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

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including earnings, balance sheets, cash flows, and shareholders' equity, along with detailed explanatory notes Condensed Consolidated Statements of Earnings and Comprehensive Income This section presents the company's unaudited condensed consolidated statements of earnings and comprehensive income for specified periods Condensed Consolidated Statements of Earnings and Comprehensive Income (in millions, except per share data) Three Months Ended June 30, | Metric | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Net sales | $627.2 | $647.8 | | Gross profit | $268.5 | $287.1 | | Operating income | $53.7 | $82.7 | | Net earnings | $29.1 | $49.0 | | Basic net earnings per share | $0.62 | $0.99 | | Diluted net earnings per share | $0.62 | $0.98 | | Total comprehensive income | $79.4 | $36.0 | Nine Months Ended June 30, | Metric | 2025 | 2024 | | :---------------------------------- | :------- | :------- | | Net sales | $1,686.3 | $1,736.1 | | Gross profit | $716.3 | $742.9 | | Operating income | $132.9 | $178.9 | | Net earnings | $56.0 | $89.8 | | Basic net earnings per share | $1.17 | $1.80 | | Diluted net earnings per share | $1.17 | $1.79 | | Total comprehensive income | $83.9 | $86.5 | Condensed Consolidated Balance Sheets This section presents the company's unaudited condensed consolidated balance sheets as of specified dates Condensed Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | June 30, 2025 | September 30, 2024 | | :---------------------------------------- | :-------------- | :----------------- | | Assets | | | | Total current assets | $1,004.7 | $936.0 | | Property, plant and equipment, net | $355.7 | $349.1 | | Goodwill | $1,342.9 | $1,338.6 | | Other intangible assets, net | $929.3 | $948.5 | | Total assets | $3,793.3 | $3,730.9 | | Liabilities and Shareholders' Equity | | | | Total current liabilities | $567.4 | $563.6 | | Long-term debt | $1,372.7 | $1,275.0 | | Total liabilities | $2,225.3 | $2,146.8 | | Total shareholders' equity | $1,568.0 | $1,584.1 | | Total liabilities and shareholders' equity | $3,793.3 | $3,730.9 | Condensed Consolidated Statements of Cash Flows This section presents the company's unaudited condensed consolidated statements of cash flows for specified periods Condensed Consolidated Statements of Cash Flows (in millions) Nine Months Ended June 30, | Cash Flow Activity | 2025 | 2024 | | :---------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $44.3 | $157.3 | | Net cash used for investing activities | $(45.3) | $(36.9) | | Net cash used for financing activities | $(10.9) | $(139.3) | | Effect of exchange rate changes on cash | $2.4 | $(1.4) | | Net decrease in cash and cash equivalents | $(9.5) | $(20.3) | | Cash and cash equivalents, end of period | $199.6 | $196.1 | Condensed Consolidated Statements of Changes in Shareholders' Equity This section details the changes in the company's shareholders' equity over specified periods - Total shareholders' equity decreased from $1,584.1 million as of September 30, 2024, to $1,568.0 million as of June 30, 2025, primarily due to share repurchases and dividends, partially offset by net earnings and foreign currency translation adjustments[15][22] Changes in Shareholders' Equity (in millions) From September 30, 2024, to June 30, 2025 | Item | Amount | | :---------------------------------------- | :------- | | Balance as of September 30, 2024 | $1,584.1 | | Net earnings | $58.1 | | Foreign currency translation adjustments | $76.5 | | Pension and postretirement activity | $0.8 | | Deferred gain/loss on hedging activity | $1.5 | | Dividends declared to common shareholders | $(14.7) | | Repurchase of shares including excise tax | $(59.8) | | Activity under share plans | $5.4 | | Balance at June 30, 2025 | $1,568.0 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements - The notes provide detailed explanations of the financial statements, including accounting policies, significant estimates, and specific financial line items, and should be read in conjunction with the company's audited annual consolidated financial statements in its Form 10-K[26] Note 1 - Background and Basis of Presentation This note describes the company's business, segments, and the basis for preparing the financial statements - Edgewell Personal Care Company is a global manufacturer and marketer of personal care products in wet shave, sun and skin care, and feminine care categories, operating in approximately 20 countries and available in over 50 countries[25] - The company operates in three segments: Wet Shave, Sun and Skin Care, and Feminine Care[30] - The company is evaluating the impact of recently issued FASB ASUs 2024-03 (Expense Disaggregation Disclosures), 2023-09 (Income Tax Disclosures), and 2023-07 (Segment Reporting) on its consolidated financial statements and disclosures[28][29][31] Note 2 - Restructuring and Related Charges This note details the company's restructuring initiatives and associated charges incurred - The company is undertaking an Operating Model Redesign in fiscal 2025 to strengthen its operating model, simplify the organization, and