Edgewell Personal Care Company (EPC) FY Conference Transcript

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]