Edgewell Personal Care(EPC)2024-02-07 21:09Financial Data and Key Metrics Changes - The company reported a 3.1% organic net sales growth for the quarter, driven by strong performance in international markets, with international organic growth exceeding 16% [23][16] - Adjusted gross margin expanded by 30 basis points year-over-year, with adjusted EBITDA at $57.2 million, and adjusted EPS at $0.24, both exceeding expectations [25][48] - Net cash used from operating activities was $72.9 million, an improvement from $86.3 million in the prior year period, ending the quarter with $214 million in cash [30] Business Line Data and Key Metrics Changes - Wet Shave organic net sales increased by 8.1%, with international growth at 18% due to improved market conditions and brand activation [26] - Sun and Skin Care organic net sales rose about 1%, with North America Sun Care growth over 5% driven by higher volumes [27] - Grooming organic net sales decreased by 2.6%, while Fem Care organic net sales fell by 11.2%, primarily due to lower volumes [28] Market Data and Key Metrics Changes - Aggregate consumption in the U.S. segment increased by 2.2%, with volume consumption remaining strong in Women's Shave and Grooming [12] - Market share gains were noted in Japan, Germany, and Canada, with the U.S. Wet Shave category experiencing flat consumption [42] - The company observed a resilient consumer base across its categories, particularly in international markets like Japan and Germany [12][16] Company Strategy and Development Direction - The company is optimistic about its new master brand strategy, particularly the replatforming of the Carefree brand in fem care [8] - Continued investment in brand support and digital activation is planned, with a focus on innovation in Sun Care and the Billie brand launch [9][38] - The leadership changes in key international markets are expected to enhance operational execution and market responsiveness [5][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to meet previously provided outlooks, despite a challenging macro environment [31] - The company anticipates organic net sales growth in the range of 2% to 4% for the fiscal year, with adjusted EBITDA expected between $340 million and $352 million [32][49] - Management highlighted the importance of local leadership and tailored strategies to drive growth in international markets [72][70] Other Important Information - The company returned nearly $23 million to shareholders during the quarter through share repurchases and dividends [30] - Adjusted SG&A expenses increased by 110 basis points, influenced by higher incentive compensation and unfavorable currency movements [47] - The company is focused on maintaining a disciplined approach to G&A costs while investing in brand innovation [18] Q&A Session Summary Question: Clarification on earnings results and guidance - Management noted that the strong earnings were influenced by a pull forward in Japan and emphasized the ongoing changes in international markets [51][52] Question: Expense line performance - Management attributed better-than-expected expense performance to productivity improvements and favorable timing in global procurement contracts [58][59] Question: Women's grooming shelf space and Billie brand growth - Management confirmed increased investment behind the Billie brand and anticipated further distribution gains [66][82] Question: Fem Care strategy and volume stabilization - Management expressed confidence in the new strategy for Fem Care, focusing on innovation and targeted marketing [67][68] Question: Gross margin expectations - Management indicated that Q1 gross margin performance was likely the strongest of the year, with expectations for a step down in subsequent quarters due to timing and structural factors [86][87] Question: International market growth outlook - Management expects international markets to continue growing at a faster rate than North America, with optimism for sequential improvement in North American performance [90][104]