shares and about 99% of Kenvue's voting shares in favor [2]. - The merger is expected to create a global leader in health and wellness by combining well-known brands such as Huggies, Kleenex, Tylenol, and Neutrogena, with the transaction anticipated to close in the second half of 2026, pending regulatory approvals [3]. Group 2: Company Overview - Kenvue Inc. operates as a consumer health company across various regions, including the US, Europe, the Middle East, Africa, Asia-Pacific, and Latin America, and is structured into three segments: Self Care, Skin Health and Beauty, and Essential Health [4].

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 - Kimberly-Clark Corporation and Kenvue Inc. have received overwhelming shareholder approval for Kimberly-Clark's acquisition of Kenvue, marking a significant step towards creating a global health and wellness leader [1][2]. Group 1: Transaction Details - The acquisition transaction is expected to close in the second half of 2026, pending regulatory approvals and other customary closing conditions [3]. - Approximately 96% of shares present at Kimberly-Clark's Special Meeting voted in favor of the share issuance related to the transaction [2]. - At Kenvue's Special Meeting, about 99% of shares voted to adopt the merger agreement, representing approximately 77% of all outstanding shares [2]. Group 2: Company Statements - Kimberly-Clark's CEO, Mike Hsu, expressed gratitude to shareholders for their support and emphasized the potential to raise care standards for billions globally while generating significant shareholder value [2]. - Kenvue's CEO, Kirk Perry, highlighted the growth opportunities for the combined company and the potential to accelerate innovation and expand access to trusted brands [2]. Group 3: Company Backgrounds - Kimberly-Clark operates in over 175 countries with a portfolio of brands that hold No. 1 or No. 2 market share positions in approximately 70 countries, focusing on sustainable practices [4]. - Kenvue is recognized as the world's largest pure-play consumer health company by revenue, with a heritage of over a century and a portfolio of well-known brands [5].

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 Corporation reported earnings per share of $1.86, exceeding estimates of $1.39, driven by effective cost control and consistent demand for essential products [1][5] - The company announced an increase in its quarterly dividend to $1.28 per share, marking the 54th consecutive year of dividend growth [2][5] - Kimberly-Clark is planning a strategic acquisition of Kenvue to enhance its market position in the health and wellness sector [3][5] Financial Metrics - The company has a price-to-earnings (P/E) ratio of approximately 17.04, indicating investor confidence in its earnings potential [4] - The price-to-sales ratio is about 1.86, while the enterprise value to sales ratio is around 2.22 [4] - The debt-to-equity ratio is notably high at about 5.44, suggesting significant reliance on debt financing, and the current ratio is approximately 0.77, indicating potential challenges in covering short-term liabilities [4]

Core Insights - Kimberly-Clark Corporation reported a stronger-than-expected quarter, driven by solid execution and expanding profit momentum despite sales pressure from changes in the U.S. diaper business [1][3] Financial Performance - The company reported fourth-quarter adjusted earnings per share of $1.86, exceeding the analyst consensus estimate of $1.81 [3] - Quarterly sales were $4.08 billion, slightly missing the expected $4.09 billion, with revenues down by 0.6% and organic sales growth of 2.1% [3] - Gross margin was 35.9%, with an adjusted gross margin of 37%, consistent with the prior year [4] - Adjusted operating profit increased to $629 million, a rise of 13.1% from the previous year, attributed to strong productivity gains and reduced planned spending [4] Strategic Initiatives - The company is making significant progress in various international markets, including Australia, Brazil, and South Korea [5] - The acquisition of Kenvue is viewed as a transformative step that will enhance the company's momentum and improve care standards globally [5] Cash and Dividend - Kimberly-Clark ended the quarter with cash and equivalents totaling $688 million and inventories of $1.475 billion [6] - The company announced an increase in its quarterly dividend to $1.28 per share, up from $1.26, payable on April 2, 2026 [7] 2026 Outlook - The company anticipates reported net sales to be impacted by approximately a 50-basis-point decline due to exiting the U.S. private-label diaper business [8] - Forecasts indicate mid- to high-single-digit adjusted operating profit growth on a constant-currency basis [8] - Expected double-digit adjusted EPS growth from continuing operations is projected, driven by increased equity-company income and stable net interest expense [9]

