Form 10-Q EDGEWELL PERSONAL CARE For: Dec 31
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E-mail 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, 2022
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
____________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I. R. S. Employer Identification No.) | |||||||||||||
| (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 | ||||||
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.
| ☒ | 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 - 51,417,185 shares as of January 31, 2023.
EDGEWELL PERSONAL CARE COMPANY
INDEX TO FORM 10-Q
| PART I. | FINANCIAL INFORMATION | |||||||
| Item 1. | Financial Statements. | |||||||
| Condensed Consolidated Statements of Earnings and Comprehensive Income for the three months ended December 31, 2022 and 2021. | ||||||||
| Condensed Consolidated Balance Sheets as of December 31, 2022 and September 30, 2022. | ||||||||
| Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2022 and 2021. | ||||||||
| Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended December 31, 2022 and 2021. | ||||||||
| Notes to Condensed Consolidated Financial Statements. | ||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | |||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | |||||||
| Item 4. | Controls and Procedures. | |||||||
| PART II. | OTHER INFORMATION | |||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | |||||||
| Item 6. | Exhibits. | |||||||
| SIGNATURE | ||||||||
2
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, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net sales | $ | $ | |||||||||
| Cost of products sold | |||||||||||
| Gross profit | |||||||||||
| Selling, general and administrative expense | |||||||||||
| Advertising and sales promotion expense | |||||||||||
| Research and development expense | |||||||||||
| Restructuring charges | |||||||||||
| Operating income | |||||||||||
| Interest expense associated with debt | |||||||||||
| Other income, net | ( | ( | |||||||||
| Earnings before income taxes | |||||||||||
| Income tax provision | |||||||||||
| Net earnings | $ | $ | |||||||||
| Earnings per share: | |||||||||||
| Basic net earnings per share | $ | $ | |||||||||
| Diluted net earnings per share | $ | $ | |||||||||
| Statements of Comprehensive Income: | |||||||||||
| Net earnings | $ | $ | |||||||||
| Other comprehensive income, net of tax | |||||||||||
| Foreign currency translation adjustments | ( | ||||||||||
Pension and postretirement activity, net of tax of $( | ( | ||||||||||
Deferred (loss) gain on hedging activity, net of tax of $( | ( | ||||||||||
| Total other comprehensive income (loss), net of tax | ( | ||||||||||
| Total comprehensive income | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions, except share data)
| December 31, 2022 | September 30, 2022 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Trade receivables, less allowance for doubtful accounts of $ | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities | |||||||||||
| Notes payable | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred income tax liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Shareholders’ equity | |||||||||||
Preferred shares, $ | |||||||||||
Common shares, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Common shares in treasury at cost, | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
EDGEWELL PERSONAL CARE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash Flow from Operating Activities | |||||||||||
| Net earnings | $ | $ | |||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation expense | |||||||||||
| Loss on sale of assets | |||||||||||
| Deferred compensation payments | ( | ||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Other, net | ( | ||||||||||
| Changes in operating assets and liabilities | ( | ( | |||||||||
| Net cash used by operating activities | $ | ( | $ | ( | |||||||
| Cash Flow from Investing Activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Acquisition of Billie, net of cash acquired | ( | ||||||||||
| Collection of deferred purchase price on accounts receivable sold | |||||||||||
| Other, net | ( | ( | |||||||||
| Proceeds from sale of Infant and Pet Care business | |||||||||||
| Net cash used by investing activities | $ | ( | $ | ( | |||||||
| Cash Flow from Financing Activities | |||||||||||
| Cash proceeds from debt with original maturities greater than 90 days | |||||||||||
| Cash payments on debt with original maturities greater than 90 days | ( | ( | |||||||||
| Net increase in debt with original maturities of 90 days or less | |||||||||||
| Repurchase of shares | ( | ( | |||||||||
| Dividends to common shareholders | ( | ( | |||||||||
| Net financing inflow (outflow) from the Accounts Receivable Facility | ( | ||||||||||
| Employee shares withheld for taxes | ( | ( | |||||||||
| Other, net | |||||||||||
| Net cash from financing activities | $ | $ | |||||||||
| Effect of exchange rate changes on cash | ( | ||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
5
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 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Pension and postretirement activity | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Deferred loss on hedging activity | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Dividends declared to common shareholders | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Repurchase of shares | — | — | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Activity under share plans | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| 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 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Pension and postretirement activity | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Deferred gain on hedging activity | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Dividends declared to common shareholders | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Repurchase of shares | — | — | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Activity under share plans | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
6
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, our 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 Personna® 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, 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.
