EDGEWELL PERSONAL CARE Co Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Category Health: Categories mostly healthy; consumption trends in line with expectations. U.S. wet shave and fem care competitive, but no material trade-down in international markets.
• International Business: Fifth consecutive quarter of organic sales growth, 40% of global business. Strong share results in sun care (Australia, Mexico) and wet shave (China).
• Innovation Platform: Rebuilt innovation platform with consumer-centric approach. New products like Shik First Tokyo in Japan and Bulldog range in Europe showing impact.
• Operational Performance: Productivity savings 340 basis points, constant currency gross margins stronger. Improved service levels and in-stock positions, addressed supply challenges in grooming and skin businesses.

Segment Performance

• Wet shave: Organic net sales down 1.3%. International wet shave grew 3% with price and volume gains. North America wet shave organic net sales declined just under 7%.
• Sun and skincare: Organic net sales increased approximately 5%. Double-digit growth in skin and grooming offset North America sun care declines. Gained market share in Australia and Mexico sun care.
• Grooming: Organic net sales increased 13%. Cremo grew 20% due to range expansion, Billy brand gained women's shave market share.
• Femcare: Organic net sales down approximately 12%. Decline driven by pads as transitioning from Stayfree to Carefree, though liners performed as expected.

Guidance

• Organic Net Sales: Previously 1%-3%, now Q2 expected ~1% due to sun care order shift to Q3. Reported sales to be negatively impacted by 160 basis points vs prior positive 70 basis points.
• Gross Margin: Constant currency gross margin accretion unchanged at 90 basis points, but full-year adjusted gross margin accretion now 55 basis points (inclusive of 35 basis points FX headwinds).
• EPS and EBITDA: Adjusted EPS and EBITDA towards lower end of ranges due to FX headwinds, partly offset by favorable pension true-up. Adjusted EPS now ~lower end of $3.15-$3.35 range, EBITDA towards lower end of $356M-$368M range.

Risks

• Currency Fluctuations: Significant strengthening of the dollar negatively impacting gross margin, expected to be a 35 basis point headwind full-year.
• Macro Environment: Volatile and uncertain macro conditions, including tariffs, inflation, and trade dynamics.
• Category Competition: U.S. wet shave and fem care highly competitive and promotional, posing challenges to market share.

Question and Answer

• Q: Femcare sales took another step back this quarter; any thoughts on resets? A: Rod and Dan discuss femcare transition from Stayfree to Carefree, progress being made, and sequential improvement expected.
• Q: Can you expand on sun care order shift? A: Rod and Dan explain sun care order shift due to Easter timing, with 80% of season's consumption between April-September.
• Q: FX is a bigger hit, any pricing plans? A: Dan and Rod discuss revenue management, productivity efforts, and no plans to cut brand investment to offset FX impact.
• Q: Quantify sun care timing shift impact on Q2 organic sales? A: Dan states Q2 organic sales expected ~1%, with impact sliding into Q3, but sequential improvement expected in North America and international.