UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
_______________________________ | | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 20222023
or
| | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
Commission File Number: 001-15401
EDGEWELL PERSONAL CARE COMPANY
(Exact name of registrant as specified in its charter) | | | | | | | | | | | | | | |
Missouri | 43-1863181 |
(State or other jurisdiction of incorporation or organization) | (I. R. S. Employer Identification No.) |
| |
6 Research Drive | (203) | 944-5500 |
Shelton, | CT | 06484 | (Registrant’s telephone number, including area code) |
(Address of principal executive offices and zip code) | | |
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | EPC | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | | | | |
Large accelerated filer | ☒ | | Accelerated filer | ☐ |
| | | | |
Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
| | | | |
| | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Common shares, $0.01 par value - 51,417,18549,933,117 shares as of January 31, 2023.2024.
EDGEWELL PERSONAL CARE COMPANY
INDEX TO FORM 10-Q
| | | | | | | | |
PART I. | FINANCIAL INFORMATION | |
Item 1. | Financial Statements.Statements | |
| Condensed Consolidated Statements of Earnings and Comprehensive Income for the three months ended December 31, 20222023 and 2021.2022 | |
| Condensed Consolidated Balance Sheets as of December 31, 20222023 and September 30, 2022.2023 | |
| Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 20222023 and 2021.2022 | |
| Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended December 31, 20222023 and 2021.2022 | |
| Notes to Condensed Consolidated Financial Statements.Statements | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk.Risk | |
Item 4. | Controls and Procedures.Procedures | |
| | |
PART II. | OTHER INFORMATION | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.Proceeds | |
Item 5. | Other Information | |
Item 6. | Exhibits.Exhibits | |
| | |
SIGNATURE | | |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(unaudited, in millions, except per share data)
| | Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| | | Three Months Ended December 31, | |
| | 2022 | | 2021 | |
Net sales | Net sales | $ | 469.1 | | | $ | 463.3 | | |
Net sales | |
Net sales | |
Cost of products sold | Cost of products sold | 280.1 | | | 273.4 | | |
Cost of products sold | |
Cost of products sold | |
Gross profit | |
Gross profit | |
Gross profit | Gross profit | 189.0 | | | 189.9 | | |
| Selling, general and administrative expense | Selling, general and administrative expense | 95.7 | | | 96.9 | | |
| Selling, general and administrative expense | |
| Selling, general and administrative expense | |
Advertising and sales promotion expense | |
Advertising and sales promotion expense | |
Advertising and sales promotion expense | Advertising and sales promotion expense | 45.9 | | | 46.2 | | |
Research and development expense | Research and development expense | 13.4 | | | 12.8 | | |
Research and development expense | |
Research and development expense | |
Restructuring charges | |
Restructuring charges | |
Restructuring charges | Restructuring charges | 2.7 | | | 2.2 | | |
Operating income | Operating income | 31.3 | | | 31.8 | | |
Operating income | |
Operating income | |
Interest expense associated with debt | Interest expense associated with debt | 19.9 | | | 17.3 | | |
Other income, net | (5.0) | | | (1.7) | | |
Interest expense associated with debt | |
Interest expense associated with debt | |
Other expense (income), net | |
Other expense (income), net | |
Other expense (income), net | |
Earnings before income taxes | |
Earnings before income taxes | |
Earnings before income taxes | Earnings before income taxes | 16.4 | | | 16.2 | | |
Income tax provision | Income tax provision | 4.5 | | | 5.0 | | |
Income tax provision | |
Income tax provision | |
Net earnings | |
Net earnings | |
Net earnings | Net earnings | $ | 11.9 | | | $ | 11.2 | | |
| Earnings per share: | Earnings per share: | | |
| Earnings per share: | |
| Earnings per share: | |
Basic net earnings per share | Basic net earnings per share | $ | 0.23 | | | $ | 0.21 | | |
Basic net earnings per share | |
Basic net earnings per share | |
Diluted net earnings per share | |
Diluted net earnings per share | |
Diluted net earnings per share | Diluted net earnings per share | $ | 0.23 | | | $ | 0.20 | | |
| Statements of Comprehensive Income: | Statements of Comprehensive Income: | | |
| Statements of Comprehensive Income: | |
| Statements of Comprehensive Income: | |
Net earnings | Net earnings | $ | 11.9 | | | $ | 11.2 | | |
Other comprehensive income, net of tax | | |
Net earnings | |
Net earnings | |
Other comprehensive income (loss), net of tax | |
Other comprehensive income (loss), net of tax | |
Other comprehensive income (loss), net of tax | |
Foreign currency translation adjustments | Foreign currency translation adjustments | 48.0 | | | (6.9) | | |
Pension and postretirement activity, net of tax of $(0.1) and $0.0 | (0.2) | | | — | | |
Deferred (loss) gain on hedging activity, net of tax of $(3.8) and $0.1 | (8.2) | | | 0.4 | | |
Total other comprehensive income (loss), net of tax | 39.6 | | | (6.5) | | |
Foreign currency translation adjustments | |
Foreign currency translation adjustments | |
Pension and postretirement activity, net of tax (benefit) of $(0.6) and $(0.1) | |
Pension and postretirement activity, net of tax (benefit) of $(0.6) and $(0.1) | |
Pension and postretirement activity, net of tax (benefit) of $(0.6) and $(0.1) | |
Deferred loss on hedging activity, net of tax (benefit) of $(1.6) and $(3.8) | |
Deferred loss on hedging activity, net of tax (benefit) of $(1.6) and $(3.8) | |
Deferred loss on hedging activity, net of tax (benefit) of $(1.6) and $(3.8) | |
Total other comprehensive income, net of tax | |
Total other comprehensive income, net of tax | |
Total other comprehensive income, net of tax | |
Total comprehensive income | Total comprehensive income | $ | 51.5 | | | $ | 4.7 | | |
Total comprehensive income | |
Total comprehensive income | |
See accompanying Notes to Condensed Consolidated Financial Statements.
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions, except share data)
| | December 31, 2022 | | September 30, 2022 |
| December 31, 2023 | | | December 31, 2023 | | September 30, 2023 |
Assets | Assets | | | |
Current assets | Current assets | | | |
Current assets | |
Current assets | | | | |
Cash and cash equivalents | Cash and cash equivalents | $ | 184.1 | | | $ | 188.7 | |
Trade receivables, less allowance for doubtful accounts of $3.9 and $3.8 | 123.1 | | | 136.9 | |
Trade receivables, less allowance for doubtful accounts of $6.1 and $5.6 | |
Inventories | Inventories | 540.2 | | | 449.3 | |
Other current assets | Other current assets | 160.1 | | | 167.3 | |
Total current assets | Total current assets | 1,007.5 | | | 942.2 | |
Property, plant and equipment, net | Property, plant and equipment, net | 348.6 | | | 345.5 | |
Goodwill | Goodwill | 1,332.3 | | | 1,322.2 | |
Other intangible assets, net | Other intangible assets, net | 996.8 | | | 996.6 | |
Other assets | Other assets | 111.8 | | | 106.6 | |
Total assets | Total assets | $ | 3,797.0 | | | $ | 3,713.1 | |
| Liabilities and Shareholders’ Equity | Liabilities and Shareholders’ Equity | |
Liabilities and Shareholders’ Equity | |
Liabilities and Shareholders’ Equity | |
Current liabilities | Current liabilities | |
Current liabilities | |
Current liabilities | |
Notes payable | |
Notes payable | |
Notes payable | Notes payable | $ | 25.2 | | | $ | 19.0 | |
Accounts payable | Accounts payable | 245.0 | | | 237.3 | |
Other current liabilities | Other current liabilities | 231.1 | | | 291.7 | |
Total current liabilities | Total current liabilities | 501.3 | | | 548.0 | |
Long-term debt | Long-term debt | 1,492.0 | | | 1,391.4 | |
Deferred income tax liabilities | Deferred income tax liabilities | 140.9 | | | 140.4 | |
Other liabilities | Other liabilities | 176.1 | | | 173.6 | |
Total liabilities | Total liabilities | 2,310.3 | | | 2,253.4 | |
Shareholders’ equity | Shareholders’ equity | | | |
| Preferred shares, $0.01 par value, 10,000,000 authorized; none issued or outstanding | Preferred shares, $0.01 par value, 10,000,000 authorized; none issued or outstanding | — | | | — | |
Common shares, $0.01 par value, 300,000,000 authorized; 65,251,989 issued; 51,536,745 and 51,573,001 outstanding | 0.7 | | | 0.7 | |
| Preferred shares, $0.01 par value, 10,000,000 authorized; none issued or outstanding | |
| Preferred shares, $0.01 par value, 10,000,000 authorized; none issued or outstanding | |
Common shares, $0.01 par value, 300,000,000 authorized; 65,251,989 issued; 50,030,286 and 50,118,789 outstanding | |
Additional paid-in capital | Additional paid-in capital | 1,577.8 | | | 1,604.3 | |
Retained earnings | Retained earnings | 935.6 | | | 931.7 | |
Common shares in treasury at cost, 13,715,244 and 13,678,988 | (850.9) | | | (860.9) | |
Common shares in treasury at cost, 15,221,703 and 15,133,200 | |
Accumulated other comprehensive loss | Accumulated other comprehensive loss | (176.5) | | | (216.1) | |
Total shareholders’ equity | Total shareholders’ equity | 1,486.7 | | | 1,459.7 | |
Total liabilities and shareholders’ equity | Total liabilities and shareholders’ equity | $ | 3,797.0 | | | $ | 3,713.1 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions) | | | Three Months Ended December 31, | | Three Months Ended December 31, |
| | 2022 | | 2021 | | 2023 | | 2022 |
Cash Flow from Operating Activities | Cash Flow from Operating Activities | | | | Cash Flow from Operating Activities | | | |
Net earnings | Net earnings | $ | 11.9 | | | $ | 11.2 | |
Depreciation and amortization | Depreciation and amortization | 22.5 | | | 21.4 | |
Share-based compensation expense | Share-based compensation expense | 6.5 | | | 5.5 | |
Loss on sale of assets | Loss on sale of assets | 0.7 | | | 0.3 | |
| Deferred compensation payments | |
Deferred compensation payments | |
Deferred compensation payments | Deferred compensation payments | — | | | (0.5) | |
Deferred income taxes | Deferred income taxes | (0.1) | | | (0.1) | |
Other, net | Other, net | (1.8) | | | 1.7 | |
Changes in operating assets and liabilities | Changes in operating assets and liabilities | (126.0) | | | (118.5) | |
Net cash used by operating activities | Net cash used by operating activities | $ | (86.3) | | | $ | (79.0) | |
| Cash Flow from Investing Activities | Cash Flow from Investing Activities | |
Cash Flow from Investing Activities | |
Cash Flow from Investing Activities | |
Capital expenditures | Capital expenditures | (11.3) | | | (9.4) | |
Acquisition of Billie, net of cash acquired | — | | | (308.8) | |
Capital expenditures | |
Capital expenditures | |
| Collection of deferred purchase price on accounts receivable sold | |
Collection of deferred purchase price on accounts receivable sold | |
Collection of deferred purchase price on accounts receivable sold | Collection of deferred purchase price on accounts receivable sold | 0.4 | | | 0.8 | |
Other, net | Other, net | (0.3) | | | (0.3) | |
Proceeds from sale of Infant and Pet Care business | — | | | 5.0 | |
Net cash used by investing activities | Net cash used by investing activities | $ | (11.2) | | | $ | (312.7) | |
| Cash Flow from Financing Activities | Cash Flow from Financing Activities | |
Cash Flow from Financing Activities | |
Cash Flow from Financing Activities | |
Cash proceeds from debt with original maturities greater than 90 days | |
Cash proceeds from debt with original maturities greater than 90 days | |
Cash proceeds from debt with original maturities greater than 90 days | Cash proceeds from debt with original maturities greater than 90 days | 241.0 | | | 291.0 | |
Cash payments on debt with original maturities greater than 90 days | Cash payments on debt with original maturities greater than 90 days | (141.0) | | | (93.0) | |
Net increase in debt with original maturities of 90 days or less | 5.5 | | | 1.4 | |
Proceeds from debt with original maturities of 90 days or less | |
Repurchase of shares | Repurchase of shares | (15.0) | | | (24.5) | |
Dividends to common shareholders | Dividends to common shareholders | (8.3) | | | (8.5) | |
Net financing inflow (outflow) from the Accounts Receivable Facility | 8.8 | | | (1.6) | |
Net financing inflow from the Accounts Receivable Facility | |
Employee shares withheld for taxes | Employee shares withheld for taxes | (8.1) | | | (9.7) | |
Other, net | Other, net | — | | | 0.4 | |
Net cash from financing activities | Net cash from financing activities | $ | 82.9 | | | $ | 155.5 | |
| Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | 10.0 | | | (3.2) | |
Effect of exchange rate changes on cash | |
Effect of exchange rate changes on cash | |
| Net decrease in cash and cash equivalents | |
Net decrease in cash and cash equivalents | |
Net decrease in cash and cash equivalents | Net decrease in cash and cash equivalents | (4.6) | | | (239.4) | |
Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | 188.7 | | | 479.2 | |
Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | $ | 184.1 | | | $ | 239.8 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited, in millions)
| | Common Shares | | Treasury Shares | |
| Number | | Par Value | | Number | | Amount | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Shareholders’ Equity |
Balance at September 30, 2022 | 65.2 | | | $ | 0.7 | | | (13.7) | | | $ | (860.9) | | | $ | 1,604.3 | | | $ | 931.7 | | | $ | (216.1) | | | $ | 1,459.7 | |
| Common Shares | |
| Number | |
| Number | |
| Number | | | Par Value | | Number | | Amount | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Shareholders’ Equity |
Balance as of September 30, 2023 | |
Net earnings | Net earnings | — | | | — | | | — | | | — | | | — | | | 11.9 | | | — | | | 11.9 | |
Foreign currency translation adjustments | Foreign currency translation adjustments | — | | | — | | | — | | | — | | | — | | | — | | | 48.0 | | | 48.0 | |
Pension and postretirement activity | Pension and postretirement activity | — | | | — | | | — | | | — | | | — | | | — | | | (0.2) | | | (0.2) | |
Deferred loss on hedging activity | Deferred loss on hedging activity | — | | | — | | | — | | | — | | | — | | | — | | | (8.2) | | | (8.2) | |
Dividends declared to common shareholders | Dividends declared to common shareholders | — | | | — | | | — | | | — | | | — | | | (8.0) | | | — | | | (8.0) | |
Repurchase of shares | — | | | — | | | (0.4) | | | (15.0) | | | — | | | — | | | — | | | (15.0) | |
Repurchase of shares including excise tax | |
Activity under share plans | Activity under share plans | — | | | — | | | 0.4 | | | 25.0 | | | (26.5) | | | — | | | — | | | (1.5) | |
Balance at December 31, 2022 | 65.2 | | | $ | 0.7 | | | (13.7) | | | $ | (850.9) | | | $ | 1,577.8 | | | $ | 935.6 | | | $ | (176.5) | | | $ | 1,486.7 | |
Balance as of December 31, 2023 | |
|
| | Common Shares | | Treasury Shares | |
| Number | | Par Value | | Number | | Amount | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Shareholders’ Equity |
Balance at September 30, 2021 | 65.2 | | | $ | 0.7 | | | (10.9) | | | $ | (776.3) | | | $ | 1,631.1 | | | $ | 865.7 | | | $ | (136.9) | | | $ | 1,584.3 | |
| Common Shares | |
| Number | |
| Number | |
| Number | | | Par Value | | Number | | Amount | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Shareholders’ Equity |
Balance as of September 30, 2022 | |
Net earnings | Net earnings | — | | | — | | | — | | | — | | | — | | | 11.2 | | | — | | | 11.2 | |
Foreign currency translation adjustments | Foreign currency translation adjustments | — | | | — | | | — | | | — | | | — | | | — | | | (6.9) | | | (6.9) | |
Pension and postretirement activity | Pension and postretirement activity | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Deferred gain on hedging activity | Deferred gain on hedging activity | — | | | — | | | — | | | — | | | — | | | — | | | 0.4 | | | 0.4 | |
Dividends declared to common shareholders | Dividends declared to common shareholders | — | | | — | | | — | | | — | | | — | | | (8.4) | | | — | | | (8.4) | |
Repurchase of shares | — | | | — | | | (0.5) | | | (24.5) | | | — | | | — | | | — | | | (24.5) | |
Repurchase of shares including excise tax | |
Activity under share plans | Activity under share plans | — | | | — | | | 0.3 | | | 33.6 | | | (37.4) | | | — | | | — | | | (3.8) | |
Balance at December 31, 2021 | 65.2 | | | $ | 0.7 | | | (11.1) | | | $ | (767.2) | | | $ | 1,593.7 | | | $ | 868.5 | | | $ | (143.4) | | | $ | 1,552.3 | |
Balance as of December 31, 2022 | |
| |
See accompanying Notes to Condensed Consolidated Financial Statements.
