Q1 2024 Edgewell Personal Care Co Earnings Call

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Operator: Good morning, and welcome to Edgewell Personal Care's first quarter 2024 earnings call. All participants will be in listen-only mode.

Good morning, and welcome to Edgewater personal care first quarter 'twenty 'twenty four earnings call.

All participants will be in listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad.

Should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Operator: To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Chris Gough. Please do so.

Please note. This event is being recorded I would now like to turn the conference over to Chris Gough.

Chris Gough: Good morning, everyone, and thank you for joining us this morning for Edgewell's first quarter fiscal year 2024 earnings call. With me this morning are Rod Little, our President and Chief Executive Officer, and Dan Sullivan, our Chief Financial Officer. Rod will kick off the call and hand it over to Dan to discuss our results and full year fiscal 2024 outlook before we transition to Q&A. This call is being recorded and will be available for replay via our website, www.edgewell.com.

Chris Gough: These go ahead.

Chris Gough: Good morning, everyone and thank you for joining us this morning for edge Wells first quarter fiscal year 2024 earnings call with me. This morning are Rod Little our President and Chief Executive Officer, and Dan Sullivan, Our Chief Financial Officer, Rod will kick off the call then hand, it over to Dan to discuss our results and full year fiscal 2024 hours before we transition to Q&A, let's call.

Chris Gough: Is being recorded and will be available for replay via our website www dot <unk> dot com.

Chris Gough: During the call, we may make statements about our expectations for future plans and performance. These might include future sales, earnings, advertising and promotional spending, product launches, savings and costs related to restructuring and repositioning actions, acquisitions and integrations, changes to our working capital metrics, currency fluctuations, commodity costs, category value, future plans for return of capital to shareholders, and more. Any such statements are forward-looking statements for the purposes of the safe provisions under the Private Securities Litigation Reform Act of 1995, reflecting our current views with respect to future events, plans, or prospects.

Chris Gough: During the call we may make statements about our expectations for future plans and performance. Despite include future sales earnings advertising and promotional spending product launches savings and costs related to restructuring and repositioning actions acquisitions and integrations and changes to our working capital metrics currency fluctuations commodity costs.

Chris Gough: Category value future plans for return of capital to shareholders and more.

Chris Gough: Any such statements are forward looking statements for the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1995, which reflect our current views with respect to future events plans or prospects. These statements are based on assumptions that are subject to various risks and uncertainties, including those described under the caption risk factors in our annual report on.

Chris Gough: These statements are based on assumptions and are subject to various risks and uncertainties, including those described under the caption risk factors in our annual report on Form 10-K for the year ended September 30, 2023, as may be amended in our quarterly reports on Form 10-Q, which is on file with the SEC. These risks may cause our actual results to be materially different from those expressed or implied by our forward-looking statements. We do not assume any obligation to update or revise any of these forward-looking statements to reflect new events or circumstances except as required by law. During this call, we will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles.

Chris Gough: Form 10-K for the year ended September 32023, as may be amended in our quarterly reports on Form 10-Q, which is on file with the SEC.

These risks may cause our actual results to be materially different from those expressed or implied by our forward looking statements. We do not assume any obligation to update or revise any of these forward looking statements to reflect new events or circumstances, except as required by law.

Chris Gough: During this call when we refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the Investor Relations section of our website at this.

Chris Gough: A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available in the investor relations section of our website. This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. However, management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. With that, I'd like to turn the call over to Rod.

Chris Gough: This non-GAAP information is provided as a supplement to not as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. However management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business with that I'd like to turn the call over to Rob.

Rod Ryan Little: Thank you, Chris. Good morning, everyone, and thanks for joining us on our fiscal 24 first quarter earnings call. We had a good start to the year with 3% organic net sales growth, largely driven by strong performance in international markets, where healthier categories and improved in-market execution drove growth. The growth was underpinned by both price and volume gains. Notably, we saw meaningful organic growth and market share gains in both Japan and Germany, reflecting both good consumer response to our brands and also strong wholesaler and retailer support. I'm very excited about the results we are seeing in our international markets as we continue to strengthen our capabilities and streamline our leadership structure across the business. A year ago, we brought the markets closer to our global center, with all non-North American markets directly reporting to me and Dan. We also made significant changes in leadership across Europe, Japan, and China, which collectively represent almost two-thirds of our international business.

Rob: Thank you Chris Good morning, everyone and thanks for joining us on our fiscal 'twenty four first quarter earnings call.

Rob: We had a good start to the year with 3% organic net sales growth largely driven by strong performance in international markets, where mostly healthier categories and improved in market execution drove growth.

Rob: The growth was underpinned by both price and volume gains.

Rob: Notably, we saw meaningful organic growth and market share gains in both Japan and Germany.

