Edgewell Personal Care Company

Good morning and welcome to Edgewell's fourth quarter and fiscal year 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Goff, investor relations. Please go ahead.

Good morning, everyone, and thank you for joining us this morning for Edgewell's fourth quarter and fiscal year 2021 earnings. With me this morning are Rod Little, our president and chief executive officer, and Dan Sullivan, our chief financial officer. Rod will kick off the call, and he'll then hand it over to Dan to discuss our results in fiscal year 22 outlook, and we will then transition to Q&A. This call is being recorded and will be available for replay via our website, www.edgewell.com. During the call, we may make statements about our expectations for future plans and performance. This might include future sales, earnings, advertising, and promotional spending, product launches, savings and costs related to restructuring, changes to our working capital metrics, currency fluctuations, commodity costs, category value, future plans for return of capital to shareholders, and more. Any such statements are forward-looking statements which reflect our current views with respect to future events. These statements are based on assumptions and are subject to various risks and uncertainties, including those described under the captions risk factor in our annual report on Form 10-K for the year end of September 30, 2020, as may be amended in our quarterly reports on Form 10-Q. These risks may cause our actual results to be materially different from those expressed or implied by our forward-looking statements. We do not assume any obligation to update or revise any of these forward-looking statements to reflect new events or circumstances, except as required by law. During this call, we will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the investor relations section of our website. Management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. With that, I'd like to turn the call over to Rod.

Thanks, Chris. Good morning, everyone, and thank you for joining us on our year-end earnings call. As you saw in the results we posted earlier today, we closed fiscal 2021 on a strong note with clear momentum. A year ago, amid the ongoing pandemic and with much uncertainty around the globe, we pressed forward with an aggressive set of objectives and launched our new growth strategy while providing a financial outlook that called for sustained top-line growth, margin expansion, commercial reinvestment, and earnings per share growth. Today, I'm pleased to report that we are tracking well against all of those objectives, exceeding our financial commitments for the year while executing on the strategic initiatives that are vital to driving sustainable long-term growth for our company. This performance is a testament to our team members who have executed with excellence in a challenging environment, and it also reflects meaningful investments in our brands. a strengthened innovation pipeline, and increased digital engagement and capabilities. This was evident in our fourth quarter results and contributed to organic net sales growth of more than 8%. Our top-line strength was broad-based, with growth in both our North American and international markets, as well as across all segments. With strong sales momentum and disciplined operational execution, adjusted operating profit increased 41%, and adjusted earnings per share increased 71%, providing for a strong finish to a very good year. Now let me turn to the full fiscal year. In a year in which first half sales were heavily impacted by ongoing COVID-19 restrictions in many regions around the world, and the second half was impacted by severe macro supply chain challenges, We grew organic net sales by nearly 4%. We benefited from improving consumption across all categories, and our results were underpinned by strong execution and accelerated growth in sun care, women's shave, and men's grooming. For the year, adjusted operating profit increased 8%. Adjusted EPS increased 11 percent, and adjusted EBITDA increased 7 percent. This project fueled gross savings of $68 million combined with improved revenue and overhead cost management helped mitigate significant inflationary pressures that increased as the year progressed. By all of these measures, we exceeded our initial full-year outlook. as well as the financial targets outlined in our long-term financial algorithm that were discussed during our analyst day one year ago. Before we review our segment results, I want to comment on the broader operating environment. As was evidenced in our results this quarter, we are seeing a healthier demand environment across many of our categories, particularly in the United States. and we are encouraged that we will likely see further improvement over time in regions of the world that have yet to experience a full recovery from COVID-19 peak levels. With the improving demand environment, we are committed to investing in our brands, and our teams remain focused and agile, even as the challenging operating environment persists. We also continue to see heightened cost pressures across many commodity categories, as well as higher wages and transportation costs. In 2021, gross savings from Project Fuel and enhanced revenue management efforts enabled the business to offset many of these unprecedented increases. As seen by the success of Project Fuel, we have built a strong core competency of continuous improvement and this discipline is embedded in our go forward plans. Our teams will continue to execute on productivity and efficiency efforts, and those savings will be one of the levers at our disposal in 2022 to help offset some of the expected cost headwinds. As discussed last quarter, In the spring, we took a double-digit price increase across our wet ones business. And last month, we implemented a mid-single-digit increase across our femcare business. Over the last few weeks, we have also announced to retailers in the U.S. that we will increase prices across additional areas of our portfolio. With these increases more surgical in their approach and the ultimate amount in timing specific to the category and brand. Outside of the U.S., we are also taking price actions to help offset the rising inflationary pressures being felt by all. Dan will discuss this in more detail. Now let me take you through a few of our segment highlights. Our right-to-win portfolio of sun, skin, and grooming brands was the catalyst for top-line performance in 2021, delivering 13% organic sales growth, and strong market share gains. Our sunning skincare segment was a bright spot for the quarter and the year, reinforcing our sun category leadership position here in the United States. Organic net sales increased by 25% for the quarter and 13% for the year. Suncare led the way with organic net sales increasing more than 55% for the quarter and 16% for the year. driven by strong consumption and share gains in North America. We gained share in the quarter, the year, and on an adjusted two-year basis. And despite the difficult supply chain and regulatory environment, our teams rose to the challenge, meeting the increased demand from both retail customers and end consumers in the quarter, with our Ormond Beach, Florida facility producing at a rate 90% above expected run rate levels. Organic net sales in our men's grooming business, driven by Jack Black and Cremo, increased by nearly 21% for the quarter and nearly 15% for the year. In personal hygiene, Wet One's organic net sales decreased 7% against an 85% year-over-year increase in the fourth quarter last year. While category consumption is down compared to a year ago, we regained significant share in the category, and we're benefiting from our price increase in the spring, as well as the introduction of Wet Ones Plus, a stronger in-stock position, and less secondary brand inventory on shelf. Wet Ones now makes up nine of the top 10 selling SKUs in the category. Our wet shave business delivered another quarter of growth, with organic net sales increasing nearly 4 percent, reflecting strength in both the North America and international markets, as sales rose in women's systems, disposables, and private label. Wet shave organic net sales increased 2 percent for the year. In feminine care, organic net sales increased nearly 10 percent in the quarter, reflecting increased consumption compared to a year ago, as well as an improving share trend led by share gains in Playtech Sport. Although organic net sales decreased 4.5% for the full year, we've now posted two consecutive quarters of growth and we've stabilized our share position as the solid number two player in the category. Almost exactly one year ago, we outlined a bold path forward for Edgewell. And one year into our strategy, we have delivered and beaten our ambition. The progress we've made in 2021 has now positioned us to deliver an outlook for 2022 that calls for another year of top-line growth while maintaining an investment stance for the business. Although ongoing cost headwinds are projected to negatively impact gross margins for the year, we will not veer from our investment mindset, and we still expect another year of adjusted EBITDA and EPS growth in 2022. Finally, the strength of our financial performance demonstrated operational progress, a strong balance sheet and free cash flow profile, coupled with our commitment to maintaining a balanced and disciplined approach to capital allocation to drive shareholder returns, has led to our announcement today of our intent to repurchase approximately $300 million of common stock over the next three fiscal years, reinforcing our pledge to increase our return to shareholders. And now I'd like to ask Dan to take you through our fiscal year results and also provide details on our outlook for fiscal 22. Dan? Thank you, Rod.