EDGEWELL PERSONAL CARE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except per share data)
Note 1 - Background and Basis of Presentation
Background
Edgewell Personal Care Company and its subsidiaries (collectively, “Edgewell” or the “Company”) is one of the world’s largest manufacturers and marketers of personal care products in the wet shave, sun and skin care, and feminine care categories. With operations in over 20 countries, ourthe Company’s products are widely available in more than 50 countries.
The Company conducts its business in the following three segments:
•Wet Shave consists of products sold under the Schick®, Wilkinson Sword®, Edge, Skintimate®, Billie®, Shave Guard and our custom brands group (formerly sold under our Shave Guard and Personna® brands,brands), as well as non-branded products. The Company’s wet shave products include razor handles and refillable blades, disposable shave products, and shaving gels and creams.
•Sun and Skin Care consists of Banana Boat® and Hawaiian Tropic® sun care products, Jack Black®, Bulldog® and Cremo® men’s grooming products, Billie women’s grooming products and Wet Ones® products.
•Feminine Care includes tampons, pads and liners sold under the Playtex Gentle Glide® and Sport®, Stayfree®, Carefree®, and o.b.® brands.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its controlled subsidiaries and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) under the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The preparation of the unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results may differ materially from those estimates. All intercompany balances and transactions have been eliminated in consolidation and, in the opinion of management, all normal recurring adjustments considered necessary for a fair statement have been included in the interim results reported. The fiscal year-end balance sheet data was derived from audited consolidated financial statements, but do not include all of the annual disclosures required by GAAP; accordingly, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited annual consolidated financial statements included in its Annual Report on Form 10-K filed with the SEC on November 16, 2022.28, 2023.
Recently Issued Accounting Pronouncements
AcquisitionIn December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures to update income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of Billie, Inc.income taxes paid by jurisdiction. The amendments in the ASU also remove disclosures related to certain unrecognized tax benefits and deferred taxes. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The amendments may be applied prospectively or retrospectively with early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.
In November 2023, the FASB issued ASU No. 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures On November 29, 2021,to expand reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. Annual disclosures are required for fiscal years beginning after December 15, 2023. Interim disclosures are required for periods within fiscal years beginning after December 15, 2024. Retrospective application is required for all prior periods presented with early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.
Recently Adopted Accounting Pronouncements
In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations" which requires that a buyer in a supplier finance program disclose additional information about the program for financial statement users including a rollforward of those obligations. The Company adopted the standard as of October 1, 2023, except for amendments relating to the rollforward requirement, which is effective for fiscal years beginning after December 15, 2023.
The Company has agreements for supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations of the Company completedwith designated third-party financial institutions. The Company is not a party to the acquisitionarrangements between the suppliers and the third-party financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. The payment terms under the programs range from 60 to 120 days. As of Billie, Inc. (“Billie”) (the “Acquisition”), a leading U.S. based consumer brand company that offers a broad portfolioDecember 31, 2023, and September 30, 2023, $24.0 and $21.8, respectively, were valid obligations under the program. The obligations are presented as Accounts payable on the Condensed Consolidated Balance Sheets.
Revision of personal care products for women. The results of Billie for the post-acquisition period are included withinPreviously Issued Consolidated Financial Statements
As previously disclosed in the Company’s results since2023 Annual Report on Form 10-K filed with the acquisition date. For more informationSEC on November 28, 2023, the Company evaluated aged accrued expenditures related to goods received but not yet invoiced by certain of its vendors (“GRNI”). Based upon an assessment, including evaluating the expiry of the applicable statute of limitations of the accrued expenditures, the Company concluded that $8.5 of aged accrued GRNI originating in years 2014 through 2018 were no longer required to be reflected as accounts payable on the Acquisition, see Note 2Consolidated Balance Sheet as of NotesSeptember 30, 2023 and should have been reversed in prior fiscal years. The Company concluded that the misstatements were not material, either individually or in the aggregate, to Condensedits previously issued consolidated financial statements.
To correct the immaterial misstatements, the Company has revised the Consolidated Financial Statements.
StatementStatements of Earnings and Comprehensive Income, Consolidated Statements of Cash Flows, Presentation
The net presentationand Consolidated Statements of borrowings and repayments under the Company's U.S revolving credit facilityChanges in the Condensed Consolidated Statement of Cash FlowsShareholders' Equity for the three months ended December 31, 2021 has been revised in order2022 as well as the associated Notes to reflect borrowings and repayments on a gross basis, resulting in $93.0 of repayments presented gross that were previously netted against borrowings. Net cash from financing activities reported in the Condensed Consolidated StatementFinancial Statements to reflect the corrections of Cash Flowsthese immaterial misstatements as of and for the three months ended December 31, 2021 was not impacted2022. There were no changes to previously issued total cash flows generated from (used by) operating, investing, or financing activities for three months ended December 31, 2022.
The following table reflects the revisions to the previously issued Consolidated Statements of Earnings and Comprehensive Income for the Company has concluded that this correction is not materialthree months ended December 31, 2022:
| | | | | | | | | | | | | | | | | | | | |
| | |
| | As Previously Reported | | Adjustment | | As Revised |
Net sales | | $ | 469.1 | | | $ | — | | | $ | 469.1 | |
Cost of products sold | | 280.1 | | | (0.6) | | | 279.5 | |
Gross profit | | 189.0 | | 0.6 | | | 189.6 | |
Operating income | | 31.3 | | 0.6 | | | 31.9 |
Earnings before income taxes | | 16.4 | | 0.6 | | | 17.0 |
Income tax provision | | 4.5 | | 0.1 | | | 4.6 |
Net earnings | | 11.9 | | 0.5 | | | 12.4 |
| | | | | | |
Earnings per share: | | | | | | |
Basic net earnings per share | | $ | 0.23 | | | $ | 0.01 | | | $ | 0.24 | |
Dilutive net earnings per share | | 0.23 | | 0.01 | | | 0.24 | |
Total comprehensive income | | 51.5 | | | 0.5 | | | 52.0 | |
The following table reflects the revisions to its financial statements.the previously issued Consolidated Statements of Cash Flows for the period ended December 31, 2022.
| | | | | | | | | | | | | | | | | |
| As Previously Reported | | Adjustment | | As Revised |
Net earnings | $ | 11.9 | | | $ | 0.5 | | | $ | 12.4 | |
Changes in operating assets and liabilities | (126.0) | | | (0.5) | | | (126.5) | |
Note 2 - Business Combinations
Billie Inc.
On November 29, 2021 (the “Acquisition Date”), the Company completed the Acquisition for cash consideration of $309.4, net of cash acquired. As a result of the Acquisition, Billie became a wholly owned subsidiary of the Company. The Company accounted for the Acquisition utilizing the acquisition method of accounting, which requires assets and liabilities to be recognized based on estimates of their acquisition date fair values. The determination of the values of the acquired assets and assumed liabilities, including goodwill, other intangible assets and deferred taxes, requires significant judgement. We have calculated fair values of the assets and liabilities acquired from Billie, including goodwill and intangible assets and working capital. The Company completed the final fair value determination of the Billie Acquisition in the fourth quarter of fiscal year 2022.
The Company used variations of the income approach in determining the fair value of intangible assets acquired in the Acquisition. Specifically, we utilized the multi-period excess earnings method to determine the fair value of the definite lived customer relationships acquired and the relief from royalty method to determine the fair value of the definite lived trade name acquired. Our determination of the fair value of the intangible assets acquired involved the use of significant estimates and assumptions related to revenue growth rates, discount rates, customer attrition rates, and royalty rates. Edgewell believes that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use.
The following table provides the allocation of the purchase price related to the Acquisition based upon the fair value of assets and liabilities assumed:
| | | | | |
Current assets | $ | 17.0 | |
Goodwill | 181.2 |
Intangible assets | 136.0 |
Other assets, including property, plant and equipment, net | 3.2 |
Current liabilities | (6.9) | |
Deferred tax liabilities | (21.1) | |
| $ | 309.4 | |
The acquired goodwill represented the value of expansion into new markets and channels of trade and is not deductible for tax purposes. The intangible assets acquired consisted primarily of the Billie trade name and customer relationships with a weighted average useful life of 19 years. All assets are included in the Company’s Wet Shave segment.
Note 32 - Restructuring Charges
Operating Model Redesign
In fiscal 2023,2024, the Company is continuingcontinues to take actions to strengthen its operating model, simplify the organization and improve manufacturing and supply chain efficiency and productivity. As a result of these actions, we expectthe Company expects to incur restructuring and repositioning related charges of approximately $18$19 in fiscal 2023.2024. The Company has incurred restructuring and related charges as follows:
| | | | | | | | | | | | | |
| Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 | | |
Severance and related benefit costs | $ | 0.9 | | | $ | 1.3 | | | |
| | | | | |
Consulting, project implementation and management, and other exit costs | 1.9 | | | 0.9 | | | |
Total restructuring | $ | 2.8 | | | $ | 2.2 | | | |
| | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | | | |
| 2023 | | 2022 | | | | |
Severance and related costs | $ | 3.9 | | | $ | 0.9 | | | | | |
Asset write-off and accelerated depreciation | 0.1 | | | — | | | | | |
Consulting, project implementation and management, and other exit costs | 2.8 | | | 1.9 | | | | | |
Total restructuring and related costs (1) | $ | 6.8 | | | $ | 2.8 | | | | | |
Pre-tax SG&A(1)Restructuring and related costs of nil and $0.1 are included within Selling, general and administrative expense (“SG&A”) for the three months ended December 31, 2023 and 2022, associated with certain information technology enablement expenses and compensation expenses for restructuring programs were included in Consulting, project implementation and management, and other exit costs.
The following table summarizes the restructuring activities and related accrual for the three months ended December 31, 2022:2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Utilized | | |
| October 1, 2022 | | Charge to Income | | | | Cash | | Non-Cash | | December 31, 2022 |
Severance and related benefit costs | $ | 1.7 | | | $ | 0.9 | | | | | $ | (2.2) | | | $ | — | | | $ | 0.4 | |
| | | | | | | | | | | |
Consulting, project implementation and management, and other exit costs | 0.8 | | | 1.9 | | | | | (1.9) | | | — | | | 0.8 | |
Total restructuring | $ | 2.5 | | | $ | 2.8 | | | | | $ | (4.1) | | | $ | — | | | $ | 1.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Utilized | | | | |
| October 1, 2023 | | Charge to Income | | | | Cash | | | | December 31, 2023 |
Severance and related costs | $ | 3.9 | | | $ | 4.0 | | | | | $ | (4.2) | | | | | $ | 3.7 | |
| | | | | | | | | | | |
Consulting, project implementation and management, and other exit costs | 0.7 | | | 2.8 | | | | | (3.5) | | | | | — | |
Total restructuring activities and related accrual | $ | 4.6 | | | $ | 6.8 | | | | | $ | (7.7) | | | | | $ | 3.7 | |
Note 43 - Income Taxes
For the three months ended December 31, 2023, the Company had income tax expense of $1.2, on Earnings before income taxes of $6.0. The effective tax rate for the three months ended December 31, 2023 was 20.1%. The difference between the federal statutory rate and the effective rate is primarily due to a favorable mix of earnings in lower tax rate jurisdictions.
For the three months ended December 31, 2022, the Company had income tax expense of $4.5$4.6 on Earnings before income taxes of $16.4.$17.0. The effective tax rate for the three months ended December 31, 2022 was 27.1%27.0%. The difference between the federal statutory rate and the effective rate iswas primarily due to an unfavorable mix of earnings in higher tax rate jurisdictions.
For the three months ended December 31, 2021, the Company had income tax expense of $5.0 on Earnings before income taxes of $16.2. The effective tax rate for the three months ended December 31, 2021 was 30.9%, respectively. The difference between the federal statutory rate and the effective rate for the three months ended December 31, 2021 is primarily due to the unfavorable mix of earnings in higher tax rate jurisdictions, as well as Internal Revenue Service Code Section 162(m) permanent adjustments and the non-deductible expenses related to the Acquisition.
Note 54 - Earnings per Share
Basic earnings per share is based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share is based on the number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of share options, and restricted share equivalent (“RSE”) and performance restricted share equivalent (“PRSE”) awards.