improve manufacturing and supply chain efficiency, expecting to incur approximately $17 million in charges[35] - The company is consolidating its Mexico facilities into a single facility in Aguascalientes, Mexico, expecting to incur $27 million in restructuring charges in fiscal 2025, with completion by Q2 fiscal 2026[36] Total Restructuring and Related Charges (in millions) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Operating Model Redesign | $8.2 | $3.2 | $14.5 | $13.2 | | Consolidation of Mexico Facilities | $9.6 | $0.0 | $19.7 | $0.0 | | Total restructuring and related charges | $17.8 | $3.2 | $34.2 | $13.2 | Note 3 - Income Taxes This note provides information on the company's income tax provision and effective tax rates Income Tax Provision and Effective Tax Rate | Period | Earnings before income taxes (2025) | Income tax provision (2025) | Effective tax rate (2025) | Earnings before income taxes (2024) | Income tax provision (2024) | Effective tax rate (2024) | | :-------------------- | :---------------------------------- | :-------------------------- | :------------------------ | :---------------------------------- | :-------------------------- | :------------------------ | | Three Months Ended June 30, | $37.2 | $8.1 | 21.7% | $62.5 | $13.5 | 21.6% | | Nine Months Ended June 30, | $76.8 | $20.8 | 27.0% | $115.5 | $25.7 | 22.2% | - The difference between the federal statutory rate and the effective tax rate for both periods was primarily due to an unfavorable mix of earnings in higher tax rate jurisdictions[40][41] - The company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S., which includes significant tax law changes effective for the company beginning fiscal 2026[42] Note 4 - Earnings per Share This note explains the calculation of basic and diluted earnings per share Weighted-Average Shares Outstanding (in millions) | Period | Basic (2025) | Basic (2024) | Diluted (2025) | Diluted (2024) | | :-------------------- | :------------- | :------------- | :--------------- | :--------------- | | Three Months Ended June 30, | 46.8 | 49.5 | 47.0 | 50.1 | | Nine Months Ended June 30, | 47.8 | 49.8 | 48.0 | 50.3 | - Basic earnings per share is based on the weighted-average number of common shares outstanding, while diluted net earnings per share adjusts for the dilutive effect of share options, restricted share equivalent (RSE), and performance restricted share equivalent (PRSE) awards[43] - Weighted-average common shares totaling 2.0 million for the three months and 1.5 million for the nine months ended June 30, 2025, were excluded from diluted EPS calculation due to their antidilutive effect[45] Note 5 - Inventories This note details the composition and valuation of the company's inventories Inventories (in millions) | Category | June 30, 2025 | September 30, 2024 | | :-------------------- | :-------------- | :----------------- | | Raw materials and supplies | $78.6 | $82.6 | | Work in process | $99.2 | $91.8 | | Finished products | $310.6 | $302.9 | | Total inventories | $488.4 | $477.3 | - Total inventories increased by $11.1 million from September 30, 2024, to June 30, 2025, primarily driven by increases in work in process and finished products[46] Note 6 - Property, Plant and Equipment ("PP&E") This note provides information on the company's property, plant, and equipment, including depreciation Property, Plant and Equipment, Net (in millions) | Category | June 30, 2025 | September 30, 2024 | | :---------------------------------- | :-------------- | :----------------- | | Total gross property, plant and equipment | $1,470.5 | $1,424.0 | | Accumulated depreciation and amortization | $(1,114.8) | $(1,074.9) | | Total property, plant and equipment, net | $355.7 | $349.1 | Depreciation and Amortization Expense (in millions) | Expense Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Depreciation expense | $13.4 | $13.0 | $39.5 | $40.0 | | Amortization expense associated with capitalized software | $1.0 | $0.9 | $2.9 | $3.2 | Note 7 - Goodwill and Intangible Assets This note details the company's goodwill and other intangible assets, including impairment analysis Goodwill by Segment (Net Balance, in millions) | Segment | September 30, 2024 | June 30, 2025 | Change | | :---------------- | :----------------- | :-------------- | :----- | | Wet Shave | $777.0 | $781.1 | +$4.1 | | Sun and Skin Care | $355.4 | $355.8 | +$0.4 | | Feminine Care | $206.2 | $206.0 | -$0.2 | | Total | $1,338.6 | $1,342.9 | +$4.3 | Intangible Assets (Net, in millions) | Category | June 30, 2025 | September 30, 2024 | | :-------------------- | :-------------- | :----------------- | | Indefinite lived | $601.7 | $597.7 | | Amortizable | $327.6 | $350.8 | | Total intangible assets | $929.3 | $948.5 | - An interim impairment analysis was performed for the Feminine Care reporting unit and its indefinite-lived trade names due to financial performance, but no impairment charge was recorded as fair values exceeded carrying values, though by less than 10%[50][51] Note 8 - Supplemental Balance Sheet Information This note provides additional details on various current assets and liabilities Other Current Assets (in millions) | Category | June 30, 2025 | September 30, 2024 | | :-------------------- | :-------------- | :----------------- | | Prepaid expenses | $84.2 | $76.4 | | Value added tax receivables | $45.8 | $40.0 | | Income taxes receivable | $19.9 | $14.7 | | Other | $13.6 | $9.1 | | Total other current assets | $163.5 | $140.2 | Other Current Liabilities (in millions) | Category | June 30, 2025 | September 30, 2024 | | :---------------------------------------- | :-------------- | :----------------- | | Accrued advertising and sales promotion | $45.6 | $26.3 | | Accrued salaries, vacations and incentive compensation | $48.1 | $78.6 | | Restructuring reserve | $23.8 | $21.4 | | Total other current liabilities | $319.7 | $319.8 | Note 9 - Accounts Receivable Facilities This note describes the company's accounts receivable financing arrangements - The company participates in accounts receivable facility programs in the United States and Japan, accounting for transfers as sales of accounts receivables, resulting in derecognition from the balance sheets[54] - Accounts receivables sold were $363.2 million for the three months and $887.8 million for the nine months ended June 30, 2025[55] - Trade receivables sold that remained outstanding were $145.6 million as of June 30, 2025, compared to $88.6 million as of September 30, 2024[55] Note 10 - Debt This note provides details on the company's long-term and short-term debt obligations Long-Term Debt (in millions) | Debt Type | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :-------------- | :----------------- | | Senior notes, fixed interest rate of 5.5%, due 2028 | $750.0 | $750.0 | | Senior notes, fixed interest rate of 4.1%, due 2029 | $500.0 | $500.0 | | U.S. Revolving Credit Facility | $130.0 | $34.0 | | Less unamortized debt issuance costs and discount | $(7.3) | $(9.0) | | Total long-term debt | $1,372.7 | $1,275.0 | - As of June 30, 2025, the company had outstanding short-term notes payable of $23.2 million with a weighted-average interest rate of 3.7%[56] Note 11 - Retirement Plans This note outlines the company's pension and postretirement benefit plans and associated costs Net Periodic Pension and Postretirement Costs (in millions) | Cost Component | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Service cost | $0.7 | $0.5 | $1.9 | $1.4 | | Interest cost | $4.6 | $5.3 | $13.6 | $16.0 | | Expected return on plan assets | $(5.5) | $(4.9) | $(16.2) | $(14.6) | | Recognized net actuarial loss | $0.6 | $0.4 | $1.8 | $1.1 | | Net periodic cost | $0.4 | $1.3 | $1.1 | $3.9 | - The service cost component of net periodic cost is recorded in Cost of products sold and SG&A, while the remaining net periodic cost is recorded in Other (income) expense, net[58] Note 12 - Shareholders' Equity This note details changes in the company's shareholders' equity, including share repurchases and dividends - The company repurchased 2.8 million shares of its common stock for $90.2 million during the nine months ended June 30, 2025, with 0.2 million shares remaining available for repurchase under the Board's authorization[59] Dividends Declared (Nine Months Ended June 30, 2025) | Date Declared | Record Date | Payable Date | Amount Per Share | | :------------ | :---------- | :----------- | :--------------- | | August 6, 2024 | September 4, 2024 | October 3, 2024 | $0.15 | | October 31, 2024 | December 3, 2024 | January 8, 2025 | $0.15 | | February 6, 2025 | March 5, 2025 | April 9, 2025 | $0.15 | | May 7, 2025 | June 6, 2025 | July 9, 2025 | $0.15 | - Dividends declared during the nine months ended June 30, 2025, totaled $21.7 million, with payments made totaling $22.4 million[61] Note 13 - Accumulated Other Comprehensive Loss This note explains the components and changes in accumulated other comprehensive loss Changes in Accumulated Other Comprehensive (Loss) Income (AOCI) (in millions) | Component | Balance as of Oct 1, 2024 | Other comprehensive income (loss), net of tax | Reclassifications to earnings | Balance as of June 30, 2025 | | :---------------------------------------- | :------------------------ | :------------------------------------------ | :-------------------------- | :-------------------------- | | Foreign Currency Translation Adjustments | $(68.3) | $28.2 | $0.0 | $(40.1) | | Pension and Postretirement Activity | $(84.8) | $(0.1) | $1.3 | $(83.6) | | Hedging Activity | $(1.7) | $(0.4) | $(1.1) | $(3.2) | | Total | $(154.8) | $27.7 | $0.2 | $(126.9) | - Total AOCI improved from $(154.8) million at October 1, 2024, to $(126.9) million at June 30, 2025, primarily due to foreign currency translation adjustments[63] Note 14 - Financial Instruments and Risk Management This note describes the company's use of financial instruments and risk management strategies - The company uses derivative instruments, primarily forward currency contracts, to reduce its exposure to foreign currency risk, maintaining a cash flow hedging program deemed highly effective[64][68] - As of June 30, 2025, the company had unrealized pre-tax losses of $4.5 million on cash flow hedges (forward currency contracts) and 64 open foreign currency contracts with a total notional value of $125.5 million[69] - The company had $130.0 million of variable rate debt