Kenvue 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑						Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
						For the quarterly period ended March 31, 2024

or

☐						Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
						For the transition period from to

Commission File Number: 001-41697

Kenvue Inc.

(Exact name of registrant as specified in its charter)

Delaware						88-1032011
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

199 Grandview Road

Skillman, New Jersey 08558

(Address of principal executive offices)

Registrant’s telephone number, including area code: (908) 874-1200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name on each exchange on which registered
Common Stock, Par Value $0.01						KVUE						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

			Large accelerated filer			☐			Accelerated filer			☐
			Non-accelerated filer			☑			Smaller reporting company			☐
			Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

On May 3, 2024, 1,914,810,796 shares of Common Stock, $0.01 par value, were outstanding.

TABLE OF CONTENTS

												Page
												No.
						Cautionary Note Regarding Forward Looking Statements						3
						Part I—Financial Information
Item 1.						Financial Statements (unaudited)						5
						Condensed Consolidated Balance Sheets						5
						Condensed Consolidated Statements of Operations						6
						Condensed Consolidated Statements of Comprehensive (Loss) Income						7
						Condensed Consolidated Statements of Equity						8
						Condensed Consolidated Statements of Cash Flows						9
						Notes to Condensed Consolidated Financial Statements						10
Item 2.						Management’s Discussion and Analysis of Financial Condition and Results of Operations						40
Item 3.						Quantitative and Qualitative Disclosures About Market Risk						48
Item 4.						Controls and Procedures						49
						Part II—Other Information
Item 1.						Legal Proceedings						50
Item 1A.						Risk Factors						50
Item 2.						Unregistered Sales of Equity Securities and Use of Proceeds						50
Item 5.						Other Information						50
Item 6.						Exhibits						51
						Signatures						52

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and Kenvue Inc.’s (“Kenvue,” the “Company” or “we”) other publicly available documents contain forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives, and projections about the future. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; our strategy for growth and cost savings; product development activities; regulatory approvals; market position; expenditures; and the effects of the Separation (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Condensed Consolidated Financial Statements included herein) on our business.

Because forward-looking statements are based on current beliefs, expectations, and assumptions regarding future events, they are subject to risks, uncertainties, and changes that are difficult to predict and many of which are outside of our control. You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. Risks and uncertainties include but are not limited to:

• Our ability to expand globally, implement our digital-first approach, and respond appropriately to competitive pressure, including pressure from private-label brands and generic non-branded products, market trends, costs and cost-saving initiatives, and customer and consumer preferences;

• The rapidly changing retail landscape, including our dependence on key retailers, policies of our retail trade customers, the emergence of e-commerce and other alternative retail channels, and challenges with innovation and research and development;

• Product reliability, safety, and/or efficacy concerns, whether or not based on scientific or factual evidence, potentially resulting in governmental investigations, regulatory action (including, but not limited to, the shutdown of manufacturing facilities, product relabeling or withdrawal of product from the market), private claims and lawsuits, significant remediation and related costs, safety alerts, product shortages, product recalls, declining sales, reputational damage, and share price impact;

• The potential that the expected benefits and opportunities from the Company’s multi-year restructuring initiative or any other planned or completed restructuring initiative, acquisition, or divestiture may not be realized or may take longer to realize than expected;

• Our ability to establish, maintain, protect, and enforce intellectual property rights, as well as address the threats of counterfeit products, infringement of our intellectual property, and other unauthorized versions of our products;

• Allegations that our products infringe the intellectual property rights of third parties;

• The impact of negative publicity and failed marketing efforts;

• Difficulties and delays in manufacturing, internally or within the supply chain, that may lead to business interruptions, product shortages, withdrawals or suspensions of products from the market, and potential regulatory action;

• Our reliance on third-party relationships, global supply chains, and production and distribution processes, which may adversely affect supply, sourcing, and pricing of materials used in our products, and impact our ability to forecast product demand;

• Interruptions, breakdowns, invasions, corruptions, destruction, and breaches of our information technology systems or those of a third party;

• The potential for labor disputes, strikes, work stoppages, and similar labor relations matters, and the impact of minimum wage increases;

• Our ability to attract and retain talented, highly skilled employees and a diverse workforce, and to implement succession plans for our senior management;

• Climate change, extreme weather, and natural disasters, or legal, regulatory or market measures to address climate change;

• The impact of increasing scrutiny and rapidly evolving expectations from stakeholders regarding environmental, social, and governance matters;

• The potential for insurance to be unavailable or insufficient to cover losses we may incur;

• Legal proceedings related to talc or talc-containing products, such as Johnson’s® Baby Powder, sold outside the United States and Canada and other risks and uncertainties related to talc or talc-containing products, including our former

parent Johnson & Johnson’s (“J&J”) ability to fully satisfy its obligation to indemnify us in the United States and Canada for the Talc-Related Liabilities (as defined in Note 14, “Commitments and Contingencies,” to the Condensed Consolidated Financial Statements included herein);

• The impact of legal proceedings and the uncertainty of their outcome, whether or not we believe they have merit;

• Changes to applicable laws, regulations, policies, and related interpretations;

• Changes in tax laws and regulations, increased audit scrutiny by tax authorities and exposures to additional tax liabilities potentially in excess of existing reserves;

• The impact of inflation and fluctuations in interest rates and currency exchange rates;

• Potential changes in export/import and trade laws, regulations, and policies;

• The impact of a natural disaster, catastrophe, epidemic, pandemic, and global tension, including armed conflict such as the ongoing military conflict between Russia and Ukraine, the recent military conflicts in the Middle East, or other event;

• The impact of impairment of our goodwill and other intangible assets;

• Our ability to access credit markets and maintain satisfactory credit ratings;

• Our ability to achieve the expected benefits of the Separation from J&J and related transactions;

• Certain J&J executive officers continuing to serve as our directors, which may create conflicts of interest or the appearance thereof;

• Restrictions on our business, potential tax and indemnification liabilities and substantial charges in connection with the Separation and related transactions;

• Failure of our rebranding efforts in connection with the Separation to achieve market acceptance, and the impact of our continued use of legacy J&J branding, including the “Johnson’s®” brand; and

• Our substantial indebtedness, including the restrictions and covenants in our debt agreements.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the fiscal twelve months ended December 31, 2023 filed on March 1, 2024 with the U.S. Securities and Exchange Commission (“SEC”) and in our other filings with the SEC. You should understand that it is not possible to predict or identify all such factors and you should not consider the risks described above to be a complete statement of all potential risks and uncertainties. We do not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments, except as required by law.

