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Fiscal 2Q 2025 Operating Results (Unaudited)

Net sales were $580.7 million in the quarter, a decrease of 3.1%, including a $9.8 million unfavorable impact from currency movements. Organic net sales decreased $8.9 million, or 1.5%. Growth in international markets was 2.9%, driven by both price and volume gains, seen across Wet Shave and Sun & Skin Care. Organic sales declined in North America by 3.9%, due to volume declines in Wet Shave, Feminine Care, and Sun Care.

Gross profit was $256.2 million, as compared to $258.1 million in the prior year quarter. Gross margin as a percent of net sales increased 100-basis points, to 44.1% in the quarter, inclusive of approximately 10-basis points of negative foreign currency. Adjusted gross margin, as a percent of net sales, increased 100-basis points, or increased 110-basis points at constant currency.  Productivity savings of approximately 380-basis points were partially offset by 195-basis points of core inflation and volume absorption and 85-basis points of unfavorable mix and increased promotional levels (net of pricing).

Advertising and sales promotion expense ("A&P") was $65.5 million, or 11.3% of net sales, an increase of $2.4 million, compared to $63.1 million, or 10.5% of net sales in the prior year quarter.

Selling, general and administrative expense ("SG&A") was $105.7 million, or 18.2% of net sales, as compared to $107.5 million, or 17.9% of net sales in the prior year quarter. Adjusted SG&A was 18.0% of net sales, an increase of 60-basis points, which was primarily driven by higher people expenses and the impact of lower net sales, partially offset by favorable currency impacts.

The Company recorded pre-tax restructuring and repositioning expenses and costs in support of cost efficiency and effectiveness programs of $12.2 million in the quarter.

Operating income, was $58.9 million, or 10.1% of net sales, inclusive of a $2.8 million unfavorable currency movement, compared to $70.1 million, or 11.7% of net sales in the prior year quarter. Adjusted operating income was $76.7 million, or 13.2% of net sales, compared to $80.7 million, or 13.5% of net sales in the prior year quarter.

Interest expense associated with debt was $20.2 million, compared to $20.4 million in the prior year quarter. The decrease in interest expense was the result of a lower borrowing rate on the Company's U.S. revolving credit facility.

Other (income) expense, net was income of $2.6 million compared to expense of $2.7 million in the prior year quarter. Currency hedge and remeasurements gains were $2.4 million in the current quarter, compared to losses of $0.3 million in the prior year quarter.

The effective tax rate for the first six months of fiscal 2025 was 32.1% compared to 23.0% in the prior year period. The fiscal 2025 effective tax rate reflects the impact of net unfavorable discrete items and the unfavorable mix of earnings in higher tax rate jurisdictions. The adjusted effective tax rate for the first six months of fiscal 2025 was 29.9%, up from the prior year period adjusted effective tax rate of 23.5%.

GAAP net earnings were $29.0 million or $0.60 per diluted share compared to $36.0 million or $0.72 per diluted share in the prior year quarter. Adjusted net earnings were $41.8 million or $0.87 per share, compared to $44.0 million or $0.88 per share in the prior year quarter. Currency movements in the quarter had no impact on adjusted EPS, as the currency-related losses within operating profit were offset by currency-related benefits included in other expense (income), net. Adjusted EBITDA was $99.3 million, inclusive of a $0.1 million unfavorable currency impact, compared to $99.7 million in the prior year quarter.

Net cash used for operating activities was $70.5 million for the six months ending March 31, 2025, compared to cash flow provided by operating activities of $56.1 million in the prior year period. The increase in cash used for operating activities was largely driven by changes in net working capital and lower earnings.

Capital Allocation

On May 7, 2025, the Board of Directors declared a quarterly cash dividend of $0.15 per common share for the second fiscal quarter of fiscal 2025. The dividend will be payable on July 9, 2025 to shareholders of record as the close of business on June 6, 2025. During the second quarter of fiscal 2025, the Company paid dividends totaling $7.3 million to stockholders and completed share repurchases of approximately 1.1 million shares at a total cost of $35.4 million. As of March 31, 2025, the Company had 1.1 million shares of common stock available for repurchase in the future under the Board's 2018 authorization.

Fiscal 2Q 2025 Operating Segment Results (Unaudited)

Wet Shave (Men's Systems, Women's Systems, Disposables, and Shave Preps)

Net sales decreased $7.6 million, or 2.6%. Organic net sales decreased $2.5 million or 0.9%, as growth in international markets, driven by both higher volumes and price, was more than offset by volume declines in Shave Preps and Disposables in North America. Segment profit increased $6.2 million, or 15.3%. Organic segment profit, excluding the unfavorable impact from currency, increased $6.7 million, or 16.5%, as higher gross margins were offset by higher marketing expenses.

