Executive Summary

Q4 2024 revenue declined 0.1% to $3.662B (organic +1.7% on +1.0 ppt price/mix, +0.7 ppt volume); GAAP EPS was $0.15 and Adjusted EPS $0.26 as weakness in pediatric pain and APAC distribution offset strength in Self Care ex-pediatrics and Skin Health & Beauty .
Gross margin expanded 80 bps YoY to 56.5% (adjusted GM down 80 bps to 58.7% due to prior-year non-recurring separation benefits); operating margin 13.2% (adjusted 19.2%) with higher brand investment funded by productivity and “Our Vue Forward” savings .
2025 guide: Net sales -1% to +1% (organic +2% to +4%, ~3% FX headwind), adjusted operating margin up YoY, and adjusted EPS flat to +2% including mid-single-digit FX drag; Q1 organic sales expected to decline low single digits due to destocking, China fixes, and temporary U.S. price/trade investments, with back-half acceleration targeted .
Dividend declared at $0.205 per share payable Feb 26, 2025; governance backdrop includes Starboard nominations and ongoing shareholder engagement, cited but not discussed in detail on the call .

What Went Well and What Went Wrong

What Went Well
- Productivity and cost actions drove FY gross margin expansion (+200 bps to 58.0%; adjusted +200 bps to 60.4%), enabling ~20% higher brand investment and still delivering FY adjusted EPS of $1.14, within guidance .
- Self Care excluding pediatric pain grew high single digits; Nicorette nearly +20%, Digestive mid-teens, Allergy high-single digits; company gained Self Care share in Q4 .
- Skin Health & Beauty returned to volume-led growth in Q4 (+2.6% organic), with double-digit organic growth in EMEA and Latin America and U.S. regained #1 Neutrogena face-care position across channels .
- Management tone: “We delivered on our 2024 profit commitments despite headwinds...” and plan to “accelerate performance” in 2025 supported by higher brand investments and efficiency gains .
What Went Wrong
- Pediatric pain category contracted significantly (≈-40% in China; ≈-11% U.S.), producing a double‑digit decline in the franchise and masking strength elsewhere; without pediatric pain, Q4 organic growth would have been ~2 ppt higher .
- Asia Pacific distribution disruption (secondary distributor liquidity/activation issues) drove order declines, with outsized impact on Essential Health; remediation (distributor replacement and reclaiming retailer activation) is underway and expected to take time .
- Q4 adjusted gross margin fell 80 bps YoY to 58.7% (lapping prior-year non-recurring separation benefits) and adjusted operating margin fell to 19.2% on higher brand investments despite productivity gains .

Financial Results

Headline P&L and margins

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($B)	$4.000	$3.899	$3.662
Diluted EPS (GAAP)	$0.03	$0.20	$0.15
Adjusted Diluted EPS (non-GAAP)	$0.32	$0.28	$0.26
Gross Margin % (GAAP)	59.1%	58.5%	56.5%
Adjusted Gross Margin %	61.6%	60.7%	58.7%
Operating Margin % (GAAP)	3.9%	16.8%	13.2%
Adjusted Operating Margin %	22.8%	22.1%	19.2%

Segment net sales (YoY comparison)

Segment Net Sales ($M)	Q4 2023	Q4 2024
Self Care	1,537	1,569
Skin Health & Beauty	1,001	1,011
Essential Health	1,128	1,082
Total	3,666	3,662

Geographic mix (Q4 YoY)

Region Net Sales ($M)	Q4 2023	Q4 2024
North America	1,762	1,842
EMEA	822	863
Asia Pacific	750	635
Latin America	332	322
Total	3,666	3,662

KPIs (mix vs. volume; period-over-period contributions)

KPI	FY 2024	Q4 2024
Organic Sales Growth %	1.5%	1.7%
Price/Mix (ppt)	+2.7	+1.0
Volume (ppt)	-1.2	+0.7
Effective Tax Rate (GAAP)	27.2%	15.3%
Adjusted Effective Tax Rate	25.5%	17.7%
Interest Expense, net ($M)	378	95

Non-GAAP reconciliations and additional detail (adjustments by type) are provided in the 8-K/press release .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales YoY change	FY 2025	N/A	-1% to +1%	Initiated
Organic Sales Growth	FY 2025	N/A	+2% to +4%	Initiated
FX impact to Net Sales	FY 2025	N/A	~3% headwind	Initiated
Adjusted Operating Income Margin	FY 2025	N/A	Improve YoY	Initiated
Adjusted Diluted EPS Growth	FY 2025	N/A	Flat to +2% (incl. mid‑single‑digit FX drag)	Initiated
Adjusted Effective Tax Rate	FY 2025	N/A	25.5%–26.5%	Initiated
Organic Sales cadence	Q1 2025	N/A	Decline low single digits	New (cadence disclosure)
Dividend	Next payment	N/A	$0.205/sh payable Feb 26, 2025	Declared

