Kenvue Inc.

Hello and welcome to the Kenview third quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sophia Sinnott, head of investor relations for Kenview.

Good morning, everyone. I'm pleased to be joined today by Tiba Mongon, Chief Executive Officer, and Paul Roux, Chief Financial Officer. Before we get started, I'd like to remind you that today's call includes forward-looking statements regarding, among other things, our operating and financial performance, market opportunities, and growth. These statements represent our current beliefs, expectations, or assumptions about future events and are subject to various risks, uncertainties, and changes that are difficult to predict and could cause our actual results to differ materially. For information regarding these risks and uncertainties, please refer to our earnings materials related to this call posted on our website and our filings with the SEC. During this call, we will also reference certain non-GAAP financial information. The presentation of this non-GAAP financial information is not intended to be considered in isolation or is a substitute for financial information presented in accordance with the U.S. GAAP. These non-GAAP financial measures should be viewed in conjunction with the most directly comparable U.S. GAAP financial measures and are not presented as substitutes for or superior to those most directly comparable U.S. GAAP financial measures. Those mostly directly comparable U.S. GAAP financial measures and a reconciliation of our non-GAAP items to those U.S. GAAP measures can be found in this morning's press release and our presentation available on the IR page of Canview's website, www.investors.canview.com. With that, I'll pass the call over to Teba.