Financial Data and Key Metrics Changes - In 2025, the company achieved approximately 2% volume-led organic growth, with 3% volume plus mix growth in Q4 despite a slowdown in global weighted average category growth to about 60 basis points [38][39] - Adjusted free cash flow for the year was $1.9 billion, consistent with previous estimates, indicating strong cash generation capabilities [39] - The company reported industry-leading gross productivity at 6.2% of Adjusted COGS, peaking at 7.2% in Q4, exceeding expectations [15] Business Line Data and Key Metrics Changes - The personal care business led productivity improvements, with significant progress in baby and childcare categories, reducing product platforms from 30 to 11 [16] - Innovations in personal care, such as Huggies' new products, contributed to share gains in key markets, with Huggies gaining nearly 50 basis points of share in Brazil in Q4 [23][28] - The company maintained healthy margins and strong exit momentum in Q4, with broad-based volume-led organic growth across all IPC focus markets [22] Market Data and Key Metrics Changes - In China, the company gained over 900 basis points of share in diapers over the past five years, while local competitors shifted focus to other markets [21] - The international personal care business saw broad-based share gains, with all focus markets delivering volume-led organic growth in Q4 [22] - The North American market demonstrated resilience, with positive volume mix-led growth for three consecutive years, despite competitive pressures [27][28] Company Strategy and Development Direction - The company is pivoting towards higher growth, higher margin personal care categories, including the sale of its Brazilian tissue operations and PPE business [4] - The acquisition of Kenvue is seen as a strategic move to enhance growth and create a consumer-centric health and wellness leader [5][6] - The company aims to achieve $2.1 billion in annual synergies from the Kenvue acquisition, with a focus on cost synergies and EPS accretion [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a challenging environment, emphasizing a commitment to innovation and brand support [11][19] - The outlook for 2026 includes expectations for mid- to high-single-digit constant currency adjusted EPS growth, driven by the Kenvue acquisition and ongoing operational improvements [46][47] - The company anticipates continued pressure on consumers and a focus on value, but remains optimistic about its growth initiatives [11] Other Important Information - The company has made significant investments in its North American manufacturing footprint, including a $2 billion investment to enhance its supply chain [16] - The Powering Care strategy has created a virtuous cycle of growth, enabling the company to maintain resilience amid external challenges [10][12] - The company has improved its cash conversion cycle significantly, moving from 6 days in 2021 to around negative 10 days by the end of 2025 [43] Q&A Session Summary Question: What are the expectations for the Kenvue acquisition? - The company expects the Kenvue acquisition to enhance growth and create significant value for shareholders, with a focus on achieving synergies and integrating the brands effectively [7][45] Question: How is the company addressing competitive pressures? - Management highlighted a disciplined approach to innovation and marketing, which has allowed the company to maintain market share and drive growth despite competitive challenges [19][27] Question: What is the outlook for 2026? - The company projects mid- to high-single-digit constant currency adjusted EPS growth for 2026, supported by strong operational performance and the Kenvue acquisition [46][47]

Financial Data and Key Metrics Changes - In 2025, the company achieved approximately 2% organic growth, supported by 3% volume plus mix growth, despite a slowdown in global weighted average category growth to roughly 60 basis points in Q4 [38][39] - Adjusted Free Cash Flow for the year was $1.9 billion, consistent with previous estimates, indicating strong cash generation capabilities [39] - The company reported industry-leading gross productivity at 6.2% of Adjusted COGS for the year, peaking at 7.2% in Q4, exceeding expectations [15] Business Line Data and Key Metrics Changes - The Personal Care business led the way in productivity improvements, with significant progress in delivering high-performing products at lower costs [16] - Innovations in the Personal Care segment, such as Huggies' new products, contributed to strong volume-led organic growth, particularly in key markets like China and Brazil [22][24] - The company exited a large private label diaper contract in North America, which impacted the overall performance but was part of a strategic realignment [38] Market Data and Key Metrics Changes - In the international Personal Care business, the company gained over 900 basis points of share in diapers over the past five years, while local competitors have struggled [20] - The company saw broad-based share gains in international focus markets, with all focus markets delivering volume-led organic growth in Q4 [22] - In North America, the company achieved a volume plus mix growth of 1.8% in Q4, with Personal Care growing value share by 20 basis points for the year [28] Company Strategy and Development Direction - The company is focused on transforming into a pure-play Personal Care company, pivoting its portfolio towards higher growth and higher margin categories [4] - The acquisition of Kenvue is seen as a strategic move to enhance growth and create a consumer-centric health and wellness leader [5][7] - The company aims to leverage its operating momentum to create significant value for shareholders and improve care standards for consumers globally [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a challenging environment, citing strong execution of the Powering Care strategy as a key driver of success [19] - The outlook for 2026 includes expectations for mid- to high-single-digit constant currency growth in Adjusted Operating Profit, supported by a robust pipeline of initiatives [46][47] - Management acknowledged ongoing consumer pressure and a focus on value, indicating that these factors will persist in the near term [11] Other Important Information - The company has made significant investments in its North American manufacturing footprint, including a $2 billion investment to enhance its capabilities [16] - The integration of Kenvue is being led by a dedicated team, with strong progress reported in the early stages [18] - The company has achieved a strong cash conversion cycle improvement, going from 6 days in 2021 to around negative 10 days at the close of 2025 [43] Q&A Session Summary Question: What are the expectations for the Kenvue acquisition? - Management expects the Kenvue acquisition to create significant value and enhance growth, with a target of generating $2.1 billion in annual synergies net of reinvestment [7][51] Question: How is the company addressing competitive pressures? - The company is focused on out-innovating and out-marketing competitors, maintaining a disciplined approach to brand investments and consumer engagement [19][27] Question: What is the outlook for Adjusted EPS growth? - The company anticipates double-digit growth in Adjusted EPS from continuing operations on a constant currency basis, driven by the Kenvue acquisition and ongoing operational improvements [47][48]