Acquisition of Billie, Inc. On November 29, 2021, the Company completed the acquisition of Billie, Inc. (“Billie”) (the “Acquisition”), a leading U.S. based consumer brand company that offers a broad portfolio of personal care products for women. The results of Billie for the post-acquisition period are included within the Company’s results since the acquisition date. For more information on the Acquisition, see Note 2 of Notes to Condensed Consolidated Financial Statements.
Statement of Cash Flows Presentation
The net presentation of borrowings and repayments under the Company's U.S revolving credit facility in the Condensed Consolidated Statement of Cash Flows for the three months ended December 31, 2021 has been revised in order 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 Statement of Cash Flows for the three months ended December 31, 2021 was not impacted and the Company has concluded that this correction is not material to its financial statements.
7
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 | $ | ||||
| Goodwill | |||||
| Intangible assets | |||||
| Other assets, including property, plant and equipment, net | |||||
| Current liabilities | ( | ||||
| Deferred tax liabilities | ( | ||||
| $ | |||||
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 3 - Restructuring Charges
Operating Model Redesign
In fiscal 2023, the Company is continuing 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 expect to incur restructuring charges of approximately $18 in fiscal 2023. The Company incurred restructuring charges as follows:
| Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | ||||||||||
| Severance and related benefit costs | $ | $ | |||||||||
| Consulting, project implementation and management, and other exit costs | |||||||||||
| Total restructuring | $ | $ | |||||||||
Pre-tax SG&A of $0.1 for the three months ended December 31, 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.
8
| Utilized | |||||||||||||||||||||||||||||
| October 1, 2022 | Charge to Income | Cash | Non-Cash | December 31, 2022 | |||||||||||||||||||||||||
| Severance and related benefit costs | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
| Consulting, project implementation and management, and other exit costs | ( | ||||||||||||||||||||||||||||
| Total restructuring | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Note 4 - Income Taxes
For the three months ended December 31, 2022, the Company had income tax expense of $4.5 on Earnings before income taxes of $16.4 . The effective tax rate for the three months ended December 31, 2022 was 27.1 %. The difference between the federal statutory rate and the effective rate is 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 5 - 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.
| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Basic weighted-average shares outstanding | |||||||||||
| Effect of dilutive securities: | |||||||||||
| RSE and PRSE awards | |||||||||||
| Total dilutive securities | |||||||||||
| Diluted weighted-average shares outstanding | |||||||||||
For the three months ended December 31, 2022, the calculation of diluted weighted-average shares outstanding excludes 1.0 of 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.
9
Note 6 - Goodwill and Intangible Assets
| Wet Shave | Sun and Skin Care | Feminine Care | Total | ||||||||||||||||||||
| Gross balance at October 1, 2022 | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated goodwill impairment | ( | ( | ( | ||||||||||||||||||||
| Net balance at October 1, 2022 | $ | $ | $ | $ | |||||||||||||||||||
| Changes in the three months ended December 31, 2022 | |||||||||||||||||||||||
| Cumulative translation adjustment | |||||||||||||||||||||||
| Gross balance at December 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated goodwill impairment | ( | ( | ( | ||||||||||||||||||||
| Net balance at December 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||
| December 31, 2022 | September 30, 2022 | ||||||||||||||||||||||||||||||||||
| Carrying Amount | Accumulated Amortization | Net | Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| Indefinite lived | |||||||||||||||||||||||||||||||||||
| Trade names and brands | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||||||||||||||
| Amortizable | |||||||||||||||||||||||||||||||||||
| Trade names and brands | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Technology and patents | |||||||||||||||||||||||||||||||||||
| Customer related and other | |||||||||||||||||||||||||||||||||||
| Total amortizable intangible assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Amortization expense was $7.7 and $6.1 for the three months ended December 31, 2022 and 2021, 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.
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.