The following is the reconciliation between the number of weighted-average shares used in the basic and diluted earnings per share calculation: | | Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| | | Three Months Ended December 31, | |
| | 2022 | | 2021 | |
Basic weighted-average shares outstanding | Basic weighted-average shares outstanding | 51.6 | | | 54.4 | | |
Basic weighted-average shares outstanding | |
Basic weighted-average shares outstanding | |
Effect of dilutive securities: | Effect of dilutive securities: | | |
RSE and PRSE awards | 0.3 | | | 0.6 | | |
Effect of dilutive securities: | |
Effect of dilutive securities: | |
Options, RSE and PRSE awards | |
Options, RSE and PRSE awards | |
Options, RSE and PRSE awards | |
Total dilutive securities | |
Total dilutive securities | |
Total dilutive securities | Total dilutive securities | 0.3 | | | 0.6 | | |
Diluted weighted-average shares outstanding | Diluted weighted-average shares outstanding | 51.9 | | | 55.0 | | |
Diluted weighted-average shares outstanding | |
Diluted weighted-average shares outstanding | |
For the three months ended December 31, 2022,
The following weighted-average common shares were excluded from the calculation of diluted weighted-average shares outstanding excludes 1.0 ofearnings per share options and 0.6 of RSE and PRSE awards because the effect of including these awards was anti-dilutive. For the three months ended December 31, 2021, the calculation of diluted weighted-average shares outstanding excludes 1.2 of share options and 0.5 of RSE and PRSE awards because the effect of including these awards was anti-dilutive.antidilutive. | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | |
| 2023 | | 2022 | | | | |
Option awards | 1.3 | | | 1.0 | | | | | |
RSE and PRSE awards | 0.6 | | | 0.6 | | | | | |
Note 65 - Goodwill and Intangible Assets
The following table sets forth goodwill by segment: | | | | | | | | | | | | | | | | | | | | | | | |
| Wet Shave | | Sun and Skin Care | | Feminine Care | | Total |
Gross balance at October 1, 2022 | $ | 1,133.5 | | | $ | 354.5 | | | $ | 205.2 | | | $ | 1,693.2 | |
Accumulated goodwill impairment | (369.0) | | | (2.0) | | | — | | | (371.0) | |
Net balance at October 1, 2022 | $ | 764.5 | | | $ | 352.5 | | | $ | 205.2 | | | $ | 1,322.2 | |
| | | | | | | |
Changes in the three months ended December 31, 2022 | | | | | | | |
Cumulative translation adjustment | 8.0 | | | 1.2 | | | 0.9 | | | 10.1 | |
| | | | | | | |
Gross balance at December 31, 2022 | $ | 1,141.5 | | | $ | 355.7 | | | $ | 206.1 | | | $ | 1,703.3 | |
Accumulated goodwill impairment | (369.0) | | | (2.0) | | | — | | | (371.0) | |
Net balance at December 31, 2022 | $ | 772.5 | | | $ | 353.7 | | | $ | 206.1 | | | $ | 1,332.3 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Wet Shave | | Sun and Skin Care | | Feminine Care | | Total |
Gross balance as of September 30, 2023 | $ | 1,140.5 | | | $ | 355.9 | | | $ | 206.0 | | | $ | 1,702.4 | |
Accumulated goodwill impairment | (369.0) | | | (2.0) | | | — | | | (371.0) | |
Net balance as of September 30, 2023 | $ | 771.5 | | | $ | 353.9 | | | $ | 206.0 | | | $ | 1,331.4 | |
| | | | | | | |
Changes in the three months ended December 31, 2023 | | | | | | | |
Cumulative translation adjustment | 4.0 | | | 0.7 | | | 1.0 | | | 5.7 | |
| | | | | | | |
Gross balance as of December 31, 2023 | $ | 1,144.5 | | | $ | 356.6 | | | $ | 207.0 | | | $ | 1,708.1 | |
Accumulated goodwill impairment | (369.0) | | | (2.0) | | | — | | | (371.0) | |
Net balance as of December 31, 2023 | $ | 775.5 | | | $ | 354.6 | | | $ | 207.0 | | | $ | 1,337.1 | |
The following table sets forth intangible assets by class: | | December 31, 2022 | | September 30, 2022 |
| Carrying Amount | | Accumulated Amortization | | Net | | Carrying Amount | | Accumulated Amortization | | Net |
| December 31, 2023 | | | December 31, 2023 | | September 30, 2023 |
| Carrying Amount | | | Carrying Amount | | Accumulated Amortization | | Net | | Carrying Amount | | Accumulated Amortization | | Net |
Indefinite lived | Indefinite lived | | | | | | | | | | | |
Trade names and brands | |
Trade names and brands | |
Trade names and brands | Trade names and brands | $ | 593.9 | | | $ | — | | | $ | 593.9 | | | $ | 587.1 | | | $ | — | | | $ | 587.1 | |
| Amortizable | Amortizable | |
Amortizable | |
Amortizable | |
Trade names and brands | |
Trade names and brands | |
Trade names and brands | Trade names and brands | $ | 339.6 | | | $ | 76.4 | | | $ | 263.2 | | | $ | 339.4 | | | $ | 72.2 | | | $ | 267.2 | |
Technology and patents | Technology and patents | 78.4 | | | 75.7 | | | 2.7 | | | 77.8 | | | 75.0 | | | 2.8 | |
Customer related and other | Customer related and other | 269.7 | | | 132.7 | | | 137.0 | | | 267.1 | | | 127.6 | | | 139.5 | |
Total amortizable intangible assets | $ | 687.7 | | | $ | 284.8 | | | $ | 402.9 | | | $ | 684.3 | | | $ | 274.8 | | | $ | 409.5 | |
Amortizable intangible assets | |
Total intangible assets | |
Amortization expense was $7.7$7.8 and $6.1$7.7 for the three months ended December 31, 20222023 and 2021,2022, respectively. Estimated amortization expense for amortizable intangible assets for the remainder of fiscal 2023 and for fiscal 2024, 2025, 2026, 2027 and 2028 is $23.0, $30.7, $30.6, $30.4, $30.4 and $30.3, respectively, and $227.5 thereafter.as follows: | | | | | |
| Estimated amortization expense |
Remainder of fiscal year 2024 | 23.3 | |
2025 | 31.1 | |
2026 | 30.7 | |
2027 | 30.5 | |
2028 | 30.4 | |
2029 | 30.4 | |
Thereafter | 197.3 | |
Goodwill and intangible assets deemed to have an indefinite life are not amortized but are instead reviewed annually for impairment of value or when indicators of a potential impairment are present. The Company’s annual impairment testing date is July 1. An interim impairment analysis may indicate that carrying amounts of goodwill and other intangible assets require adjustment or that remaining useful lives should be revised. The Company determined there was no triggering event requiring an interim impairment analysis during the three months ended December 31, 2022.
Note 7 - Supplemental Balance Sheet Information | | | | | | | | | | | |
| December 31, 2022 | | September 30, 2022 |
Inventories | | | |
Raw materials and supplies | $ | 103.0 | | | $ | 80.4 | |
Work in process | 95.1 | | | 103.2 | |
Finished products | 342.1 | | | 265.7 | |
Total inventories | $ | 540.2 | | | $ | 449.3 | |
Other Current Assets | | | |
Miscellaneous receivables | $ | 39.3 | | | $ | 39.6 | |
Inventory returns receivable | 1.1 | | | 1.1 | |
Prepaid expenses | 73.6 | | | 70.2 | |
Value added tax collectible from customers | 19.4 | | | 21.3 | |
Income taxes receivable | 20.5 | | | 19.3 | |
Other | 6.2 | | | 15.8 | |
Total other current assets | $ | 160.1 | | | $ | 167.3 | |
Property, Plant and Equipment | | | |
Land | $ | 18.6 | | | $ | 18.0 | |
Buildings | 142.3 | | | 140.3 | |
Machinery and equipment | 1,086.9 | | | 1,050.0 | |
Capitalized software costs | 59.2 | | | 56.5 | |
Construction in progress | 39.4 | | | 47.0 | |
Total gross property, plant and equipment | 1,346.4 | | | 1,311.8 | |
Accumulated depreciation and amortization | (997.8) | | | (966.3) | |
Total property, plant and equipment, net | $ | 348.6 | | | $ | 345.5 | |
Other Current Liabilities | | | |
Accrued advertising, sales promotion and allowances | $ | 40.1 | | | $ | 34.9 | |
Accrued trade allowances | 29.2 | | | 31.4 | |
Accrued salaries, vacations and incentive compensation | 33.2 | | | 51.1 | |
Income taxes payable | 7.2 | | | 17.4 | |
Returns reserve | 30.4 | | | 47.5 | |
Restructuring reserve | 1.2 | | | 2.5 | |
Value added tax payable | 6.7 | | | 6.5 | |
Deferred compensation | 4.7 | | | 4.5 | |
Short term lease obligation | 8.8 | | | 8.8 | |
Customer advance payments | 1.0 | | | 1.1 | |
Dividends payable | 7.7 | | | 7.8 | |
Other | 60.9 | | | 78.2 | |
Total other current liabilities | $ | 231.1 | | | $ | 291.7 | |
Other Liabilities | | | |
Pensions and other retirement benefits | $ | 57.8 | | | $ | 57.9 | |
Deferred compensation | 18.3 | | | 17.6 | |
Long term lease obligation | 41.6 | | | 41.5 | |
Other non-current liabilities | 58.4 | | | 56.6 | |
Total other liabilities | $ | 176.1 | | | $ | 173.6 | |
2023.
Note 86 - Leases
The Company leases certain offices and manufacturing facilities, warehouses, employee vehicles and certain manufacturing related equipment and determines if an arrangement is or contains a lease at inception. Leases may include options to extend or terminate the lease, and those options are recorded on the Condensed ConsolidatedSupplemental Balance Sheet when it is reasonably certain that the Company will exercise one of those options. All recorded leases are classified as operating leases, and lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheet.
A summary of the Company's lease information is as follows:Information | | | | | | | | | | | | | | |
| | December 31, 2022 | | September 30, 2022 |
Assets | Classification | | | |
Right of use assets | Other assets | $ | 50.1 | | | $ | 50.1 | |
| | | | |
Liabilities | | | | |
Current lease liabilities | Other current liabilities | $ | 8.8 | | | $ | 8.8 | |
Long-term lease liabilities | Other liabilities | 41.6 | | | 41.5 | |
Total lease liabilities | | $ | 50.4 | | | $ | 50.3 | |
| | | | |
Other information | | | | |
Weighted-average remaining lease term (years) | | 10 | | 10 |
Weighted-average incremental borrowing rate | | 6.6 | % | | 6.6 | % |
| | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | |
| 2022 | | 2021 | | | | |
Statement of Earnings | | | | | | | |
Lease cost (1) | $ | 3.0 | | | $ | 3.5 | | | | | |
| | | | | | | |
Other information | | | | | | | |
Leased assets obtained in exchange for new lease liabilities | 1.0 | | | 0.5 | | | | | |
Cash paid for amounts included in the measurement of lease liabilities | $ | 3.0 | | | $ | 3.6 | | | | | |
(1)Lease expense is included in Cost of products sold or SG&A expense based on the nature of the lease. Short-term lease expense is excluded from this amount and is not considered material.
The Company's future lease payments, including reasonably assured renewal options under lease agreements, are as follows: | | | | | |
Lease liability repayments | December 31, 2022 |
Remainder of fiscal 2023 | $ | 8.4 | |
2024 | 9.9 | |
2025 | 9.1 | |
2026 | 7.6 | |
2027 | 5.8 | |
2028 and thereafter | 35.1 | |
Total future minimum lease commitments | 75.9 | |
Less: Imputed interest | (25.5) | |
Present value of lease liabilities | $ | 50.4 | |
| | | | | | | | | | | |
| December 31, 2023 | | September 30, 2023 |
Inventories | | | |
Raw materials and supplies | $ | 94.1 | | | $ | 86.3 | |
Work in process | 92.2 | | | 91.1 | |
Finished products | 335.6 | | | 315.0 | |
Total inventories | $ | 521.9 | | | $ | 492.4 | |
Other Current Assets | | | |
| | | |
| | | |
Prepaid expenses | $ | 82.5 | | | $ | 72.5 | |
Value added tax receivables | 39.8 | | | 43.7 | |
Income taxes receivable | 25.1 | | | 18.9 | |
Other | 9.5 | | | 12.3 | |
Total other current assets | $ | 156.9 | | | $ | 147.4 | |
Property, Plant and Equipment | | | |
Land | $ | 18.8 | | | $ | 18.5 | |
Buildings | 144.9 | | | 142.6 | |
Machinery and equipment | 1,117.8 | | | 1,105.3 | |
Capitalized software costs | 61.4 | | | 60.2 | |
Construction in progress | 41.2 | | | 38.5 | |
Total gross property, plant and equipment | 1,384.1 | | | 1,365.1 | |
Accumulated depreciation and amortization | (1,050.6) | | | (1,027.2) | |
Total property, plant and equipment, net | $ | 333.5 | | | $ | 337.9 | |
Other Current Liabilities | | | |
Accrued advertising and sales promotion | $ | 38.1 | | | $ | 31.5 | |
Accrued trade allowances | 27.0 | | | 29.8 | |
Accrued salaries, vacations and incentive compensation | 34.2 | | | 65.4 | |
Income taxes payable | 6.5 | | | 11.9 | |
Returns reserve | 36.1 | | | 53.5 | |
| | | |
Accrued interest | 9.8 | | | 25.0 | |
| | | |
| | | |
| | | |
| | | |
Other | 94.3 | | | 92.4 | |
Total other current liabilities | $ | 246.0 | | | $ | 309.5 | |
Other Liabilities | | | |
Pensions and other retirement benefits | $ | 59.6 | | | $ | 58.2 | |
| | | |
| | | |
Other | 124.9 | | | 121.5 | |
Total other liabilities | $ | 184.5 | | | $ | 179.7 | |
Note 97 - Accounts Receivable FacilityFacilities
The Company participates in multiple accounts receivable purchase agreementsfacility programs both in the United States and Japan. These receivable agreements are between the Company and MUFG Bank, LTD, and the subsidiaries of both parties. Transfers under the accounts receivable repurchase agreements are accounted for as sales of accounts receivables, resulting in the receivables being de-recognizedderecognized from the Condensed Consolidated Balance Sheet. The purchaser assumes the credit risk at the time of sale and has the right at any time to assign, transfer, or participate any of its rights under the purchased receivables to another bank or financial institution. The purchase and sale of receivables under accounts receivable repurchase agreements is intended to be an absolute and irrevocable transfer without recourse by the purchaser to the Company for the creditworthiness of any obligor. The Company continueshas considered its performance obligation to have collectioncollect and servicing responsibilities forservice the receivables sold in the United States and receives separate compensation for their servicing.Japan and has determined that such services are not material. The compensation received is considered acceptable servicing compensation and as such, the Company does not recognize a servicing asset or liability.
