Edgewell Personal Care(US:EPC)2025-11-13 14:02Financial Data and Key Metrics Changes - In Q4, the company generated organic net sales growth of 2.5%, aligning with expectations in international markets and showing progress in North America [7][22] - Adjusted gross margin rate decreased by 330 basis points, primarily due to higher-than-anticipated inventory adjustments and increased trade promotions [27][28] - Adjusted operating income was $40.3 million, or 7.5% of net sales, compared to $56 million, or 10.8% of net sales last year [28] Business Line Data and Key Metrics Changes - International organic net sales grew by 6.9%, driven by volume and price gains across all segments [22] - North America experienced a decline in organic net sales of approximately 1%, with Wet Shave declining by about 1% while Sun Care and Grooming showed growth [23][24] - Grooming organic net sales grew by 9%, led by over 28% growth in Cremo [26] Market Data and Key Metrics Changes - International markets represented approximately 40% of global sales and delivered strong growth for the fourth consecutive year [8] - Europe generated its third straight year of growth, and Greater China delivered double-digit growth [9] - In the U.S. razor and blades category, consumption was down 80 basis points in the quarter, although market share improved sequentially [23] Company Strategy and Development Direction - The company plans to divest its Feminine Care business to focus on core categories with competitive advantages, including Shave, Sun, and Skin Care [6][19] - A multi-year innovation roadmap is being implemented, with significant investments in brand building and marketing [11][12] - The company aims to optimize its North American Wet Shave business and manufacturing footprint to enhance productivity and efficiency [10][12] Management Comments on Operating Environment and Future Outlook - Management acknowledged significant external pressures, including tariffs and foreign exchange volatility, impacting financial performance [8][20] - The outlook for fiscal 2026 anticipates a return to organic net sales growth, driven by mid-single-digit growth in international markets and stabilization in North America [16][33] - The company expects to face challenges from inflation and tariffs but is focused on productivity gains and brand investments to support growth [16][35] Other Important Information - The company declared a $0.15 per share dividend for Q4 and returned approximately $7 million to shareholders via dividends [29] - The anticipated divestiture of the Feminine Care business is expected to impact adjusted EPS by approximately $0.40-$0.50 annually [32] Q&A Session Summary Question: Outlook and EPS in Q1 - Management indicated that the 2026 plan is balanced and achievable, with expectations for low single-digit category growth and maintaining market share [42][43] Question: Strategy and M&A Intentions - The focus is on winning in Shave, Grooming, Sun, and Skin categories, with potential for M&A as asset values decline [51][54] Question: Productivity and Gross Margin Concerns - Management expressed confidence in the second-half-oriented plan, expecting higher sales growth and productivity improvements to enhance gross margin [64][66] Question: Sun and Skin Category Outlook - The company plans conservatively for the Sun season, with clean inventory levels and new campaigns for Hawaiian Tropic and Banana Boat [82]