Rob: Reflecting both good consumer response to our brands also strong wholesaler and retailer support.

Rob: I am very excited about the results we're seeing in our international markets as we continue to strengthen our capabilities and streamlined our leadership structure across the business.

Rob: Year ago, we brought the markets closer to our global center with all non North American markets directly reporting to me and Dan.

Rob: We also made significant changes the leadership across Europe, Japan, and China, which collectively represent almost two thirds of our international business and we've continued to push decision, making and accountability to the local teams all of which has contributed to a more robust organic growth profile.

Rod Ryan Little: And we've continued to push decision making and accountability to the local teams, all of which has contributed to a more robust organic growth profile. In North America, despite some transitory dynamics that contributed to year-over-year organic net sales declines, most notably in FemCare, our consumption and resulting market share results were solid and largely in line with trends. Across our markets, the consumer remains resilient, our categories remain relatively healthy, and as we move into our bigger spring and summer selling seasons, we believe we are well-positioned with notable innovation in sun care, our brand replatforming in fem care, and the Billy launch into new body categories all in front of us. The tested gross margin expanded year-over-year ahead of our expectations.

Rob: In North America, despite some transitory dynamics that contributed to year over year organic net sales declines most notably in Fem care.

Rob: Our consumption and resulting market share results were solid and largely in line with trend.

Rob: Across our markets the consumer remains resilient our categories remain relatively healthy and as we move into a bigger spring and summer selling season. We believe we are well positioned with notable innovation in Sun care, our brand re platforming and fem care and the ability launching new body.

Rob: Categories, all in front of us.

Rob: Adjusted gross margin expanded year over year ahead of our expectations.

Rod Ryan Little: We increased investment in our brands in the quarter, remained disciplined on G&A costs, and delivered adjusted EBITDA and EPS ahead of our expectations. With this good start to the year and with strong fundamentals in place, we have increased confidence in our ability to deliver our outlook for both top and bottom lines. The first quarter was a good example of the business model we have built and, ultimately, our path for continued success.

Rob: Driven by our ability to accelerate productivity savings and realized gains from improved price and revenue management.

Rob: We increased investment in our brands in the quarter.

Rob: Main discipline on G&A costs and delivered adjusted EBITDA and EPS ahead of our expectations.

Rob: With this good start to the year and with strong fundamentals in place we have increased confidence in our ability to deliver on our outlook for both top and bottom line.

Rob: The first quarter was a good example is a business model, we have built and ultimately our path for continued success.

Rod Ryan Little: Solid top-line growth with good market share outcomes, accelerated gross margin accretion, incremental commercial investment in support of priority brands and markets, and a healthy, sustainable profit profile. Importantly, our portfolio of leading brands continues to be top of mind for consumers across the globe, regardless of their preferred channel, in-store or online. In our shaving business, we are seeing the clear advantages of our manufacturing technology and improved brand building and digital capabilities, with compelling innovation and stronger retailer partnerships globally. Private Brands, Market Share Game, and the successful retail expansion of the Billy brand here in the United States and in Canada, all demonstrating clear proof points of a healthier SHEA portfolio.

Rob: Top line growth with good market share outcomes.

Rob: Accelerated gross margin accretion incremental commercial investments in support of priority brands and markets and a healthy sustainable profit profile.

Rob: Importantly, our portfolio of leading brands continues to be top of mind for consumers across the globe, regardless of their preferred channel in store or online.

Rob: And our shaving business, we are seeing the clear advantages of our manufacturing technology and improved brand building and digital capabilities with compelling innovation stronger retailer partnerships globally.

Rob: Private brands market share gains and the successful retail expansion of the 1 billion brand here in the United States and in Canada.

Rob: All demonstrating clear proof points of a healthier shape portfolio.

Rob: In Sun care and mid single digit organic growth in the quarter was in line with expectations and we saw good execution from concept to shelf across our leading portfolio of trusted brands.

Rod Ryan Little: In some respects, the mid-single-digit organic growth in the quarter was in line with expectations, and we saw good execution from concept to shelf across our leading portfolio of trusted brands. Our end-to-end capabilities of product formulation, regulatory, quality control, internal manufacturing, and direct store delivery to shelf are all points of competitive advantage that contribute to our broader success. Our grooming portfolio of well-crafted brands continues to resonate with consumers and will soon be augmented by the disruptive force of the Billy brand as we begin to execute our retail pilot and the initial launch of the brand's offering, Embody, beginning today.

Rob: Our Indiana capabilities of product formulation regulatory quality control internal manufacturing and direct store delivery to shelf are all points of competitive advantage. It contributed to our broader success.

Rob: Our grooming portfolio, a well crafted brands continues to resonate with consumers and will soon be augmented by the disruptive force the Billy brand as we begin to execute our retail pilot and the initial launch of the brand's offering embody beginning today.