Sun and Skin Care (Sun Care, Men's and Women's Grooming Products, and Wet Ones)

Net sales decreased $4.7 million, or 2.0%. Organic net sales decreased $0.2 million, or 0.1%, as growth in Grooming in and Wet One's, was offset by declines in North America Sun Care.  Segment profit decreased $3.6 million, or 6.6%, including an unfavorable impact from foreign currency of  $2.4 million, or 4.4%. Organic segment profit decreased $1.2 million, or 2.2%, driven by lower gross margin and higher SG&A expenses, partly offset by lower marketing expenses.

Feminine Care (Tampons, Pads, and Liners)

Net sales decreased $6.4 million, or 9.1% with minimal currency impact, largely driven by a decline in Pads and Tampons. Segment profit decreased $5.6 million, or 64.4%. Organic segment profit decreased $5.7 million, or 65.5%, primarily driven by lower gross profit and higher marketing expenses, partially offset by lower SG&A expenses.

Full Fiscal Year 2025 Financial Outlook

The Company is providing the following outlook assumptions for fiscal 2025*

• Organic net sales are now expected to be in the range of flat to 1% (previously in the range of 1% to 3%)

  • Currency is now expected to negatively impact reported net sales by 10-basis points (previously, 160-basis points negative)

• GAAP EPS is now expected to be in the range of $2.09 to $2.29 (previously in the range of $2.54 to $2.74)

  • Includes: Restructuring and re-positioning charges**, Sun Care reformulation, Other costs

• Adjusted EPS is now expected to be in the range of $2.85 to $3.05 (previously towards the lower end of the range of $3.15 to $3.35)

  • Includes an estimated $0.35 per share unfavorable impact from foreign currency changes (previously $0.36)

  • Adjusted gross margin is expected to increase approximately 10-basis points (previous 55-basis points), or 70-basis points (previously 90-basis points) at constant currency, reflecting increased investments, which are expected to primarily impact the third quarter and incremental tariffs of approximately $3 million to $4 million

  • Adjusted operating margin is expected to decrease approximately 65 basis points (previously increase 10-basis points), or 10 basis points at constant currency (previously increase 50 basis points)

  • The EPS outlook reflects the impact of expected share repurchases of approximately $90 million

• Adjusted EBITDA is expected to be in the range of $329 to $341 million (previously towards the lower end of the range of $356 to $368 million)

  • Includes an estimated $22 million unfavorable (previously $23 million unfavorable) impact from foreign currency changes

• Other Expense (Income), net is now expected to be expense of $3 million (previously income of $1 million), inclusive of interest income of $2 million (previously $3 million)

• Interest expense associated with debt is expected to be approximately $74 million

• Adjusted effective tax rate is expected to be approximately 20% (previously 22%)

• Total depreciation and amortization expense expected to be approximately $87 million (previously $89 million)

• Capital expenditures expected to be approximately 2.5% to 3.0% of net sales

• Free cash flow is expected to be approximately in the range of $130 million to $140 million (previously $185 million)

*    This outlook reflects all known tariffs, including tariffs placed by the U.S., on other countries and tariffs announced by other countries, on the U.S. This outlook does not include tariffs that have been announced and delayed, or other additional tariffs which could result in additional costs incurred.

**   In fiscal 2025, the Company is taking specific actions to strengthen its operating model, simplify the organization and improve manufacturing and supply chain efficiency through restructuring and repositioning actions, including the organizational and operational changes in Mexico. As a result of these actions, the Company expects to incur pre-tax charges of approximately $33 million (previously $29 million) for the full fiscal year.

Webcast Information

In conjunction with this announcement, the Company will hold an investor conference call beginning at 8:00 a.m. Eastern Time today. All interested parties may access a live webcast of this conference call at www.edgewell.com, under the "Investors," and "News and Events" tabs or by using the following link:  http://ir.edgewell.com/news-and-events/events 

For those unable to participate during the live webcast, a re-play will be available on www.edgewell.com, under the "Investors," "Financial Reports," and "Quarterly Earnings" tabs. This release includes references to the Company's website and references to additional information and materials found on its website. The Company's website and such information and materials are not incorporated by reference in, and are not part of, this release.

About Edgewell

Edgewell is a leading pure-play consumer products company with an attractive, diversified portfolio of established brand names such as Schick®, Wilkinson Sword® and Billie® men's and women's shaving systems and disposable razors; Edge and Skintimate® shave preparations; Playtex®, Stayfree®, Carefree® and o.b.® feminine care products; Banana Boat®, Hawaiian Tropic®, Bulldog®,  Jack Black®, and CREMO® sun and skin care products; and Wet Ones® products. The Company has a broad global footprint and operates in more than 50 markets, including the U.S., Canada, Mexico, Germany, Japan, the U.K. and Australia, with approximately 6,700 employees worldwide.

