Edgewell Personal Care reports fiscal Q1 Feminine Care net sales of US$72.4M, up 4.9% year-over-year on increased consumption and impact of higher pricing, while market share remained stable; segment profit down 4.5% to US$8.4M on lower gross profit

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SHELTON, Connecticut , February 8, 2022 (press release) –

Net Sales Increase of 2.7%, or 2.5% Organic
Company Updates Previously Provided Outlook for Fiscal 2022 to Include the Billie Acquisition

Edgewell Personal Care Company (NYSE: EPC) today announced results for its first fiscal quarter 2022 ended December 31, 2021. 

Executive Summary

  • Net sales were $463.3 million, an increase of 2.7% compared to the prior year quarter.
  • Organic net sales increased 2.5% compared to the prior year quarter. (Organic basis excludes the impact of the Billie acquisition and the negative translational impact from currency.)
  • GAAP Diluted Earnings Per Share ("EPS") were $0.20 for the first quarter compared to $0.32 in the prior year quarter.
  • Adjusted EPS were $0.42 for the first quarter, compared to $0.43 in the prior year quarter, inclusive of a $0.04 negative impact from the Billie acquisition.
  • The Company ended the first quarter with $240 million in cash on hand, access to an additional $221 million revolving credit facility and a net debt leverage ratio of 3.3x.
  • Returned $33 million to shareholders through share repurchases and dividends in the first quarter.
  • The Board of Directors declared a cash dividend of $0.15 per common share on February 4th, 2022 for the first quarter.

The Company reports and forecasts results on a GAAP and non-GAAP basis and has reconciled non-GAAP results and outlook to the most directly comparable GAAP measures later in this release.  See non-GAAP Financial Measures for a more detailed explanation, including definitions of various non-GAAP terms used in this release.  All comparisons used in this release are with the same period in the prior fiscal year unless otherwise stated.

"During the first quarter, we capitalized on the strength of the underlying demand for our products and delivered strong organic net sales growth in all three segments and across most major geographic regions.  We also executed well on the bottom line, despite a progressively challenging macro environment, with significant cost pressures and increasingly volatile supply chain conditions," said Rod Little, Edgewell's President and Chief Executive Officer. "We remain focused on our strategic priorities that are critical to the ongoing transformation of our business. In the quarter, we continued the integration efforts of Billie and, and earlier this month, began supporting the exciting national rollout of the Billie brand in Walmart. We also returned $33 million to shareholders through share repurchases and a dividend as we remain committed to a disciplined and balanced approach to capital allocation to drive long term shareholder value."

Fiscal 1Q 2022 Operating Results (Unaudited)

Net sales were $463.3 million in the quarter, an increase of 2.7% including a net $6.8 million or 1.5% impact from the acquisition of Billie and a $5.9 million or 1.3% negative impact from currency.  Organic net sales increased 2.5%, reflecting a combination of higher pricing and volume growth across the Wet Shave, Sun Care and Feminine Care businesses, partly offset by lower sales volumes in Wet One's. 

Gross profit was $189.9 million, as compared to $193.3 million in the prior year period. Gross margin as a percent of net sales for the first quarter of fiscal 2022 was 41.0%. Adjusted gross margin decreased 140-basis points compared to the prior year quarter, as 100-basis points of favorable pricing, promotional efficiency and mix and 200-basis points of productivity gains were more than offset by a 400-basis point impact from higher cost of goods and 50-basis points related to the negative effect of currency translation and other items.

Advertising and sales promotion expense ("A&P") increased $5.0 million to $46.2 million, or 10.0% of net sales, as compared to $41.2 million, or 9.1% of net sales in the prior year quarter, primarily reflecting increases in Sun and Skin Care and Wet Shave. 

Selling, general and administrative expense ("SG&A") was $96.9 million, or 20.9% of net sales, as compared to $93.1 million, or 20.6% of net sales in the prior year quarter. Adjusted SG&A declined 110-basis points as a percent of net sales, as lower incentive and fringe benefit costs were only partly offset by higher compensation expense and the additional costs associated with the Billie acquisition, including increased amortization expense.

The Company recorded pre-tax restructuring and other non-recurring expenses of $2.2 million in the quarter in support of restructuring programs, consisting largely of severance and outplacement, IT enablement and consulting costs, as well as $6.0 million in acquisition and integration costs related to the Billie acquisition.

Operating income was $31.8 million compared to $41.6 million in the prior year quarter. Adjusted operating income was $46.7 million, or 10.1% of net sales compared to $49.0 million in the prior year quarter.   

The effective tax rate for the first three months of fiscal 2022 was 30.9% as compared to 29.7% in the prior year quarter.  The adjusted effective tax rate for the first three months of fiscal 2022 was 25.3%, down from the prior year quarter adjusted effective tax rate of 28.4%.  The fiscal 2022 effective tax rate and adjusted effective tax rate reflects an increase in Internal Revenue Service Code Section 162(m) permanent adjustments partially offset by favorable stock compensation vests compared to fiscal 2021.

GAAP net earnings for the quarter were $11.2 million or $0.20 per share compared to $17.7 million or $0.32 per share in the first quarter of fiscal 2021. Adjusted net earnings in the quarter were $23.2 million or $0.42 per share, as compared to $23.3 million or $0.43 per share in the prior year period, inclusive of a $0.04 negative impact from the Billie acquisition. This $0.04 reflects the impact of deferred profit, as a consequence of profit on sales to Billie transitioning to cost, as well as higher amortization of intangible asset costs.  Adjusted EBITDA was $69.7 million compared to $72.2 million in the prior year period.

Net cash used by operating activities was $79.0 million for the first three months of fiscal 2022 compared to $82.5 million in the prior year period.