Rod Ryan Little: And finally, in FemCare, we believe that we've now cycled through the supply chain and demand imbalances that have plagued the category over the last 18 months and made year-over-year comparisons challenging. I'm personally bullish about the opportunity that our new master brand strategy offers as we re-platform our pads and liners business under the Carefree brand with a unique consumer positioning and emotive campaign that I expect will resonate well with our target Our brands are healthier, and once again this year, better represented across all channels of distribution than at any point since we began as an independent company in 2015. Initial read on distribution outcomes for 2024 is encouraging, all of which underpins our durable, sustainable, top-line growth profile this fiscal year and beyond. Operationally, we remain disciplined in the face of continued, though easing, inflationary headwinds.

Rob: And finally in Fem care, we believe that we've now cycled through the supply chain and demand imbalances that have plagued the category over the last 18 months.

Rob: Make year over year comparisons challenging.

Rob: I'm personally bullish about the opportunities that our new Master brand strategy offers as we re platform our pads and liners business under the carefree brand with a unique consumer positioning and emotive campaign that I expect will resonate well with our target consumers.

Rob: Our brands are healthier and once again this year better represented across all channels of distribution.

Rob: Any point since we began as an independent company in 2015.

Rob: The initial read on distribution outcomes, where 'twenty 'twenty four is encouraging.

Rob: All of which underpins our durable sustainable topline growth profile this fiscal year and beyond.

Rob: Operationally, we remained disciplined in the face of continued though easing inflationary headwinds.

Rod Ryan Little: We generated almost 600 basis points of combined gross margin benefits from productivity and efficiency initiatives, as well as price and revenue management execution. Our teams did a terrific job in the quarter driving operational excellence across the supply chain while further realizing the benefits of our focus on unit economics and sound revenue and promotion management. And importantly, as planned, we increased investment in support of our brands with spend centered around digital activation, ahead of the compelling innovation that will come to market later this quarter. But to wrap up, the results this quarter and our outlook for the full year illustrate the progress we've made since outlining our long-term vision and growth goals in 2020 and, importantly, demonstrate that our strategy is working.

Rob: We generated almost 600 basis points of combined gross margin benefits from productivity and efficiency initiatives as well as price and revenue management execution.

Rob: Our teams did a terrific job in the quarter and driving operational excellence across our supply chain. While further realizing the benefits of our focus on unit economics, It sound revenue and promotion management.

Rob: And importantly, as planned we increased investment in support of our brands with spin centered around digital activation ahead of the compelling innovation that will come to market later this quarter.

Rob: So to wrap up the results this quarter and our outlook for the full year illustrates the progress we've made since outlining our long term vision and growth goals in 2020.

Accordingly demonstrate that our strategy is working.

Rod Ryan Little: As we move past peak inflationary pressures that we have contended with for the past two years, we remain confident in our financial model, which calls for organic net sales growth, gross margin accretion, G&A leverage, and strong free cash flow generation. Simply put, our business is better, with a stronger portfolio of brands and a demonstrated ability to successfully execute against each of our key strategic priorities.

Rob: As we move past peak inflationary pressures that.

Rob: We have contended with for the past two years, we remain confident in our financial model, which calls for organic net sales growth gross margin accretion G&A leverage and strong free cash flow generation.

Rob: Simply put our business is better.

Rob: A stronger portfolio of brands.

Rob: And a demonstrated ability to successfully execute against each of our key strategic priorities.

Daniel J. Sullivan: This gives us confidence that we will deliver significant value creation for our shareholders. And now, I'd like to ask Dan to take you through our first quarter results and discuss our outlook for fiscal 24.

Rob: This gives us confidence that we will deliver significant value creation for our shareholders.

Rob: And now I'd like to ask Dan to take you through our first quarter results and discuss our outlook for fiscal 'twenty four Dan.

Daniel J. Sullivan: Thank you, Rod. Good morning, everyone. As Rod mentioned, operational and commercial execution in the corridor was strong, particularly in our international market, which helped drive solid top-line growth, good market share results, and notable gross margin accretion, all of which enabled better-than-expected earnings and cash generation for the Corps, all setting us up well to deliver full-year results in line with our previous outline. For the quarter, organic net sales grew 3.1%, largely driven by higher prices. International organic growth was just over 16%, underpinned by both price and volume gains. In the quarter, the consumer remained resilient, with our categories in aggregate continuing to grow and signs of structural recovery in key international markets like Japan and Germany. Aggregate consumption across our US segments increased 2.2% in the quarter below the 52-week trend as gains from pricing eased compared to a year ago. Importantly, volume consumption remains strong in both women's shave and grooming, where we gained and held the volume share perspective.