outstanding as of June 30, 2025, primarily from its U.S. Revolving Credit Facility, exposing it to interest rate risk[67] Note 15 - Segment Data This note provides detailed financial information by operating segment - Segment performance is evaluated based on segment profit, excluding certain U.S. GAAP items that management considers unusual or non-recurring[82] Net Sales by Segment (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Wet Shave | $317.0 | $316.3 | $897.0 | $911.1 | | Sun and Skin Care | $243.4 | $256.9 | $595.1 | $608.1 | | Feminine Care | $66.8 | $74.6 | $194.2 | $216.9 | | Total net sales | $627.2 | $647.8 | $1,686.3 | $1,736.1 | Segment Profit (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Wet Shave | $44.1 | $47.6 | $137.3 | $141.7 | | Sun and Skin Care | $46.0 | $64.2 | $93.4 | $117.3 | | Feminine Care | $4.5 | $6.6 | $10.8 | $22.6 | | Total segment profit | $94.6 | $118.4 | $241.5 | $281.6 | Note 16 - Commitments and Contingencies This note discloses the company's legal and contractual commitments and potential liabilities - The company is subject to various legal proceedings in the ordinary course of business, but believes that any liability arising from such matters is not reasonably likely to be material to its financial position, results of operations, or cash flows[93] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the third quarter and first nine months of fiscal 2025, compared to the prior year. It covers key financial metrics, segment performance, liquidity, capital resources, and critical accounting estimates, highlighting factors influencing performance and future outlook Forward-Looking Statements This section outlines the nature and limitations of forward-looking statements contained within the report - This document contains forward-looking statements reflecting expectations, estimates, or projections concerning future results or events, which are inherently subject to known and unknown risks, uncertainties, and assumptions[96] - The company disclaims any obligation to publicly update forward-looking statements, except as required by law, and cautions against undue reliance on these statements[96] Non-GAAP Financial Measures This section explains the company's use of non-GAAP financial measures and their reconciliation to GAAP equivalents - The company utilizes non-GAAP measures such as 'adjusted' or 'organic' to exclude unusual or non-recurring items, providing a more meaningful period-to-period comparison of ongoing operating results and aiding internal operating decisions[98][99] - Organic net sales and segment profit exclude the impact of changes in foreign currency translation, while 'adjusted' non-GAAP measures (e.g., adjusted gross margin, adjusted EPS) exclude specific unusual costs or income[100][101] Executive Summary This section provides a high-level overview of the company's key financial performance for the reported periods - The executive summary provides key financial results for the third quarter and first nine months of fiscal 2025, including net sales, net earnings, and earnings per share, with reconciliations to adjusted non-GAAP measures[105] Third Quarter of Fiscal 2025 Summary This section summarizes the company's key financial performance for the third quarter of fiscal 2025 Key Financial Highlights (3 Months Ended June 30, 2025 vs 2024) | Metric | 2025 (GAAP) | 2024 (GAAP) | Change (GAAP) | 2025 (Adjusted) | 2024 (Adjusted) | Change (Adjusted) | | :-------------------- | :---------- | :---------- | :-------------- | :-------------- | :-------------- | :---------------- | | Net Sales | $627.2 | $647.8 | $(20.6) (-3.2%) | N/A | N/A | N/A | | Net Earnings | $29.1 | $49.0 | $(19.9) (-40.6%) | $43.4 | $61.2 | $(17.8) (-29.1%) | | Diluted EPS | $0.62 | $0.98 | $(0.36) (-36.7%) | $0.92 | $1.22 | $(0.30) (-24.6%) | - Organic net sales decreased by 4.2% in Q3 fiscal 2025, with international markets showing 2.2% growth largely driven by price gains, while North America declined by 8.0% due to volume declines and increased promotional levels[108] First Nine Months of Fiscal 2025 Summary This section summarizes the company's key financial performance for the first nine months of fiscal 2025 Key Financial Highlights (9 Months Ended June 30, 2025 vs 2024) | Metric | 2025 (GAAP) | 2024 (GAAP) | Change (GAAP) | 2025 (Adjusted) | 2024 (Adjusted) | Change (Adjusted) | | :-------------------- | :---------- | :---------- | :-------------- | :-------------- | :-------------- | :---------------- | | Net Sales | $1,686.3 | $1,736.1 | $(49.8) (-2.9%) | N/A | N/A | N/A | | Net Earnings | $56.0 | $89.8 | $(33.8) (-37.6%) | $88.5 | $117.2 | $(28.7) (-24.5%) | | Diluted EPS | $1.17 | $1.79 | $(0.62) (-34.6%) | $1.84 | $2.33 | $(0.49) (-21.0%) | - Organic net sales decreased by 2.5% for the first nine months of fiscal 2025, with international markets growing 2.3% (price and volume) and North America declining 5.4% (Wet Shave, Sun Care, Feminine Care)[111] - Adjusted net earnings decreased primarily due to lower net sales and a decrease in gross margin[111] Operating Results This section analyzes the company's financial performance across various income statement line items for the