Thank you everyone for joining us today. First, I'd like to welcome Sophia Tsinis as our Head of Investor Relations. Many of you know Sophia. She brings over 20 years of experience and expertise in both investor relations and equity research in the consumer product sector, and we are pleased she is now part of the Canview team. In the third quarter, we delivered year-over-year organic growth of 0.9% on top of 3.6% last year. Despite the softer top line that we are actively addressing, we delivered another quarter of strong productivity and efficiencies, funded our investment in our brands, and generated adjusted diluted earnings per share of 28 cents. Throughout the organization, we are fundamentally and rapidly transforming our ways of working to unleash our full potential and fulfill our commitments to create long-term shareholder value. Leveraging our entire portfolio of iconic and trusted brands, We're activating our new Can-U playbook to strengthen our presence and prominence in store, reach more consumers directly and through healthcare professionals, and amplify our innovation in a more impactful way. Self-care and essential health are already benefiting from this new way of working. In skin health and beauty, while we are not yet where we want to be, we are advancing these focus areas to improve our growth trajectory, and I will get into more details about the early results we started seeing in a minute. This playbook is powered by the increased marketing investment we discussed with you earlier this year. For 2024, we are on track to invest approximately 20% more than we did last year through advertising, healthcare professional engagement, in-store prominence, and direct consumer engagement, with an increasing focus on social media marketing powered by analytics and AI. Not only are we investing more, but we are also improving the efficiency and effectiveness of our marketing spend. For example, we announced in August the creation of our new global content factory, the production agency ecosystem we will leverage to drive relevant content in each market while reducing our costs. We are funding these marketing investments by driving productivity and efficiency in our business. In Q3, we delivered another quarter of strong adjusted gross margin expansion of 130 basis points versus last year. In addition, As we rapidly transform our organization, we are also starting to see a decline in non-marketing related operating expenses. We have now exceeded nearly three quarters of our TSAs and remain on track to fully exit these agreements by mid-2025. As we unwind these TSAs, our teams continue to find better, simpler, and more cost-effective ways to operate as an independent company. We are also on track to deliver $350 million in annual savings by 2026 through the Our View Forward initiative as we continue to modernize our systems and optimize our organization. Combining these two programs, we are making rapid progress in becoming a leaner, more agile and fast-moving consumer health organization with a more efficient cost structure which in turn allows us to invest in our brands at more competitive levels, build new capabilities, and deliver on our income commitments. Now looking at the key highlights of our performance this quarter. Around the world, we see that consumers continue to prioritize taking control of their own health and are looking for convenience and value. In self-care, our largest segment, organic sales grew 0.7% in the third quarter, in line with our expectations as we lapped a strong year-ago comparison of 6.7% growth. In a quarter where we saw volumes impacted by continued low incidence of allergy and pediatric fever, self-care once again outperformed the market. In the U.S., we continued to strengthen our number one positions in pain and allergy, with both Tylenol and Zeotec once again growing share in both value and volume this quarter. This was the ninth consecutive quarter of share gain for Tylenol and the 13th consecutive quarter of share gain for Zeotec. We are rapidly expanding distribution of our recently launched Tylenol Easy to Swallow across key retailers and are amplifying this innovation with increased advertising spend and an impactful omnichannel approach with our Greatness Hurts campaign. As a result, Tylenol Easy to Swallow is already the number one performing innovation in adult internal analgesics across the U.S. and is bringing new consumers to the brand. Outside the U.S., our self-care portfolio continues to gain share as well. For example, we continue to win with Nicorette. In the U.K., we drove mid-teens growth in Nicorette Quick Mist as the first and only nicotine replacement therapy marketed to aid both smoking and vaping cessation. In addition, we are building on this momentum with the relaunch of Nicorette Lozenge, with a new claim of fighting cravings in just two minutes. With this multi-pronged approach, we are not only strengthening our global leadership position in smoking cessation, but are also expanding the category to vaping cessation. Essential Health continues to perform well, driving volume growth for the second quarter in a row. We delivered organic growth of 4.5% in the third quarter on top of 3.8% last year, with broad-based growth across all categories and all regions. Here as well, we are advancing our priorities to drive sustained growth. For example, in oral care, this was another strong quarter for Listerine with high single-digit growth globally. We are driving this growth by expanding distribution at our top retail partners, and enhancing our in-store prominence with impactful displays, especially with our latest innovations like Listerine Clinical Solutions in the US. In addition, we are reaching more consumers, increasing our media spend, and partnering with digital creators to generate engaging content on social media that highlights the superiority of Listerine in a consumer-relevant way. Similarly, we see the positive impact of our new ways of working with Band-Aid in the US, where we drove mid-single-digit growth behind the success of our latest innovation, Band-Aid ProHeal. This superior product has been clinically tested to improve wound healing by 60%. And here as well, we expanded distribution at our top retail partners, increased media presence with the return of the iconic Band-Aid jingle, and have generated strong traction to date with Band-Aid ProHeal accounting for more than one-third of the brand's growth. In skin health and beauty, organic sales for the segment declined 2.7% year-over-year. In the US, our playbook is not yet delivering the results we want to see, and the pace of recovery was hindered this quarter by a muted sun season and decelerating skincare category dynamics. In China, the consumer backdrop, as many of you know, remains challenging. While addressing these headwinds in short term, we are also moving at pace to strengthen our underlying skincare expertise by building a world-class team and by partnering with the best leaders in the industry, two key enablers to improve and sustain higher performance in this segment. This week, we welcomed Andrew Steinleck to Canview as our new head of skin health and beauty for North America and Europe. Andrew is a seasoned and accomplished leader with a strong global track record in building brands successfully leading turnarounds and accelerating growth with a deep understanding of how to win in skin health and beauty. We are also creating powerful partnerships with highly influential leaders in skin care. Last week, we announced a breakthrough collaboration between Neutrogena and two of the world's most recognizable dermatologists, Dr. Banu Sali, a renowned skincare innovator, and Dr. Shah, the most followed dermatologist educator worldwide with over 20 million social media followers across key social channels and over 550 million likes on TikTok. The objective of this multi-year partnership is to strengthen the brand's innovation and create more engaging and authentic communication while expanding and accelerating our dermatologist engagement. These are two foundational steps in the right direction for the segment, with more to come in the future. Europe continued to deliver strong performance during the third quarter, growing double digits and demonstrating the power of our playbook in the segment. Sales growth was balanced between volume growth and value realisation, driven by new product launches, solid brand activation plans and distribution expansion. For example, we rapidly increased our in-store presence with the deployment of nearly 5,000 Neutrogena brand blocks across pharmacies in France and Spain, and we significantly amplified our reach to consumers with an enhanced influencer strategy in these countries. And in the UK, Aveeno became one of the fastest growing face care brands with strong in-store execution and a viral campaign with celebrity Molly May Haig. In the US, We did not see the overall sequential volume improvements that we were expecting, with revenue for the segment declining year over year. However, we are encouraged by early signs of sequential recovery in the areas that we have prioritized thus far. For example, in Eutrogena, we have put concerted effort behind strengthening in-store performance for our two largest platforms, Faith and Sun, which account for about 80% of the brand sales in the U.S. and we are starting to see initial progress in brick-and-mortar tract channels. In face, while still down year-over-year, Neutrogena gained 40 basis points of share sequentially since the new face care planograms were put in place midway through the quarter. And in September, Neutrogena regained its position as the number one face care brand in these channels. In sun, despite the muted season, We strengthened our number one leadership position and outperformed the market this quarter as Neutrogena gained 20 basis points of share in the same channels. We see these improvements as early evidence that our Canview playbook is starting to generate results in Neutrogena. In distribution, while we see further opportunities for improvement, we are making progress. Shelf resets are now complete for this year, with nitrogena benefiting from increased point of distribution at some retailers, improved shelving and navigation at others, and broad distribution for our latest innovations, collagen bank, acne patch for sensitive skin, and our new ultra-gentle cleansers. In addition, we have doubled our professional sales force and are now reaching significantly more dermatologists. And it is working. Neutrogena has now reached its highest level of average recommendations by dermatologists for face care in the last four years. This is an investment for the long term and a strong sign of future revenue potential. Importantly, we are reaching more consumers with our increased marketing investments and continued pivot to social platforms such as TikTok and Instagram. For example, we are supporting our Collagen Bank innovation through an impactful campaign targeting Gen Z consumers with celebrity Haile Steinfeld. This social first activation has generated more than 800 million video views to date. These actions are starting to drive sequential share gains in the pockets of a Neutrogena business that we have prioritized thus far. But let me be clear, this is still a work in progress, and our teams are working diligently on both amplifying these Neutrogena green shoots and building the same momentum across the balance of our skin health and beauty business. As I've said all along, the recovery of our US skin health business will not happen overnight and will not be linear, but we continue to work to make fundamental changes to this business with new talent, new partnerships, and a relentless focus on executing our new playbook with precision. At the beginning of the year, I told you that you would see a new Canview in action as we transform from a division of a large organization to being an independent pure play global leader in consumer health. Our transformation is well on its way and we already started seeing improvements in part of the P&L, but we are not yet seeing the full impact in our top line. Our 2024 growth rate is tracking towards the low end of the range we shared with you at the beginning of the year due to both the pace of recovery in skin health and beauty, and softer category dynamics in the back half of the year in both self-care and skin health and beauty. At the same time, we are ahead on our productivity initiatives, which in combination with our cost savings programs are fueling an acceleration in brand investment for future growth, while still enabling us to deliver within our adjusted diluted earnings per share outlook for the year. In parallel, we are making sure we are building the right foundation for sustainable performance. we are advancing our healthy lives mission. You may have seen our improved MSCI score from triple B to double A. Also encouraged to see that every day, our teams around the world demonstrate their unwavering commitment to transform our company and advance our key priorities of reaching more consumers, investing more behind our brands, and building a culture of performance and impact. This makes us confident that we are on our way to generate sustainable and profitable growth and drive strong value creation over time. With that, I will turn it over to Paul.