Part I—FINANCIAL INFORMATION

KENVUE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in Millions, Shares in Thousands, Except Per Share Data)

						March 31, 2024						December 31, 2023
Assets
Current assets
Cash and cash equivalents						$	1,155					$	1,382
Trade receivables, less allowances for credit losses ($26 and $25 as of March 31, 2024 and December 31, 2023, respectively)						2,160						2,073
Inventories						1,884						1,851
Prepaid expenses and other receivables						645						567
Other current assets						253						265
Total current assets						6,097						6,138
Property, plant, and equipment, net						2,005						2,042
Intangible assets, net						9,378						9,619
Goodwill						9,032						9,271
Deferred taxes on income						171						158
Other assets						600						623
Total Assets						27,283						27,851
Liabilities and Equity
Current liabilities
Loans and notes payable						1,522						599
Accounts payable						2,602						2,489
Accrued liabilities						1,083						1,456
Accrued rebates, returns, and promotions						795						795
Accrued taxes on income						164						142
Total current liabilities						6,166						5,481
Employee related obligations						354						360
Long-term debt						7,033						7,687
Deferred taxes on income						2,568						2,621
Other liabilities						541						491
Total liabilities						16,662						16,640
Commitments and contingencies (Note 14)
Equity
Preferred stock, $0.01 par value, 750,000 shares authorized; no shares issued and outstanding as of March 31, 2024 and December 31, 2023						—						—
Common stock, $0.01 par value, 12,500,000 shares authorized; 1,919,648 and 1,914,698 shares issued and outstanding as of March 31, 2024; 1,915,407 and 1,915,057 shares issued and outstanding as of December 31, 2023						19						19
Additional paid-in capital						16,033						16,147
Treasury stock, 4,950 and 350 shares at cost as of March 31, 2024 and December 31, 2023, respectively						(98)						(7)
Retained earnings						342						429
Accumulated other comprehensive loss						(5,675)						(5,377)
Total equity						10,621						11,211
Total Liabilities and Equity						$	27,283					$	27,851

See accompanying Notes to Condensed Consolidated Financial Statements.

KENVUE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; In Millions Except Per Share Data)

						Fiscal Three Months Ended
						March 31, 2024						April 2, 2023
Net sales						$	3,894					$	3,852
Cost of sales						1,652						1,727
Gross profit						2,242						2,125
Selling, general, and administrative expenses						1,573						1,502
Restructuring expenses						41						—
Other operating expense (income), net						78						(17)
Operating income						550						640
Other expense, net						28						30
Interest expense, net						95						1
Income before taxes						427						609
Provision for taxes						131						140
Net income						$	296					$	469
Net income per share
Basic						$	0.15					$	0.27
Diluted						$	0.15					$	0.27
Weighted average number of shares outstanding
Basic						1,915						1,716
Diluted						1,920						1,716

See accompanying Notes to Condensed Consolidated Financial Statements.

KENVUE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited; Dollars in Millions)

												Fiscal Three Months Ended
																		March 31, 2024						April 2, 2023
Net income																		$	296					$	469
Other comprehensive (loss) income, net of taxes

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This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions, and projections about our industry, business, and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal twelve months ended December 31, 2023 filed on March 1, 2024 with the SEC (the “Annual Report”) and the section entitled “Cautionary Note Regarding Forward-Looking Statements” included herein.

This discussion should be read in conjunction with our accompanying Condensed Consolidated Financial Statements as of March 31, 2024 and for the fiscal three months ended March 31, 2024 and April 2, 2023, which have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for interim financial statements, and our audited consolidated financial statements for the fiscal twelve months ended December 31, 2023, which are included in the Annual Report. In our opinion, the Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of the financial condition, results of operations, and cash flows for the periods indicated. All currency amounts are expressed in U.S. dollars unless otherwise noted.

Overview

Company Overview

At Kenvue, our purpose is to realize the extraordinary power of everyday care. As a global leader at the intersection of healthcare and consumer goods, we are the world’s largest pure-play consumer health company by revenue with $15.4 billion in Net sales in 2023. By combining the power of science with meaningful human insights and digital-first approach, we empower consumers to live healthier lives every day. Trusted by generations, our differentiated portfolio of iconic brands—including Tylenol®, Neutrogena®, Listerine®, Johnson’s®, BAND-AID® Brand, Aveeno®, Zyrtec®, and Nicorette®—is backed by science and recommended by healthcare professionals, which further reinforces our consumers’ connections to our brands.

Our portfolio includes Self Care, Skin Health and Beauty, and Essential Health products, allowing us to connect with consumers globally—in their daily rituals and the moments that matter most.

Our global scale and the breadth of our brand portfolio are complemented by our well-developed capabilities and accelerated through our digital-first approach, allowing us to dynamically capitalize on and respond to current trends impacting our categories and geographic markets.

With a sole focus on consumer health, our marketing organization operates efficiently by leveraging our precision marketing, e-commerce, and broader digital capabilities to develop unique consumer insights and further enhance the relevance of our brands. Similarly, our research and development organization combines these consumer insights with deep, multi-disciplinary scientific expertise, and engagement with healthcare professionals, to drive innovative new products, solutions, and experiences centered around consumer health.

Our Business Segments

We operate our business through the following three reportable business segments:

*•*Self Care. Our Self Care product categories include: Pain Care; Cough, Cold, and Allergy; and Other Self Care (Digestive Health, Smoking Cessation, Eye Care, and Other). Major brands in the segment include Tylenol®, Motrin®, Nicorette®, Benadryl®, Zyrtec®, Zarbee’s®, ORSLTM, Rhinocort®, and Calpol®.

• Skin Health and Beauty. Our Skin Health and Beauty product categories include: Face and Body Care; and Hair, Sun, and Other. Major brands in the segment include Neutrogena®, Aveeno®, Dr.Ci:Labo®, OGX®, Le Petit Marseillais®, Lubriderm®, and Rogaine®.

• Essential Health. Our Essential Health product categories include: Oral Care; Baby Care; and Other Essential Health (Women’s Health, Wound Care, and Other). Major brands in the segment include Listerine®, Johnson’s®, BAND-AID® Brand, Stayfree®, o.b.® tampons, Carefree®, and Desitin®.