As of December 31, 2022, the discount rate used to determine the purchase price for the subject receivables shall be based upon Bloomberg Short Term Bank Yield Index plus a margin applicable to the specified obligor.
Accounts receivables sold were $212.1$216.1 and $155.3$212.1 for the three months ended December 31, 20222023 and 2021,2022, respectively. The trade receivables sold that remained outstanding as of December 31, 20222023 and September 30, 20222023 were $85.4$82.4 and $78.7,$82.1, respectively. The net proceeds received were included in both Cash used byfrom operating activities and Cash used by investing activities on the Condensed Consolidated Statements of Cash Flows. The difference between the carrying amount of the trade receivables sold and the sum of the cash received is recorded as a loss on sale of receivables in Other income,expense (income), net in the Condensed Consolidated Statements of Earnings and Comprehensive Income. The loss on sale of trade receivables was $0.9$1.2 and $0.2$0.9 for the three months ended December 31, 20222023 and 2021,2022, respectively.
Note 108 - Debt
The detail of long-term debt was as follows: | | December 31, 2022 | | September 30, 2022 |
Senior notes, fixed interest rate of 5.500%, due 2028 | $ | 750.0 | | | $ | 750.0 | |
Senior notes, fixed interest rate of 4.125%, due 2029 | 500.0 | | | 500.0 | |
| December 31, 2023 | | | December 31, 2023 | | September 30, 2023 |
Senior notes, fixed interest rate of 5.5%, due 2028 | |
Senior notes, fixed interest rate of 4.1%, due 2029 | |
U.S. revolving credit facility (1) | U.S. revolving credit facility (1) | 255.0 | | | 155.0 | |
Total long-term debt, including current maturities | 1,505.0 | | | 1,405.0 | |
Total | |
| Less unamortized debt issuance costs and discount (2) | Less unamortized debt issuance costs and discount (2) | 13.0 | | | 13.6 | |
Less unamortized debt issuance costs and discount (2) | |
Less unamortized debt issuance costs and discount (2) | |
Total long-term debt | Total long-term debt | $ | 1,492.0 | | | $ | 1,391.4 | |
(1)The U.S. revolving credit facility matures in April 2025.
(2)AtAs of December 31, 2022,2023, the balance for the Senior Notes due 2028 and the Senior Notes due 2029 are reflected net of debt issuance costs of $8.0$6.5 and $5.0,$4.2, respectively. AtAs of September 30, 2022,2023, the balance for the Senior Notes due 2028 and the Senior Notes due 2029 are reflected net of debt issuance costs of $8.3$6.9 and $5.3,$4.4, respectively.
The Company had outstanding variable-rate international borrowings, recorded in Notes payable,As of $25.2 and $19.0 as of December 31, 20222023 and September 30, 2022, respectively.
U.S. Revolving Credit Facility
On February 6, 2023, the Company amended the senior secured revolving credit facility in an aggregate principal amountalso had outstanding short-term notes payable with financial institutions with original maturities of $425 dated March 28, 2020. The amendment transitions the credit agreement from using the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) as many LIBOR periods will no longer be quoted after June 2023. The Company does not expect this change to haveless than 90 days of $24.2 a material change onnd $19.5, respectively, with weighted-average interest expense.rates of 3.9% for both periods. These notes were primarily outstanding international borrowings.
Note 119 - Retirement Plans
The Company has several defined benefit pension plans covering employees in the U.S. and certain employees in other countries, which are included in the information presented below.countries. The plans provide retirement benefits based on years of service and compensation. The Company also sponsors or participates in several other non-U.S. pension and postretirement arrangements, including various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, which are not significant in the aggregate and, therefore, are not included in the information presented below.
The Company’s net periodic pension and postretirement (income) costs for theseits material plans were as follows: | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | |
| 2022 | | 2021 | | | | |
Service cost | $ | 0.5 | | | $ | 1.0 | | | | | |
Interest cost | 5.2 | | | 2.6 | | | | | |
Expected return on plan assets | (5.4) | | | (5.3) | | | | | |
Recognized net actuarial loss | 0.4 | | | 1.5 | | | | | |
| | | | | | | |
Net periodic cost (income) | $ | 0.7 | | | $ | (0.2) | | | | | |
| | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | |
| 2023 | | 2022 | | | | |
Service cost | $ | 0.5 | | | $ | 0.5 | | | | | |
Interest cost | 5.3 | | | 5.2 | | | | | |
Expected return on plan assets | (4.9) | | | (5.4) | | | | | |
Recognized net actuarial loss | 0.4 | | | 0.4 | | | | | |
| | | | | | | |
Net periodic cost | $ | 1.3 | | | $ | 0.7 | | | | | |
The service cost component of the net periodic cost (income) associated with the Company’s retirement plans is recorded to Cost of products sold and SG&A on the Condensed Consolidated Statement of Earnings and Comprehensive Income. The remaining net periodic cost (income) is recorded to Other income,expense (income), net on the Condensed Consolidated Statement of Earnings and Comprehensive Income.
Note 1210 - Shareholders’ Equity
Share Repurchases
In January 2018, the Company’s Board of Directors (the “Board”) authorized the repurchase of up to 10.0 shares of the Company’s common stock, replacing the previous share repurchase authorization from May 2015. The Company repurchased 0.4 shares of its common stock for $15.0 during the three months ended December 31, 2022.2023. There are 6.14.2 shares of common stock available for repurchase in the future under the Board’s authorization as of December 31, 2022.2023. Any future share repurchases may be made in the open market, privately negotiated transactions, or otherwise permitted, and in such amounts and at such times as the Company deems appropriate based upon prevailing market conditions, business needs, and other factors.
Dividends
Dividends declared duringDividend activity in the three months ended December 31, 2022 totaled $8.0. Payments made for dividends during the three months ended December 31, 2022 totaled $8.3.2023 are as follows:
| | | | | | | | | | | | | | | | | | | | |
Date Declared | | Record Date | | Payable Date | | Amount Per Share |
August 1, 2023 | | September 7, 2023 | | October 4, 2023 | | $ | 0.15 | |
November 2, 2023 | | December 6, 2023 | | January 4, 2024 | | $ | 0.15 | |
On November 3, 2022,February 1, 2024, the Board declared a quarterly cash dividend of $0.15 per common share for the fourthsecond fiscal quarter. The dividend was paid on January 4, 2023 to shareholdersquarter of record as of the close of business on November 29, 2022.
On February 3, 2023, the Board declared a quarterly cash dividend of $0.15 per common share for the first fiscal quarter.2024. The dividend will be payable on April 5, 20234, 2024 to stockholdersshareholders of record as of the close of business on March 8, 2023.7, 2024.
Dividends declared during the three months ended December 31, 2023 totaled $7.6. Payments made for dividends during the three months ended December 31, 2023 totaled $7.6.
Note 1311 - Accumulated Other Comprehensive Loss
The following table presents the changes in accumulated other comprehensive loss (“AOCI”),AOCI, net of tax, by component: | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Currency Translation Adjustments | | Pension and Post-retirement Activity | | Hedging Activity | | Total |
Balance at October 1, 2022 | $ | (131.2) | | | $ | (92.6) | | | $ | 7.7 | | | $ | (216.1) | |
OCI before reclassifications (1) | 48.0 | | | (0.5) | | | (4.8) | | | 42.7 | |
Reclassifications to earnings | — | | | 0.3 | | | (3.4) | | | (3.1) | |
Balance at December 31, 2022 | $ | (83.2) | | | $ | (92.8) | | | $ | (0.5) | | | $ | (176.5) | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Currency Translation Adjustments | | Pension and Post-retirement Activity | | Hedging Activity | | Total |
Balance as of October 1, 2023 | $ | (86.9) | | | $ | (86.0) | | | $ | 2.9 | | | $ | (170.0) | |
Other comprehensive income (loss), net of tax | 27.0 | | | (0.4) | | | (2.3) | | | 24.3 | |
Reclassifications to earnings | — | | | 0.3 | | | (1.1) | | | (0.8) | |
Balance as of December 31, 2023 | $ | (59.9) | | | $ | (86.1) | | | $ | (0.5) | | | $ | (146.5) | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Currency Translation Adjustments | | Pension and Post-retirement Activity | | Hedging Activity | | Total |
Balance at October 1, 2021 | $ | (41.8) | | | $ | (97.3) | | | $ | 2.2 | | | $ | (136.9) | |
OCI before reclassifications (1) | (6.9) | | | (1.1) | | | 1.2 | | | (6.8) | |
Reclassifications to earnings | — | | | 1.1 | | | (0.8) | | | 0.3 | |
Balance at December 31, 2021 | $ | (48.7) | | | $ | (97.3) | | | $ | 2.6 | | | $ | (143.4) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Currency Translation Adjustments | | Pension and Post-retirement Activity | | Hedging Activity | | Total |
Balance as of October 1, 2022 | $ | (131.2) | | | $ | (92.6) | | | $ | 7.7 | | | $ | (216.1) | |
Other comprehensive (loss) income, net of tax | 48.0 | | | (0.5) | | | (4.8) | | | 42.7 | |
Reclassifications to earnings | — | | | 0.3 | | | (3.4) | | | (3.1) | |
Balance as of December 31, 2022 | $ | (83.2) | | | $ | (92.8) | | | $ | (0.5) | | | $ | (176.5) | |
(1)OCI is defined as other comprehensive income (loss).
The following table presents the reclassifications out of AOCI: | | Three Months Ended December 31, | | | Affected Line Item in the Condensed Consolidated Statements of Earnings |
| | Three Months Ended December 31, | |
| | Three Months Ended December 31, | |
| | Three Months Ended December 31, | | | | | Affected Line Item in the Condensed Consolidated Statements of Earnings |
Details of AOCI Components | Details of AOCI Components | | 2022 | | 2021 | | Affected Line Item in the Condensed Consolidated Statements of Earnings | | |
Gain / (Loss) on cash flow hedges | | | | | | | |
Gain on cash flow hedges | |
Gain on cash flow hedges | |
Gain on cash flow hedges | |
Foreign exchange contracts | Foreign exchange contracts | | $ | 5.0 | | | $ | 1.3 | | | | Other income, net |
| 1.6 | | | 0.5 | | | | Income tax provision |
| 3.4 | | | 0.8 | | | |
Foreign exchange contracts | |
Foreign exchange contracts | | | $ | 1.6 | | | $ | 5.0 | | | | | | | Other expense (income), net |
Income tax expense | | Income tax expense | | 0.5 | | | 1.6 | | | | | | | Income tax provision |
| | 1.1 | |
Amortization of defined benefit pension and postretirement items | Amortization of defined benefit pension and postretirement items | | | | | | |
Actuarial losses | | $ | (0.4) | | | $ | (1.5) | | | | (1) |
| (0.1) | | | (0.4) | | | | Income tax provision |
| (0.3) | | | (1.1) | | | |
Amortization of defined benefit pension and postretirement items | |
Amortization of defined benefit pension and postretirement items | |
Actuarial losses (1) | |
Actuarial losses (1) | |
Actuarial losses (1) | |
Income tax (benefit) | |
Income tax (benefit) | |
Income tax (benefit) | | | (0.1) | | | (0.1) | | | | | | | Income tax provision |
| | (0.3) | |
| Total reclassifications for the period | Total reclassifications for the period | | $ | 3.1 | | | $ | (0.3) | | | |
| Total reclassifications for the period | |
| Total reclassifications for the period | |
(1)These AOCI components are included in the computation of net periodic cost. See Note 119 of Notes to Condensed Consolidated Financial Statements.
Note 1412 - Financial Instruments and Risk Management
In the ordinary course of business, the Company may enter into contractual arrangements (also referred to as derivatives) to reduce its exposure to foreign currency. The Company has master netting agreements with all of its counterparties that allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default. The Company manages counterparty risk through the utilization of investment grade commercial banks, diversification of counterparties, and its counterparty netting arrangements. The section below outlines the types of derivatives in place atas of December 31, 20222023 and September 30, 2022,2023, as well as the Company’s objectives and strategies for holding derivative instruments.
Foreign Currency Risk
A significant share of the Company’s sales is tied to currencies other than the U.S. dollar, the Company’s reporting currency. As such, a weakening of currencies relative to the U.S. dollar can have a negativean unfavorable impact on reported earnings. Conversely, strengthening of currencies relative to the U.S. dollar can improve reported results. The primary currencies to which the Company is exposed include the euro, the Japanese yen, the British pound, the Canadian dollar, and the Australian dollar.
Additionally, the Company’s foreign subsidiaries enter into internal and external transactions that create non-functional currency balance sheet positions at the foreign subsidiary level. These exposures are generally the result of intercompany purchases, intercompany loans and, to a lesser extent, external purchases, and are revalued in the foreign subsidiary’s local currency at the end of each month. Changes in the value of the non-functional currency balance sheet positions in relation to the foreign subsidiary’s local currency results in an exchange gain or loss recorded in Other income,expense (income), net. The primary currency to which the Company’s foreign subsidiaries are exposed is the U.S. dollar.
Cash Flow Hedges
AtAs of December 31, 2022,2023, the Company maintainedmaintains a cash flow hedging program related to foreign currency risk. These derivative instruments have a high correlation to the underlying exposure being hedged and have been deemed highly effective by the Company for accounting purposes in offsetting the associated risk.
The Company has forward currency contracts to hedge cash flow uncertainty associated with currency fluctuations. These transactions are accounted for as cash flow hedges. The Company had an unrealized pre-tax lossesloss of $0.7$0.6 and gainsan unrealized pre-tax gain of $11.3 at$4.4 as of December 31, 20222023 and September 30, 2022,2023, respectively, on these forward currency contracts, which are accounted for as cash flow hedges and included in AOCI. Assuming foreign exchange rates versus the U.S. dollar remain at December 31, 20222023 levels over the next 12 months, the majority of the pre-tax gainloss included in AOCI atas of December 31, 20222023 is expected to be included in Other income,expense (income), net. Contract maturities for these hedges extend into fiscal 2023. At2025. As of December 31, 2022,2023, there were 64 open foreign currency contracts with a total notional value of $105.4.