Financial Data and Key Metrics Changes - In 2025, the company achieved approximately 2% volume-led organic growth, with a strong performance in the fourth quarter, delivering 3% volume plus mix growth despite a slowdown in global weighted average category growth to roughly 60 basis points [38][39] - Adjusted free cash flow for the year was $1.9 billion, consistent with previous estimates, indicating the company's ability to maintain performance across quarters [39][45] - The company reported industry-leading gross productivity at 6.2% of Adjusted COGS, peaking at 7.2% in the fourth quarter, exceeding expectations [15] Business Line Data and Key Metrics Changes - The personal care business led the way in productivity improvements, with significant progress in categories like baby and childcare, which are highly competitive [16] - The company pivoted its portfolio towards higher growth, higher margin personal care categories, including the sale of its Brazilian tissue operations and PPE business, and exiting approximately $650 million of private label business [4][5] - Innovations in the personal care segment, such as Huggies' new products, contributed to strong volume growth and market share gains in various regions [24][28] Market Data and Key Metrics Changes - In international personal care markets, the company gained over 900 basis points of share in diapers over the past five years, while local competitors shifted focus away from China [20] - The company saw broad-based share gains in international personal care focus markets, with all focus markets delivering volume-led organic growth in Q4 [21][22] - In North America, the company achieved a third consecutive year of positive volume mix-led growth, with personal care growing value share by 20 basis points [27][28] Company Strategy and Development Direction - The company is focused on its "Powering Care" strategy, which emphasizes innovation, cost discipline, and a pivot towards higher margin categories [3][4] - The acquisition of Kenvue is seen as a significant step in the company's transformation, expected to enhance growth and create a scaled health and wellness leader [5][6] - The company aims to build a consumer-centric care model with a portfolio of ten iconic billion-dollar brands across critical life stages [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a challenging environment, citing strong execution and a focus on innovation-led growth [19][39] - The outlook for 2026 includes expectations for mid- to high-single-digit constant currency adjusted EPS growth, driven by the Kenvue acquisition and ongoing operational improvements [47][48] - The company anticipates continued pressure on consumers and a focus on value, but remains committed to supporting its brands and driving growth initiatives [11][47] Other Important Information - The company has made significant investments in its North American manufacturing footprint, including a $2 billion investment to build an advanced manufacturing facility and an automated distribution center [16] - The company has improved its cash conversion cycle from 6 days in 2021 to around negative 10 days at the close of 2025, reflecting better working capital discipline [43] - The company has achieved a strong overhead leverage, expanding adjusted operating profit margins by 100 basis points over the past two years [42] Q&A Session Summary Question: What are the expectations for the Kenvue acquisition? - Management expects the Kenvue acquisition to be quickly accretive to earnings and value-enhancing for shareholders, with a focus on achieving significant synergies [37][53] Question: How is the company addressing competitive pressures? - The company is maintaining a disciplined approach to innovation and marketing, focusing on delivering superior consumer value propositions to navigate competitive pressures [19][27] Question: What is the outlook for 2026? - The company projects mid- to high-single-digit constant currency adjusted EPS growth for 2026, supported by the Kenvue acquisition and ongoing operational improvements [47][48]

POWERING CARE Forward-Looking Statements Certain matters contained in this presentation concerning our plans and expectations regarding the pending mergers with Kenvue and the pending International Family Care and Professional ("IFP") joint venture transaction with Suzano ("IFP Transaction"), the business outlook, including raw material, energy and other input costs, the anticipated charges and savings from the 2024 Transformation Initiative, cash flow and uses of cash, growth initiatives, innovations, mark ...