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Note 7 - Supplemental Balance Sheet Information
| December 31, 2022 | September 30, 2022 | ||||||||||
| Inventories | |||||||||||
| Raw materials and supplies | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished products | |||||||||||
| Total inventories | $ | $ | |||||||||
| Other Current Assets | |||||||||||
| Miscellaneous receivables | $ | $ | |||||||||
| Inventory returns receivable | |||||||||||
| Prepaid expenses | |||||||||||
| Value added tax collectible from customers | |||||||||||
| Income taxes receivable | |||||||||||
| Other | |||||||||||
| Total other current assets | $ | $ | |||||||||
| Property, Plant and Equipment | |||||||||||
| Land | $ | $ | |||||||||
| Buildings | |||||||||||
| Machinery and equipment | |||||||||||
| Capitalized software costs | |||||||||||
| Construction in progress | |||||||||||
| Total gross property, plant and equipment | |||||||||||
| Accumulated depreciation and amortization | ( | ( | |||||||||
| Total property, plant and equipment, net | $ | $ | |||||||||
| Other Current Liabilities | |||||||||||
| Accrued advertising, sales promotion and allowances | $ | $ | |||||||||
| Accrued trade allowances | |||||||||||
| Accrued salaries, vacations and incentive compensation | |||||||||||
| Income taxes payable | |||||||||||
| Returns reserve | |||||||||||
| Restructuring reserve | |||||||||||
| Value added tax payable | |||||||||||
| Deferred compensation | |||||||||||
| Short term lease obligation | |||||||||||
| Customer advance payments | |||||||||||
| Dividends payable | |||||||||||
| Other | |||||||||||
| Total other current liabilities | $ | $ | |||||||||
| Other Liabilities | |||||||||||
| Pensions and other retirement benefits | $ | $ | |||||||||
| Deferred compensation | |||||||||||
| Long term lease obligation | |||||||||||
| Other non-current liabilities | |||||||||||
| Total other liabilities | $ | $ | |||||||||
11
Note 8 - 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 Consolidated 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:
| December 31, 2022 | September 30, 2022 | |||||||||||||
| Assets | Classification | |||||||||||||
| Right of use assets | Other assets | $ | $ | |||||||||||
| Liabilities | ||||||||||||||
| Current lease liabilities | Other current liabilities | $ | $ | |||||||||||
| Long-term lease liabilities | Other liabilities | |||||||||||||
| Total lease liabilities | $ | $ | ||||||||||||
| Other information | ||||||||||||||
| Weighted-average remaining lease term (years) | ||||||||||||||
| Weighted-average incremental borrowing rate | % | % | ||||||||||||
| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Statement of Earnings | |||||||||||
Lease cost (1) | $ | $ | |||||||||
| Other information | |||||||||||
| Leased assets obtained in exchange for new lease liabilities | |||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | $ | |||||||||
| Lease liability repayments | December 31, 2022 | ||||
| Remainder of fiscal 2023 | $ | ||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 and thereafter | |||||
| Total future minimum lease commitments | |||||
| Less: Imputed interest | ( | ||||
| Present value of lease liabilities | $ | ||||
12
Note 9 - Accounts Receivable Facility
The Company participates in multiple accounts receivable purchase agreements 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 accounts receivable repurchase agreements are accounted for as sales of receivables, resulting in the receivables being de-recognized from the 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 continues to have collection and servicing responsibilities for the receivables sold and receives separate compensation for their servicing. 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 and $155.3 for the three months ended December 31, 2022 and 2021, respectively. The trade receivables sold that remained outstanding as of December 31, 2022 and September 30, 2022 were $85.4 and $78.7 , respectively. The net proceeds received were included in both Cash used by 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, net in the Condensed Consolidated Statements of Earnings and Comprehensive Income. The loss on sale of trade receivables was $0.9 and $0.2 for the three months ended December 31, 2022 and 2021, respectively.
Note 10 - 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 | $ | $ | |||||||||
| Senior notes, fixed interest rate of 4.125%, due 2029 | |||||||||||
U.S. revolving credit facility (1) | |||||||||||
| Total long-term debt, including current maturities | |||||||||||
Less unamortized debt issuance costs and discount (2) | |||||||||||
| Total long-term debt | $ | $ | |||||||||
(1)The U.S. revolving credit facility matures in April 2025.
(2)At December 31, 2022, the balance for the Senior Notes due 2028 and the Senior Notes due 2029 are reflected net of debt issuance costs of $8.0 and $5.0 , respectively. At September 30, 2022, the balance for the Senior Notes due 2028 and the Senior Notes due 2029 are reflected net of debt issuance costs of $8.3 and $5.3 , respectively.
U.S. Revolving Credit Facility
On February 6, 2023, the Company amended the senior secured revolving credit facility in an aggregate principal amount 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 have a material change on interest expense.
Note 11 - Retirement Plans
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| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Service cost | $ | $ | |||||||||
| Interest cost | |||||||||||
| Expected return on plan assets | ( | ( | |||||||||
| Recognized net actuarial loss | |||||||||||
| Net periodic cost (income) | $ | $ | ( | ||||||||
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, net on the Condensed Consolidated Statement of Earnings and Comprehensive Income.
