Johnson and Johnson Company 4th Quarter 2020 Earnings Call

Introduction

On January 26, 2020, Johnson and Johnson released its 2020 full-year and fourth-quarter earnings report. Since its creation, Johnson and Johnson’s company has grown to become one of the broadest based and largest health organizations in the world. Contemporarily, the company has over 135000 employees all over the world working every single day to transform health’s trajectory for humanity (Johnson & Johnson, 2021). Despite the uncertainties and challenges presented by the COVID-19 pandemic, Johnson and Johnson managed to achieve a not operational and financial performance in 2020. The company’s ability and unbridled focus enabled them to advance their business operation. In this paper, I will summarize the overall messages of three speakers, including the investor relations officer, the board chairperson, and the C.F.O, to provide an important message and critique the effectiveness of each speaker’s mode of communication.

Chris DelOrefice: Vice President of Investor Relations

Chris DelOrefice opens the conference call by welcoming everyone to the company’s review of their 2020 business results and for their 2021 financial outlook. He also provides a list of individuals who would join him on the conference call, including Alex Gorsky, the C.E.O, and Joe Wolk. The C.F.O. Chris DelOrefice indicates where the review can be accessed, including associated schedules and additional materials (EarningsCast, 2021). Nonetheless, he provides an outline of the entire earnings call. In the call, Gorsky will provide perspective on the company’s business highlights and overall results for the year 2020. Chris DelOrefice will review the P&L and fourth-quarter sales for three business segments and the company. Wolk will close by providing insights concerning capital allocation deployment, the company’s cash position, and their 2021 guidance.

In his speech, Chris DelOrefice provides a recap of the fourth quarter. First, the company had an 8.3% increase in its worldwide sales, standing at 22.5 billion dollars compared to the previous year. The company also reported a general increase in sales in the U.S and outside, with the currency having a positive impact on their OUS reported results. Excluding the net impact of divestiture and acquisitions, there was an increase in adjusted operation sales growth in the country and outside the country by 9.6% and 4.8% percent, respectively (EarningsCast, 2021). When it comes to low earnings, the company reported some net earnings of 1.7 billion dollars and diluted earnings of 0.65 dollars per share of 1.50 dollars. The consolidated sales for 2020 increased by 0.6%, standing at 82.6 billion dollars. However, the company reported a year-over-year negative change in regions outside the United States. Due to the company’s OUS skin health, Wound Care, and Oral Care, consumer health was strongly delivered above 2020’s market’s growth. There was also a decline in the sales of over-the-counter medicines, with the U.S receiving flat results. Worldwide Pharmaceutical sales and the company’s oncology portfolio received sales increase and growth.

Alex Gorsky: Chairman of the Board of Directors and Chief Executive Officer

In his speech, Gorsky provides his viewpoint on the business highlights and overall results of the year. According to Gorsky, 2020 was a year full of challenges and uncertainty due to the COVID-19 pandemic, but it helped them clarify their values and priorities. Johnson and Johnson showed the importance of their credo and power in guiding their actions to meet their stakeholders’ needs (EarningsCast, 2021). Gorsky appreciates how the company’s diversified business had touched different parts of people’s lives as they had the responsibility and ability to when the virus turned into a pandemic. He also appreciated the progress made by Janssen scientists in testing their vaccines while maintaining the highest level of safety and safety standards. The C.E.O is particularly proud of the growth and progress of Johnson and Johnson in achieving the core milestones over the year.

An important message highlighted by Gorsky is the company’s relentless focus on execution and excellence in meeting their stakeholder’s needs. The C.E.O appreciates the company’s 2020 performances in different sectors. According to Gorsky, the 2020 performance indicates continued confidence from the physicians, patients, consumers, and customers (EarningsCast, 2021). The company’s pharmaceutical business also performed well, kept approvals and pipeline submission on track, and passed the clinical trials of patient enrollment. Nonetheless, Johnson and Johnson’s Consumer Health business also improved, and Medical devices showed agility and resiliency, paving the way for a strong recovery. Also, the company’s unparalleled scientific expertise allowed them to come up with life-enhancing innovations, including R&D colleagues advancing their robust pipeline of transformational and innovative products. The company has filed amivantamab for treating exon 20 mutations in small cell lung cancer in Europe and the U.S. Additionally, the company’s Medical Device business has made significant growth in advancing their pipeline and achieving certain milestones despite the pandemic.