Capital Allocation

On February 4, 2022, the Board of Directors declared a quarterly cash dividend of $0.15 per common share for the first fiscal quarter. The dividend is payable April 5, 2022 to stockholders of record as of the close of business on March 8, 2022.

During the first quarter of fiscal 2022, the Company completed share repurchases of 557,963 shares at a total cost of $24.5 million. The Company has 9.2 million shares of common stock available for repurchase in the future under the Board's 2018 authorization.

Fiscal 1Q 2022 Operating Segment Results (Unaudited)

Wet Shave (Men's Systems, Women's Systems, Disposables, and Shave Preps)

Wet Shave net sales increased $7.0 million, or 2.5%. Organic net sales increased $6.0 million or 2.1%, driven by growth in Women's Systems and Disposables, partly offset by declines in Men's Systems, primarily in North America and Shave Preps, which were negatively impacted by supply chain issues and out of stocks.  Wet Shave segment profit decreased $1.1 million, or 2.1%, as higher sales were offset by the negative effect of inflationary pressures and higher A&P spending, including the impact from the Billie acquisition, and unfavorable currency translation.

Sun and Skin Care (Sun Care, Wet Ones, Bulldog, Jack Black and Cremo)

Sun and Skin Care net sales increased $1.8 million, or 1.7%.  Organic net sales increased $2.0 million, or 1.9%, primarily driven by Sun Care growth of over 40%, reflecting market share gains and continued category recovery in both U.S. and international markets, as well as organic net sales growth in Men's Grooming. Wet One's organic net sales declined 41%, reflecting the impact of cycling prior year COVID-19 related growth of over 110%.  Sun and Skin Care segment profit decreased $1.5 million, as higher sales were more than offset by the negative effect of inflationary pressures and substantially higher A&P spend in support of increased program activation.

Feminine Care (Tampons, Pads, and Liners)

Feminine Care net sales increased $3.4 million, or 4.9%. The increase in net sales reflected increased consumption and the impact of higher pricing, while market share remained stable.  Feminine Care segment profit decreased $0.4 million, or 4.5% driven by lower gross profit, partly offset by lower A&P and SG&A. 

Full Fiscal Year 2022 Financial Outlook

The Company is updating its previously provided outlook assumptions for fiscal 2022 to include the ten month impact of the Billie acquisition and the incremental negative impact of currency translation. Excluding these impacts, the current outlook is in-line with the previously provided outlook.

Mr. Little commented, "As we look to the remainder of the year, we are encouraged by the improving demand environment, as well as the distribution gains we are driving that are fueled by strong innovation. However, we are also facing supply chain disruptions and cost inflation that we are actively working to mitigate, even as we maintain a disciplined investment stance in our brands.  All of this is reflected in our underlying Fiscal 2022 outlook which we are reiterating today."

  • Reported net sales expected to increase mid-single digits (previously low-single digit increase)
    • Updated to include an estimated 400-basis point increase from the acquisition of Billie, net of Edgewell sales to Billie which were included in the previous outlook
    • Updated to Include a 160-basis point negative impact from currency translation (previously 110 basis-point negative impact)
  • Organic sales expected to increase low-single digits (previously low-single digit increase)
  • GAAP EPS anticipated to be in the range of $2.23 to $2.51 (previously $2.73 to $3.01)
    • Includes: Restructuring charges,* acquisition and integration costs, Sun Care reformulation costs, and value added tax settlement costs
  • Adjusted EPS anticipated to now be in the range of $2.74 to $3.02 (previously $2.98 to $3.26)
    • Updated to Include a $0.13 negative impact from increased amortization expense from the Billie acquisition, a $0.06 negative impact resulting from deferred profit on intercompany sales to Billie, and a $0.05 incremental negative impact from currency translation
    • The EPS outlook includes an assumption that share repurchases will offset dilution only
  • Adjusted EBITDA expected to now be in the range of $357 to $377 million (previously $365 to $385)
    • Updated to include an $4.1 million negative impact from Billie 3rd party sales profit deferral, and a $3.9 million negative impact from currency translation
  • Adjusted effective tax rate expected to be in the range of 22% to 23%
  • Total depreciation and amortization expense is expected to be $93.5 million, including $9.0 million in incremental amortization expense related to the acquisition of Billie
  • Expected capital expenditures of approximately 3.0% of net sales
  • Free cash flow expected to be approximately 100% of non-GAAP net earnings

*In Fiscal 2022, the Company expects to take specific actions to strengthen its operating model, simplify the organization and improve manufacturing and supply chain efficiency and productivity.  As a result of these actions, the Company expects to incur one-time charges of approximately $17 million, inclusive of $2.2 million incurred in the fiscal first quarter.

Webcast Information

In conjunction with this announcement, the Company will hold an investor conference call beginning at 8:00 a.m. Eastern Time today. All interested parties may access a live webcast of this conference call at www.edgewell.com, under the "Investors," and "News and Events" tabs or by using the following link:  http://ir.edgewell.com/news-and-events/events

For those unable to participate during the live webcast, a replay will be available on www.edgewell.com, under the "Investors," "Financial Reports," and "Quarterly Earnings" tabs. 

About Edgewell

Edgewell is a leading pure-play consumer products company with an attractive, diversified portfolio of established brand names such as Schick®, Wilkinson Sword® and Billie® men's and women's shaving systems and disposable razors; Edge and Skintimate® shave preparations; Playtex®, Stayfree®, Carefree® and o.b.® feminine care products; Banana Boat®, Hawaiian Tropic®, Bulldog®,  Jack Black®, and CREMO® sun and skin care products; and Wet Ones® products. The Company has a broad global footprint and operates in more than 50 markets, including the U.S., Canada, Mexico, Germany, Japan, the U.K. and Australia, with approximately 6,900 employees worldwide.

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

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