Edgewell Personal Care Company

Good day and welcome to the Agile Personal Care Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I'd like now to turn the conference over to Chris Goff, Vice President, Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us this morning for Edgewell's third quarter fiscal year 2022 earnings call. 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, then hand it over to Dan to discuss our results and full year 22 outlook before we 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 performance. This might include future sales, earnings, advertising and promotional spending, product launches, savings and costs related to restructurings, 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 for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to future events, plans, or prospects. These statements are based on assumptions and are subject to various risks and uncertainties, including those described under the caption risk factors in our annual report on Form 10-K for the year ended September 30th. 2021, as may be amended in our quarterly reports on Form 10Q, which is on file with the SEC. 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. The 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.

Thank you, Chris. Good morning, everyone, and thank you for joining us. We grew organic net sales 9% this quarter, delivering our fifth consecutive quarter of organic net sales growth, driven by solid consumer demand for our products. Importantly, our growth was broad-based, with North America increasing 9% and international markets increasing 8.4%. Growth was also well-balanced, coming from all segments of the business and fueled by strong volume growth. The 9% growth in the quarter was above our expectations as we've benefited from a strong and earlier start to the peak sun care season in the U.S., and from both heightened demand and improved supply in our feminine care business. Our omni-channel strategy continues to deliver strong results, as we saw growth in both brick and mortar as well as e-commerce channels. E-commerce growth in North America was 31%. Consumption growth for our brands in the United States was over 7%. reflecting increased volumes in price as we grew market share in aggregate. The sun category in the U.S. remains strong, and our share gains accelerated. In fact, Banana Boat is now the number one sun care brand in the United States in the latest 52-week period, reflecting all of the critical factors required to win in this category. Consumer-focused innovation underpinned by great product formulation capabilities, strong distribution both in aisle and out, and a supply chain that ensures availability on shelf. Billy contributed approximately 370 basis points to top line growth, driven by continued strong execution in Walmart, where the brand has maintained its nearly 19-point share of the women's shave category. While organic growth this quarter was strong, currency headwinds increased significantly in the quarter, negatively impacting reported sales by $22 million in the quarter, which is nearly $9 million or 150 basis points worse than our previous expectations. With the strength on the top line, we overcame incremental foreign exchange headwinds and delivered 86 cents of adjusted earnings per share and $97.1 million in adjusted EBITDA, both above our expectations. While the external environment remains challenging and volatile, we believe our results this quarter reflect the continued execution of our strategy and the underlying structural improvement in our business. And while we've benefited from a stronger than expected start to the peak sun season, consumer demand for our products across all of our key categories in the United States remains strong, driven by the impact of new distribution, a more stable supply chain, and incremental price actions. While COVID-related closures continue to impact Asia and certain parts of Europe, we were encouraged to see improved category and volume growth in several other key international markets, particularly in Latin America, largely driven by an increase in travel. Dan will take you through the specifics shortly, but we also saw improved performance across our supply chains. with increased production output and service levels across femcare and wet shave, as expected. Inflationary pressures in aggregate were relatively unchanged to our previous expectations, although choppiness remains in certain commodity baskets and labor levels remain tight, though manageable. However, with the dramatic strengthening of the dollar during the quarter, currency is now expected to be an increasing headwind, to top and bottom line results in the fourth quarter. Despite these ongoing macro market challenges, we continue to make a lot of progress in the transformation of Edgewell to achieve our objective of sustained top and bottom line growth. This progress is a result of our continued focus on fundamentals and good execution and is evidenced in four specific areas. First, our ability to deliver meaningful consumer-centric innovation. Second, our improved presence on shelf. Third, stronger capabilities across the organization, and most notably in brand building, direct to consumer, and digital execution. And finally, we remain committed to our efforts to drive cost out of the business and structurally simplify our operating model. As we discussed last quarter, our brands are healthier than they have been at any time in recent years. We are executing well at retail, led by our leading Sun portfolio of brands, aided by our recent acquisitions, and underpinned by the best distribution outcomes we've seen since our split from Energizer in 2015. We believe all of this puts us in a great position to deliver on our outlook of 4% organic net sales growth for the fiscal year, which would be our second successive 4% growth year. and builds confidence that we can deliver on our growth ambitions for the future. And now I'd like to ask Dan to take you through our third quarter results and also provide details on our outlook for the full fiscal year.