reported periods - This section details the changes in net sales, gross profit, operating expenses (SG&A, A&P, R&D), restructuring charges, interest expense, other income/expense, and income tax provision for the third quarter and first nine months of fiscal 2025 compared to the prior year[112] Net Sales This section analyzes the company's net sales performance, including organic and currency impacts Net Sales - Total Company (in millions) | Period | Net sales - fiscal 2024 | Organic Change | Organic % Chg | Impact of currency | Net sales - fiscal 2025 | Total % Chg | | :-------------------- | :---------------------- | :------------- | :------------ | :----------------- | :---------------------- | :---------- | | Q3 | $647.8 | $(27.5) | (4.2)% | $6.9 | $627.2 | (3.2)% | | Nine Months | $1,736.1 | $(42.9) | (2.5)% | $(6.9) | $1,686.3 | (2.9)% | - For the third quarter, organic net sales decreased 4.2% due to volume declines and increased promotional levels in North America, partially offset by price gains in international markets[113] - For the first nine months, organic net sales decreased 2.5% primarily due to volume declines in Wet Shave, Feminine Care, and Sun Care, despite organic growth in international markets[114] Gross Profit This section details the company's gross profit and gross margin performance Gross Profit (in millions) | Period | 2025 | 2024 | Change | % Change | Gross Margin % (2025) | Gross Margin % (2024) | | :-------------------- | :----- | :----- | :----- | :------- | :-------------------- | :-------------------- | | Q3 | $268.5 | $287.1 | $(18.6) | (6.5)% | 42.8% | 44.3% | | Nine Months | $716.3 | $742.9 | $(26.6) | (3.6)% | 42.5% | 42.8% | - Q3 gross margin decreased by 150 basis points to 42.8%, primarily due to core inflation, volume absorption, negative foreign currency, increased promotional levels, and unfavorable mix, partially offset by productivity savings[115] - Nine-month adjusted gross margin decreased by 50 basis points to 42.8%, impacted by similar factors as Q3[116] Selling, General and Administrative Expense This section analyzes the company's selling, general, and administrative expenses SG&A Expense (in millions) | Period | 2025 | 2024 | Change | % of Net Sales (2025) | % of Net Sales (2024) | | :-------------------- | :----- | :----- | :----- | :-------------------- | :-------------------- | | Q3 | $104.4 | $110.1 | $(5.7) | 16.6% | 17.0% | | Nine Months | $313.0 | $320.9 | $(7.9) | 18.6% | 18.5% | - Q3 adjusted SG&A as a percentage of net sales was flat at 16.2%, driven by lower incentive compensation and favorable currency impacts, partly offset by higher consulting expenses and the impact of lower net sales[117] - Nine-month adjusted SG&A as a percentage of net sales increased by 20 basis points to 18.2%, primarily due to the impact of lower net sales, higher consulting expenses, and unfavorable currency impacts, partially offset by lower incentive compensation expense[118] Advertising and Sales Promotion Expense This section details the company's advertising and sales promotion expenditures A&P Expense (in millions) | Period | 2025 | 2024 | Change | % Change | % of Net Sales (2025) | % of Net Sales (2024) | | :-------------------- | :----- | :----- | :----- | :------- | :-------------------- | :-------------------- | | Q3 | $80.4 | $76.6 | $3.8 | 5.0% | 12.8% | 11.8% | | Nine Months | $196.2 | $187.9 | $8.3 | 4.4% | 11.6% | 10.8% | - Advertising and sales promotion expense increased both in absolute terms and as a percentage of net sales for both the third quarter and first nine months of fiscal 2025, indicating increased marketing investment[119][121] Research and Development Expense This section analyzes the company's research and development expenses R&D Expense (in millions) | Period | 2025 | 2024 | Change | % Change | % of Net Sales (2025) | % of Net Sales (2024) | | :-------------------- | :----- | :----- | :----- | :------- | :-------------------- | :-------------------- | | Q3 | $14.0 | $14.6 | $(0.6) | (4.1)% | 2.2% | 2.3% | | Nine Months | $41.8 | $42.1 | $(0.3) | (0.7)% | 2.5% | 2.4% | - R&D expense remained relatively stable, with a slight decrease in absolute terms for both the third quarter and first nine months of fiscal 2025[122][123] Restructuring and Related Charges This section details the company's restructuring activities and associated costs Restructuring and Related Charges (in millions) | Period | 2025 | 2024 | Change | | :-------------------- | :----- | :----- | :----- | | Q3 | $16.0 | $3.1 | $12.9 | | Nine Months | $32.4 | $13.1 | $19.3 | - The company expects to incur approximately $44 million in pre-tax charges in fiscal 2025 related to strengthening its operating model and consolidating Mexico operations[124] Interest Expense Associated with Debt This section analyzes the company's interest expense related to its debt Interest Expense Associated with Debt (in millions) | Period | 2025 | 2024 | Change | % Change | | :-------------------- | :----- | :----- | :----- | :------- | | Q3 | $19.4 | $18.8 | $0.6 | 3.2% | | Nine Months | $58.4 | $59.0 | $(0.6) | (1.0)% | - Q3 interest expense increased due to higher borrowing levels on the U.S. Revolving Credit