Note 12 - 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. There are 6.1 shares of common stock available for repurchase in the future under the Board’s authorization as of December 31, 2022. Any future share repurchases may be made in the open market, privately negotiated transactions, or otherwise, 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 during 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 .
On November 3, 2022, the Board declared a quarterly cash dividend of $0.15 per common share for the fourth fiscal quarter. The dividend was paid on January 4, 2023 to shareholders of record as of the close of business on November 29, 2022.
Note 13 - Accumulated Other Comprehensive Loss
The following table presents the changes in accumulated other comprehensive loss (“AOCI”), net of tax, by component:
| Foreign Currency Translation Adjustments | Pension and Post-retirement Activity | Hedging Activity | Total | ||||||||||||||||||||
| Balance at October 1, 2022 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
OCI before reclassifications (1) | ( | ( | |||||||||||||||||||||
| Reclassifications to earnings | ( | ( | |||||||||||||||||||||
| Balance at December 31, 2022 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Foreign Currency Translation Adjustments | Pension and Post-retirement Activity | Hedging Activity | Total | ||||||||||||||||||||
| Balance at October 1, 2021 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
OCI before reclassifications (1) | ( | ( | ( | ||||||||||||||||||||
| Reclassifications to earnings | ( | ||||||||||||||||||||||
| Balance at December 31, 2021 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
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The following table presents the reclassifications out of AOCI:
| Three Months Ended December 31, | Affected Line Item in the Condensed Consolidated Statements of Earnings | |||||||||||||||||||
| Details of AOCI Components | 2022 | 2021 | ||||||||||||||||||
| Gain / (Loss) on cash flow hedges | ||||||||||||||||||||
| Foreign exchange contracts | $ | $ | Other income, net | |||||||||||||||||
| Income tax provision | ||||||||||||||||||||
| Amortization of defined benefit pension and postretirement items | ||||||||||||||||||||
| Actuarial losses | $ | ( | $ | ( | (1) | |||||||||||||||
| ( | ( | Income tax provision | ||||||||||||||||||
| ( | ( | |||||||||||||||||||
| Total reclassifications for the period | $ | $ | ( | |||||||||||||||||
(1)These AOCI components are included in the computation of net periodic cost. See Note 11 of Notes to Condensed Consolidated Financial Statements.
Note 14 - 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 at December 31, 2022 and September 30, 2022, 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 negative 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, net. The primary currency to which the Company’s foreign subsidiaries are exposed is the U.S. dollar.
Cash Flow Hedges
At December 31, 2022, the Company maintained 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 unrealized pre-tax losses of $0.7 and gains of $11.3 at December 31, 2022 and September 30, 2022, 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, 2022 levels over the next 12 months, the majority of the pre-tax gain included in AOCI at December 31, 2022 is expected to be included in Other income, net. Contract maturities for these hedges extend into fiscal 2023. At December 31, 2022, there were 64 open foreign currency contracts with a total notional value of $105.4 .
15
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, 2022 and 2021, resulted in a loss of $ and a gain of $, respectively, and was recorded in Other income, net in the Condensed Consolidated Statements of Earnings and Comprehensive Income. At December 31, 2022, there were seven open foreign currency derivative contracts not designated as cash flow hedges with a total notional value of $65.9 .
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 | $ | ( | $ | ||||||||
| Derivatives not designated as cash flow hedging relationships: | |||||||||||
| Foreign currency contracts | $ | ( | $ | ||||||||
(1)All derivative assets are presented in Other current assets or Other assets.
The following table provides the amounts of gains and losses on derivative instruments:
| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Derivatives designated as cash flow hedging relationships: | |||||||||||
| Foreign currency contracts | |||||||||||
Gain (loss) recognized in OCI (1) | $ | ( | $ | ||||||||
Gain reclassified from AOCI into income (1) (2) | |||||||||||
| Derivatives not designated as cash flow hedging relationships: | |||||||||||
| Foreign currency contracts | |||||||||||
Gain (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.
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) | ||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||
| Gross amounts of recognized assets (liabilities) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Gross amounts offset in the balance sheet | ( | ||||||||||||||||||||||
| Net amounts of assets (liabilities) presented in the balance sheet | $ | $ | ( | $ | $ | ( | |||||||||||||||||
(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.
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| December 31, 2022 | September 30, 2022 | ||||||||||
| Liabilities at estimated fair value: | |||||||||||
| Deferred compensation | $ | ( | $ | ( | |||||||
| Derivatives - foreign currency contracts | ( | ||||||||||
| Net liabilities at estimated fair value | $ | ( | $ | ( | |||||||
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. At December 31, 2022 and September 30, 2022, 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.