For additional information about our three reportable business segments, see “—Key Factors Affecting Our Results—Our Brands and Product Portfolio” and Note 15, “Segments of Business,” to the Condensed Consolidated Financial Statements included herein.

Separation from Johnson & Johnson

In November 2021, Johnson & Johnson (“J&J”), our former parent company, announced its intention to separate its Consumer Health segment (the “Consumer Health Business”) into an independent publicly traded company (the “Separation”). Kenvue was incorporated in Delaware in February 2022, as a wholly owned subsidiary of J&J, to serve as the ultimate parent company of J&J’s Consumer Health Business. In April 2023, J&J completed the transfer of substantially all of the assets and liabilities of the Consumer Health Business to us and our subsidiaries. In May 2023, we completed an initial public offering (the “Kenvue IPO”) of approximately 10.4% of our outstanding common stock and began trading on the New York Stock Exchange under the ticker symbol “KVUE.” Following the Kenvue IPO, J&J owned approximately 89.6% of our outstanding common stock. In July 2023, J&J announced an exchange offer (the “Exchange Offer”) under which its shareholders could exchange shares of J&J common stock for shares of our common stock owned by J&J. In August 2023, J&J completed the Exchange Offer and exchanged shares representing 80.1% of our common stock, completing the Separation from J&J and transition to being a fully independent public company. Following the Separation, J&J continues to own approximately 9.5% of our outstanding common stock.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description of the Company and Business Segments,” to the Condensed Consolidated Financial Statements for additional information.

We are incurring certain non-recurring separation-related costs in connection with our establishment as a standalone public company (the “Separation-related costs”). We expect the Separation-related costs will continue through at least the fiscal year 2024. For additional information about the Separation, see Note 1, “Description of the Company and Summary of Significant Accounting Policies,” and Note 9, “Relationship with J&J,” to the Condensed Consolidated Financial Statements included herein.

Relationship with J&J

We have entered into the Separation Agreement and various other agreements with J&J for the purpose of effecting the Separation. These agreements provide a framework for our relationship with J&J and govern various interim and ongoing relationships between us and J&J that follow the completion of the Kenvue IPO. See Note 9, “Relationship with J&J,” to the Condensed Consolidated Financial Statements included herein for additional information on these agreements.

Kenvue Global Corporate Headquarters

On April 20, 2023, we entered into a long-term lease for a newly renovated office building and a newly constructed research and development building in Summit, New Jersey (the “Global Corporate Headquarters Lease”). when completed, will encompass a total of approximately 290,000 square feet and serve as our new global corporate headquarters and research and development center. The relocation to this campus is expected to occur in 2025 for the office building and continue through 2026 for the new research and development building. We will continue to operate from our interim corporate headquarters in Skillman, New Jersey, until that time.

On February 21, 2024, we listed our interim corporate headquarters in Skillman New Jersey for sale, which met the criteria to be classified as held for sale at that date. For the fiscal three months ended March 31, 2024, an impairment charge of $68 million was recorded on the held for sale asset associated with the interim corporate headquarters in Skillman. See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Assets Held for Sale,” to the Condensed Consolidated Financial Statements included herein for more information.

Key Factors Affecting Our Results

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section entitled “Risk Factors” in our Annual Report.

Our Brands and Product Portfolio

We have a world-class, global portfolio of iconic and modern brands, and we have been making and investing in consumer products for over 135 years that are trusted by generations of consumers. Our business is balanced and resilient with leading brands across categories and geographic markets. Our brands are widely recognized and represent a combination of global powerhouses and regional brands, many of which hold leading positions in their respective categories. Our brands are built for moments that uniquely matter; these moments of care create an emotional connection to our products that creates deep bonds between consumers and our brands.

Consumers, customers, and third-party partners value and trust the reputation, reliability, and status of our brands and the quality, performance, and functionality of our products, and we believe there are significant opportunities to further increase our category and brand penetration by continuing to deepen our brand relevance and salience across our portfolio, continually earning a place for our products in consumers’ hearts and homes.

Increased Competition

Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, the rapid growth of e-commerce, and the integration of traditional and digital operations at key retail trade customers. One of our customers accounted for approximately 13% and 14% of our total Net sales for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively. Our top 10 customers represented approximately 43% and 42% of our total Net sales for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively. As a result of these trends, certain large-format retail trade customers have significant bargaining strength and represent a significant portion of our total Net sales.

Macroeconomic Trends

Global economic challenges, including the impact from acts of war, military actions, terrorist attacks, or civil unrest, such as the ongoing military conflict between Russia and Ukraine (the “Russia-Ukraine War”) or the ongoing conflict in the Middle East, may continue to cause economic uncertainty and volatility. The impact of these issues may adversely affect prevailing economic conditions and our business, results of operations, or financial condition.

Russia-Ukraine War

Although the long-term implications of the Russia-Ukraine War are difficult to predict at this time, the financial impact of the conflict to us during the fiscal three months ended March 31, 2024 and April 2, 2023 was not significant to our results of operations. For the fiscal three months ended March 31, 2024 and April 2, 2023, our Ukrainian business represented 0.2% and 0.1% of our Net sales, respectively. As of both March 31, 2024 and December 31, 2023 our Ukrainian business represented 0.1% of our net assets. For the fiscal three months ended March 31, 2024 and April 2, 2023, our Russian business represented 1.1% and 1.2% of our Net sales, respectively. As of both March 31, 2024 and December 31, 2023, our Russian business represented 0.7% of our net assets.

In the fiscal three months ended April 3, 2022, we announced our decision to suspend supply of all of our products into Russia other than our over-the-counter medicines within our Self Care segment, which we continued to supply as patients rely on many of these products for healthcare purposes. Supply of the suspended products terminated during the fiscal three months ended July 3, 2022. We also suspended all advertising in Russia, all clinical trials in Russia, and any additional investment in Russia. We will continue to monitor the geopolitical situation in Russia and to evaluate our activities and future operations in Russia.

Acquisitions and Divestitures

We did not complete any significant acquisitions or divestitures during the fiscal three months ended March 31, 2024 and April 2, 2023.