Derivatives not Designated as Hedges
The Company has foreign currency derivative contracts, which are not designated as cash flow hedges for accounting purposes, to hedge balance sheet exposures. Any gains or losses on these contracts are expected to be offset by exchange gains or losses on the underlying exposures and, thus, are not expected to be subject to significant market risk. The change in the estimated fair
value of the foreign currency contracts for the three months ended December 31, 20222023 and 2021,2022, resulted in a loss of $2.71.1 and a gain of $1.12.7, respectively, and was recorded in Other income,expense (income), net in the Condensed Consolidated Statements of Earnings and Comprehensive Income. AtAs of December 31, 2022,2023, there were seventhree open foreign currency derivative contracts not designated as cash flow hedges with a total notional value of $65.9.$27.0.
The following table provides estimated fair values of derivative instruments: | | | | | | | | | | | |
| Fair Value of Assets (1) |
| December 31, 2022 | | September 30, 2022 |
Derivatives designated as cash flow hedging relationships: | | | |
Foreign currency contracts | $ | (0.7) | | | $ | 11.3 | |
Derivatives not designated as cash flow hedging relationships: | | | |
Foreign currency contracts | $ | (2.7) | | | $ | 2.0 | |
| | | | | | | | | | | |
| Fair Value of Assets (Liabilities) as of (1) |
| December 31, 2023 | | September 30, 2023 |
Derivatives designated as cash flow hedging relationships: | | | |
Foreign currency contracts | $ | (0.6) | | | $ | 4.4 | |
Derivatives not designated as cash flow hedging relationships: | | | |
Foreign currency contracts | $ | (1.2) | | | $ | 0.9 | |
(1)All derivativeDerivative assets are presented in Other current assets or Other assets. Derivative liabilities are presented in Other current liabilities or Other liabilities.
The following table provides the pre-tax amounts of gains and losses on derivative instruments: | | Three Months Ended December 31, | |
| 2022 | | 2021 | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| 2023 | |
| 2023 | |
| 2023 | |
Derivatives designated as cash flow hedging relationships: | |
Derivatives designated as cash flow hedging relationships: | |
Derivatives designated as cash flow hedging relationships: | Derivatives designated as cash flow hedging relationships: | | | | |
Foreign currency contracts | Foreign currency contracts | | | |
Foreign currency contracts | |
Foreign currency contracts | |
Gain (loss) recognized in OCI (1) | |
Gain (loss) recognized in OCI (1) | |
Gain (loss) recognized in OCI (1) | Gain (loss) recognized in OCI (1) | $ | (7.1) | | | $ | 1.8 | | |
Gain reclassified from AOCI into income (1) (2) | Gain reclassified from AOCI into income (1) (2) | 4.9 | | | 1.3 | | |
Gain reclassified from AOCI into income (1) (2) | |
Gain reclassified from AOCI into income (1) (2) | |
Derivatives not designated as cash flow hedging relationships: | |
Derivatives not designated as cash flow hedging relationships: | |
Derivatives not designated as cash flow hedging relationships: | Derivatives not designated as cash flow hedging relationships: | | |
Foreign currency contracts | Foreign currency contracts | | |
Gain (loss) recognized in income (2) | $ | (2.7) | | | $ | 1.1 | | |
Foreign currency contracts | |
Foreign currency contracts | |
Loss recognized in income (2) | |
Loss recognized in income (2) | |
Loss recognized in income (2) | |
(1)Each of these derivative instruments had a high correlation to the underlying exposure being hedged for the periods indicated and have been deemed highly effective by the Company in offsetting associated risk.
(2)Gain (loss) was recorded in Other income,expense (income), net.
The following table provides financial assets and liabilities for balance sheet offsetting: | | At December 31, 2022 | | At September 30, 2022 |
| Assets (1) | | Liabilities (2) | | Assets (1) | | Liabilities (2) |
| As of December 31, 2023 | | | As of December 31, 2023 | | As of September 30, 2023 |
| Assets (1) | | | Assets (1) | | Liabilities (2) | | Assets (1) | | Liabilities (2) |
Foreign currency contracts | Foreign currency contracts | | | | | | | |
Gross amounts of recognized assets (liabilities) | |
Gross amounts of recognized assets (liabilities) | |
Gross amounts of recognized assets (liabilities) | Gross amounts of recognized assets (liabilities) | $ | 2.0 | | | $ | (5.7) | | | $ | 13.4 | | | $ | (0.5) | |
Gross amounts offset in the balance sheet | Gross amounts offset in the balance sheet | (0.1) | | | 0.4 | | | — | | | 0.4 | |
Net amounts of assets (liabilities) presented in the balance sheet | Net amounts of assets (liabilities) presented in the balance sheet | $ | 1.9 | | | $ | (5.3) | | | $ | 13.4 | | | $ | (0.1) | |
(1)All derivative assets are presented in Other current assets or Other assets.
(2)All derivative liabilities are presented in Other current liabilities or Other liabilities.
Fair Value Hierarchy
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.
The following table sets forth the Company’s financial assets and liabilities, which are carried at fair value and measured on a recurring basis during the period, all of which are classified as Level 2 within the fair value hierarchy: | | | | | | | | | | | |
| December 31, 2022 | | September 30, 2022 |
Liabilities at estimated fair value: | | | |
Deferred compensation | $ | (22.6) | | | $ | (21.8) | |
Derivatives - foreign currency contracts | (3.4) | | | 13.3 | |
Net liabilities at estimated fair value | $ | (26.0) | | | $ | (8.5) | |
| | | | | | | | | | | |
| December 31, 2023 | | September 30, 2023 |
Assets (Liabilities) at estimated fair value: | | | |
Deferred compensation liability | $ | (20.7) | | | $ | (19.4) | |
Derivatives - foreign currency contracts (liability) asset | (1.8) | | | 5.6 | |
Net assets (liabilities) at estimated fair value | $ | (22.5) | | | $ | (13.8) | |
The estimated fair value of the deferred compensation liability is determined based upon the quoted market prices of the investment options that are offered under the plan. AtAs of December 31, 20222023 and September 30, 2022,2023, the estimated fair value of foreign currency contracts is the amount that the Company would receive or pay to terminate the contracts, considering first the quoted market prices of comparable agreements or, in the absence of quoted market prices, factors such as interest rates, currency exchange rates, and remaining maturities.
AtAs of December 31, 20222023 and September 30, 2022,2023, the Company had no Level 1 financial assets or liabilities, other than pension plan assets, and no Level 3 financial assets or liabilities atas of December 31, 20222023 and September 30, 2022,2023, respectively.
AtAs of December 31, 20222023 and September 30, 2022,2023, the fair market value of fixed rate long-term debt was $1,001.0$1,139.8 and $945.9,$1,028.6, respectively, compared to its carrying value of $1,250.0 in each period. The estimated fair value of the long-term debt was estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements. The estimated fair value of long-term debt, excluding the U.S. revolvingCompany’s credit facility due 2025 betweenagreement, dated as of March 28, 2020, by and among, inter alia, the Company, the subsidiaries of the Company from time to time parties thereto, the lenders from time to time parties thereto, MUFG, as syndication agent, TD as joint lead arranger and Bank of America, N.A.,BofA, as administrative agent and lenders parties thereto (“Revolvingcollateral agent (the "Revolving Credit Facility”Facility"), has been determined based on Level 2 inputs.
Due to the nature of cash and cash equivalents and short-term borrowings, including notes payable, the carrying amounts on the balance sheets approximate fair value. Additionally, the carrying amounts of the Revolving Credit Facility, which are classified as long-term debt on the balance sheet, approximate fair value due to the revolving nature of the balances. The estimated fair value of cash and cash equivalents, short-term borrowings, and the Revolving Credit Facility have been determined based on Level 2 inputs.
Note 1513 - Segment Data
For an overview of the Company’s segments, refer to Note 1 toof the Notes to Condensed Consolidated Financial Statements. Segment performance is evaluated based on segment profit, exclusiveexcluding certain U.S. GAAP items that management does not believe are indicative of general corporate expenses, share-based compensation costs, restructuring chargesongoing operating performance due to their unusual or non-recurring nature and certain costs deemed non-recurringwhich may have a disproportionate positive or negative impact on the Company’s financial results in nature, including acquisition and integration costs, Sun Care reformulation costs, value-added tax settlement costs and the amortization of intangible assets.any particular period. Financial items, such as interest income and expense, are managed on a global basis at the corporate level.level and therefore are excluded from segment profit. The exclusion of such charges from segment results reflects management’s view on how itmanagement monitors and evaluates segment performance.operating performance, generates future operating plans and makes strategic decisions regarding the allocation of capital.
The Company’s operating model includes some shared business functions across the segments, including product warehousing and distribution, transaction processing functions and, in most cases, combined sales force and management teams. The Company applies a fully allocated cost basis in which shared business functions are allocated between the segments.
Segment net sales and profitability are presented below: | | |
| |
| |
| | | Three Months Ended December 31, | |
| | 2022 | | 2021 | |
Net Sales | Net Sales | | | | |
Net Sales | |
Net Sales | |
Wet Shave | |
Wet Shave | |
Wet Shave | Wet Shave | $ | 275.3 | | | $ | 286.1 | | |
Sun and Skin Care | Sun and Skin Care | 112.9 | | | 104.8 | | |
Sun and Skin Care | |
Sun and Skin Care | |
Feminine Care | Feminine Care | 80.9 | | | 72.4 | | |
Feminine Care | |
Feminine Care | |
Total net sales | |
Total net sales | |
Total net sales | Total net sales | $ | 469.1 | | | $ | 463.3 | | |
| Segment Profit | Segment Profit | | | |
| Segment Profit | |
| Segment Profit | |
Wet Shave | |
Wet Shave | |
Wet Shave | Wet Shave | $ | 35.4 | | | $ | 51.5 | | |
Sun and Skin Care | Sun and Skin Care | 13.1 | | | 3.7 | | |
Sun and Skin Care | |
Sun and Skin Care | |
Feminine Care | |
Feminine Care | |
Feminine Care | Feminine Care | 11.8 | | | 8.4 | | |
Total segment profit | Total segment profit | 60.3 | | | 63.6 | | |
Total segment profit | |
Total segment profit | |
General corporate and other expenses | General corporate and other expenses | (15.9) | | | (10.8) | | |
General corporate and other expenses | |
General corporate and other expenses | |
Amortization of intangibles | |
Amortization of intangibles | |
Amortization of intangibles | |
Interest and other expense, net | |
Interest and other expense, net | |
Interest and other expense, net | |
Restructuring and related costs(1) | |
Restructuring and related costs(1) | |
Restructuring and related costs(1) | Restructuring and related costs(1) | (2.8) | | | (2.2) | | |
Acquisition and integration costs (1)(2) | Acquisition and integration costs (1)(2) | (2.1) | | | (6.0) | | |
Acquisition and integration costs (1)(2) | |
Acquisition and integration costs (1)(2) | |
Sun Care reformulation costs (2)(3) | Sun Care reformulation costs (2)(3) | (0.5) | | | (3.3) | | |
Sun Care reformulation costs (2)(3) | |
Sun Care reformulation costs (2)(3) | |
Wet Ones manufacturing plant fire (4) | |
Wet Ones manufacturing plant fire (4) | |
Wet Ones manufacturing plant fire (4) | |
Other project costs | |
Other project costs | |
Other project costs | |
| VAT settlement costs (3) | — | | | (3.4) | | |
Amortization of intangibles | (7.7) | | | (6.1) | | |
Interest and other expense, net | (14.9) | | | (15.6) | | |
| Total earnings before income taxes | Total earnings before income taxes | $ | 16.4 | | | $ | 16.2 | | |
| Total earnings before income taxes | |
| Total earnings before income taxes | |
(1)Includes pre-tax SG&A of $2.1nil and $5.7$0.1 for the three months ended December 31, 2023 and 2022, respectively.
(2)Includes pre-tax SG&A of $0.7 and 2021, respectively, for the Billie acquisition. Additionally, includes Cost of products sold of $0.3 related to the valuation of acquired inventory for the Billie acquisition$2.1 for the three months ended December 31, 2023 and 2022, respectively, for the acquisition of Billie, Inc. on November 29, 2021.
(2)(3)Includes pre-tax R&D of $0.5 and $0.5 for the three months ended December 31, 20222023 and pre-tax COGS of $3.3 for the three months ended December 31, 2021,2022, respectively, related to the reformulation, recall and destruction of certain Sun Care products.
(3)(4)Includes pre-tax SG&AOn December 1, 2023, a fire occurred at our Wet Ones manufacturing plant in Sidney, Ohio. There were no injuries reported and damage was limited to a single manufacturing process. As a consequence of $3.4 forthe fire damage, there was a partial shutdown of the operations that manufacture Wet Ones raw materials. Through the three months ended December 31, 20212023, the Company has incurred $1.5 in costs related to incremental material charges, labor and absorption as a result of the estimated settlement of prior years’ value-added tax audits in Germany.fire.
The following table presents the Company’s net sales by geographic area: | | Three Months Ended December 31, | |
| 2022 | | 2021 | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| 2023 | |
| 2023 | |
| 2023 | |
Net Sales to Customers | |
Net Sales to Customers | |
Net Sales to Customers | Net Sales to Customers | | | | |
United States | United States | $ | 271.8 | | | $ | 262.5 | | |
United States | |
United States | |
International | |
International | |
International | International | 197.3 | | | 200.8 | | |
Total net sales | Total net sales | $ | 469.1 | | | $ | 463.3 | | |
Total net sales | |
Total net sales | |
Supplemental product information is presented below for net sales: | | Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| | | Three Months Ended December 31, | |
| | 2022 | | 2021 | |
Razors and blades | Razors and blades | $ | 247.0 | | | $ | 255.7 | | |
Razors and blades | |
Razors and blades | |
Tampons, pads, and liners | |
Tampons, pads, and liners | |
Tampons, pads, and liners | Tampons, pads, and liners | 80.9 | | | 72.4 | | |
Sun care products | Sun care products | 47.8 | | | 40.2 | | |
Sun care products | |
Sun care products | |
Grooming products | |
Grooming products | |
Grooming products | Grooming products | 47.3 | | | 46.3 | | |
Wipes and other skin care | Wipes and other skin care | 17.8 | | | 18.3 | | |
Wipes and other skin care | |
Wipes and other skin care | |
Shaving gels and creams | |
Shaving gels and creams | |
Shaving gels and creams | Shaving gels and creams | 28.3 | | | 30.4 | | |
Total net sales | Total net sales | $ | 469.1 | | | $ | 463.3 | | |
Total net sales | |
Total net sales | |
Note 1614 - Subsequent EventCommitments and Contingencies
Legal Proceedings
The Company initiatedand its subsidiaries are subject to a number of legal proceedings in various jurisdictions arising out of its operations during the wind-upordinary course of Canada's Defined Benefit Pensionbusiness. Many of these legal matters are in June 2021. On January 25, 2023,preliminary stages and involve complex issues of law and fact and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated and discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued if such disclosure is necessary for its financial statements to not be misleading. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. Based upon present information, the Company received approval by the Financial Services Regulatory Authoritybelieves that its liability, if any, arising from such pending legal proceedings, asserted legal claims, and known potential legal claims which are likely to be asserted, is not reasonably likely to be material to its financial position, results of Ontario (“FSRA”) to wind-up the Company’s Canada Defined Benefit Plan. As a result of the termination and settlement of the Canada Defined Benefit Plan, the Company will recognize previously recorded accumulated other comprehensive loss and write off the pension assets of the Canada Defined Benefit Pension Plan. This will result in a non-cash settlement expense of approximately $8.0.operations or cash flows, when taking into account established accruals for estimated liabilities.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(Amounts in millions, except per share data, unaudited)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the accompanying notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on November 16, 202228, 2023 (the “2022“2023 Annual Report”). The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs and involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed within “Forward-Looking Statements” below and in Item 1A. Risk Factors and “Forward-Looking Statements” included within our 20222023 Annual Report.