At December 31, 2022 and September 30, 2022, the Company had no Level 1 financial assets or liabilities, other than pension plan assets, and no Level 3 financial assets or liabilities at December 31, 2022 and September 30, 2022, respectively.
At December 31, 2022 and September 30, 2022, the fair market value of fixed rate long-term debt was $1,001.0 and $945.9 , respectively, compared to its carrying value of $1,250.0
Due to the nature of cash and cash equivalents and short-term borrowings, including notes payable, 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 15 - Segment Data
For an overview of the Company’s segments, refer to Note 1 to Notes to Condensed Consolidated Financial Statements. Segment performance is evaluated based on segment profit, exclusive of general corporate expenses, share-based compensation costs, restructuring charges and certain costs deemed non-recurring in nature, including acquisition and integration costs, Sun Care reformulation costs, value-added tax settlement costs and the amortization of intangible assets. Financial items, such as interest income and expense, are managed on a global basis at the corporate level. The exclusion of such charges from segment results reflects management’s view on how it evaluates segment performance.
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.
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Segment net sales and profitability are presented below:
| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net Sales | |||||||||||
| Wet Shave | $ | $ | |||||||||
| Sun and Skin Care | |||||||||||
| Feminine Care | |||||||||||
| Total net sales | $ | $ | |||||||||
| Segment Profit | |||||||||||
| Wet Shave | $ | $ | |||||||||
| Sun and Skin Care | |||||||||||
| Feminine Care | |||||||||||
| Total segment profit | |||||||||||
| General corporate and other expenses | ( | ( | |||||||||
| Restructuring and related costs | ( | ( | |||||||||
Acquisition and integration costs (1) | ( | ( | |||||||||
Sun Care reformulation costs (2) | ( | ( | |||||||||
VAT settlement costs (3) | ( | ||||||||||
| Amortization of intangibles | ( | ( | |||||||||
| Interest and other expense, net | ( | ( | |||||||||
| Total earnings before income taxes | $ | $ | |||||||||
(1)Includes pre-tax SG&A of $2.1 and $5.7 for the three months ended December 31, 2022 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 for the three months ended December 31, 2021.
(2)Includes pre-tax R&D of $0.5 for the three months ended December 31, 2022 and pre-tax COGS of $3.3 for the three months ended December 31, 2021, respectively, related to the reformulation, recall and destruction of certain Sun Care products.
(3)Includes pre-tax SG&A of $3.4 for the three months ended December 31, 2021 related to the estimated settlement of prior years’ value-added tax audits in Germany.
| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net Sales to Customers | |||||||||||
| United States | $ | $ | |||||||||
| International | |||||||||||
| Total net sales | $ | $ | |||||||||
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| Three Months Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Razors and blades | $ | $ | |||||||||
| Tampons, pads, and liners | |||||||||||
| Sun care products | |||||||||||
| Grooming products | |||||||||||
| Wipes and other skin care | |||||||||||
| Shaving gels and creams | |||||||||||
| Total net sales | $ | $ | |||||||||
Note 16 - Subsequent Event
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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, 2022 (the “2022 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 2022 Annual Report.
Forward-Looking Statements
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 Care 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. 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 2022 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 such as restructuring costs, acquisition and integration costs, and other non-standard items. 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:
•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.
◦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.
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•Additionally, we utilize “adjusted” non-GAAP measures including gross profit, SG&A, operating income, income taxes, net earnings, and 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 2022 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.
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Executive Summary
The following is a summary of key results for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Net earnings and earnings per share (“EPS”) for the periods presented were impacted by restructuring and related costs, acquisition and integration costs, Sun Care reformulation costs, and other non-standard items, 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 2023
•Net sales in the first quarter of fiscal 2023 increased 1.3% to $469.1. Organic net sales increased 3.0% compared to the prior year quarter, with strong Sun Care and Women’s Shave performance in International markets, and Men’s Shave and Feminine Care in North America.
•Net earnings in the first quarter of fiscal 2023 were $11.9 compared to $11.2 in the prior year quarter. On an adjusted basis, net earnings for the first quarter of fiscal 2023 were $16.0 compared to $23.2 in the prior year quarter. Adjusted earnings declined compared to the prior year quarter despite higher net sales, due to lower gross margins from inflationary pressures and foreign currency, and higher SG&A and interest costs.
