EDGEWELL PERSONAL CARE Co Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Challenging quarter due to weak Sun Care seasons in North America and certain Latin America markets.
• International growth with 40% of global sales, delivering mid-single-digit organic growth and strengthened market share.
• Consumer-led innovation across portfolio, e.g., Billie's expansion, Bulldog in Skin Care, Cremo range expansion, Hawaiian Tropic's success.
• Productivity and efficiency with 270 basis points of gross savings in the quarter.
• North America transformation efforts: Rigorous business assessment, modern brand building, and organizational redesign with targeted brand campaigns for Cremo, Hawaiian Tropic, and Schick Hydro Silk.
• Impact of tariffs and foreign exchange on full-year profit, with tariffs adding ~$5M to in-year cost and currency fluctuations affecting P&L.

Segment Performance

• Wet Shave: Organic net sales down about 2%. International Wet Shave grew ~3% driven by price and SRGM gains. Private brands had low single-digit gains.
• Sun and Skin Care: Organic net sales down ~5%. U.S. Sun Care was impacted by adverse weather; Hawaiian Tropic saw 18% consumption growth and 150 basis point share gain, while Banana Boat lost share. Internationally, value and volume market share gains in Europe and LatAm.
• Fem Care: Organic net sales down ~10%. Consumption up in pads but down in tampons; share declined 30 basis points but improved from 52-week trend.

Guidance

• Full-year organic net sales expected down ~1.3%.
• Adjusted EPS now anticipated at ~$2.65, inclusive of ~$0.46 per share currency headwinds. On constant currency, adjusted EPS expected to increase by 2%.
• Adjusted EBITDA expected at ~$312M, inclusive of ~$29M currency headwinds.
• Free cash flow expected at ~$80M, reflecting lower GAAP earnings and working capital changes. Tariffs have ~$5M P&L impact and ~$10M cash impact.

Risks

• Tariffs and foreign exchange fluctuations impacting profitability.
• Adverse weather affecting Sun Care sales and consumption.
• Policy uncertainty in tariffs posing challenges to global supply chain.
• Retailer inventory tightening affecting Fem Care organic net sales.

Question and Answer

• Q: Can you expand on the drivers of the free cash flow cut? **A: Rod, Fran, and Dan responded, citing lower earnings, higher working capital inventory builds around tariffs, and being caught heavy with Sun Care due to season.
• Q: What drives Q4 organic sales growth and transitory vs persistent headwinds? **A: Rod and Dan discussed international growth acceleration, North America factors like Sun Care rebound, Fem Care improvement, and Wet Shave cycling effects. Transitory factors include tariffs, inflation, etc., while underlying strengths like international growth and productivity persist.
• Q: What about future investment levels and innovation? A: Rod and Dan mentioned continued incremental investment in international brands, ongoing brand campaigns in North America, and plans for new campaigns and innovation in Sun Care and Shave categories.