Forward-Looking Statements
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934.1934, as amended (the “Exchange Act”). The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of Edgewell Personal Care Company or any of our businesses (the “Company”). Forward-looking statements generally can be identified by the use of words or phrases such as “believe,” “expect,” “expectation,” “anticipate,” “may,” “could,” “intend,” “estimate,” “plan,” “target,” “predict,” “likely,” “will,” “should,” “forecast,” “outlook,” “strategy,” or other similar words or phrases. These statements are not based on historical facts, but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future earnings and performance of Edgewell Personal Carethe Company or any of our businesses, and the integration of the Billie, Inc. (“Billie”) acquisition and expected benefits from this transaction, including growth opportunities and cost savings.businesses. Many factors outside our control could affect the realization of these estimates. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this report are only made as of the date of this report, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. You should not place undue reliance on these statements.
In addition, other risks and uncertainties not presently known to us or that we presently consider immaterial could significantly affect the forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Risks and uncertainties include those detailed from time to time in our publicly filed documents, including in Item 1A. Risk Factors of Part I of our 20222023 Annual Report.
Non-GAAP Financial Measures
While we report financial results in accordance with GAAP, this discussion also includes non-GAAP measures. These non-GAAP measures are referred to as “adjusted” or “organic” and exclude items suchwhich are considered by the Company as restructuring costs, acquisitionunusual or non-recurring, and integration costs, and other non-standard items.which may have a disproportionate positive or negative impact on the Company’s financial results in any particular period. Reconciliations of non-GAAP measures are included within this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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. We use this non-GAAP information internally to make operating decisions and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of ongoing operating results. Given certain significant events, including the acquisition of Billie, we view the use of non-GAAP measures that take into account the impact of these unique events as particularly valuable in understanding our underlying operational results and providing insights into future performance. The information can also be used to perform trend analysis and to better identify operating trends that may otherwise be masked or distorted by the types of items that are excluded. This non-GAAP information is also a component in determining management’s incentive compensation. Finally, we believe this information provides more transparency.
The following provides additional detail on our non-GAAP measures:measures for the periods presented:
•We analyze net sales and segment profit on an organic basis to better measure the comparability of results between periods. Organic net sales and organic segment profit exclude the impact of changes in foreign currency translation and the impact of the Billie acquisition.
◦Organic net sales will be unfavorably impacted in October and November of fiscal 2023 by the Billie acquisition as sales that were previously reported as third party sales to Billie are now included as inter-company sales.translation.
◦Segment profit will be impacted by fluctuations in translation and transactional foreign currency. The impact of currency was applied to segments using management’s best estimate.
•Additionally, we utilize “adjusted” non-GAAP measures including adjusted gross profit, adjusted selling general and administrative (“SG&A,&A”), adjusted operating income, adjusted income taxes, adjusted net earnings, and adjusted diluted earnings per share internally to make operating decisions. The following items are excluded when analyzing non-GAAP measures: restructuring and related costs, acquisition and integration costs, Sun Care reformulation charges, and other non-standard items.
All comparisons are with the same period in the prior year, unless otherwise noted.
Industry and Market Data
Unless we indicate otherwise, we base the information contained or incorporated by reference herein, concerning our industry on our general knowledge and expectations. Our market position, market share, and industry market size are estimates based on internal and external data from various industry analyses, our internal research and adjustments, and assumptions that we believe to be reasonable. We have not independently verified data from industry analyses and cannot guarantee its accuracy or completeness. In addition, we believe that industry, market size, market position and market share data within our industry provides general guidance but is inherently imprecise and has not been verified by any independent source. Further, our estimates and assumptions involve risks and uncertainties and are subject to change based on various factors, including those discussed in Item 1A. Risk Factors in Part I of our 20222023 Annual Report. These and other factors could cause results to differ materially from those expressed in the estimates and assumptions. You are cautioned not to place undue reliance on this data.
Retail sales for purposes of market size, market position and market share information are based on retail sales in U.S. dollars.
Trademarks and Trade Names
We own or have rights to use trademarks and trade names that we use in conjunction with the operation of our business, which appear throughout this Quarterly Report on Form 10-Q. We may also refer to brand names, trademarks, service marks and trade names of other companies and organizations, which are the property of their respective owners.
Impact of the COVID-19 Pandemic
Throughout the novel coronavirus 2019 (“COVID-19”) pandemic, we have taken and continue to take significant measures to protect our employees and businesses, while remaining in compliance with local and national guidelines.
We have implemented additional health and safety measures at all of our manufacturing and office locations to ensure the health and wellbeing of our employees. To date, we have not experienced any material operational disruptions across our manufacturing or distribution facilities.
The prolonged COVID-19 pandemic environment has resulted in increased supply chain challenges across labor management, raw material procurement and product distribution. The continued duration and severity of COVID-19 pandemic may cause further disruptions related to our key suppliers, increase procurement and distribution costs and impact our ability to hire and retain employees, which may result in higher labor costs going forward. However, the impact, timing and severity of potential disruptions cannot be reasonably estimated at this time.
Significant Events
Acquisitions
On November 29, 2021, the Company completed the acquisition of Billie, a leading U.S. based consumer brand company that offers a broad portfolio of personal care products for women, for a purchase price of $309.4, net of cash acquired. We purchased Billie utilizing a combination of cash on hand and drawing on our U.S. revolving credit facility due 2025 between the Company and Bank of America, N.A., as administrative agent, and lenders parties thereto (“Revolving Credit Facility”). As a result, Billie became a wholly owned subsidiary of the Company. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for further discussion.
Executive Summary
The following is a summary of key results for the first quarter of fiscal 20232024, as compared to the first quarter ofcorresponding periods in fiscal 2022. Net2023. In addition to net sales, net earnings and earnings per share (“EPS”) for the periods presented were also impacted by restructuring and relatedcertain costs acquisition and integration costs, Sun Care reformulation costs, and other non-standard items,or income, as described in the table below. The impact of these items on reported net earnings and EPS are provided as a reconciliation of net earnings and EPS to adjusted net earnings and adjusted diluted EPS, both of which are non-GAAP measures.
First Quarter of Fiscal 20232024
•Net sales in the first quarter of fiscal 20232024 increased 1.3%$19.8, or 4.2%, to $469.1.$488.9, as compared to the prior year quarter. Organic net sales increased 3.0%$14.3, or 3.1%, compared to the prior year quarter, withas international markets increased $28.7 or 16.2%, primarily driven by strong Sun Careperformance across all segments, and Women’s Shave performance in International markets,reflecting growth from higher volumes and Men’s Shavepricing across wet shave and Feminine Caregrooming, partially offset by lower net sales in North America.America of $14.4 or 4.9%. In aggregate, organic net sales growth was driven by increased pricing, with volumes essentially flat.
•Net earningsin the first quarter of fiscal 20232024 were $11.9$4.8 compared to $11.2$12.4 in the prior year quarter. On an adjusted basis, net earnings for the first quarter of fiscal 20232024 were $16.0$12.0 compared to $23.2$16.5 in the prior year quarter. Adjusted net earnings declined compared to the prior year quarter despite higher net sales,decreased primarily due to lower gross margins from inflationary pressures and foreign currency, and higherincreased SG&A and interest costs.advertising and promotion expense (“A&P”) in the current quarter.
•Net earnings per diluted share during the first quarter of fiscal 20232024 were $0.23$0.09 compared to $0.20$0.24 in the prior year quarter. On an adjusted basis, net earnings per diluted share during the first quarter of fiscal 20232024 were $0.31$0.24 compared to $0.42$0.32 in the prior year quarter.
| | Three Months Ended December 31, 2022 |
| Gross Profit | | SG&A | | Operating Income | | EBIT(1) | | Income taxes | | Net Earnings | | Diluted EPS |
| Three Months Ended December 31, 2023 | | | Three Months Ended December 31, 2023 |
| Gross Profit | | | Gross Profit | | SG&A | | Operating Income | | EBIT(1) | | Income taxes | | Net Earnings | | Diluted EPS |
GAAP — Reported | GAAP — Reported | $ | 189.0 | | $ | 95.7 | | $ | 31.3 | | $ | 16.4 | | | $ | 4.5 | | | $ | 11.9 | | $ | 0.23 | |
Restructuring and related costs | Restructuring and related costs | — | | 0.1 | | 2.8 | | 2.8 | | | 0.7 | | | 2.1 | | 0.04 | |
Acquisition and integration costs | Acquisition and integration costs | — | | 2.1 | | 2.1 | | 2.1 | | | 0.5 | | | 1.6 | | 0.03 | |
Sun Care reformulation costs | |
| Wet Ones manufacturing plant fire | |
Wet Ones manufacturing plant fire | |
Wet Ones manufacturing plant fire | |
| Sun Care reformulation costs | — | | — | | 0.5 | | 0.5 | | | 0.1 | | | 0.4 | | 0.01 | |
Other project costs | |
Other project costs | |
Other project costs | |
| Total Adjusted Non-GAAP | Total Adjusted Non-GAAP | $ | 189.0 | | $ | 93.5 | | $ | 36.7 | | $ | 21.8 | | | $ | 5.8 | | | $ | 16.0 | | $ | 0.31 | |
| Total Adjusted Non-GAAP | |
Total Adjusted Non-GAAP | |
GAAP as a percent of net sales | GAAP as a percent of net sales | 40.3 | % | | 20.4 | % | | 6.7 | % | | GAAP effective tax rate | 27.1 | % | |
Adjusted as a percent of net sales | Adjusted as a percent of net sales | 40.3 | % | | 19.9 | % | | 7.8 | % | | Adjusted effective tax rate | 26.4 | % | |
Adjusted as a percent of net sales | |
Adjusted as a percent of net sales | |
| | Three Months Ended December 31, 2021 |
| Gross Profit | | SG&A | | Operating Income | | EBIT(1) | | Income taxes | | Net Earnings | | Diluted EPS |
| Three Months Ended December 31, 2022 | | | Three Months Ended December 31, 2022 |
| Gross Profit | | | Gross Profit | | SG&A | | Operating Income | | EBIT(1) | | Income taxes | | Net Earnings | | Diluted EPS |
GAAP — Reported | GAAP — Reported | $ | 189.9 | | $ | 96.9 | | $ | 31.8 | | $ | 16.2 | | | $ | 5.0 | | | $ | 11.2 | | $ | 0.20 | |
Restructuring and related costs | Restructuring and related costs | — | | — | | 2.2 | | 2.2 | | | 0.5 | | | 1.7 | | 0.03 | |
Acquisition and integration costs | Acquisition and integration costs | 0.3 | | 5.7 | | 6.0 | | 6.0 | | | 0.3 | | | 5.7 | | 0.11 | |
| Sun Care reformulation costs | Sun Care reformulation costs | 3.3 | | — | | 3.3 | | 3.3 | | | 1.0 | | | 2.3 | | 0.04 | |
VAT settlement costs | — | | 3.4 | | 3.4 | | 3.4 | | | 1.1 | | | 2.3 | | 0.04 | |
Sun Care reformulation costs | |
Sun Care reformulation costs | |
| Total Adjusted Non-GAAP | |
| Total Adjusted Non-GAAP | |
| Total Adjusted Non-GAAP | Total Adjusted Non-GAAP | $ | 193.5 | | $ | 87.8 | | $ | 46.7 | | $ | 31.1 | | | $ | 7.9 | | | $ | 23.2 | | $ | 0.42 | |
| GAAP as a percent of net sales | GAAP as a percent of net sales | 41.0 | % | | 20.9 | % | | 6.9 | % | | GAAP effective tax rate | 30.9 | % | |
GAAP as a percent of net sales | |
GAAP as a percent of net sales | |
Adjusted as a percent of net sales | Adjusted as a percent of net sales | 41.8 | % | | 19.0 | % | | 10.1 | % | | Adjusted effective tax rate | 25.3 | % | |
Adjusted as a percent of net sales | |
Adjusted as a percent of net sales | |
(1)EBIT is defined as Earnings before Income taxes.
Operating Results
The following table presents changes in net sales for the first quarter of fiscal of 2023,2024, as compared to the corresponding periodperiods in fiscal 2022,2023, and provides a reconciliation of organic net sales to reported amounts.
Net Sales | Net Sales - Total Company | Net Sales - Total Company | | |
Period Ended December 31, 2022 | | |
Net Sales - Total Company | |
Net Sales - Total Company | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
| Q1 | |
| Q1 | |
| Q1 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Organic | |
Organic | |
Organic | |
| | Q1 | | % Chg | |
Net sales - fiscal 2022 | $ | 463.3 | | | | |
Organic | 14.0 | | | 3.0 | % | |
Impact of Billie acquisition, net | 12.0 | | | 2.6 | % | |
Impact of currency | Impact of currency | (20.2) | | | (4.3) | % | |
Net sales - fiscal 2023 | $ | 469.1 | | | 1.3 | % | |
| Impact of currency | |
| Impact of currency | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
For the first quarter of fiscal 2023,2024, net sales were $469.1,$488.9, an increase of 1.3%$19.8, or 4.2%, including a $12.0$5.5, or 2.6% net impact from the acquisition of Billie and a $20.2 or 4.3% negative1.1%, favorable impact from currency movements. Organic net sales increased 3.0%$14.3, or 3.1%, with 5.8%as international markets across all segments increased 16.2%, reflecting growth in International markets driven by Sun Carefrom higher volumes and Women’spricing across Wet Shave and 1.2% growthGrooming, partially offset by lower net sales in North America markets drivenwhich decreased by Men’s Shave and Feminine Care. Overall,4.9%. In aggregate, organic net sales growth was driven by increased 4.5% from higher pricing.pricing, with volumes essentially flat.
