Edgewell Personal Care Company (EPC) FY Conference Summary Company Overview - **Company**: Edgewell Personal Care Company (EPC) - **Date of Conference**: August 12, 2025 - **Key Speakers**: Dan Sullivan (COO), Fran Wiseman (CFO) Key Points Transformation and Business Strengths - **Transformation Status**: Company is in a transformation phase amidst challenges such as COVID, inflation, and tariffs [4][8] - **International Business**: Accounts for approximately 40% of revenue, with a 6-7% CAGR over the last four years, projected to grow by 45% this year [5] - **Innovation**: Significant improvements in innovation structure, with successful launches in international markets, including Hawaiian Tropic in Mexico and Bulldog in the UK [6][7] - **Productivity Savings**: Historical savings of 250-300 basis points annually, with expectations to continue this trend [8] - **Cash Flow**: Average free cash flow projected between $150 million to $180 million [8] Areas for Improvement - **U.S. Market Focus**: The company is working on enhancing its U.S. operations, including hiring a new President of North America and reorganizing the commercial business [9] - **Top-Line Growth**: Long-term growth target remains at 2-3%, with international markets expected to outperform the U.S. [12][14] Recent Performance and Market Conditions - **Q3 Challenges**: The sun care segment faced difficulties due to poor weather, impacting nearly a third of the business [17][18] - **Market Share Gains**: Despite challenges, 80% of international business held or gained market share, with notable performance from brands like Hawaiian Tropic and HydroSilk [19][21] - **Q4 Outlook**: Anticipated organic growth of approximately 22.5%, with international growth expected to be around 8% [22] Consumer Health and Competitive Landscape - **Consumer Sentiment**: No signs of consumer hesitancy or trade-down to private labels observed, with categories growing at 3-4% [24][25] - **Competitive Environment**: The U.S. market remains competitive, particularly in women's grooming, but the company is well-positioned with its diverse portfolio [56][59] Financial Metrics and Projections - **Gross Margin**: Historically strong, with a slight decline in 2025 due to tariffs and currency impacts, but expected to recover [27][29] - **Tariff Impact**: Estimated annual exposure to tariffs is between $40 million to $50 million, representing 3-4% of COGS [31] - **Free Cash Flow**: Expected to deliver around $80 million in 2025, down from historical levels due to various headwinds [38][39] Strategic Focus and Future Outlook - **Capital Allocation**: Focus on debt paydown and share repurchases, with a goal to reduce debt leverage to around three times [41][42] - **Brand Performance**: Hawaiian Tropic is performing well, while Banana Boat is stable but affected by weather conditions [43][44] - **Grooming Segment Growth**: The grooming portfolio has grown to represent about 10% of total business, with brands like Bulldog and Cremo showing strong performance [61] Conclusion - **Future Prospects**: The company is optimistic about its transformation efforts, strong cash flow, and the potential for growth in both international markets and the U.S. [64][65]

Financial Data and Key Metrics Changes - Organic net sales decreased by 4.2% in Q3 2025, with North America Sun Care business underperforming expectations by approximately $25 million [42] - Adjusted gross margin rate decreased by 150 basis points, impacted by lower Sun Care sales [42] - GAAP diluted net earnings per share were $0.62 compared to $0.98 in Q3 2024, while adjusted earnings per share were $0.92 compared to $1.22 in the prior year [44] Business Line Data and Key Metrics Changes - Wet Shave organic net sales were down about 2%, while international Wet Shave grew about 3% [33] - Sun and Skin Care organic net sales were down approximately 5%, with mid single-digit growth in Grooming led by 28% organic net sales growth for Cremo [35] - Fem Care organic net sales were down approximately 10%, driven largely by tampons and pads [37] Market Data and Key Metrics Changes - International markets delivered 2% organic growth, with double-digit growth in Greater China and mid single-digit growth in Oceania and Europe [32] - In North America, organic sales declined about 8%, with significant declines in Sun Care, Wet Shave, and Fem Care [32] - Market share for Hawaiian Tropic increased by 150 basis points in Q3, while Cremo saw a 40 basis point increase [15] Company Strategy and Development Direction - The company is committed to investing in brand campaigns and innovations to strengthen its portfolio for long-term success [20] - A focus on international market growth strategy, which now represents 40% of global sales, is expected to deliver mid-single-digit organic growth [10] - The company is undergoing a transformation in North America to improve commercial effectiveness and operating efficiency [14] Management Comments on Operating Environment and Future Outlook - The operating environment remains challenging due to tariffs and foreign exchange volatility, impacting full-year profit headwinds [8] - Management remains confident in the ability to grow international markets and across core categories despite short-term pressures [39] - The company anticipates organic net sales to be down approximately 1.3% for the fiscal year, with adjusted earnings per share expected to be approximately $2.65 [46] Other Important Information - The company returned approximately $32 million to shareholders during the quarter, achieving a target of approximately $90 million in share repurchases for the fiscal year [45] - The company is actively pursuing opportunities to mitigate the potential impact of tariffs through expanded sourcing efforts and vendor negotiations [24] Q&A Session Summary Question: Can you expand on the drivers of the free cash flow cut? - Management indicated that lower earnings and additional FX headwinds were significant drivers of the cash flow change, alongside working capital changes [54][56] Question: Can you speak high level to the puts and takes for fiscal 2026? - Management noted that while they cannot provide specific guidance for 2026, they are confident in their ability to deliver growth in the range of 2% to 3% moving forward [66][72] Question: What drives the organic sales growth expected in Q4? - Management expects growth driven by improved performance in Sun Care, Fem Care, and Wet Ones, with a positive outlook based on recent sales data [82][86] Question: Will elevated levels of brand support continue into fiscal 2026? - Management confirmed that they will continue to invest in brand support and innovation, particularly in international markets and key brands in North America [90][92] Question: How are inventories currently in the channel for Sun Care? - Management stated that they are generally comfortable with inventory levels and are prepared to replenish quickly due to their supply chain advantages [102]

Core Insights - Inner Mongolia Yili Industrial Group Co., Ltd. reported total revenue of 115.78 billion yuan for FY2024, reinforcing its status as Asia's leading dairy producer [1] - In Q1 FY2025, Yili experienced better-than-expected growth with simultaneous increases in revenue and net profit despite challenging market conditions [1] Financial Performance - Yili proposed a dividend payout of 7.726 billion yuan for FY2024, achieving a record-high payout ratio of 91.4% [4] - The company initiated a share buyback program of up to 2 billion yuan, resulting in total shareholder returns of 100.4% of profits [4] - Cumulatively, Yili has distributed 50.8 billion yuan in dividends since its listing, ranking first among Chinese dairy companies [4] Business Segments - In FY2024, Yili's liquid milk business generated revenue of 75.003 billion yuan, maintaining its leading position [5] - The ice cream segment reported revenue of 8.721 billion yuan, securing the top spot in revenue and market share for the 30th consecutive year [5] - Milk powder and related businesses achieved record-high revenue of 29.675 billion yuan, with milk powder sales leading in China and goat milk formula ranking first globally [5] International Growth - Yili's international business showed robust growth in FY2024, with overseas ice cream revenue increasing by 13% and infant formula revenue surging by 68% [6] - Flagship brands Cremo and Joyday performed strongly in Southeast Asia, ranking among the top three ice cream brands in Indonesia and Thailand [6] Corporate Responsibility and ESG - Yili promotes a comprehensive green supply chain and engages in rural revitalization initiatives and social responsibility programs [7] - The company achieved an AA rating in MSCI's latest 2024 ESG ratings, the highest in the industry, marking four consecutive years of upgrades [8]

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]