Legal Proceedings

See Note 14, “Commitments and Contingencies,” to the Condensed Consolidated Financial Statements included herein for additional information regarding our current legal proceedings.

Restructuring

See Note 16, “Restructuring,” and Note 17, “Subsequent Events,” to the Condensed Consolidated Financial Statements included herein for information about our restructuring programs.

Results of Operations

Fiscal Three Months Ended March 31, 2024 Compared with Fiscal Three Months Ended April 2, 2023

Our results for the fiscal three months ended March 31, 2024 and April 2, 2023 were as follows:

						Fiscal Three Months Ended												Change In Fiscal Period
						March 31, 2024						April 2, 2023						Change 2023 to 2024
(Dollars in Millions)																		Amount						Percent
Net sales						$	3,894					$	3,852					$	42					1.1		%
Cost of sales						1,652						1,727						(75)						(4.3)
Gross profit						2,242						2,125						117						5.5
Selling, general, and administrative expenses						1,573						1,502						71						4.7
Restructuring expenses						41						—						41						*
Other operating expense (income), net						78						(17)						95						*
Operating income						550						640						(90)						(14.1)
Other expense, net						28						30						(2)						(6.7)
Interest expense, net						95						1						94						*
Income before taxes						427						609						(182)						(29.9)
Provision for taxes						131						140						(9)						(6.4)
Net income						$	296					$	469					$	(173)					(36.9)		%

• Calculation not meaningful.

Net Sales

Net sales were $3.9 billion for both the fiscal three months ended March 31, 2024 and April 2, 2023, an increase of $42 million, or 1.1%. Excluding the impact of unfavorable changes in currency rates of $31 million, Organic growth was $73 million, primarily attributable to value realization (defined as price including mix), partially offset by volume-related decreases. In Self Care, there was increased demand across the segment, including the Cough, Cold, and Allergy and Other Self Care product categories, partially offset by declines in Pain Care attributable to trade inventory fluctuations in the United States. In Skin Health and Beauty, negative growth was driven by volume declines in the United States due to execution challenges, coupled with market softness in China. Momentum in Essential Health continued, driven by value realization and strong performance in Oral Care, along with growth in Women’s Health led by value realization and brand activation, partially offset by overall volume-related decreases in Baby Care.

Cost of Sales

Cost of sales were $1.7 billion for both the fiscal three months ended March 31, 2024 and April 2, 2023, a decrease of $75 million, or 4.3%, primarily attributable to the realization of benefits associated with our supply chain optimization initiatives, lower costs of key ingredients and packaging materials due to the softened impact of inflation, and $13 million favorable translational currency impacts. Gross profit margin increased 240 basis points to 57.6% for the fiscal three months ended March 31, 2024 as compared to 55.2% for the fiscal three months ended April 2, 2023, primarily due to growth in Net sales driven by value realization, realization of benefits associated with our supply chain optimization initiatives, lower costs of key ingredients and packaging materials due to the softened impact of inflation, and favorable transactional foreign currency fluctuations.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $1.6 billion and $1.5 billion for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively, an increase of $71 million, or 4.7%. Selling, general, and administrative expenses as a

percentage of Net sales increased 140 basis points to 40.4% for the fiscal three months ended March 31, 2024, as compared to 39.0% for the fiscal three months ended April 2, 2023, primarily attributable to higher costs in enterprise functions as we now operate on a standalone basis, transition services agreement costs with J&J, and increased investment in our brands. These cost increases were partially offset by a $31 million decrease in Separation-related costs and $9 million favorable translational currency impacts.

Restructuring Expenses

Restructuring expenses were $41 million for the fiscal three months ended March 31, 2024, driven by costs incurred primarily for steps taken to save costs, including global workforce reductions, changes in management structure, and the relocation of business activities to centralized shared-service functions in lower-cost locations, as we began to take steps intended to enhance organizational efficiencies and better position Kenvue for future growth. See Note 16, “Restructuring,” and Note 17, “Subsequent Events,” to the Condensed Consolidated Financial Statements included herein for additional information.

Other Operating Expense (Income), Net

Other operating expense (income), net was $78 million and $(17) million for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively, an increase in expense of $95 million. The increase was primarily driven by the impact of a $68 million impairment charge related to our interim corporate headquarters in Skillman, New Jersey, which was classified as held for sale on February 21, 2024. The increase was further driven by the accounting impact of net economic benefit arrangements with J&J in connection with the Deferred Local Businesses (see Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Condensed Consolidated Financial Statements included herein for additional information), and a $9 million gain recognized on the sale of a manufacturing facility in Lancaster, Pennsylvania in the fiscal three months ended April 2, 2023.

Other Expense, Net

Other expense, net was $28 million and $30 million for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively. The decrease in expense was primarily driven by lower foreign currency losses, offset by an increase in losses on investments.

Interest Expense, Net

Interest expense, net was $95 million and $1 million for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively. The increase in expense was driven by interest expense recognized on the Senior Notes and notes issued under the Commercial Paper Program. See Note 4, “Borrowings,” to the Condensed Consolidated Financial Statements included herein for additional information.

Provision For Taxes

Provision for taxes was $131 million and $140 million for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively, a decrease in provision for taxes of $9 million. The decrease in expense was primarily due to lower quarter-to-date income in comparison to the prior period as a result of a full quarter of interest expense and the recording of a valuation allowance against a deferred tax asset related to future foreign tax benefits in the fiscal three months ended April 2, 2023. In addition, the worldwide effective income tax rates for the fiscal three months ended March 31, 2024 and April 2, 2023 were 30.7% and 23.0%, respectively. The increase for the fiscal three months ended March 31, 2024 as compared to the fiscal three months ended April 2, 2023 was primarily the result of reduced benefits for foreign tax credits, prior year releases of tax reserves due to statute of limitations expiring, and a shortfall on stock-based compensation. See Note 11, “Income Taxes,” to the Condensed Consolidated Financial Statements included herein for additional information.

Segment Results

Segment profit is based on Operating income, excluding depreciation and amortization, Separation-related costs, restructuring and operating model optimization initiatives, the impact of the conversion of stock-based awards, issuance of Founder Shares, Other operating expense (income), net, and unallocated general corporate administrative expenses (referred to herein as “Segment adjusted operating income”), as management excludes these items in assessing segment financial performance. General corporate/unallocated expenses, which includes expenses related to treasury, legal operations, and certain other expenses, along with gains and losses related to the overall management of our Company, are not allocated to the segments. In assessing segment performance and managing operations, management does not review segment assets.