For further discussion regarding net sales, including a summary of reported versus organic changes, see “Segment Results.”
Gross Profit
Gross profit was $189.0$197.7 during the first quarter of fiscal 2023, including a $14.4 unfavorable impact from currency,2024, compared to $189.9$189.6 in the prior year quarter.quarter, an increase of $8.1 or 4.3%. Gross margin as a percent of net sales for the first quarter of fiscal 2023 was 40.3%40.4%, or flat compared to 41.0% in the prior year quarter. Adjusted gross margin decreased 150-basis points as a 500-basis point impact frompercent of net sales was 40.7% compared to 40.4% in the prior year quarter. The increase of 30-basis points was due to productivity savings of approximately 380-basis points, the benefit of higher commoditypricing of approximately 210-basis points, and transportation related costs, was offset by 240-basisapproximately 70-basis points of productivity savingsfavorable currency, more than offset core gross inflationary pressures of approximately 70-basis points, transitory cost headwinds related to unfavorable absorption and 250-basisheightened unit cost inflation trapped in inventory of 520-basis points benefit from higher pricing and promotion management.40-basis points of negative mix and other.
Selling, General and Administrative Expense
SG&A was $95.7$103.3, or 21.1%, of net sales in the first quarter of fiscal 2023,2024 compared to $95.7, or 20.4%, of net sales compared to $96.9 in the prior year quarter, or 20.9% of net sales.quarter. Adjusted SG&A as a percent of net sales was 19.9%21.0%, an increase of 90-basis110-basis points, as improved leverage, the benefits of operating efficiency programsprimarily driven by higher people and favorable currency was more than offset byincentive compensation expenses, and the impact of the Billie acquisition, including amortization, and higher compensation expense.unfavorable currency movements.
Advertising and Sales Promotion Expense
For the first quarter of fiscal 2023, advertising and promotion (“2024, A&P”)&P was $45.9, down $0.3$48.2, an increase of $2.3, or 5.0%, compared to $45.9 in the prior year quarter of $46.2.quarter. A&P as a percent of net sales was 9.8%9.9%, as compared to 10.0%9.8% in the prior year quarter. Excluding the favorable impactquarter, primarily due to timing of currency translation, A&P would have increased $1.7brand investments and 0.2% as a percent of net sales as compared to the prior year.marketing campaigns.
Research and Development Expense
Research and development expense (“R&D”) for the first quarter of fiscal 20232024 was $13.4,$13.3, a decrease of $0.1, or 0.7%, compared to $12.8$13.4 in the prior year quarter. As a percent of net sales, R&D was 2.9%2.7% in the first quarter of fiscal 20232024 compared to 2.8%2.9% in the prior year quarter.
Interest Expense Associated with Debt
Interest expense associated with debt for the first quarter of fiscal 20232024 was $19.9,$19.8, a decrease of $0.1, or 0.5%, compared to $17.3$19.9 in the prior year quarter. The increasedecrease in interest expense was the result of higher interest rates and a higherlower overall debt balance on the Company’s Revolving Credit Facility.Facility, partially offset by higher interest rates.
Other income,expense (income), net
Other income,expense (income), net was income$0.3 of $5.0expense in the first quarter of fiscal 2022,2024, a decrease in income of $5.3, or 106.0%, compared to $1.7$5.0 of income in the prior year quarter. The increase in incomechange compared to the prior year quarter was primarily driven by $5.3 in favorablelower foreign currency hedge settlements, partially offset by $1.8 in higher pension expense.gains.
Income Tax Provision
The effective tax rate for the first three monthsquarter of fiscal 20232024 was 27.1%,20.1% compared to 30.9%27.0% in the prior year period. The fiscal 20222024 effective tax rate reflects a more favorable mix of earnings in lower tax rate jurisdictions and the unfavorable impact related to the Acquisition.of a change in our prior estimates. On an adjusted basis, the effective tax rate was 26.4%22.8% and 25.3%26.4% for the first quarter of fiscal2024 and 2023, and fiscal 2022, respectively.
Operating Model Redesign
In fiscal 2023,2024, the Company is continuing to strengthen its operating model, simplify the organization and improve manufacturing and supply chain efficiency. As a result of these actions, we expect to incur charges of approximately $18.$19 in fiscal 2024. We incurred $2.8$6.8 during the first quarter of fiscal 2023,2024, primarily related to employee severance and benefitrelated costs.
Segment Results
The following tables present changes in segment net sales and segment profit for the first quarter of fiscal 2023,2024, compared to the corresponding periodperiods in fiscal 2022,2023, and provide a reconciliation of organic segment net sales and organic segment profit to reported amounts. For a reconciliation of segment profit to Earnings before income taxes, refer to Note 1513 of Notes to Condensed Consolidated Financial Statements.
Our operating model includes some shared business functions across segments, including product warehousing and distribution, transaction processing functions and, in most cases, a combined sales force and management teams. We apply a fully allocated cost basis in which shared business functions are allocated between segments.
Wet Shave | Net Sales - Wet Shave | Net Sales - Wet Shave | | |
Period Ended December 31, 2022 | | |
Net Sales - Wet Shave | |
Net Sales - Wet Shave | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
| Q1 | |
| Q1 | |
| Q1 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Organic | |
Organic | |
Organic | |
| | Q1 | | % Chg | |
Net sales - fiscal 2022 | $ | 286.1 | | | | |
Organic | (5.3) | | | (1.9) | % | |
Impact of Billie acquisition, net | 11.6 | | | 4.1 | % | |
Impact of currency | Impact of currency | (17.1) | | | (6.0) | % | |
Net sales - fiscal 2023 | $ | 275.3 | | | (3.8) | % | |
| Impact of currency | |
| Impact of currency | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
Wet Shave net sales for the first quarter of fiscal 2023 decreased $10.82024 increased $26.4, or 3.8%.9.6%, including a $4.0 or 1.5% favorable impact from currency. Organic net sales decreased $5.3,increased $22.4, or 1.9%8.1%, primarily driven by unit declines. Organic net sales in International markets decreased 0.7%, as growth in Europe and Latin America was more than offset by declines in Japan, which cycled last year’s Men’s Hydro brand re-launch. North America organic net sales decreased 3.2%, as growthreflecting an increase in Men’s and Women’s Systems, Disposables and Shave Preps, was more thanPreps. International organic sales increased 18.3%, driven by strong volume and price growth in most international markets, with notable growth in key Asian markets, partially offset by lower Women’s Systemsa 2.0% decrease in North American sales.
| | | | | | | | | | | | | | | |
Segment Profit - Wet Shave | | | | | | | |
Period Ended December 31, 2022 | | | | | | | |
| Q1 | | % Chg | | | | |
Segment profit - fiscal 2022 | $ | 51.5 | | | | | | | |
Organic | (8.2) | | | (15.9) | % | | | | |
| | | | | | | |
Impact of currency | (7.9) | | | (15.4) | % | | | | |
Segment profit - fiscal 2023 | $ | 35.4 | | | (31.3) | % | | | | |
| | | | | | | | | | | | | | | |
Segment Profit -Wet Shave | | | | | | | |
Period Ended December 31, 2023 | | | | | | | |
| Q1 | | % Chg | | | | |
Segment profit - fiscal 2023 | $ | 35.7 | | | | | | | |
Organic | 14.4 | | | 40.3 | % | | | | |
| | | | | | | |
Impact of currency | 3.6 | | | 10.1 | % | | | | |
Segment profit - fiscal 2024 | $ | 53.7 | | | 50.4 | % | | | | |
Wet Shave segment profit for the first quarter of fiscal 20232024 was $35.4, down $16.1,$53.7, an increase of $18.0, or 31.3%50.4%. The decline inOrganic segment profit was reflective of lower organicincreased $14.4, or 40.3%, reflecting higher net sales and higher cost of goods sold, negative impact of foreign currency and increased brand investment.gross margins.
Sun and Skin Care
| Net Sales - Sun and Skin Care | Net Sales - Sun and Skin Care | | |
Period Ended December 31, 2022 | | |
Net Sales - Sun and Skin Care | |
Net Sales - Sun and Skin Care | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
| Q1 | |
| Q1 | |
| Q1 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Organic | |
Organic | |
Organic | |
| | Q1 | | % Chg | |
Net sales - fiscal 2022 | $ | 104.8 | | | | |
Organic | 10.6 | | | 10.1 | % | |
Impact of Billie acquisition, net | 0.4 | | | 0.4 | % | |
Impact of currency | Impact of currency | (2.9) | | | (2.8) | % | |
Net sales - fiscal 2023 | $ | 112.9 | | | 7.7 | % | |
| Impact of currency | |
| Impact of currency | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
Sun and Skin Care net sales for the first quarter of fiscal 20232024 increased 7.7%$2.5, or 2.2%. Organic net sales increased $10.6,$1.0, or 10.1% primarily0.9%, driven by 68%mid-single-digit Sun Care growth across both North America and International markets, partially offset by lower sales in Men’s grooming and Wet One’s. Organic net sales in International markets increased 8.0%, led by Oceaniastrong Sun Care demand in Latin America and Latin America.Europe, while North America Sun Care organic net sales decreased 6.5%. Additionally, Grooming organic net sales increased 4.3% and Wet Ones organic net sales decreased 2.5%.2.3%, primarily driven by lower volumes.
| | | | | | | | | | | | | | | |
Segment Profit - Sun and Skin Care | | | | | | | |
Period Ended December 31, 2022 | | | | | | | |
| Q1 | | % Chg | | | | |
Segment profit - fiscal 2022 | $ | 3.7 | | | | | | | |
Organic | 10.0 | | | 270.3 | % | | | | |
Impact of currency | (0.6) | | | (16.2) | % | | | | |
Segment profit - fiscal 2023 | $ | 13.1 | | | 254.1 | % | | | | |
| | | | | | | | | | | | | | | |
Segment Profit - Sun and Skin Care | | | | | | | |
Period Ended December 31, 2023 | | | | | | | |
| Q1 | | % Chg | | | | |
Segment profit - fiscal 2023 | $ | 13.3 | | | | | | | |
Organic | (15.1) | | | (113.6) | % | | | | |
Impact of currency | 0.5 | | | 3.8 | % | | | | |
Segment (loss) - fiscal 2024 | $ | (1.3) | | | (109.8) | % | | | | |
Segment profitloss for the first quarter of fiscal 20232024 was $13.1, an increase$1.3, a decrease of $9.4. The increase in$14.6, or 109.8%. Organic segment profit wasdecreased $15.1, or 113.6%, primarily driven largely by higher sales and strongerlower gross profit in part as a result of increased pricing.resulting from significantly higher inflation related costs.
Feminine Care | Net Sales - Feminine Care | Net Sales - Feminine Care | | |
Period Ended December 31, 2022 | | |
| Q1 | | % Chg | |
Net sales - fiscal 2022 | $ | 72.4 | | | | |
Net Sales - Feminine Care | |
Net Sales - Feminine Care | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
Period Ended December 31, 2023 | |
| Q1 | |
| Q1 | |
| Q1 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Net sales - fiscal 2023 | |
Organic | |
Organic | |
Organic | Organic | 8.7 | | | 12.0 | % | |
Impact of currency | Impact of currency | (0.2) | | | (0.3) | % | |
Net sales - fiscal 2023 | $ | 80.9 | | | 11.7 | % | |
Impact of currency | |
Impact of currency | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
Net sales - fiscal 2024 | |
Feminine Care net sales for the first quarter of fiscal 2023 increased $8.5,2024 was $71.8, a decrease of $9.1, or 11.7%. The increase11.2%, primarily due to a decline in net sales was driven by higher pricingTampons, reflective of the comparison to last years competitive product out-of-stocks and improved product availability.further retailer inventory reductions this fiscal quarter.
| | | | | | | | | | | | | | | |
Segment Profit - Feminine Care | | | | | | | |
Period Ended December 31, 2022 | | | | | | | |
| Q1 | | %Chg | | | | |
Segment profit - fiscal 2022 | $ | 8.4 | | | | | | | |
Organic | 3.8 | | | 45.3 | % | | | | |
Impact of currency | (0.4) | | | (4.8) | % | | | | |
Segment profit - fiscal 2023 | $ | 11.8 | | | 40.5 | % | | | | |
| | | | | | | | | | | | | | | |
Segment Profit - Feminine Care | | | | | | | |
Period Ended December 31, 2023 | | | | | | | |
| Q1 | | % Chg | | | | |
Segment profit - fiscal 2023 | $ | 11.9 | | | | | | | |
Organic | (4.5) | | | (37.9) | % | | | | |
Impact of currency | (0.1) | | | (0.8) | % | | | | |
Segment profit - fiscal 2024 | $ | 7.3 | | | (38.7) | % | | | | |
Feminine Care segment profit for the first quarter of fiscal 20232024 was $11.8, an increase$7.3, a decrease of $3.4,$4.6, or 40.5%38.7%. Organic segment profit decreased $4.5, or 37.9%, largelyprimarily driven by higherlower sales and the resulting impact on gross profit which was partially offset by increased A&P support.
profit.