•Net earnings per diluted share during the first quarter of fiscal 2023 were $0.23 compared to $0.20 in the prior year quarter. On an adjusted basis, net earnings per diluted share during the first quarter of fiscal 2023 were $0.31 compared to $0.42 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 | |||||||||||||||||||||||||||||||||||
| GAAP — Reported | $ | 189.0 | $ | 95.7 | $ | 31.3 | $ | 16.4 | $ | 4.5 | $ | 11.9 | $ | 0.23 | |||||||||||||||||||||||||||
| Restructuring and related costs | — | 0.1 | 2.8 | 2.8 | 0.7 | 2.1 | 0.04 | ||||||||||||||||||||||||||||||||||
| Acquisition and integration costs | — | 2.1 | 2.1 | 2.1 | 0.5 | 1.6 | 0.03 | ||||||||||||||||||||||||||||||||||
| Sun Care reformulation costs | — | — | 0.5 | 0.5 | 0.1 | 0.4 | 0.01 | ||||||||||||||||||||||||||||||||||
| Total Adjusted Non-GAAP | $ | 189.0 | $ | 93.5 | $ | 36.7 | $ | 21.8 | $ | 5.8 | $ | 16.0 | $ | 0.31 | |||||||||||||||||||||||||||
| 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 | 40.3 | % | 19.9 | % | 7.8 | % | Adjusted effective tax rate | 26.4 | % | ||||||||||||||||||||||||||||||||
| Three Months Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Gross Profit | SG&A | Operating Income | EBIT(1) | Income taxes | Net Earnings | Diluted EPS | |||||||||||||||||||||||||||||||||||
| GAAP — Reported | $ | 189.9 | $ | 96.9 | $ | 31.8 | $ | 16.2 | $ | 5.0 | $ | 11.2 | $ | 0.20 | |||||||||||||||||||||||||||
| Restructuring and related costs | — | — | 2.2 | 2.2 | 0.5 | 1.7 | 0.03 | ||||||||||||||||||||||||||||||||||
| Acquisition and integration costs | 0.3 | 5.7 | 6.0 | 6.0 | 0.3 | 5.7 | 0.11 | ||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||
| 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 | 41.0 | % | 20.9 | % | 6.9 | % | GAAP effective tax rate | 30.9 | % | ||||||||||||||||||||||||||||||||
| Adjusted as a percent of net sales | 41.8 | % | 19.0 | % | 10.1 | % | Adjusted effective tax rate | 25.3 | % | ||||||||||||||||||||||||||||||||
(1)EBIT is defined as Earnings before Income taxes.
Operating Results
The following table presents changes in net sales for the first quarter fiscal of 2023, as compared to the corresponding period in fiscal 2022, and provides a reconciliation of organic net sales to reported amounts.
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Net Sales
| Net Sales - Total Company | |||||||||||
| Period Ended December 31, 2022 | |||||||||||
| 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 | (20.2) | (4.3) | % | ||||||||
| Net sales - fiscal 2023 | $ | 469.1 | 1.3 | % | |||||||
For the first quarter of fiscal 2023, net sales were $469.1, an increase of 1.3%, including a $12.0 or 2.6% net impact from the acquisition of Billie and a $20.2 or 4.3% negative impact from currency movements. Organic net sales increased 3.0%, with 5.8% growth in International markets driven by Sun Care and Women’s Shave, and 1.2% growth in North America markets driven by Men’s Shave and Feminine Care. Overall, net sales growth increased 4.5% from higher pricing.
For further discussion regarding net sales, including a summary of reported versus organic changes, see “Segment Results.”
Gross Profit
Gross profit was $189.0 during the first quarter of fiscal 2023, including a $14.4 unfavorable impact from currency, compared to $189.9 in the prior year quarter. Gross margin as a percent of net sales for the first quarter of fiscal 2023 was 40.3% compared to 41.0% in the prior year quarter. Adjusted gross margin decreased 150-basis points as a 500-basis point impact from higher commodity and transportation related costs, was offset by 240-basis points of productivity savings and 250-basis points benefit from higher pricing and promotion management.
Selling, General and Administrative Expense
SG&A was $95.7 in the first quarter of fiscal 2023, or 20.4% of net sales, compared to $96.9 in the prior year quarter, or 20.9% of net sales. Adjusted SG&A as a percent of net sales was 19.9%, an increase of 90-basis points, as improved leverage, the benefits of operating efficiency programs and favorable currency was more than offset by the impact of the Billie acquisition, including amortization, and higher compensation expense.