See Note 15, “Segments of Business,” to the Condensed Consolidated Financial Statements included herein for additional information.

Fiscal Three Months Ended March 31, 2024 Compared with Fiscal Three Months Ended April 2, 2023

The following table presents Segment net sales and Segment adjusted operating income and the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal three months ended March 31, 2024 and April 2, 2023. See Note 15, “Segments of Business,” to the Condensed Consolidated Financial Statements included herein for further details regarding Segment net sales and Segment adjusted operating income.

			Fiscal Three Months Ended																								Change In Fiscal Period
			March 31, 2024												April 2, 2023												Change 2023 to 2024
(Dollars in Millions)			Amount						Percent						Amount						Percent						Amount						Percent
Segment Net Sales
Self Care			$	1,698					43.6		%				$	1,640					42.6		%				$	58					3.5		%
Skin Health and Beauty			1,054						27.1						1,111						28.8						(57)						(5.1)
Essential Health			1,142						29.3						1,101						28.6						41						3.7
Segment net sales			$	3,894					100.0		%				$	3,852					100.0		%				$	42					1.1		%
Self Care			$	606											$	582											$	24					4.1		%
Skin Health and Beauty			149												150												(1)						(0.7)
Essential Health			256												210												46						21.9
Segment adjusted operating income			$	1,011											$	942											$	69					7.3		%
Reconciliation to Income before taxes:
Less:
Depreciation			75												71
Amortization			74												81
Separation-related costs			67												98
Restructuring and operating model optimization initiatives			50												—
Conversion of stock-based awards(1)			22												—
Founder Shares(2)			8												—
Other operating expense (income), net			78												(17)
General corporate/unallocated expenses			87												69
Operating income			$	550											$	640
Other expense, net			28												30
Interest expense			95												1
Income before taxes			$	427											$	609

(1) Segment adjusted operating income excludes the impact of the conversion of stock-based awards that occurred on August 23, 2023. This adjustment represents the net impact of the gain on reversal of previously recognized stock-based compensation expense, offset by stock-based compensation expense recognized in the fiscal three months ended March 31, 2024 relating to employee services provided prior to the Separation.

(2) On August 25, 2023, the Company’s Compensation & Human Capital Committee approved equity grants to individuals employed by Kenvue as of October 2, 2023 (the “Founder Shares”). On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and PSUs to executive officers and either stock options and PSUs or RSUs to non-executive individuals.

Organic Growth

We assess our Net sales performance by measuring Organic growth, a non-GAAP financial measure, which measures the period-over-period change in Net sales excluding the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures. Management believes Organic growth provides investors with additional, supplemental

information that they may find useful in assessing our results of operations by excluding the impact of certain items that we believe do not directly reflect our underlying operations.

The following tables present a reconciliation of the change in U.S. GAAP Net sales to Organic growth for the fiscal three months ended March 31, 2024 as compared to the fiscal three months ended April 2, 2023:

			Fiscal Three Months Ended March 31, 2024 vs April 2, 2023**(1)**
			Reported Net sales change												Impact of foreign currency												Organic growth
(Dollars in Millions)			Amount						Percent						Amount												Amount						Percent
Self Care			$	58					3.5		%				$	(11)											$	69					4.2		%
Skin Health and Beauty			(57)						(5.1)						(7)												(50)						(4.5)
Essential Health			41						3.7						(13)												54						4.9
Total			$	42					1.1		%				$	(31)											$	73					1.9		%

			Fiscal Three Months Ended March 31, 2024 vs April 2, 2023**(1)**
			Reported Net sales change						Impact of foreign currency												Organic growth
												Price/Mix**(2)**						Volume
Self Care			3.5		%				(0.7)		%										5.6		%				(1.4)		%
Skin Health and Beauty			(5.1)						(0.6)												2.4						(6.9)
Essential Health			3.7						(1.2)												6.8						(1.9)
Total			1.1		%				(0.8)		%										5.0		%				(3.1)		%

(1) Acquisitions and divestitures did not materially impact Net sales for the fiscal three months ended March 31, 2024 or April 2, 2023.

(2) Also referred to as value realization.

Self Care Segment

Self Care Segment Net Sales

The Self Care Segment Net sales were $1.7 billion and $1.6 billion for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively, an increase of $58 million, or 3.5%. Excluding the unfavorable impact of foreign currency translation, Organic growth was $69 million, or 4.2%, primarily driven by value realization of 5.6%, partially offset by volume-related decreases of 1.4%. The increase was driven by increased demand for Cough, Cold, and Allergy and Other Self Care products due to strong performance in Digestive Health and Smoking Cessation products, effective promotional strategies, and new distribution partnerships. The increase was partially offset by declines in Pain Care attributable to trade inventory fluctuations primarily in the United States.

Self Care Segment Adjusted Operating Income

The Self Care Segment adjusted operating income increased by $24 million, or 4.1%, to $606 million for the fiscal three months ended March 31, 2024. The increase was primarily driven by value realization and the realization of benefits associated with our supply chain optimization initiatives, partially offset by volume-related decreases, the negative impact of cost inflation, and increased investment in our brands.

Skin Health and Beauty Segment

Skin Health and Beauty Segment Net Sales

The Skin Health and Beauty Segment Net sales were $1.1 billion for both the fiscal three months ended March 31, 2024 and April 2, 2023, a decrease of $57 million, or 5.1%. Excluding the unfavorable impact of foreign currency translation, Organic growth decreased $50 million, or 4.5%, primarily driven by volume-related decreases of 6.9%, partially offset by value realization of 2.4%. The decrease was driven by volume declines in the United States attributable to execution challenges, distribution losses, and supply chain constraints, coupled with market softness in China. The decrease was partially offset by positive growth outside the United States and China attributable to product innovation and effective promotional strategies.

Skin Health and Beauty Segment Adjusted Operating Income

The Skin Health and Beauty Segment adjusted operating income was consistent with the prior period which was primarily driven by value realization, the positive impact of declining cost inflation, the realization of benefits associated with our supply chain optimization initiatives, and the positive impact of lower transactional foreign currency fluctuations, offset by volume-related decreases and increased investment in our brands. Segment adjusted operating income margin increased by 0.6% for the fiscal three months ended March 31, 2024 as compared to the fiscal three months ended April 2, 2023.

