• Organic Net Sales: Decreased 1.3% overall; International growth of 2%, North America declined 4%.
• Adjusted Gross Margin: Decreased 60 basis points; increased approximately 80 basis points in constant currency.
• Productivity Savings: Achieved 340 basis points.
• Adjusted Operating Income: $27 million, down from $36 million last year.
• Adjusted Operating Margin: Decreased 170 basis points, mainly due to currency impact.
• Adjusted Earnings Per Share: $0.07; currency movements had a $0.17 per share unfavorable impact.
• Adjusted EBITDA: $45.9 million, including an $11 million unfavorable currency impact.
• Net Cash Used by Operating Activities: $115.6 million, compared to $72.9 million in the prior year.
• Share Repurchases: Totaled $30 million in the quarter.
• Dividend: Declared a cash dividend of $0.15 per share for the first quarter.
• Fiscal 2025 Outlook: Organic net sales growth expected in the range of 1% to 3%; adjusted EPS and EBITDA towards the lower end of their respective ranges due to currency headwinds.

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

Release Date: February 10, 2025

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

Positive Points

• Edgewell Personal Care Co (NYSE:EPC) delivered solid results despite a volatile external environment, with organic net sales in line with expectations.
• The company saw continued growth in international markets, particularly in wet shave, sun care, and grooming categories.
• Gross margin at constant currency remained strong, enabling year-over-year incremental brand investments.
• Edgewell Personal Care Co (NYSE:EPC) achieved its fifth consecutive quarter of organic sales growth internationally, with a three-year CAGR of nearly 8%.
• The company is experiencing positive traction from its rebuilt innovation platform, with successful product launches like Schick First Tokyo in Japan and Bulldog range expansion in Europe.

Negative Points

• Organic net sales decreased by 1.3%, with a 4% decline in North America due to lower volumes in femcare and wet shave.
• The US wet shave and femcare categories remain highly competitive and promotional, impacting sales negatively.
• Adjusted operating income decreased to $27 million from $36 million last year, with adjusted operating margin decreasing by 170 basis points.
• Currency movements had a significant negative impact, with an approximately $0.17 per share unfavorable impact on adjusted earnings per share.
• Net cash used by operating activities increased to $115.6 million for the quarter, compared to $72.9 million in the prior year period.

Q & A Highlights

Q: Femcare sales have been weak, and you've mentioned consolidating the brand portfolio. Can you explain why the business is still struggling and if the spring resets will help? A: The category is healthy overall, driven by pads, where we're currently challenged. We've been transitioning consumers from Stay Free to Carefree pads, which is taking longer than expected. However, we're making progress, and results should improve sequentially throughout the year due to easier comparisons and ongoing consumer conversion efforts.

Q: Can you provide context on the businesses experiencing atypically negative performance and when they might improve? A: Improvement is expected primarily in the second half of the year. Supply chain issues from last year, like the fire in our manufacturing plant, are being resolved. Wet Ones is already back online, and other areas like EDGE and Cremo will start to improve as we lap those periods in the summer.

Q: FX is a bigger hit this year. What are your plans to offset this, and are you considering pricing changes? A: The FX impact is heavier than anticipated, but we're maintaining our profit guidance within the original ranges. While we've executed planned pricing for 2025, we are focusing on revenue management, optimizing trade terms, and managing mix. We are not planning to cut brand investments to offset FX impacts.

Q: How do you view your position in the sun care market as we head into the peak season? A: We feel well-positioned for the sun season with strong distribution and innovation. We're optimistic about weather patterns and have good retailer support. Internationally, we've seen strong performance, winning market share in Australia and Mexico. Our innovation pipeline, including a complete mineral restage in the US, is robust.

Q: What are your updated thoughts on capital allocation and potential M&A? A: We've been focusing on deleveraging and share buybacks, but M&A remains important for growth. We're active in the market, though valuations are challenging. We wouldn't shy away from acquisitions that are meaningful to our growth. Share repurchase is also a good use of capital given our current valuation.

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