• Organic Net Sales Growth: Slight increase of 0.2% for fiscal year 2024.
• International Markets Growth: Over 7% increase, contributing to 40% of total revenue.
• North America Organic Net Sales: Decreased by about 4%.
• Adjusted Gross Margin: Increased by 140 basis points year-over-year.
• Adjusted Operating Margin: Increased by 100 basis points for the year.
• Adjusted Earnings Per Share Growth: 18% increase at constant currency.
• Free Cash Flow Generation: $175 million for fiscal year 2024.
• Net Debt Leverage Ratio: 3.1x at the end of the fiscal year.
• Share Repurchases: $18.3 million in the fourth quarter.
• Dividend Payout: $0.15 per share for the fourth quarter.
• Billie Brand Market Share: Gained 260 basis points in women's shave.
• Sun Care Organic Net Sales: Decreased by 3.5% in the fourth quarter.
• Fem Care Organic Net Sales: Decreased by about 9% in the fourth quarter.
• Adjusted EBITDA: $78.9 million in the fourth quarter.
• Cash on Hand: $209 million at the end of the fiscal year.

• Warning! GuruFocus has detected 5 Warning Signs with EPC.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Edgewell Personal Care Co (NYSE:EPC) achieved slight organic net sales growth and expanded adjusted gross margins in fiscal 2024.
• The company delivered double-digit adjusted earnings per share growth at constant currency for the second consecutive year.
• International markets grew over 7% and now constitute about 40% of total revenue, demonstrating strong global performance.
• The Billie brand gained 260 basis points of market share in women's shave, indicating successful brand expansion.
• Edgewell Personal Care Co (NYSE:EPC) reported significant productivity savings, contributing to gross margin accretion and strong bottom-line results.

Negative Points

• Top line growth was below expectations, with organic net sales decreasing 2.8% in the fourth quarter.
• North America organic net sales declined about 6%, with specific declines in Wet Shave, Fem Care, and Wet Ones.
• The US Sun Care category consumption declined about 6% in the quarter due to unfavorable weather conditions.
• The company faced supply chain challenges, particularly in the grooming, skin, and preps businesses, impacting sales.
• Currency fluctuations are expected to be a headwind to earnings in fiscal 2025, adding financial pressure.

Q & A Highlights

Q: Can you go through your confidence levels on organic sales growth for fiscal '25? What are the key drivers for returning to mid-single-digit growth in international markets and stabilizing the North America business? A: Daniel Sullivan, Principal Financial Officer, highlighted confidence in profit expectations even if sales fall short, citing relentless productivity efforts and cost focus. He emphasized international growth, which is expected to be mid-single-digit, driven by brand activation, innovation, and strong team performance. In North America, tailwinds are expected from Sun Care, grooming, and the Billie brand expansion. Rod Little, CEO, added confidence in the growth profile, with 70% of the business expected to grow mid-single digits, and efforts to stabilize the US Shave and Fem Care segments.

Q: Can you explain the expectations for Sun Care in the quarter and the health of the category moving forward? A: Daniel Sullivan explained that the last quarter of Sun Care is significant, accounting for 1/3 of the category in the US. The quarter was below expectations due to a 6% decline in consumption, impacting organic sales. Despite this, the category is healthy, with a natural growth profile of 2% to 4%. Rod Little added that the company has a strong innovation pipeline and capabilities, with consumers trading up rather than down in the category.

Q: What are the building blocks for your fiscal '25 sales outlook, and how do you expect sales to grow as the year progresses? A: Rod Little emphasized confidence in the growth profile, driven by a stronger innovation platform and local market model. He highlighted successful campaigns like Wilkinson Sword in Europe and Schick First Tokyo in Japan. Additionally, Fem Care is expected to improve from a 10% decline to flat, with strong retailer response and a robust pipeline for future growth. Daniel Sullivan added that Q1 will be impacted by cycling previous benefits and timing elements, with growth expected in later quarters.

Q: Can you discuss the gross margin outlook and the drivers of COGS inflation for next year? A: Daniel Sullivan stated that the company will continue to focus on productivity and price to manage gross margins. For fiscal '25, productivity gains are expected to accelerate, with less realization from price. COGS inflation is anticipated to be in the 2% to 3% range, driven by low single-digit inflation on raw materials, mid-single-digit inflation on labor, and likely deflationary trends in warehouse and distribution.

Q: How do you plan to address the challenges in the US Shave and Fem Care categories? A: Rod Little expressed confidence in stabilizing these categories, with a focus on leadership changes and retailer support. The company has a new leader for North America, Jessica Spence, and stronger teams in place. The goal is to achieve flat growth in these segments, which would contribute to the overall growth target for fiscal '25.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.