Essential Health Segment

Essential Health Segment Net Sales

The Essential Health Segment Net sales were $1.1 billion for both the fiscal three months ended March 31, 2024 and April 2, 2023, an increase of $41 million, or 3.7%. Excluding the unfavorable impact of foreign currency translation, Organic growth was $54 million or 4.9%, primarily driven by value realization of 6.8%, led by strong performance in Oral Care and growth in Women’s Health. The increase was partially offset by volume-related decreases of 1.9%, primarily attributable to declines in Baby Care.

Essential Health Segment Adjusted Operating Income

The Essential Health Segment adjusted operating income increased by $46 million, or 21.9% to $256 million for the fiscal three months ended March 31, 2024. The increase was primarily driven by value realization, partially offset by volume-related decreases, and increased investment in our brands.

Liquidity and Capital Resources

Prior to April 4, 2023, our working capital requirements and capital expenditures were satisfied as part of J&J’s corporate-wide cash management and centralized funding programs, and a substantial portion of our cash was transferred to J&J. Cash and cash equivalents held by J&J at the corporate level were not specifically identifiable to us.

Effective April 4, 2023, upon completion of the Consumer Health Business Transfer (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description of the Company and Business Segments,” to the Condensed Consolidated Financial Statements included herein), we no longer participate in J&J’s corporate-wide cash management and centralized funding programs.

Cash Flows

Summarized cash flow information for the fiscal three months ended March 31, 2024 and April 2, 2023 were as follows:

																		Change In Fiscal Period
						Fiscal Three Months Ended												Change 2023 to 2024
(Dollars in Millions)						March 31, 2024						April 2, 2023						Amount						Percent
Net income						$	296					$	469					$	(173)					(36.9)		%
Net changes in assets and liabilities						$	(339)					$	118					$	(457)					*
Net cash flows from operating activities						$	287					$	802					$	(515)					(64.2)		%
Net cash flows used in investing activities						$	(152)					$	(41)					$	(111)					*
Net cash flows (used in) from financing activities						$	(326)					$	7,388					$	(7,714)					*

• Calculation not meaningful.

Operating Activities

Net cash flows from operating activities were $287 million and $802 million for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively, a decrease of $515 million. The decrease was primarily attributable to changes in working

capital balances driven by a net decrease in Accounts payable and Accrued liabilities due to the timing of payments and an increase in Trade receivables due to the timing of collections.

Investing Activities

Net cash flows used in investing activities were $152 million and $41 million for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively. Net cash flows used in investing activities were primarily driven by purchases of property, plant, and equipment in both the fiscal three months ended March 31, 2024 and April 2, 2023, partially offset by proceeds from the sale of assets in the fiscal three months ended April 2, 2023.

Financing Activities

Net cash flows (used in) from financing activities were $(326) million and $7,388 million for the fiscal three months ended March 31, 2024 and April 2, 2023, respectively. Net cash flows used in financing activities for the fiscal three months ended March 31, 2024 were primarily driven by $383 million of dividends paid and $91 million of payments made to purchase treasury shares, partially offset by $160 million of net proceeds from the issuance of commercial paper under the Commercial Paper Program (as defined below). Net cash flows from financing activities for the fiscal three months ended April 2, 2023 were primarily driven by $7.7 billion of net proceeds from Senior Notes (as defined below), partially offset by Net transfers to J&J of $286 million. Net transfers to J&J were driven by cash pooling and general financing activities, indirect corporate cost allocations from J&J, and taxes deemed to be settled with J&J. For further details regarding Net transfers from (to) J&J, see Note 9, “Relationship with J&J—Net Transfers to J&J,” to the Condensed Consolidated Financial Statements included herein.

Sources of Liquidity

Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $1.2 billion as of March 31, 2024, cash flows from operations, borrowing capacity under our Revolving Credit Facility (as defined below) of $4.0 billion and authorized Commercial Paper Program issuance of $4.0 billion. As of March 31, 2024, we had no amounts outstanding under the Revolving Credit Facility and $767 million of outstanding balances under our Commercial Paper Program, net of related discount of $2 million.

Our ability to fund our operating needs will depend on our ability to continue to generate positive cash flow from operations, and on our ability to obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities. Based upon our history of generating positive cash flows, we believe our existing cash and cash generated from operations will be sufficient to service our current obligations for at least the next 12 months.

Management believes that our cash balances and funds provided by operating activities, along with borrowing capacity and access to capital markets, taken as a whole, provide adequate liquidity to meet all of our current and long-term obligations when due, including third-party debt that we incurred in connection with the Separation, adequate liquidity to fund capital expenditures, and flexibility to meet investment opportunities that may arise. However, we cannot assure you that we will be able to obtain additional debt or equity financing on acceptable terms in the future.

Cash and cash equivalents decreased by $227 million during the fiscal three months ended March 31, 2024 to $1.2 billion as of March 31, 2024, as compared to $1.4 billion as of December 31, 2023. Cash and cash equivalents held by our foreign subsidiaries was $1.1 billion and $1.3 billion as of March 31, 2024 and December 31, 2023, respectively.

Supplier Finance Program

As a part of our ongoing efforts to maximize working capital and managing liquidity, we work with suppliers to optimize payment terms and conditions on accounts payable through a voluntary supply chain financing program. The program provides some of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the arrangements between the suppliers and the third-party financial institutions. Our obligations to the suppliers, including amounts due, and scheduled payment dates, are not affected by a participating supplier’s decision to participate in the program. See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Supplier Finance Program,” to the Condensed Consolidated Financial Statements included herein.

Senior Notes

On March 22, 2023, we issued eight series of senior unsecured notes (the “Senior Notes”) in an aggregate principal amount of $7.75 billion. The net proceeds to us from the Senior Notes offering was $7.7 billion after deductions of discounts and issuance costs of $77 million. The net proceeds were reflected as Restricted cash on the Condensed Consolidated Balance Sheet prior to their release from escrow on April 5, 2023. Upon release from escrow, these funds were loaned to J&J through the Facility Agreement dated April 5, 2023. For further details on the Senior Notes, see Note 4, “Borrowings—Senior Notes,” to the Condensed Consolidated Financial Statements included herein.