Facility, while nine-month interest expense decreased due to a lower borrowing rate on the same facility[125][126] Other (income) expense, net This section details other non-operating income and expenses Other (income) expense, net (in millions) | Period | 2025 (GAAP) | 2024 (GAAP) | 2025 (Adjusted) | 2024 (Adjusted) | | :-------------------- | :------------ | :------------ | :-------------- | :-------------- | | Q3 | $2.9 (income) | $1.4 (expense) | $0.2 (income) | $1.7 (income) | | Nine Months | $2.3 (income) | $4.4 (expense) | $(0.1) (expense) | $1.3 (expense) | - Q3 saw income of $2.9 million, including $2.7 million in other project gains, compared to a $1.4 million expense in the prior year which included a $3.1 million loss on investment[127] - The nine-month period included a $0.9 million gain on investment and $1.5 million in other project gains in 2025, compared to a $3.1 million loss on investment in the prior year[128] Income Tax Provision This section analyzes the company's income tax provision and effective tax rate Effective Tax Rate | Period | 2025 (GAAP) | 2024 (GAAP) | 2025 (Adjusted) | 2024 (Adjusted) | | :-------------------- | :---------- | :---------- | :-------------- | :-------------- | | Q3 | 21.7% | 21.6% | 22.4% | 21.2% | | Nine Months | 27.0% | 22.2% | 26.4% | 22.3% | - The higher effective tax rate for the first nine months of fiscal 2025 reflects the impact of net unfavorable discrete items compared to net favorable discrete items in the prior year period[130] - The company is currently assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements, with certain provisions effective beginning fiscal 2026[131] Segment Results This section details the financial performance of the company's operating segments, including net sales and segment profit - This section provides a detailed breakdown of net sales and segment profit for the Wet Shave, Sun and Skin Care, and Feminine Care segments, including organic growth and currency impacts[132] - The company's operating model includes shared business functions across segments, with costs allocated on a fully allocated cost basis[133] Wet Shave This section details the financial performance of the Wet Shave segment Wet Shave Net Sales (in millions) | Period | Net sales - fiscal 2024 | Organic Change | Organic % Chg | Impact of currency | Net sales - fiscal 2025 | Total % Chg | | :-------------------- | :---------------------- | :------------- | :------------ | :----------------- | :---------------------- | :---------- | | Q3 | $316.3 | $(5.7) | (1.8)% | $6.4 | $317.0 | 0.2% | | Nine Months | $911.1 | $(12.2) | (1.3)% | $(1.9) | $897.0 | (1.5)% | Wet Shave Segment Profit (in millions) | Period | Segment profit - fiscal 2024 | Organic Change | Organic % Chg | Impact of currency | Segment profit - fiscal 2025 | Total % Chg | | :-------------------- | :--------------------------- | :------------- | :------------ | :----------------- | :--------------------------- | :---------- | | Q3 | $47.6 | $1.1 | 2.3% | $(4.6) | $44.1 | (7.4)% | | Nine Months | $141.7 | $7.6 | 5.4% | $(12.0) | $137.3 | (3.1)% | - Q3 organic net sales decreased 1.8% due to volume declines and increased promotional levels in North America, despite 2.8% growth in international markets driven by higher price[134] Sun and Skin Care This section details the financial performance of the Sun and Skin Care segment Sun and Skin Care Net Sales (in millions) | Period | Net sales - fiscal 2024 | Organic Change | Organic % Chg | Impact of currency | Net sales - fiscal 2025 | Total % Chg | | :-------------------- | :---------------------- | :------------- | :------------ | :----------------- | :---------------------- | :---------- | | Q3 | $256.9 | $(14.1) | (5.5)% | $0.6 | $243.4 | (5.3)% | | Nine Months | $608.1 | $(8.4) | (1.3)% | $(4.6) | $595.1 | (2.1)% | Sun and Skin Care Segment Profit (in millions) | Period | Segment profit - fiscal 2024 | Organic Change | Organic % Chg | Impact of currency | Segment profit - fiscal 2025 | Total % Chg | | :-------------------- | :--------------------------- | :------------- | :------------ | :----------------- | :--------------------------- | :---------- | | Q3 | $64.2 | $(16.9) | (26.3)% | $(1.3) | $46.0 | (28.3)% | | Nine Months | $117.3 | $(19.5) | (16.6)% | $(4.4) | $93.4 | (20.4)% | - Q3 organic net sales decreased 5.5%, largely driven by weather-related volume declines and increased competition in North America Sun Care, partially offset by 6.1% growth in Grooming[138] Feminine Care This section details the financial performance of the Feminine Care segment Feminine Care Net Sales (in millions) | Period | Net sales - fiscal 2024 | Organic Change | Organic % Chg | Impact of currency | Net sales - fiscal 2025 | Total % Chg | | :-------------------- | :---------------------- | :------------- | :------------ | :----------------- | :---------------------- | :---------- | | Q3 | $74.6 | $(7.7) | (10.4)% | $(0.1) | $66.8 | (10.5)% | | Nine Months | $216.9 | $(22.3) | (10.3)% | $(0.4) | $194.2 | (10.5)% | Feminine Care Segment Profit (in millions) | Period | Segment profit - fiscal 2024 | Organic Change | Organic % Chg | Impact of currency | Segment profit - fiscal 2025 | Total % Chg | | :-------------------- | :--------------------------- | :------------- | :------------ | :----------------- | :--------------------------- | :---------- | | Q3 | $6.6 | $(1.7) | (25.7)% | $(0.4) | $4.5 | (31.8)% | | Nine Months | $22.6 | $(11.3) | (50.0)% | $(0.5) | $10.8 | (52.2)% | - Q3 organic net sales decreased 10.4%, primarily driven by a decline in Pads and Tampons across both North America and International sales[142] General Corporate and Other Expenses This section details the company's general corporate and unallocated expenses General Corporate and Other Expenses (in millions) | Period | 2025 | 2024 | Change | % of Net Sales (2025) | % of Net Sales (2024) | | :-------------------- | :----- | :----- | :----- | :-------------------- | :-------------------- | | Q3 | $(57.4) | $(55.9) | $(1.5) | (9.2)% | (8.6)% | | Nine Months | $(164.7) | $(166.1) | $1.4 | (9.8)% | (9.6)% | - Corporate expenses decreased for both the third quarter and first nine months of fiscal 2025, primarily related to lower people costs[147] - The nine-month period included a $0.9 million gain on an equity method investment in fiscal 2025, compared to a $3.1 million loss in the prior year, and costs related to a vendor bankruptcy and a prior year manufacturing plant fire[147][148][149] Liquidity and Capital Resources This section discusses the company's cash flows, capital structure, and ability to meet its financial obligations - The company manages its worldwide cash requirements, with a significant portion of cash balances located outside the U.S. and denominated in foreign currencies[150] - The company believes its cash on hand, cash flows from operations, and borrowing capacity under the U.S. Revolving Credit Facility will be sufficient to satisfy its future working capital, interest payments, R&D activities, capital expenditures, and other financing requirements for at least the next 12 months[152] Total Borrowings (in millions) | Interest Type | Currency | June 30, 2025 | September 30, 2024 | | :------------ | :------- | :-------------- | :----------------- | | Fixed | USD | $1,250.0 | $1,250.0 | | Variable | USD | $130.0 | $34.0 | | Variable | various | $23.2 | $24.5 | | Total borrowings | | $1,403.2 | $1,308.5 | Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Summary of Cash Flow Activities (in millions) | Activity | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Operating activities | $44.3 | $157.3 | | Investing activities | $(45.3) | $(36.9) | | Financing activities | $(10.9) | $(139.3) | | Effect of exchange rate changes on cash | $2.4 | $(1.4) | | Net decrease in cash and cash equivalents | $(9.5) | $(20.3) | Operating Activities This section details the cash generated or used by the company's primary business operations - Cash flow provided by operating activities decreased significantly to $44.3 million during the first nine months of fiscal 2025, compared to $157.3 million in the prior year, largely driven by changes in net working capital and lower earnings[156] Investing Activities This section outlines the cash flows related to the company's acquisition and disposal of long-term assets - Net cash used for investing activities increased to $45.3 million during the first nine months of fiscal 2025, from $36.9 million in the prior year, primarily due to an increase in capital expenditures to $49.4 million (from $30.6 million)[157] Financing Activities This section describes the cash flows associated with debt, equity, and dividend transactions - Net cash used for financing activities decreased to $10.9 million during the first nine months of fiscal 2025, compared to $139.3 million in the prior year[158] - This change was driven by net borrowings of $96.0 million under the U.S. Revolving Credit Facility in fiscal 2025, compared to repayments of $72.0 million in the prior year, partially offset by higher share repurchases ($90.2 million vs $40.2 million)[158] Share Repurchases This section provides details on the company's common stock repurchase program - The company repurchased 2.8 million shares of its common stock for $90.2 million during the first nine months of fiscal 2025, with 0.2 million shares remaining available under the 2018 Share Repurchase Plan[159] Dividends This section reports on the dividends declared and paid to common shareholders - Dividends declared during the nine months ended June 30, 2025, totaled $21.7 million, with payments made totaling $22.4 million[161] - The Board declared a quarterly cash dividend of $0.15 per common share for the third fiscal quarter of 2025, payable on October 8, 2025[160] Commitments and Contingencies This section discloses the company's contractual obligations and potential liabilities - As of June 30, 2025, the company had outstanding borrowings of $130.0 million under the U.S. Revolving Credit Facility (matures 2029) and future minimum repayments of fixed debt of $750.0 million in fiscal 2028 and $500.0 million in fiscal 2029[162] - There have been no other material changes in contractual obligations since the presentation in the 2024 Annual Report[163] Recent Accounting Pronouncements This section provides updates on new accounting standards and their potential