EDGEWELL PERSONAL CARE Co Q1 FY2026 earnings call

Management highlighted the successful divestiture of the feminine care business to Essity, which is a pivotal step in the transformation journey. They delivered a solid start to the quarter with overall results ahead of expectations, where strength in North America offset international softness. Internationally, they saw share gains in key markets. Profitability was above expectations due to favorable mix and productivity gains. Key operational focuses include driving international growth, making thoughtful innovation investments, achieving productivity gains through supply chain optimization, and executing a U.S. Commercial transformation to return the business to profitable growth.

On a continuing operations basis, North America organic net sales grew just under 1% in the quarter, driven by meaningful growth in Sun Care and Grooming, partially offset by Wet Shave and Skin. International organic net sales decreased 1.6% as expected, primarily due to new product development phasing in Wet Shave in Japan and Sun Care sales in distributor markets. Wet Shave organic net sales declined approximately 4% in North America, while international Wet Shave declined less than 1%. Sun and Skin Care organic net sales increased approximately 8%, with Sun Care growing nearly 20% and Grooming growing nearly 7% while Skincare declined approximately 15%. Wet Ones organic net sales declined about 15%, but was approximately flat on a two-year basis.

For fiscal 2026, on a continuing operations basis, net sales range remains unchanged with organic net sales growth expected to be in the range of down 1% to up 2% excluding 150 basis points of currency tailwind. Adjusted EPS is expected to be in the range of $1.70 to $2.10, incorporating a $0.44 headwind from the feminine care divestiture. Adjusted EBITDA is expected to be in the range of $245 million to $265 million, including a net $44 million headwind from the divestiture. Adjusted free cash flow, excluding feminine care divestiture impacts, is expected to be in the range of $80 million to $110 million. Gross margin rate is expected to grow for the full year versus fiscal 2025 due to productivity savings and pricing actions.

Risks include an operating environment that is still choppy with muted category growth, a cautious consumer, inflationary pressure from tariffs, currency fluctuations, commodity costs, and potential operational inefficiencies that could impact results.

Q: Post-feminine care world, thoughts on portfolio construction, M&A, and seasonality?

A: Rod Little mentioned focusing on core categories like shave, sun, skincare, and grooming, with no immediate focus on M&A currently, using proceeds for debt reduction, and noting sun care has seasonality with Q1 being a low point in the Northern Hemisphere.

Q: Expectations for fiscal Q2 organic sales and feminine care dilution into 2027?

A: Fran Weissman said Q2 organic sales are expected to be down about 3% with a half-one net sales decline of about 2%, and Rod Little discussed the impact of stranded costs and transitional services agreement related to the feminine care divestiture affecting 2027 earnings.

Q: Organic sales phasing, category growth, and U.S. growth confidence?

A: Rod Little stated the back half of the year will see growth from share gains, distribution outcomes, and confidence in U.S. growth due to better talent, innovation, and marketing.

Q: Sun Care Q1 strength, EPS outlook?

A: Rod Little and Fran Weissman discussed Sun Care's early season strength and the EPS outlook range remaining as previously communicated.

Q: Wet Shave in North America promotional level, inventory, private label?

A: Rod Little addressed the competitive promotional intensity in North American Wet Shave, noted no meaningful inventory pockets, and said private label sales are stable with no significant trade down.