Our Senior Notes are governed by an indenture and supplemental indenture between us and a trustee (collectively, the “indenture”). The indenture contains certain covenants, including limitations on us and certain of our subsidiaries’ ability to incur liens or engage in sale-leaseback transactions. The indenture also contains restrictions on our ability to consolidate, merge or sell substantially all of our assets. In addition, the indenture contains other customary terms, including certain events of default, upon the occurrence of which the Senior Notes may be declared immediately due and payable.

Commercial Paper Program

On March 3, 2023, we entered into a commercial paper program (the “Commercial Paper Program”). Our Board of Directors (the “Board”) has authorized the issuance of up to $4.0 billion in an aggregate principal amount of commercial paper under the Commercial Paper Program. Any such issuance will mature within 364 days from date of issue. The Commercial Paper Program contains representations and warranties, covenants, and defaults that are customary for this type of financing. The commercial paper notes issued under the Commercial Paper Program are unsecured notes ranking at least pari passu with all of our other senior unsecured indebtedness. For further details on the Commercial Paper Program, see Note 4, “Borrowings—Commercial Paper Program,” to the Condensed Consolidated Financial Statements included herein.

Prior to the Kenvue IPO, we issued $1.25 billion under the Commercial Paper Program which, collectively with the Senior Notes as further described above, are referred to as the “Debt Financing Transactions.”

Revolving Credit Facility

On March 6, 2023, we entered into a credit agreement providing for a five-year senior unsecured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $4.0 billion to be made available in U.S. dollars and Euros.

Interest Expense, Net

We recognized Interest expense, net of $95 million in the Condensed Consolidated Statement of Operations during the fiscal three months ended March 31, 2024 which primarily includes interest expense, including amortization of discounts and debt issuance costs, recognized on the Senior Notes and interest expense incurred as a result of the Commercial Paper Program.

Compliance with Covenants

As of March 31, 2024, we were in compliance with all debt covenants, and no default or event of default has occurred.

Dividends

Quarterly dividends have been paid since the Kenvue IPO. A summary of cash dividends per share on the outstanding Kenvue common stock declared to shareholders by our Board and paid during the fiscal three months ended March 31, 2024 is presented below:

Declaration Date						Record Date						Payment Date						Per Share Amount
January 25, 2024						February 14, 2024						February 28, 2024						$0.20

On April 25, 2024, we announced that our Board declared a dividend of $0.20 per share on our common stock. The dividend is payable on May 22, 2024 to shareholders of record as of the close of business on May 8, 2024.

Future Cash Requirements

We expect our future cash requirements will relate to working capital, capital expenditures, restructuring and integration, compensation and benefit-related obligations, interest expense and debt service obligations, litigation costs, the return of capital to shareholders, including through the payment of any dividend, and other contractual obligations that arise in the normal course of business. We may also use cash to enter into business development transactions, such as licensing arrangements or strategic acquisitions.

As of March 31, 2024, we expect our primary cash requirements for 2024 to include capital expenditures. We have made payments of $153 million for property, plant, and equipment during the fiscal three months ended March 31, 2024.

Share Repurchase Program

Our Board has authorized a share repurchase program, under which we are authorized to repurchase up to 27,000,000 shares of our outstanding common stock in open market or privately negotiated transactions. The program has no expiration date and may be suspended or discontinued at any time. The intent of this repurchase program is to offset dilution from the vesting or exercise of equity awards under the Kenvue 2023 Plan (as defined in Note 8, “Stock-Based Compensation,” to the Condensed Consolidated Financial Statements included herein). We repurchased 4,600,000 shares of our outstanding common stock for $91 million during the fiscal three months ended March 31, 2024.

Future Litigation

In the ordinary course of business, we are involved in litigation, claims, government inquiries, investigations, charges, and proceedings. See Note 14, “Commitments and Contingencies,” to the Condensed Consolidated Financial Statements included herein for further details regarding certain matters that are currently pending. Our ability to successfully resolve pending and future litigation may adversely impact our financial condition, results of operations, or cash flows.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements (as defined under the rules and regulations of the SEC) or any relationships with unconsolidated entities that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, net sales or expenses, results of operations, liquidity, cash requirements, or capital resources.

Other Information

Baby Powder Transition

On August 11, 2022, we announced the commercial decision to transition to an all cornstarch-based baby powder portfolio. As a result of this transition, talc-based Johnson’s® Baby Powder was discontinued globally in 2023. Talc-based Johnson’s® Baby Powder was previously discontinued during 2020 in certain markets including the United States and Canada. We do not expect the impact of this change to have a significant impact on our results of operations.

Deferred Markets

In order to ensure compliance with applicable law, to obtain necessary governmental approvals and other consents, and for other business reasons, we deferred the transfer of certain assets and liabilities of businesses in certain non-U.S. jurisdictions, including China, Malaysia, and Russia, until after the completion of the Kenvue IPO. On September 11, 2023, J&J transferred the equity interests in the majority of the Deferred Legal Entities (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Condensed Consolidated Financial Statements included herein) to the Company that previously had been consolidated as Variable Interest Entities (“VIEs”) in the Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements included herein include businesses in all jurisdictions in which we will operate following the completion of the Separation, including any Deferred Local Business (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Condensed Consolidated Financial Statements included herein). For more information regarding Deferred Local Businesses, see “Risk Factors—Risks Related to Our Relationship with J&J—The transfer of certain assets and liabilities from J&J to us contemplated by the Separation has not been completed and may be significantly delayed or not occur at all” in our Annual Report and Note 1, “Description of the

Company and Summary of Significant Accounting Policies,” to the Condensed Consolidated Financial Statements included herein.

Provision For Taxes

On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation Development (“OECD”) Pillar Two Inclusive Framework that was supported by over 130 countries worldwide. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. On July 17, 2023, the OECD published Administrative Guidance proposing certain safe harbors that effectively extend certain effective dates to January 1, 2027. The OECD continues to release additional guidance, including guidance on safe harbors for which we may qualify, and many countries have already implemented legislation consistent with the OECD Pillar Two Framework. Due to these new rules, our provision for taxes could be unfavorably impacted as the legislation becomes effective in countries in which we conduct business. However, based on the Company’s current analysis, currently enacted laws for Pillar Two do not have a significant impact on the Condensed Consolidated Financial Statements. We are continuing to evaluate the Model Global Anti-Base Erosion Rules for Pillar Two and related legislation, and their potential impact on future periods.