Notes: Guidance excludes potential 2025 tariff impacts; management has contingency plans but did not embed tariffs in the outlook .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2–Q3 2024)	Current Period (Q4 2024)	Trend
Supply chain productivity and gross margin	GM expansion driven by productivity and value realization; “Our Vue Forward” savings funding A&M	Continued productivity; FY GM +200 bps; Q4 adjusted GM -80 bps YoY on prior non-recurring benefit and mix/inflation	Structurally improving; Q4 mix/inflation headwinds
Self Care and seasonality	Volumes soft; price/mix supported growth; share gains highlighted in Q3	Strong ex‑pediatrics; Nicorette ~+20%, Digestive mid‑teens, Allergy HSD; pediatrics a large drag	Mixed: ex‑pediatrics strong; pediatrics weak
Skin Health & Beauty trajectory	Early recovery signs; focus on innovation and brand building	Volume-led +2.6% organic; EMEA/LATAM strong; U.S. regained #1 Neutrogena face care	Improving
APAC route-to-market	—	Distributor disruption in China; replacing underperformers; reclaiming activation with retailers	Corrective actions underway
RGM/pricing and trade investments	Value realization key in H1–Q3	Select U.S. price reductions and higher trade in H1 to improve competitiveness; negative U.S. value realization near term; RGM COE and trade spend tech roll-out	Short-term margin/top-line headwind; long-term mix/volume benefit targeted
AI/technology in planning	—	AI-driven tools in integrated business planning to enhance forecasting and agility	New capability
Macro/tariffs	—	Tariffs excluded from guide; mitigation playbook ready (alt sourcing, pricing potential)	Risk monitored
Shareholder/governance	—	Starboard nominations acknowledged; no further comment on call	Ongoing engagement

Management Commentary

CEO: “We delivered on our 2024 profit commitments despite headwinds that resulted in softer than expected sales growth and we enter 2025 as a more competitive company with stronger foundations.”
CEO on pediatrics drag: “Total company organic sales growth without [pediatric pain] would have been about 2 points higher in the fourth quarter and about 1 point higher for the full year 2024.”
CFO on cadence: “Combined, [destocking and strategic price investments] will account for a 3- to 4-point headwind in the first quarter…organic sales to decline low single digits in Q1…much stronger in the back half.”
CFO on 2025 profitability: “These combined savings will more than offset the investments…As a result, we’re planning for adjusted operating margin to expand year-over-year.”

Q&A Highlights

Near-term top line and cadence: Q1 organic sales decline LSD from pediatrics destocking, China RTM remediation, and stepped-up U.S. trade; Q2 moderates; back half stronger (absent Q4’24 headwinds and with initiatives taking hold) .
Category growth: Expect 2–3% category growth in 2025 with less pricing contribution versus 2024; private label penetration broadly flat to down in aggregate .
Pricing and trade: Temporary U.S. negative value realization in H1 from selective price reductions/trade; expect positive value realization in H2 outside U.S.; funded by efficiencies and modest GM accretion .
Margin cadence: More muted in H1, improving into Q3; typical seasonal pattern with Q3 stronger and customary Q4 plant costs .
Tariffs: Exposure mainly U.S./Canada; levers include alternate sourcing and potential pricing; not included in guidance .
China distribution: Replacing weak distributors; reclaiming retailer activation for better visibility/execution .
Cash conversion: 2024 FCF $1.3B vs $2.7B in 2023; progressing but not reaching 90–100% conversion in 2025 due to separation/IT investments; line of sight thereafter .

Estimates Context

S&P Global consensus (EPS, revenue, EBITDA) for Q4 2024 was not retrievable at time of analysis due to a rate limit, so we cannot present a beat/miss vs Street here (attempted via S&P Global GetEstimates; unavailable). As a result, we anchor to company-reported actuals only and note that near-term Street models may need to reflect management’s Q1 low-single-digit organic decline and back-half weighted recovery commentary .

Key Takeaways for Investors

Near-term setup: H1 headwinds from pediatrics destocking, China RTM remediation, and U.S. price/trade investments pressure growth/margins; Q1 organic LSD decline is guided—be cautious on early-2025 prints .
Back-half acceleration: Management expects stronger H2 on normalization of pediatrics seasonality, China execution improvements, distribution gains, and more impactful innovation and media; adjusted operating margin targeted to expand in 2025 despite FX .
Mix and pricing: Temporary negative U.S. value realization in H1 should give way to positive global value realization in H2; monitor elasticity and competitive response to selective price cuts .
Regional watchpoints: EMEA/LATAM remain growth engines; Asia Pacific recovery hinges on distributor transition and retailer activation control; track APAC sales/volume normalization .
Self Care resilience ex‑pediatrics: Strong momentum across Nicorette, Digestive, and Allergy suggests underlying demand health; recovery in pediatrics and seasonality will be a key quarterly swing factor .
Margin drivers: Ongoing productivity, “Our Vue Forward” savings and planning/AI tools aim to fund higher brand investments and still expand adjusted operating margin; monitor gross margin cadence and A&M efficiency .
Policy/FX risks: Guide excludes tariffs; FX a ~3% headwind to 2025 top line and mid-single-digit drag to EPS—watch USD and tariff implementation headlines for estimate revisions .

Appendix: Additional Data Points

Q4 effective tax rate 15.3% (adjusted 17.7%); full-year ETR 27.2% (adjusted 25.5%) .
Net debt at Dec 29, 2024: $7.5B (cash $1.1B; total debt $8.6B) .
Dividend declared: $0.205/share payable Feb 26, 2025 .
Shareholder engagement: Company acknowledged Starboard’s nominations and prior discussions; no call commentary beyond focusing on results and outlook .

All figures are company-reported GAAP or non-GAAP as indicated; see 8-K and press release for reconciliations and definitions .

Kenvue Inc. (KVUE)·Q4 2024 Earnings Summary