Edgewell Personal Care Q3 2024: EPS surges 23% despite slight decline in net sales

07-Aug-2024 - Last updated on 07-Aug-2024 at 13:47 GMT

Edgewell's President and Chief Executive Officer, Rod Little, highlighted the company's performance in a press statement, sharing that "Our third quarter results reflected robust gross margin accretion leading to substantial adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share growth." © RBFried Getty Images

Edgewell Personal Care's Q3 2024 financial results reveal a slight decline in net sales to $647.8 million, but the company achieved significant gross margin expansion and a 23% increase in adjusted EPS, despite challenging market conditions.

Edgewell Personal Care Company, whose brand portfolio includes Schick, Billie men's and women's shaving systems and disposable razors, Banana Boat, and CREMO sun and skin care products, has released its financial results for the third fiscal quarter of 2024. The company's performance during this period reflects a mixed performance amidst a competitive market.

Despite the challenges posed by an increasingly competitive market and unfavorable currency movements, Edgewell reported a slight decrease in net sales while achieving significant improvements in gross margin and adjusted earnings per share (EPS).

Financial performance

For the quarter ending June 30, 2024, Edgewell reported net sales of $647.8 million, a slight decrease of 0.3% from the same period last year. Organic sales, which exclude the impact of currency fluctuations, increased by 0.6% during the quarter.

Despite the slight decline in overall sales, the company achieved significant gross margin expansion, with gross profit rising to $287.1 million from $280.3 million in the prior year. Gross margin as a percentage of net sales increased by 120 basis points to 44.3%, as reported by Edgewell.

The company's EPS saw a notable increase of 23%, reaching $1.22 compared to $0.99 in the previous year. In contrast, generally accepted accounting principles (GAAP) diluted EPS decreased by 4% to $0.98, down from $1.02, as reported in Edgewell's recently published fiscal results.

The company ended the quarter with $196.1 million in cash and access to an additional $369.7 million revolving credit facility. The net debt leverage ratio stood at 3.1x. Additionally, the company confirmed that Edgewell returned $17.4 million to shareholders through share repurchases and dividends.

Operational highlights

For the third quarter, Edgewell reported a 47.4% increase in Wet Shave segment profit despite a 2.4% decrease in net sales for this segment. According to the company's reporting, the increase in profit was attributed to higher gross margins and reduced marketing expenses.

In the Sun and Skin Care segment, net sales grew by 4.9%, driven by Sun Care's growth across international and North American markets. However, growth in North America was tempered by weak early-season weather, reported the company's earnings statement. Conversely, the report continued that Feminine Care experienced a 7.9% decrease in net sales, primarily due to declines in Tampons and Pads, which led to a 52.9% decrease in segment profit.

Full FY 2024 outlook

Looking ahead, Edgewell has revised its full-year outlook. The company now expects organic net sales to increase by approximately 1%, down from the previously forecasted 2%.

The company reported that GAAP EPS is projected to be around $2.28, while adjusted EPS is anticipated to be approximately $3.00. Edgewell also expects adjusted gross margin to increase by approximately 140 basis points and adjusted EBITDA to reach approximately $356 million.
Edgewell confirmed that the impact of currency movements is expected to be less severe than previously estimated, with an anticipated $8 million unfavorable impact compared to $11 million.

Capital allocation & future plans

The Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on October 3, 2024. During the third quarter, the company confirmed that Edgewell repurchased approximately 0.3 million shares for $9.9 million and paid $7.5 million in dividends.

While Edgewell faced currency fluctuations and declines in specific segments in the recent fiscal quarter, the company's strategic initiatives in cost management and international growth have yielded positive results. The adjustments to the fiscal year outlook reflect ongoing efforts to enhance operational efficiency and navigate market dynamics effectively.