Foreign Currency Risk

Because we manufacture and sell products and finance operations in a number of countries throughout the world, we are exposed to the impact on revenue and expenses of movements in currency exchange rates, including as a result of the strengthening of the U.S. dollar or fluctuations in foreign currency rates in numerous jurisdictions, particularly the European Union, the United Kingdom, Japan, China, Canada, Brazil, and India.

We manage the impact of foreign exchange rate movements on our earnings, cash flows, and fair values of assets and liabilities through operational means and through the use of various financial instruments, including derivative instruments such as forward and swap foreign exchange contracts. The financial instruments utilized are viewed as risk management tools and are not used for trading or speculative purposes. Forward and swap foreign exchange contracts are sensitive to changes in foreign currency rates. Gains or losses on these contracts are generally offset by the gains or losses on the underlying transactions, and therefore, would have no impact on future anticipated earnings and cash flows.

Inflation Risk

Inflationary pressures have recently increased, and may continue to increase, the costs of raw materials, packaging components, and other inputs for our products. In recent years, we have experienced, and we continue to experience, higher than expected inflation, including escalating transportation, commodity, and other supply chain costs and disruptions that have affected, and continue to affect, our results of operations. We have partially offset the impact of inflation largely through price increases, in addition to continued supply chain optimization initiatives.

However, if our costs continue to be subject to significant inflationary pressures, we may not be able to offset such higher costs through price increases, which could adversely affect our business, results of operations, or financial condition.

Interest Rate Risk

Our cash equivalents and marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Interest rate risk is managed through the maintenance of a portfolio of variable and fixed-rate debt composed of short and long-term instruments. The objective is to maintain a cost-effective mix that management deems appropriate. From time to time, we also hedge the anticipated issuance of fixed-rate debt, and those contracts are designated as cash flow hedges. As of March 31, 2024, our outstanding long-term debt portfolio was comprised primarily of fixed-rate debt, and therefore, any fluctuation in market interest rate is not expected to have a material impact on our results of operations. Our interest expense for any new floating rate debt we may incur in the future, including under the Revolving Credit Facility, could be exposed to changes in interest rates. Interest rate risk is highly sensitive due to many factors, including the monetary and tax policies of the United States and other countries, market and economic factors, and other factors beyond our control.

Commodity Price Risk

We are exposed to commodity and other price risk, including from resins, pulp and corn derivatives, vegetable oils and oleochemicals, and other inputs, including energy, labor, transportation (such as trucks, containers, and ocean freight), and logistics services. We use various strategic pricing mechanisms to manage cost exposures on certain material purchases with the objective of obtaining appropriate costs for these commodities.

Credit Risk

We are exposed to potential credit losses in the event of nonperformance by counterparties to our receivables, including our customers. Concentrations of credit risk arising from receivables from customers are limited due to the diversity of our customers. We perform credit evaluations of our customers’ financial conditions and may also obtain collateral or other security as appropriate. Notwithstanding these efforts, current adverse macroeconomic factors across the global economy may increase the difficulty in collecting receivables. We are also exposed to the risk of credit loss in the event of nonperformance by counterparties to financial instrument contracts; however, nonperformance is considered unlikely and any nonperformance is unlikely to be material as it is our policy to contract with diverse, credit-worthy counterparties based upon both strong credit ratings and other credit considerations.

Evaluation of Disclosure Controls and Procedures

As of March 31, 2024, the end of the period covered by this report, management of the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. The Company’s Chief Executive Officer, Thibaut Mongon, and Chief Financial Officer, Paul Ruh, reviewed and participated in this evaluation of Kenvue’s disclosure controls and procedures. Based on this evaluation, Messrs. Mongon and Ruh concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the fiscal three months ended March 31, 2024, the period covered by this report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information called for by this item is incorporated herein by reference to Note 14, “Commitments and Contingencies,” to the Condensed Consolidated Financial Statements included herein.

There have been no material changes in our risk factors from those disclosed under Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the fiscal twelve months ended December 31, 2023 filed on March 1, 2024 with the SEC.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no sales of equity securities by the Company during the fiscal three months ended March 31, 2024.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During the fiscal three months ended October 1, 2023, our Board authorized a share repurchase program, under which we are authorized to repurchase up to 27,000,000 shares of our outstanding common stock in open market or privately negotiated transactions. The program has no expiration date and may be suspended or discontinued at any time. The intent of this repurchase program is to offset dilution from the vesting or exercise of equity awards under the Kenvue 2023 Plan (as defined in Note 8, “Stock-Based Compensation,” to the Condensed Consolidated Financial Statements included herein).

The following table represents our purchase of common stock during the fiscal three months ended March 31, 2024:

(Shares in Thousands)
Period						Total Number of Shares Purchased						Average Price Paid Per Common Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Program						Approximate Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2024 - January 31, 2024						301						$	21.01					301						26,349
February 1, 2024 - February 29, 2024						4,299						$	19.70					4,299						22,050
March 1, 2024 - March 31, 2024						—						$	—					—						22,050
Total number of shares purchased						4,600

Insider Trading Arrangements and Policies

During the fiscal three months ended March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a1(f) under the Exchange Act) adopted or terminated any contract, instruction, or written plan for the purchase or sale of the Company’s securities intended to satisfy the conditions of the affirmative defense provided by Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Exhibit Number						Exhibit Description
3.1						Amended and Restated Certificate of Incorporation of Kenvue Inc., effective as of May 3, 2023, filed as Exhibit 3.1 to the Current Report on Form 8-K filed by Kenvue Inc. with the SEC on May 8, 2023, and incorporated herein by reference
3.2						Amended and Restated Bylaws of Kenvue Inc., effective as of May 3, 2023, filed as Exhibit 3.2 to the Current Report on Form 8-K filed by Kenvue Inc. with the SEC on May 8, 2023, and incorporated herein by reference
31.1						Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2						Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1						Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
32.2						Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith
** Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Kenvue Inc.
Date: May 9, 2024			/s/ PAUL RUH
			Paul Ruh
			Chief Financial Officer (Principal Financial Officer)
Date: May 9, 2024			/s/ HEATHER HOWLETT
			Heather Howlett
			Chief Accounting Officer (Principal Accounting Officer)