General Corporate and Other Expenses | | Quarter Ended December 31, | |
| 2022 | | 2021 | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| Three Months Ended December 31, | |
| 2023 | |
| 2023 | |
| 2023 | |
Corporate expenses | Corporate expenses | $ | 15.9 | | | $ | 10.8 | | |
Corporate expenses | |
Corporate expenses | |
Amortization of intangibles | |
Amortization of intangibles | |
Amortization of intangibles | |
Interest and other expense, net | |
Interest and other expense, net | |
Interest and other expense, net | |
Restructuring and related costs | |
Restructuring and related costs | |
Restructuring and related costs | Restructuring and related costs | 2.8 | | | 2.2 | | |
Acquisition and integration costs | Acquisition and integration costs | 2.1 | | | 6.0 | | |
| Acquisition and integration costs | |
Acquisition and integration costs | |
Sun Care reformulation costs | Sun Care reformulation costs | 0.5 | | | 3.3 | | |
Value-added tax settlement costs | — | | | 3.4 | | |
Sun Care reformulation costs | |
Sun Care reformulation costs | |
Wet Ones manufacturing plant fire | |
Wet Ones manufacturing plant fire | |
Wet Ones manufacturing plant fire | |
Other project costs | |
Other project costs | |
Other project costs | |
General corporate and other expenses | |
General corporate and other expenses | |
General corporate and other expenses | General corporate and other expenses | $ | 21.3 | | | $ | 25.7 | | |
% of net sales | % of net sales | 4.5 | % | | 5.5 | % | |
% of net sales | |
% of net sales | |
For the first quarter of fiscal 2023,2024, corporate expenses were $15.9,$16.2, or 3.4%3.3%, of net sales, compared to $10.8,$15.9, or 2.3%3.4%, of net sales.sales in the prior year quarter. For the first quarter of fiscal 2023,2024, the increase in corporate expenseexpenses was primarily due to higher benefitpeople and legalincentive compensation costs.
Wet Ones manufacturing plant fire
On December 1, 2023, a fire occurred at our Wet Ones manufacturing plant in Sidney, Ohio. There were no injuries reported and damage was limited to a single manufacturing process. As a consequence of the fire damage, there was a partial shutdown of the operations that manufacture Wet Ones raw materials. Through the three months ended December 31, 2023, the Company has incurred $1.5 in costs related to incremental material charges, labor and absorption as a result of the fire.
Liquidity and Capital Resources
AtAs of December 31, 2022,2023, a significant portion of our cash balances was located outside the U.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies. Refer to Note 1412 of Notes to Condensed Consolidated Financial Statements for a discussion of the primary currencies to which the Company is exposed. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We generally repatriate a portion of current year earnings from select non-U.S. subsidiaries only if the economic cost of the repatriation is not considered material.
Our cash is deposited with multiple counterparties which consist of major financial institutions. We consistently monitor positions with, and credit ratings of, counterparties both internally and by using outside ratings agencies.
Our total borrowings were $1,530.2 at December 31, 2022, including $280.2 tied to variable interest rates. Our total borrowings at September 30, 2022 were $1,424.0. We had outstanding borrowings of $255.0 under the Revolving Credit Facility at December 31, 2022. Taking into account outstanding letters of credit of $5.9, as of December 31, 2022, $164.1 was available under the Revolving Credit Facility. We had outstanding international borrowings, recorded in Notes payable, of $25.2 and $19.0 as of December 31, 20222023 and September 30, 2022, respectively.2023 were as follows:
On February 6, 2023, we amended our Revolving Credit Facility to transition from using the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) as LIBOR will no longer be available December 31, 2024. | | | | | | | | | | | | | | | | | | | | |
| Interest Type | Currency | | December 31, 2023 | | September 30, 2023 |
Long-term notes | fixed | USD | | $ | 1,250.0 | | | $ | 1,250.0 | |
Revolver loans borrowed under credit facility | variable | USD | | 213.0 | | | 122.0 | |
Short-term notes payable | variable | various | | 24.2 | | | 19.5 | |
Total borrowings | | | | $ | 1,487.2 | | | $ | 1,391.5 | |
Our Revolver utilization is summarized below.
| | | | | | | | | | | |
| December 31, 2023 | | September 30, 2023 |
Total revolver capacity | $ | 425.0 | | | $ | 425.0 | |
Less: Revolver borrowings | 213.0 | | | 122.0 | |
Less: Outstanding letters of credit | 5.4 | | | 5.9 | |
Revolver balance available | $ | 206.6 | | | $ | 297.1 | |
Historically, we have generated, and expect to continue to generate, positivefavorable cash flows from operations. Our cash flows are affected by the seasonality of our Sun Care products,businesses, typically resulting in higher net sales and increased cash generated in the second and third quarterquarters of each fiscal year. We believe our cash on hand, cash flows from operations and borrowing capacity under ourthe Revolving Credit Facility will be sufficient to satisfy our future working capital requirements, interest payments, R&D activities, capital expenditures, and other financing requirements for at least the next 12 months. We will continue to monitor our cash flows, spending and liquidity needs.
To date, the COVID-19 pandemic has not had a significant impact on our liquidity or capital resources. However, the COVID-19 pandemic has led to disruption and volatility in the global capital markets which could impact our capital resources and liquidity in the future. For further information, please refer to Item 1A. Risk Factors in Part I of our 2022 Annual Report.
Short-term financing needs primarily consist of working capital requirements and interest payments on our long-term debt. Long-term financing needs will depend largely on potential growth opportunities, including acquisition activity and repayment or refinancing of our long-term debt obligations. Our long-term liquidity may be influenced by our ability to borrow additional funds, renegotiate existing debt, and raise equity under terms that are favorable to us. We may, from time-to-time, seek to repurchase shares of our common stock. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
As of December 31, 2022,2023, we were in compliance with the provisions and covenants associated with our debt agreements.
Cash Flows
A summary of our cash flow activities is provided in the following table: | | Three Months Ended December 31, |
| 2022 | | 2021 |
Net cash from (used by): | | | |
| Three Months Ended December 31, | | | Three Months Ended December 31, |
| 2023 | | | 2023 | | 2022 |
Net cash (used by) from: | |
Operating activities | |
Operating activities | |
Operating activities | Operating activities | $ | (86.3) | | | $ | (79.0) | |
Investing activities | Investing activities | (11.2) | | | (312.7) | |
Financing activities | Financing activities | 82.9 | | | 155.5 | |
Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | 10.0 | | | (3.2) | |
Net (decrease) increase in cash and cash equivalents | $ | (4.6) | | | $ | (239.4) | |
Net decrease in cash and cash equivalents | |
Operating Activities
Cash flow used by operating activities was $86.3$72.9 during the first three monthsquarter of fiscal 2023,2024, compared to $79.0a use of $86.3 during the prior year period. The decrease in cash flowsused versus the same period in the prior year was driven by a largerlower net working capital build.
Investing Activities
Cash flowNet cash used by investing activities was $11.2$6.0 during the first three monthsquarter of fiscal 2023,2024, compared to $312.7 used$11.2 during the prior year period. Capital expenditures were $11.3$6.5 during the first three monthsquarter of fiscal 2023,2024, compared to $9.4 in the prior year period. We completed the acquisition of Billie for $308.8, net of cash acquired, in the prior year period. Additionally, we collected $5.0 of proceeds from the sale of the Infant and Pet Care business$11.3 in the prior year period.
Financing Activities
Net cash from financing activities was $82.9$69.8 during the first three monthsquarter of fiscal 2023,2024, compared to $155.5$82.9 in the prior year period. During the first three monthsquarter of fiscal 2023,2024, we had net borrowings of $100.0$91.0 under ourthe Revolving Credit Facility, compared to $198.0 in the prior year period. We repurchased $15.0 of our common stock under our 2018 Board authorization to repurchase our common stock (the “Repurchase Plan”) compared to $24.5$100.0 in the prior year period. Dividend payments totaled $8.3$7.6 in the first three monthsquarter of fiscal 2023,2024, compared to $8.5$8.3 in the prior year period. We had financing outflows for employee equity awards held for taxes totaling $8.1$7.0 in the first three monthsquarter of fiscal 2023,2024, compared to $9.7$8.1 in the prior year period.
Share Repurchases
During the first three months of fiscal 2023,2024, we repurchased 0.4 shares of our common stock for $15.0. We have 6.14.2 shares remaining under the Repurchase Plan as of December 31, 2022.2023. Future share repurchases, if any, would be made in the open market, privately negotiated transactions or otherwise, in such amounts and at such times as we deem appropriate based upon prevailing market conditions, business needs and other factors.
Dividends
Dividend activity for the three months ended December 31, 2023 are as follows:
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Date Declared | | Record Date | | Payable Date | | Amount Per Share |
August 1, 2023 | | September 7, 2023 | | October 4, 2023 | | $ | 0.15 | |
November 2, 2023 | | December 6, 2023 | | January 4, 2024 | | $ | 0.15 | |
On November 3, 2022,February 1, 2024, the Board declared a quarterly cash dividend of $0.15 per common share for the fourthsecond fiscal quarter. The dividend was paid on January 4, 2023 to shareholdersquarter of record as of the close of business on November 29, 2022.
On February 3, 2023, the Board declared a quarterly cash dividend of $0.15 per common share for the first fiscal quarter.2024. The dividend will be payable on April 5, 20234, 2024 to stockholdersshareholders of record as of the close of business on March 8, 2023.7, 2024.
Dividends declared during the three months ended December 31, 20222023 totaled $8.0.$7.6. Payments made for dividends during the three months ended December 31, 20222023 totaled $8.3.$7.6.
Commitments and Contingencies
Contractual Obligations
AtAs of December 31, 2022,2023, we had outstanding borrowings of $255.0$213.0 under the Revolving Credit Facility. As of December 31, 2022,2023, future minimum repayments of debt were: $255.0$213.0 in fiscal 2025, $750.0 in fiscal 2028 and $500.0 in fiscal 2029.
There have been no other material changes in our contractual obligations since the presentation in our 20222023 Annual Report.
Recent Accounting Pronouncements
Information regarding new accounting pronouncements is included in Note 1 of the Notes to Condensed Consolidated Financial Statements
Critical Accounting Policies
Our critical accounting policies and estimates are fully described in our 20222023 Annual Report. The preparation of these financial statements requires us to make estimates and assumptions. These estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates. There have been no significant changes to our critical accounting policies and estimates since September 30, 2022.2023.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
(Amounts in millions)
The market risk inherent in our financial instruments and positions represents the potential loss arising from adverse changes in currency rates, commodity prices, and interest rates. At times, we enter into contractual arrangements (derivatives) to reduce these exposures. For further information on our foreign currency derivative instruments, refer to Note 1412 of Notes to our Condensed Consolidated Financial Statements. As of December 31, 2022,2023, there were no open derivative or hedging instruments for future purchases of raw materials or commodities. Our exposure to interest rate risk relates primarily to our variable-rate debt instruments, which currently bear interest based on LIBORSecured Overnight Financing Rate (SOFR) plus margin. As of December 31, 2022,2023, our outstanding variable-rate debt included $280.2$237.2 related to ourthe Revolving Credit Facility and international, variable-rate notes payable. Assuming a one-percent increase in the applicable interest rates, annual interest expense on these variable-rate debt instruments would increase approximately $2.8.$2.4.
There have been no material changes in our assessment of market risk sensitivity since our presentation of Quantitative and Qualitative Disclosures About Market Risk in our 20222023 Annual Report.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the specified time periods, and that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.
Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022.2023. Based on that evaluation, our CEO and CFO concluded that, as of that date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 20222023 that have materially affected, or are likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds.Proceeds, and Issuer Purchases of Equity Securities.
The following table sets forth the purchases of our Company’s securities by the Company and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) (17 CFR 240.10b-18(a)(3)) during the first quarter of fiscal 2023:2024: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares Purchased (1) (2) | |
Average Price Paid per share (3) | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | | Maximum Number that May Yet Be Purchased Under the Plans or Programs |
October 1 to 31, 2022 | | 129,549 | | | $ | 38.56 | | | 129,549 | | | 6,346,481 | |
November 1 to 30, 2022 | | 307,919 | | | 39.96 | | | 124,553 | | | 6,221,928 | |
December 1 to 31, 2022 | | 141,907 | | | 40.65 | | | 124,199 | | | 6,097,729 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares Purchased (1) (2) | |
Average Price Paid per share (3) | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | | Maximum Number that May Yet Be Purchased Under the Plans or Programs |
October 1 to 31, 2023 | | 99,039 | | | $ | 35.49 | | | 99,039 | | | 4,511,638 | |
November 1 to 30, 2023 | | 298,526 | | | $ | 34.57 | | | 111,208 | | | 4,400,430 | |
December 1 to 31, 2023 | | 230,524 | | | $ | 35.46 | | | 213,695 | | | 4,186,735 | |
(1)201,074Includes 204,147 shares purchased during the first quarter relaterelated to the surrender to the Company of shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock equivalent awards.
(2)In January 2018, our Board authorized a repurchase of up to 10 million shares of our Company’s common stock. This authorization replaced the prior share repurchase authorization of May 2015. During the first quarter of fiscal 2023,2024, we repurchased 378,301423,942 shares under this authorization.
(3)Includes $0.02 per share of brokerage fee commissions.commissions and excludes excise tax.
Item 5. Other Information.
During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits. | | | | | |
Exhibit Number | Exhibit |
3.1 | |
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3.2 | |
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3.3 | |
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10.1 | Credit Agreement, dated as of March 28, 2020, by and among, inter alia, the Company, the subsidiaries of the Company from time to time parties thereto, the lenders from time to time parties thereto, MUFG, as syndication agent, TD as joint lead arranger and BofA, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 2, 2020). |
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10.2 | |
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10.3 | |
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10.4 | |
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10.5 | Amendment No. 1 to Credit Agreement, dated as of February 6, 2023 (this “Amendment”), among Edgewell Personal Care Company, a Missouri corporation (the “Borrower”), each of the Guarantors party hereto, Bank of America, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”), and each Issuing Bank and Lender party hereto. |
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10.6 | Master Accounts Receivable Purchase Agreement dated as of September 15, 2017 among Edgewell Personal Care, LLC, as the Seller, Edgewell Personal Care Company, as Guarantor, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Purchaser (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed September 19, 2017). |
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31.1* | |
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31.2* | |
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32.1** | |
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32.2** | |
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101 | The following materials from the Edgewell Personal Care Company Quarterly Report on Form 10-Q formatted in inline eXtensible Business Reporting Language (“iXBRL”): (i) the Condensed Consolidated Statements of Earnings and Comprehensive Income for the three months ended December 31,202231, 2023 and 2021,2022, (ii) the Condensed Consolidated Balance Sheets at December 31, 20222023 and September 30, 2022,2023, (iii) the Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 20222023 and 2021,2022, (iv) the Condensed Consolidated Statements of Shareholder’s Equity for the three months ended December 31, 20222023 and 20212022 and (v) Notes to Condensed Consolidated Financial Statements. The financial information contained in the XBRL-related documents is “unaudited” and “unreviewed.” |
*Filed herewith.
** Furnished herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| | EDGEWELL PERSONAL CARE COMPANY |
| | | |
| | Registrant |
| | | |
| | By: | /s/ Daniel J. Sullivan |
| | | Daniel J. Sullivan |
| | | Chief Financial Officer |
| | | (principal financial and principal accounting officer) |
| | | |
Date: | February 8, 20237, 2024 | | |