Edgewell Personal Care Company (NYSE: EPC) reported Q2 EPS of $1.31, $0.13 better than the analyst estimate of $1.18. Revenue for the quarter came in at $608.1 million versus the consensus estimate of $603.3 million.

Executive Summary

• Net sales were $608.1 million in the second quarter of fiscal 2018, a decrease of 0.5% when compared to the prior year period on a reported basis, and down 3.4% on an organic basis. (Organic basis excludes sales impact from the Jack Black acquisition, the Playtex gloves divestiture, and the translational benefit from currency.)
• GAAP Diluted Earnings Per Share (\"EPS\") were $1.20 for the second quarter as compared to $1.14 in the prior year quarter. Adjusted EPS were $1.31 for the second quarter, compared to $1.21 in the prior year quarter.
• Completed the acquisition of Jack Black, L.L.C., a leading U.S. men\'s prestige skincare company.
• Launched \"Project Fuel,\" an enterprise-wide initiative designed to transform the Company\'s business and cost structure, deliver substantial cost savings, increase agility and provide the capabilities and financial resources needed to drive growth and shareholder value.
• Project Fuel is expected to deliver an estimated $225 million in gross cost savings over the fiscal year 2019 to 2021 time horizon.
• Updated financial outlook for fiscal 2018.

Updated Full Fiscal Year 2018 Financial Outlook

For fiscal 2018, net sales are expected to decline approximately 50 basis points, while organic net sales are expected to be down approximately 3% (previously 1%.) Organic net sales exclude an approximate 230 basis-point increase from favorable foreign currency translation and a 30 basis-point combined increase from the Jack Black and Bulldog acquisitions, net of the Playtex gloves divestiture. The lowered outlook for organic net sales is largely due to increased category and competitive pressure in Wet Shave in the U.S., the impact of significant trade inventory reductions in Wet Shave in Japan, primarily impacting third quarter net sales and profit, and the impact to Infant Care from the expected Toys R Us liquidation.

The Company\'s outlook for GAAP EPS for fiscal 2018 is now expected to be in the range of $2.70 to $2.90 (previously $3.80 to $4.00 ), including the charge related to the Tax Act, the gain related to the sale of the Playtex gloves business, Jack Black integration costs and Project Fuel restructuring charges. The outlook for Adjusted EPS in now expected to be in the range of $3.40 to $3.60 (previously $3.90 to $4.10). The Company estimates that approximately $0.40 of the full year Adjusted EPS reduction versus the prior outlook is attributable to expectations for fiscal third quarter performance. Full year Adjusted operating income margin as a percent of net sales is now anticipated to be down approximately 120 basis points versus the prior year.

The Company\'s ZBS initiative is anticipated to drive $25 - $30 million in net savings in fiscal 2018. Benefits from the ZBS program will be reinvested into marketing spend and the Company\'s strategic growth initiatives.

For fiscal 2018, Project Fuel related restructuring charges and capital expenditures are expected to be approximately $40 million and $16 million, respectively.

The adjusted effective tax rate for the 2018 fiscal year is estimated to be in the range of 22% to 24%.

The Company anticipates that fiscal 2018 free cash flow will be above 100% of GAAP net earnings.

GUIDANCE:

Edgewell Personal Care Company sees FY2018 EPS of $3.40-$3.60, versus the consensus of $3.77.

For earnings history and earnings-related data on Edgewell Personal Care Company (EPC) click here.