Forward-Looking Statements. This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. Forward-looking statements generally can be identified by the use of words or phrases such as "believe," "expect," "expectation," "anticipate," "may," "could," "intend," "belief," "estimate," "plan," "target," "predict," "likely," "will," "should," "forecast," "outlook," or other similar words or phrases. These statements are not based on historical facts, but instead reflect the Company's expectations, estimates or projections concerning future results or events, including, without limitation, the future earnings and performance of Edgewell or any of its businesses. Many factors outside our control could affect the realization of these estimates. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause the Company's actual results to differ materially from those indicated by those statements. The Company cannot assure you that any of its expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and the Company disclaims any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. You should not place undue reliance on these statements.

In addition, other risks and uncertainties not presently known to the Company or that it presently considers immaterial could significantly affect the accuracy of any such forward-looking statements. Risks and uncertainties include those detailed from time to time in the Company's publicly filed documents, including in Item 1A. Risk Factors of Part I of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 14, 2024.

Non-GAAP Financial Measures. While the Company reports financial results in accordance with generally accepted accounting principles ("GAAP") in the U.S., this discussion also includes non-GAAP measures. These non-GAAP measures are referred to as "adjusted" or "organic" and exclude items which are considered by the Company as unusual or non-recurring and which

may have a disproportionate positive or negative impact on the Company's financial results in any particular period. Reconciliations of non-GAAP measures, including reconciliations of measures related to the Company's fiscal 2025 financial outlook, are included within the Notes to Condensed Consolidated Financial Statements included with this release.

This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The Company uses this non-GAAP information internally to make operating decisions and believes it is helpful to investors because it allows more meaningful period-to-period comparisons of ongoing operating results. The information can also be used to perform analysis and to better identify operating trends that may otherwise be masked or distorted by the types of items that are excluded. This non-GAAP information is a component in determining management's incentive compensation. Finally, the Company believes this information provides a higher degree of transparency. The following provides additional detail on the Company's non-GAAP measures:

• The Company utilizes "adjusted" non-GAAP measures including gross margin, SG&A, operating income, operating margin, effective tax rate, net earnings, diluted earnings per share, and EBITDA to internally make operating decisions.

  • Constant currency measures are calculated by removing the impact of translational and transactional foreign currencies changes, net of foreign currency hedges compared to the prior year. Transactional foreign currency changes are driven by foreign legal entities' transactions not denominated in local currency.

• The Company analyzes its net sales and segment profit on an organic basis to better measure the comparability of results between periods. Organic net sales and organic segment profit exclude the impact of changes in foreign currency and the impact of acquisitions.

  • Segment profit will be impacted by fluctuations in translation and transactional foreign currency. The impact of currency was applied to segments using management's best estimate.

• Free cash flow is defined as net cash from operating activities, less capital expenditures plus collections of deferred purchase price of accounts receivable sold and proceeds from sales of fixed assets. Free cash flow conversion is defined as free cash flow as a percentage of net earnings adjusted for the net impact of non-cash impairments.

• Net debt is defined as Gross debt less cash. Net debt leverage ratio is defined as net debt less cash divided by trailing twelve month adjusted EBITDA.

Basis of Presentation.  Please refer to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 14, 2024, as amended by the Company on November 21, 2024.

 

 

EDGEWELL PERSONAL CARE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except per share data)

Note 1 —  Segments

The Company conducts its business in the following three segments: Wet Shave, Sun and Skin Care, and Feminine Care (collectively, the "Segments," and each individually, a "Segment"). Segment performance is evaluated based on segment profit, exclusive of general corporate expenses, share-based compensation costs, items which are considered by the Company to be unusual or non-recurring and which may have a disproportionate positive or negative impact on the Company's financial results in any particular period and the amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion of such charges from segment results reflects management's view on how it evaluates segment performance.

Segment net sales and profitability are presented below:

Refer to Note 2 - GAAP to Non-GAAP Reconciliations for the income statement location of non-GAAP adjustments to earnings before income taxes.

Note 2 — GAAP to Non-GAAP Reconciliations

The following tables provide a GAAP to Non-GAAP reconciliation of certain line items from the Condensed Consolidated Statement of Earnings:

Note 3 - Net Sales and Profit by Segment

Operations for the Company are reported via three Segments. The following tables present changes in net sales and segment profit for the three and six months ended March 31, 2025, as compared to the corresponding period in the prior year quarter.

For all tables, the impact of currency to segment profit includes both the translational and transactional currency changes during the quarter.

Note 4 - Net Debt and EBITDA

The Company reports financial results on a GAAP and adjusted basis. The tables below are used to reconcile Net Debt and Net earnings to EBITDA and Adjusted EBITDA, which are non-GAAP measures, to improve comparability of results between periods.

 

Note 5 - Outlook

The following tables provide reconciliations of Adjusted EPS and Adjusted EBITDA, Non-GAAP measures, included within the Company's outlook for projected fiscal 2025 results:

 

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