Gorsky’s effectiveness in communication is evident in how he correctly pronounces words in a way that enables people to fully understand what he is saying. Also, his voice quality is friendly and enthusiastic showing that he is profession and providing an important message to the audience. Nonetheless, Gorsky is able balance the pitch of his voice by talking in a relaxed and controlled manner. While listening to Gorsky an individual can clearly understand him him because he adjusts the volume of his voice (Guffey & Loewy, 2016). He also balances the rate of his voice to avoid speaking too slowly or too quickly. This makes the speech interesting and captivating to the listener. Besides Gorsky emphasizes on words such as “our,” “business,” and “pandemic,” to make the message natural and interesting. He also confident and competent.

Joe Wolk: Executive Vice President and Chief Financial Office

Joe Wolk provides insights concerning capital allocation deployment, cash position, and guidance for 2021. When it comes to the 2020n company’s cash position, Wolk highlights how Johnson and Johnson a free flow of 20 billion dollars more than that of 2019 (EarningsCast, 2021). By the end of 2020, the company had about 10 billion dollars’ net debt comprising marketable securities and cash and an approximate debt of 35 billion dollars. A major element of Johnson & Johnson’s business is maintaining its long-term approach of driving value creation and growth across the enterprise. The company’s top priority in 2020 was to create an effective and safe COVID-19 vaccine. By the end of 2020, Johnson & Johnson had invested more than seven billion dollars in cash opportunities like R&D investment. By announcing a 6.3 increase, the company continues to prioritize its dividend. This led to a 10.5 billion return and about 50% of their free cash flow. When it comes to 2021 full-year guidance, the company is well-positioned to continue to deliver long-term value to their consumers, provided their previous performance in the unprecedented contemporary environment. They continue to work with other healthcare systems and monitor their progress as they try to balance the surges in cases of COVID-19. Also, they are encouraged by the availability of vaccines and how to stabilize the employment levels.

An important aspect highlighted by Wolk is the company’s Consumer Health Segment. According to Wolk, the Consumer Health Segment has yielded robust performance throughout the COVID-19 pandemic leading to significant market growth (EarningsCast, 2021). However, the performance has led to sales comparison related to the pandemic in the first quarter of 2021, especially with over-the-counter drugs. As a result, Johnson and Johnson plan to progress their margin expansion as they plan that their SKU rationalization program will lead to negative sales outcomes in the first half of 2021. They also expect a more normalized growth in the second half of 2021 as consumers will return to using the typical patterns for products in beauty and skin health areas.

When it comes speaking effectiveness, Wolk is able to integrate his perceived authority as a way of building trust. He is able to clearly pronounce the words with correct syllables and sound making it easier for the listener to understand what he is say. The quality of his voice show his expertise in communication and identifies that he has a leadership quality (Guffey & Loewy, 2016). Wolk’s voice pitch is controlled, and relaxed with rising and falling intonation making it interesting to listen as he speaks. He is also able to adjust the volume of his voice to the listeners and the occasion. Nonetheless, he adjusts the rate of his of his speech to balance talking the number his words per minute. Wolk emphasizes on some specific words like “we,” “development,” “consumers,” and “progress,” to make his speech interesting.

Conclusion

In conclusion, Johnson and Johnson’s 2020 conference call highlights the progress made by the company in terms of sales and production throughout the year. DelOrefice begins by introducing the calls and providing a review of the P&L results and fourth-quarter sales. He is followed by Gorsky, who provides his viewpoint on 2020’s business highlights and overall results. Wolk concludes by providing highlights on capital allocation, cash proposition, and 2021 guidance. One thing I have learned that that can help me in future is to have strong communication skills which incorporates a clear pronunciation of words, voice quality and balancing the volume and pitch of my voice to ensure there is clear understanding.