Edgewell Personal Care Co ((EPC)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Edgewell Personal Care Co’s recent earnings call presented a mixed sentiment characterized by robust international growth and strong brand performances, particularly in Billy and Cremo. However, these positives were tempered by challenges in the North American market, notably in the femcare segment, and significant currency headwinds impacting the financial results.
International Business Growth
The international segment of Edgewell Personal Care Co reported a 2% organic growth, marking a significant achievement of five consecutive quarters of organic sales growth and the eleventh in the last twelve quarters. This consistent growth has resulted in a three-year compound annual growth rate (CAGR) of nearly 8%, demonstrating the company’s strong foothold and expansion in international markets.
Strong Performance of Billy and Cremo Brands
Edgewell’s Billy brand experienced a notable gain of 230 basis points in women’s shave market share, securing a 15% share at Walmart and over 10% nationally. Meanwhile, the Cremo brand saw an impressive 20% organic growth, driven by an expanded range and effective retail execution, underscoring the company’s robust brand strategy.
Improved Operational Execution
The company achieved productivity savings of 340 basis points, surpassing expectations and contributing to an 80 basis point accretion in constant currency gross margin. Additionally, there were significant improvements in service levels and in-stock positions, indicating enhanced operational efficiency.
Strong International Sun Care Performance
Edgewell’s sun care segment showed strong performance internationally, with increased market share in Australia and Mexico. The growth was fueled by innovation and strong brand activation, accompanied by successful new product launches in Japan, Europe, and other key markets.
Organic Net Sales Decline
Despite successes, Edgewell faced a decline in overall organic net sales by 1.3%, largely due to a 4% sales drop in North America. This decline was attributed to lower volumes in the femcare and wet shave categories, highlighting regional market challenges.
Challenges in Femcare
The femcare segment experienced a 12% decline in organic net sales, especially in pads, due to the transition from Stayfree to Carefree and increased promotional activity impacting market share. This transition poses ongoing challenges for the company in stabilizing its market position.
Currency Headwinds Impact
Currency fluctuations had a significant adverse effect, reducing adjusted operating margin by 170 basis points and decreasing adjusted EBITDA by $11 million. Furthermore, adjusted earnings per share faced a $0.17 per share unfavorable impact, illustrating the substantial financial pressure from currency movements.
Forward-Looking Guidance
Looking ahead, Edgewell Personal Care Co provided guidance for the first quarter of fiscal year 2025, which reflects a challenging macroeconomic environment. The company expects organic net sales growth of 1% to 3% for the full year, with constant currency gross margins anticipated to rise by 90 basis points. However, after adjusting for currency impacts, this increase is expected to be only 55 basis points. Adjusted EPS is projected towards the lower end of the $3.15 to $3.35 range, with foreign exchange expected to impact EPS by approximately $0.36 per share. Additionally, adjusted EBITDA is forecast to be at the lower end of the $356 million to $368 million range due to about $23 million in currency headwinds. Despite these challenges, the company remains focused on sustaining growth momentum, particularly in international sun care and grooming categories, while managing operational efficiencies and productivity savings.
In summary, Edgewell Personal Care Co’s earnings call highlighted mixed sentiments, with strong international growth and brand performances being offset by challenges within the North American market and significant currency headwinds. The company remains committed to its growth strategies and operational efficiencies to navigate the current economic landscape.
