Core Insights - Essity has agreed to acquire Edgewell Personal Care's feminine care business for USD 340 million, enhancing its position in the North American hygiene market [1][3] - The acquisition includes well-known brands such as Carefree, Stayfree, and o.b., as well as global rights for Playtex and a production facility in Dover, Delaware [1][3] - The deal is expected to close in the first quarter of 2026, pending regulatory approvals [1] Financial Summary - The purchase price of USD 340 million represents an EBITDA multiple of approximately 12.1x based on pro-forma IFRS as of June 30, 2025, and 8.3x when including estimated run-rate synergies [1] - For the 12 months ending June 30, 2025, the acquired business reported net sales of USD 261 million and a segment operating profit of USD 17 million [1] Strategic Implications - This acquisition aligns with Essity's strategy to focus on high-margin categories and strengthen its market position in the US, the largest hygiene market globally [1] - Essity aims to leverage its established success in the feminine care sector to grow the acquired brands [1]

Core Viewpoint - Edgewell Personal Care Company has entered into a definitive agreement to sell its feminine care business to Essity for $340 million, aiming to streamline its portfolio and focus on core competitive areas [1][2][3]. Transaction Details - The transaction is expected to close in the first quarter of calendar 2026, pending regulatory approvals [2]. - Edgewell's feminine care brands include Playtex®, Stayfree®, Carefree®, and o.b.® [2]. - Proceeds from the sale will primarily be used to strengthen Edgewell's balance sheet and invest in long-term growth of its core businesses [2]. Strategic Implications - The sale is seen as a pivotal step in Edgewell's transformation, allowing the company to sharpen its focus on core categories and enhance its financial position for sustainable growth [3]. - The acquisition will enable Essity to strengthen its personal care business in North America, aligning with its strategy to focus on high-yield categories [3]. Transition Support - Edgewell will collaborate with Essity to ensure a smooth transition for employees, customers, and consumers, providing certain services to support the transition post-transaction [4]. Financial Impact - Beginning in the first quarter of fiscal 2026, Edgewell will classify the feminine care business as discontinued operations [5]. - The sale is expected to impact adjusted EPS by approximately $0.40 to $0.50 and adjusted EBITDA by $35 to $45 million, net of income from transition support services [5].

Financial Data and Key Metrics Changes - Organic net sales decreased by 1.5% in Q2 2025, with international markets growing by 3% while North America declined by 4% [22][36] - Adjusted gross margin rate increased by 100 basis points, with productivity savings of approximately 380 basis points [37][30] - Adjusted earnings per share were $0.87, slightly down from $0.88 in the prior year quarter [38] Business Line Data and Key Metrics Changes - Wet Shave organic net sales were down about 1%, while international Wet Shave grew by 3% [24] - Grooming organic net sales increased by 9%, led by a 20% growth for the Cremo brand [28] - Fem Care organic net sales decreased by approximately 9%, primarily driven by declines in tampons and pads [29] Market Data and Key Metrics Changes - Consumption in the U.S. Sun Care category decreased by 1% in the quarter, with total market share down by 60 basis points [27] - Double-digit organic growth was observed in Greater China, with mid-single-digit growth in Japan and Europe [22] - The U.S. razors and blades category saw a consumption decline of 30 basis points, with market share decreasing by 90 basis points [25] Company Strategy and Development Direction - The company is focused on restoring momentum in North America, with significant investments in sun care and women's shave categories [12][33] - A new campaign for Hawaiian Tropic is set to be the largest investment in the U.S. in five years, targeting Gen Z consumers [34] - The company aims to leverage recent successes in international markets to replicate growth in North America [13] Management's Comments on Operating Environment and Future Outlook - Management noted increasing pressure on consumers and a decline in consumer confidence, impacting spending behaviors [17][14] - The outlook for the second half of the fiscal year anticipates a modest growth profile, with organic net sales growth expected to be flat to 1% [41] - Management expressed confidence in sequential improvement in North America, driven by new leadership and strategic initiatives [14][75] Other Important Information - The estimated impact of tariffs on cost of goods sold for fiscal 2025 is approximately $3 million to $4 million [43] - The company plans to continue exploring opportunities to mitigate tariff impacts through productivity and potential price increases [92][93] - Free cash flow for the full year is now expected to be in the range of $130 million to $140 million, reflecting lower earnings and higher inventory levels [45] Q&A Session Summary Question: Can you provide more details on the tariff impact? - The estimated in-year impact of tariffs is $3 million to $4 million, primarily affecting the fourth quarter, with a broader annualized exposure of 3% to 4% of COGS [50][52] Question: What is the confidence level for second half organic sales growth? - The company expects a 2% organic growth in the second half, driven by international growth, Sun Care category growth, and a more thoughtful approach to fem care [62][64] Question: How does the company view the North American execution? - Management clarified that while sales did not meet expectations, they are confident in execution and are investing in key programs for improvement [76][78]