Edgewell Personal Care(EPC) - 2025 Q3 - Quarterly Results

Executive Summary Edgewell faced a challenging Q3 FY2025 with weak Sun Care seasons and declining sales, but saw international growth and strategic investments CEO Commentary CEO noted challenging Q3 FY2025 from weak Sun Care and FX headwinds, balanced by international growth and market share gains - Challenging quarter due to very weak Sun Care seasons in North America and certain Latin American markets, compounded by tariffs and foreign exchange contributing to full-year profit headwinds[3] - Strong performance in International business with growth and strengthened market share, and strong supply chain execution leading to further productivity gains[4] - Improved market share performance in North America from targeted, stepped-up investments in Hawaiian Tropic, Cremo, and Hydro Silk brands, positioning the portfolio for a stronger 2026 and beyond[4] Key Financial Highlights Q3 FY2025 saw net sales decrease 3.2% to $627.2 million, with GAAP EPS at $0.62 and Adjusted EPS at $0.92 Key Financial Metrics | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :----- | :--------- | :--------- | :--------- | | Net Sales | $627.2 million | $647.8 million | -3.2% | | Organic Net Sales | -4.2% | N/A | -4.2% | | GAAP Diluted EPS | $0.62 | $0.98 | -36.7% | | Adjusted EPS | $0.92 | $1.22 | -24.6% | - Ended the third quarter with $199.6 million in cash on hand and a net debt leverage ratio of 3.7x[5] - Returned $31.7 million to shareholders in the form of $24.5 million in share repurchases and $7.2 million of dividends in the third quarter[5] Fiscal 3Q 2025 Operating Results (Unaudited) Q3 FY2025 saw a 3.2% net sales decrease, reduced gross margin, and lower operating income, alongside dividend payments and share repurchases Consolidated Financial Performance Q3 FY2025 net sales decreased 3.2% to $627.2 million, with adjusted gross margin down 150 bps and operating income falling to $53.7 million Consolidated Financial Metrics | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :----- | :--------- | :--------- | :----- | | Net Sales | $627.2M | $647.8M | -3.2% | | Organic Net Sales | -4.2% | N/A | -4.2% | | Gross Profit | $268.5M | $287.1M | -6.5% | | Adjusted Gross Margin | 42.8% | 44.3% | -150 bps | | Operating Income | $53.7M | $82.7M | -35.1% | | Adjusted Operating Income | $75.1M | $94.8M | -20.8% | | GAAP Net Earnings | $29.1M | $49.0M | -40.6% | | Adjusted Net Earnings | $43.4M | $61.2M | -29.1% | | Adjusted EBITDA | $96.4M | $117.2M | -17.8% | - Organic net sales decreased 4.2%, with North America declining 8.0% due to volume declines and increased promotional levels in Sun Care, Wet Shave, and Feminine Care, while international markets saw 2.2% organic growth driven by price gains[6] - Adjusted gross margin decreased 150-basis points to 42.8%, primarily due to 180-basis points of core inflation and volume absorption, 90-basis points of increased promotional levels, and 40-basis points of unfavorable mix, partially offset by 270-basis points of productivity savings[7] Capital Allocation The Board declared a $0.15 per share dividend, with $7.2 million paid in dividends and $24.5 million in share repurchases - Declared a quarterly cash dividend of $0.15 per common share for the third fiscal quarter of fiscal 2025, payable on October 8, 2025[18] Capital Allocation Activity | Capital Allocation Activity | Q3 FY2025 | | :------------------------ | :--------- | | Dividends Paid | $7.2 million | | Share Repurchases | $24.5 million | | Shares Repurchased | 0.9 million | - As of June 30, 2025, the Company had 0.2 million shares of common stock available for repurchase under the Board's 2018 authorization[18] Fiscal 3Q 2025 Operating Segment Results (Unaudited) All segments experienced declines in Q3 FY2025, with Wet Shave net sales up slightly but organic sales down, and Sun/Skin and Feminine Care showing significant decreases Wet Shave Segment Wet Shave net sales increased 0.2% to $317.0 million, but organic net sales decreased 1.8%, while segment profit fell 7.4% Wet Shave Segment Performance | Metric | Q3 FY2025 | Q3 FY2024 | Change | Organic Change | | :----- | :--------- | :--------- | :----- | :------------- | | Net Sales | $317.0M | $316.3M | +0.2% | -1.8% | | Segment Profit | $44.1M | $47.6M | -7.4% | +2.3% | - Organic net sales decreased 1.8%, as growth in international markets, driven by higher price, was more than offset by volume declines and increased promotional levels in North America[19] - Organic segment profit increased 2.3%, as higher gross margins and lower SG&A spend were partly offset by higher marketing expenses[19] Sun and Skin Care Segment Sun and Skin Care net sales decreased 5.3% to $243.4 million, with organic sales down 5.5% and segment profit falling 28.3% Sun and Skin Care Segment Performance | Metric | Q3 FY2025 | Q3 FY2024 | Change | Organic Change | | :----- | :--------- | :--------- | :----- | :------------- | | Net Sales | $243.4M | $256.9M | -5.3% | -5.5% | | Segment Profit | $46.0M | $64.2M | -28.3% | -26.3% | - Organic net sales decreased 5.5%, largely driven by weather-related volume declines and increased competition in North America Sun Care[20] - Grooming increased 6.1% driven by increased volumes within the Sun and Skin Care segment[20] - Organic segment profit decreased 26.3%, driven by lower gross margin and higher marketing and SG&A expenses[20] Feminine Care Segment Feminine Care net sales decreased 10.5% to $66.8 million, driven by declines in Pads and Tampons, with segment profit down 31.8% Feminine Care Segment Performance | Metric | Q3 FY2025 | Q3 FY2024 | Change | Organic Change | | :----- | :--------- | :--------- | :----- | :------------- | | Net Sales | $66.8M | $74.6M | -10.5% | -10.4% | | Segment Profit | $4.5M | $6.6M | -31.8% | -25.7% | - Net sales decreased 10.5% with minimal currency impact, largely driven by a decline in Pads and Tampons[21] - Organic segment profit decreased 25.7%, primarily driven by lower gross profit, partially offset by lower marketing and SG&A expenses[21] Full Fiscal Year 2025 Financial Outlook Edgewell updated its FY2025 outlook, projecting decreased organic net sales and EPS, while increasing restructuring charges to strengthen operations Key Outlook Assumptions FY2025 outlook updated