Advertising and Sales Promotion Expense
For the first quarter of fiscal 2023, advertising and promotion (“A&P”) was $45.9, down $0.3 compared to the prior year quarter of $46.2. A&P as a percent of net sales was 9.8%, as compared to 10.0% in the prior year quarter. Excluding the favorable impact of currency translation, A&P would have increased $1.7 and 0.2% as a percent of net sales as compared to the prior year.
Research and Development Expense
Research and development expense (“R&D”) for the first quarter of fiscal 2023 was $13.4, compared to $12.8 in the prior year quarter. As a percent of net sales, R&D was 2.9% in the first quarter of fiscal 2023 compared to 2.8% in the prior year quarter.
Interest Expense Associated with Debt
Interest expense associated with debt for the first quarter of fiscal 2023 was $19.9, compared to $17.3 in the prior year quarter. The increase in interest expense was the result of higher interest rates and a higher overall debt balance on the Company’s Revolving Credit Facility.
Other income, net
Other income, net was income of $5.0 in the first quarter of fiscal 2022, compared to $1.7 in the prior year quarter. The increase in income was primarily driven by $5.3 in favorable foreign currency hedge settlements, partially offset by $1.8 in higher pension expense.
Income Tax Provision
The effective tax rate for the first three months of fiscal 2023 was 27.1%, compared to 30.9% in the prior year period. The fiscal 2022 effective tax rate reflects the unfavorable impact related to the Acquisition. On an adjusted basis, the effective tax rate was 26.4% and 25.3% for the first quarter of fiscal 2023 and fiscal 2022, respectively.
23
Operating Model Redesign
In fiscal 2023, 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. We incurred $2.8 during the first quarter of fiscal 2023, primarily related to employee severance and benefit costs.
Segment Results
The following tables present changes in segment net sales and segment profit for the first quarter of fiscal 2023, compared to the corresponding period in fiscal 2022, 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 15 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 | |||||||||||
| Period Ended December 31, 2022 | |||||||||||
| 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 | (17.1) | (6.0) | % | ||||||||
| Net sales - fiscal 2023 | $ | 275.3 | (3.8) | % | |||||||
Wet Shave net sales for the first quarter of fiscal 2023 decreased $10.8 or 3.8%. Organic net sales decreased $5.3, or 1.9%, 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 growth in Men’s Systems, Disposables and Shave Preps, was more than offset by lower Women’s Systems 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) | % | |||||||
Wet Shave segment profit for the first quarter of fiscal 2023 was $35.4, down $16.1, or 31.3%. The decline in segment profit was reflective of lower organic net sales, higher cost of goods sold, negative impact of foreign currency and increased brand investment.
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Sun and Skin Care
| Net Sales - Sun and Skin Care | |||||||||||
| Period Ended December 31, 2022 | |||||||||||
| 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 | (2.9) | (2.8) | % | ||||||||
| Net sales - fiscal 2023 | $ | 112.9 | 7.7 | % | |||||||
Sun and Skin Care net sales for the first quarter of fiscal 2023 increased 7.7%. Organic net sales increased $10.6, or 10.1% primarily driven by 68% Sun Care growth in International markets, led by Oceania and Latin America. 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%.
| 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 for the first quarter of fiscal 2023 was $13.1, an increase of $9.4. The increase in segment profit was driven largely by higher sales and stronger gross profit, in part as a result of increased pricing.
Feminine Care
| Net Sales - Feminine Care | |||||||||||
| Period Ended December 31, 2022 | |||||||||||
| Q1 | % Chg | ||||||||||
| Net sales - fiscal 2022 | $ | 72.4 | |||||||||
| Organic | 8.7 | 12.0 | % | ||||||||
| Impact of currency | (0.2) | (0.3) | % | ||||||||
| Net sales - fiscal 2023 | $ | 80.9 | 11.7 | % | |||||||
Feminine Care net sales for the first quarter of fiscal 2023 increased $8.5, or 11.7%. The increase in net sales was driven by higher pricing and improved product availability.
| 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 | % | |||||||
Feminine Care segment profit for the first quarter of fiscal 2023 was $11.8, an increase of $3.4, or 40.5%, largely driven by higher sales and gross profit which was partially offset by increased A&P support.
25
General Corporate and Other Expenses
| Quarter Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Corporate expenses | $ | 15.9 | $ | 10.8 | |||||||
| Restructuring and related costs | 2.8 | 2.2 | |||||||||
| Acquisition and integration costs | 2.1 | 6.0 | |||||||||
| Sun Care reformulation costs | 0.5 | 3.3 | |||||||||
| Value-added tax settlement costs | — | 3.4 | |||||||||
| General corporate and other expenses | $ | 21.3 | $ | 25.7 | |||||||
| % of net sales | 4.5 | % | 5.5 | % | |||||||
For the first quarter of fiscal 2023, corporate expenses were $15.9, or 3.4% of net sales, compared to $10.8, or 2.3% of net sales. For the first quarter of fiscal 2023, the increase in corporate expense was primarily due to higher benefit and legal costs.