impact - Information regarding new accounting pronouncements is included in Note 1 of the Notes to Condensed Consolidated Financial Statements[164] Critical Accounting Estimates This section discusses the company's significant accounting judgments and estimates that affect financial reporting - There have been no significant changes to the company's critical accounting estimates since September 30, 2024[165] - An interim impairment analysis for the Feminine Care reporting unit was conducted due to a triggering event, with fair value exceeding carrying value by less than 10%, resulting in no impairment charge for the three and nine months ended June 30, 2025[166] - The fair value of reporting units' goodwill is sensitive to differences between estimated and actual cash flows, including changes in projected revenue, EBITDA margin, discount rate, and market multiples[167] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, including foreign currency, commodity prices, and interest rates, and its strategies for managing these risks, primarily through derivative instruments. It also provides a quantitative sensitivity analysis for interest rate risk - The company's market risk primarily stems from adverse changes in currency rates, commodity prices, and interest rates, which it mitigates using contractual arrangements (derivatives)[168] - As of June 30, 2025, the company had $154.3 million in variable-rate debt, and a one-percent increase in applicable interest rates would increase annual interest expense by approximately $1.5 million[168] - There have been no material changes in the assessment of market risk sensitivity since the company's 2024 Annual Report[169] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, based on an evaluation by management, including the CEO and CFO. It also states that there were no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[171] - There were no changes in the company's internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are likely to materially affect, its internal control over financial reporting[172] PART II. OTHER INFORMATION This section provides additional information including risk factors, equity security sales, other disclosures, and a list of exhibits Item 1A. Risk Factors This section refers to the risk factors detailed in the company's 2024 Annual Report, noting that there have been no material changes to these risks since then, except as updated in the March 31, 2025, Quarterly Report - The company's business is subject to various risks and uncertainties, as detailed in Item 1A. Risk Factors of its 2024 Annual Report[174] - There have been no material changes to the risk factors disclosed in the 2024 Annual Report, except as set forth in the Quarterly Report on Form 10-Q for the period ended March 31, 2025[174] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities during the third quarter of fiscal 2025, including the number of shares purchased, average price paid, and remaining authorization under the repurchase plan Issuer Purchases of Equity Securities (Q3 Fiscal 2025) | Period | Total Number of Shares Purchased | Average Price Paid per share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number that May Yet Be Purchased Under the Plans or Programs | | :------------------ | :----------------------------- | :--------------------------- | :----------------------------------------------------------------- | :------------------------------------------------------------------ | | April 1 to 30, 2025 | 283,838 | $29.97 | 283,052 | 798,862 | | May 1 to 31, 2025 | 452,189 | $28.27 | 452,189 | 346,673 | | June 1 to 30, 2025 | 119,979 | $26.91 | 119,979 | 226,694 | - 786 shares were purchased during the quarter related to the surrender of shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock equivalents[175] - The average price paid per share includes $0.02 per share of brokerage fee commissions and excludes excise tax[176] Item 5. Other Information This section states that no director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - During the three months ended June 30, 2025, no director or officer of the company adopted, modified, or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement'[178] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and the iXBRL formatted financial statements - The exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Securities Exchange Act and Sarbanes-Oxley Act (Exhibits 31.1, 31.2, 32.1, 32.2)[179] - The Condensed Consolidated Statements of Earnings and Comprehensive Income, Balance Sheets, Cash Flows, Statements of Shareholder's Equity, and Notes to Condensed Consolidated Financial Statements are provided in iXBRL format (Exhibit 101), with the financial information noted as 'unaudited' and 'unreviewed'[179] SIGNATURE This section contains the official certification and signature for the filed report SIGNATURE This section contains the signature of the Chief Financial Officer, Francesca Weissman, on behalf of Edgewell Personal Care Company, certifying the filing of the report - The report is signed by Francesca Weissman, Chief Financial Officer, on behalf of Edgewell Personal Care Company, dated August 5, 2025[183]