Edgewell Personal Care Company

Good morning and welcome to Edgewell Personal Care first quarter 2024 earnings 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. Please go ahead.

Good morning, everyone, and thank you for joining us this morning for Edgewell's first quarter fiscal year 2024 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 fiscal 2024 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 and performance. This might include future sales, earnings, advertising and promotional spending, product launches, savings and costs related to restructuring and repositioning actions, acquisitions and integrations, 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 the 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 30, 2023, 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. This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. However, 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 Rob.

Thank you, Chris. Good morning, everyone, and thanks for joining us on our fiscal 24 first quarter earnings call. We had a good start to the year with 3% organic net sales growth, largely driven by strong performance in international markets, where mostly healthier categories and improved in-market execution drove growth. The growth was underpinned by both price and volume gains. Notably, we saw meaningful organic growth and market share gains in both Japan and Germany, reflecting both good consumer response to our brands and also strong wholesaler and retailer support. I am very excited about the results we are seeing in our international markets as we continue to strengthen our capabilities and streamline our leadership structure across the business. A year ago, we brought the markets closer to our global center, with all non-North American markets directly reporting to me and Dan. We also made significant changes in leadership across Europe, Japan, and China, which collectively represent almost two-thirds of our international business. And we've continued to push decision-making and accountability to the local teams, all of which has contributed to a more robust organic growth profile. In North America, despite some transitory dynamics that contributed to year-over-year organic net sales declines, most notably in femcare, our consumption and resulting market share results were solid and largely in line with trend. Across our markets, the consumer remains resilient, our categories remain relatively healthy, and as we move into our bigger spring and summer selling seasons, We believe we are well positioned with notable innovation in Suncare, our brand replatforming in Femcare, and the Billy launch into new body categories all in front of us. Adjusted gross margin expanded year over year ahead of our expectations, driven by our ability to accelerate productivity savings and realize gains from improved price and revenue management. We increased investment in our brands in the quarters. remained disciplined on G&A costs, and delivered adjusted EBITDA and EPS ahead of our expectations. With this good start to the year and with strong fundamentals in place, we have increased confidence in our ability to deliver our outlook for both top and bottom line. The first quarter was a good example of the business model we have built and ultimately our path for continued success. Solid top line growth with good market share outcomes, accelerated gross margin accretion, incremental commercial investment in support of priority brands and markets, and a healthy, sustainable profit profile. Importantly, our portfolio of leading brands continues to be top of mind for consumers across the globe, regardless of their preferred channel, in-store or online. In our shaving business, we are seeing the clear advantages of our manufacturing technology and improved brand building and digital capabilities. with compelling innovation and stronger retailer partnerships globally, private brands, market share gains, and the successful retail expansion of the Billy brand here in the United States and in Canada, all demonstrating clear proof points of a healthier Shea portfolio. In Suncare, the mid-single-digit organic growth in the quarter was in line with expectations, and we saw good execution from concept to shelf across our leading portfolio of trusted brands. Our end-to-end capabilities of product formulation, regulatory, quality control, internal manufacturing, and direct store delivery to shelf are all points of competitive advantage that contribute to our broader success. Our grooming portfolio of well-crafted brands continues to resonate with consumers and will soon be augmented by the disruptive force of the Billy brand as we begin to execute our retail pilot and the initial launch of the brand's offering, Embody, beginning today. And finally, in Femcare, we believe that we've now cycled through the supply chain and demand imbalances that have plagued the category over the last 18 months and make year-over-year comparisons challenging. I'm personally bullish about the opportunity that our new master brand strategy offers as we re-platform our pads and liners business under the Carefree brand with a unique consumer positioning, and emotive campaign that I expect will resonate well with our target consumers. Our brands are healthier and, once again this year, better represented across all channels of distribution than at any point since we began as an independent company in 2015. The initial read on distribution outcomes for 2024 is encouraging, all of which underpins our durable, sustainable, top-line growth profile this fiscal year and beyond. Operationally, we remained disciplined in the face of continued, though easing, inflationary headwinds. We generated almost 600 basis points of combined gross margin benefits from productivity and efficiency initiatives, as well as price and revenue management execution. Our teams did a terrific job in the quarter of driving operational excellence across the supply chain, while further realizing the benefits of our focus on unit economics and sound revenue and promotion management. And importantly, as planned, we increased investment in support of our brands with spend centered around digital activation ahead of the compelling innovation that will come to market later this quarter. So to wrap up, the results this quarter and our outlook for the full year illustrate the progress we've made since outlining our long-term vision and growth goals in 2020. And importantly, demonstrate that our strategy is working. As we move past peak inflationary pressures that we have contended with for the past two years, we remain confident in our financial model, which calls for organic net sales growth, gross margin accretion, G&A leverage, and strong free cash flow generation. Simply put, our business is better with a stronger portfolio of brands and a demonstrated ability to successfully execute against each of our key strategic priorities. This gives us confidence that we will deliver significant value creation for our shareholders. And now I'd like to ask Dan to take you through our first quarter results and discuss our outlook for fiscal 24. Dan?