26
Liquidity and Capital Resources
At December 31, 2022, a 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 14 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, 2022 and September 30, 2022, respectively.
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.
Historically, we have generated, and expect to continue to generate, positive cash flows from operations. Our cash flows are affected by the seasonality of our Sun Care products, typically resulting in higher net sales and increased cash generated in the second and third quarter of each fiscal year. We believe our cash on hand, cash flows from operations and borrowing capacity under our 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, we were in compliance with the provisions and covenants associated with our debt agreements.
27
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): | |||||||||||
| Operating activities | $ | (86.3) | $ | (79.0) | |||||||
| Investing activities | (11.2) | (312.7) | |||||||||
| Financing activities | 82.9 | 155.5 | |||||||||
| Effect of exchange rate changes on cash | 10.0 | (3.2) | |||||||||
| Net (decrease) increase in cash and cash equivalents | $ | (4.6) | $ | (239.4) | |||||||
Operating Activities
Cash flow used by operating activities was $86.3 during the first three months of fiscal 2023, compared to $79.0 during the prior year period. The decrease in cash flows versus the same period in the prior year was driven by a larger net working capital build.
Investing Activities
Cash flow used by investing activities was $11.2 during the first three months of fiscal 2023, compared to $312.7 used during the prior year period. Capital expenditures were $11.3 during the first three months of fiscal 2023, 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 in the prior year period.
Financing Activities
Net cash from financing activities was $82.9 during the first three months of fiscal 2023, compared to $155.5 in the prior year period. During the first three months of fiscal 2023, we had net borrowings of $100.0 under our 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 in the prior year period. Dividend payments totaled $8.3 in the first three months of fiscal 2023, compared to $8.5 in the prior year period. We had financing outflows for employee equity awards held for taxes totaling $8.1 in the first three months of fiscal 2023, compared to $9.7 in the prior year period.
Share Repurchases
During the first three months of fiscal 2023, we repurchased 0.4 shares of our common stock for $15.0. We have 6.1 shares remaining under the Repurchase Plan as of December 31, 2022. 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
On November 3, 2022, the Board declared a quarterly cash dividend of $0.15 per common share for the fourth fiscal quarter. The dividend was paid on January 4, 2023 to shareholders 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. The dividend will be payable on April 5, 2023 to stockholders of record as of the close of business on March 8, 2023.
Dividends declared during 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.
Commitments and Contingencies
Contractual Obligations
At December 31, 2022, we had outstanding borrowings of $255.0 under the Revolving Credit Facility. As of December 31, 2022, future minimum repayments of debt were: $255.0 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 2022 Annual Report.
28
Critical Accounting Policies
Our critical accounting policies and estimates are fully described in our 2022 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.
29
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 14 of Notes to Condensed Consolidated Financial Statements. As of December 31, 2022, 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 LIBOR plus margin. As of December 31, 2022, our outstanding variable-rate debt included $280.2 related to our 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.
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 2022 Annual Report.
30
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. 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, 2022 that have materially affected, or are likely to materially affect, our internal control over financial reporting.
31
PART II - OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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:
| 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 | ||||||||||||||||||||||
(1)201,074 shares purchased during the first quarter relate 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, we repurchased 378,301 shares under this authorization.
(3)Includes $0.02 per share of brokerage fee commissions.
32
Item 6. Exhibits.
| Exhibit Number | Exhibit | ||||
| 3.1 | |||||
| 3.2 | |||||
| 3.3 | |||||
| 10.1 | |||||
| 10.2 | |||||
| 10.3 | |||||
| 10.4 | |||||
| 10.5 | |||||
| 31.1* | |||||
| 31.2* | |||||
| 32.1** | |||||
| 32.2** | |||||
| 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 ended December 31,2022 and 2021, (ii) the Condensed Consolidated Balance Sheets at December 31, 2022 and September 30, 2022, (iii) the Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2022 and 2021, (iv) the Condensed Consolidated Statements of Shareholder’s Equity for the three months ended December 31, 2022 and 2021 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
33
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 officer) | |||||||||||
| Date: | February 8, 2023 | ||||||||||
34
ATTACHMENTS / EXHIBITS
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
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