Edgewell Personal Care Company

Good morning, everyone, and welcome to Edgewell's first quarter 2023 earnings conference call. All participants will be in a listed-only mode. Should you need assistance, please say no to a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To join the question queue, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Chris Goff, Vice President of Investor Relations. Sir, you may begin.

Good morning, everyone, and thank you for joining us this morning for Edgewell's first quarter fiscal year 2023 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 update to the full year 2023 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 of 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 and are in the report on Form 10-K for the year ended September 30th, 2022, as may be amended in our quarterly reports on Form 10-Q, 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. 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 first quarter earnings call. This was a good start to the fiscal year with organic growth in line with our expectations and marking our seventh consecutive quarter of year-over-year organic growth. And despite significant currency headwinds and persistent cost inflation, we delivered strong bottom line results that reflected good commercial execution and highlights the underlying structural improvements we've made across our business. As we discussed last quarter, there are four key components for success in fiscal 2023. First, delivering continued organic sales growth, enabled by better brand resonance and stronger presence on show. Second, strengthening our gross margins, leading to rate accretion for the full year. Third, making meaningful investments behind our brands. And finally, continuing to execute on our productivity and efficiency initiatives. We made good progress against each of these elements this quarter, a testament to the hard work and dedication of our teams, all of which reinforces the confidence we have in our business going forward. Organic net sales growth was broad-based and in line with our expectations. Price execution has been solid across our business, and we continue to see elasticities in line with our modeling and below historic levels. Our international market growth was strong and delivered through both volume and price gains, reflecting a strong start to the sun season and continued strength in women's shave. And the Billy brand continues to outperform with clear momentum for its national retail launch that is just now beginning. In fact, with three strong brands, including Intuition and Hydrosilk, Edgewell is now the market leader in women's systems at Walmart. Feminine care grew 12% with both price and volume gains, benefiting from continued heightened demand in the category and our improved in-stock position. These results led to further progress in market shares across our business. In North America, we broadly held share in aggregate across our portfolio. And in key international markets like Germany, we saw noticeable market share gains, both of which included strong performance in our leading women's shave business. This broad-based organic growth across categories and geographies, along with stabilized market share results in key markets, is further evidence of our healthy top line and offers clear proof points of our ability to deliver sustainable growth for this business. Dan will take you through the details, but I'd like to call out the progress we made on gross margin in the quarter. essentially fully offsetting inflationary headwinds through the realization of price actions and the ongoing execution of our productivity initiatives. So while the operating environment remains highly challenging, we are on track to deliver margin accretion in the second half and for the full fiscal year. Importantly, we also remained in investment mode. With AMP spend of over 11% of net sales, excluding our custom brands, private label, shave business. Our focus was on early season sun execution internationally, strengthening our digital activation and e-commerce presence and supporting innovation and new products, including our barber style launch across Europe and grooming product expansion in the United States for the Edge and Cremo brands. The growing top line, strengthening gross margin profile, and a demonstrated focus on cost reduction all enable a sustained ability to invest in our brands, and we are seeing the return from our investments. Lastly, we continue to simplify our business and deliver meaningful gross cost reduction across both cost of goods sold and G&A, and we expect this will continue as we move through the year. We are operating in a challenging, volatile, and uncertain marketplace. Inflationary and foreign exchange pressures remain significant headwinds to our business. The labor market remains tight with the potential to again complicate manufacturing and distribution efforts. And perhaps most importantly, there are some initial signs of weakening consumer sentiment in the face of likely economic challenges ahead. We therefore need to be cautious as we consider the balance of the year. Act with urgency and continue to focus on controlling the controllables. Our brands are healthier and better represented on shelf than at any point since we began as an independent company. And the early read on distribution outcomes for 2023 is very encouraging. Supply chain service levels improved in the quarter, and we've taken the necessary steps to ensure good execution, particularly related to the upcoming U.S. sun season. And consumer-centric innovation and new product development is playing an increasingly important role in our portfolio. With the acquired brand building capabilities of the Cremo and Billy teams now benefiting our broader portfolio. With the progress we made this quarter, we are confident that we are taking the right actions to deliver sustained value creation over the long term. And we are well positioned to deliver our previous outlook for the fiscal year. And now I'd like to ask Dan to take you through our first quarter results and to also provide additional details on our outlook for fiscal 2023. Dan? Thanks, Rod.