Daniel J. Sullivan: Rob Good morning, everyone as Rob mentioned operational and commercial execution in the quarter was strong, particularly in our international markets, which helped drive solid top line growth good market share results and notable gross margin accretion.

Daniel J. Sullivan: All of which enabled better than expected earnings and cash generation for the quarter.

Daniel J. Sullivan: Setting us up well to deliver full year results in line with our previous outlook.

Daniel J. Sullivan: For the quarter organic net sales grew three 1% largely driven by higher pricing.

International organic growth was just over 16% underpinned by both price and volume gains.

Daniel J. Sullivan: In the quarter, the consumer remained resilient with our categories in aggregate continuing to grow and signs of structural recovery in key international markets like Japan and Germany.

Daniel J. Sullivan: Aggregate consumption across our U S segment increased two 2% in the quarter below 52 week trends.

Daniel J. Sullivan: As gains from pricing eased compared to a year ago.

Daniel J. Sullivan: Importantly, volume consumption remained strong in both women's shave and grooming, where we gained and held the volume share respectively.

Daniel J. Sullivan: Operationally our teams continue to execute.

Daniel J. Sullivan: Operationally, our teams continue to improve service levels and unit fill rates while realizing better-than-expected productivity savings. And our commercial teams drove strong gains from both price and promotion management. In total, these efforts combined to provide almost 600 basis points of growth margin tailwinds in the quarter, which nearly offset the transitory unfavorable effect of lower manufacturing absorption and the negative effect of heightened unit cost inflation trapped in inventory, both of which we previewed last quarter. Despite these significant one-time headwinds, we delivered 30 basis points of adjusted gross margin increase. Adjusted EPS of $0.24 per share and adjusted EBDA of $57.2 million, both of which were above our expectations. Now, let me turn to the detailed results for the quarter.

Daniel J. Sullivan: The supply chain organization further improve service levels and unit fill rates, while realizing better than expected productivity savings.

Daniel J. Sullivan: And our commercial teams drove strong gains from both price and promotion management.

In total these efforts combined to provide almost 600 basis points of gross margin tailwind in the quarter, which nearly offset the transitory unfavorable effect of lower manufacturing absorption and the negative effect of heightened unit cost inflation trapped in inventory both of which we previewed last quarter.

Daniel J. Sullivan: Despite these significant onetime headwinds, we delivered 30 basis points of adjusted gross margin accretion adjusted EPS of <unk> 24 cents per share and adjusted EBITDA of $57 $2 million, all of which were above our expectations.

Speaker Change: Now, let me turn to the detailed results for the quarter.

Speaker Change: As mentioned organic net sales increased three 1% driven by strong performance across international markets, all of which grew year over year the.

Daniel J. Sullivan: As mentioned, organic net sales increased 3.1%, driven by strong performance across international markets, all of which grew year over year. The strong international performance was a result of nearly double-digit volume growth, coupled with mid-single-digit price-related gains. Performance in Japan was a highlight as a return to healthy category consumption was met with strong price execution and a favorable pull-forward of purchases ahead of the New Year holiday. However, organic sales in North America were down 4.9%, more than half of which was attributable to declines in FEMCARE, as we cycled double-digit organic growth last year.

Speaker Change: The strong international performance was a result of nearly double digit volume growth coupled with mid single digit price related games.

Speaker Change: Performance in Japan was a highlight as it returned to healthy category consumption was met with strong price execution and a favorable pull forward of purchases ahead of the new year holiday.

Speaker Change: Organic sales in North America were down four 9% more than half of which was attributable to declines in fem care as we cycled double digit organic growth last year.

Daniel J. Sullivan: North America volumes were down just over 6% while pricing delivered over one point of growth; wet shave organic net sales were up 8.1% with growth across men's and women's systems, disposables, and prep. International wet shave growth stood out in the quarter at 18% as a result of improved market conditions, strong in-market brand activation, higher pricing, and the aforementioned replenishment phasing benefits in Japan. In the quarter, we saw meaningful market share gains in Japan, Germany, and Canada. However, wet shave organic sales in North America declined 2%, with declines in both disposables and preps more than offsetting a strong quarter for men's systems. In the U.S.

Speaker Change: North America volumes were down just over 6% while pricing delivered over one point of growth.

Speaker Change: Wet shave organic net sales were up eight 1% with growth across men's and women's systems and disposables and perhaps.

Speaker Change: International wet shave growth stood out in the quarter at 18% as a result of improved market conditions strong in market brand activation higher pricing and the aforementioned replenishment phasing benefits in Japan.

Speaker Change: In the quarter, we saw meaningful market share gains in Japan, Germany and Canada.

Speaker Change: Wet shave organic sales in North America declined 2% with declines in both disposables and perhaps more than offsetting a strong quarter for men's systems.

Speaker Change: In the U S razors and blades category consumption was flat in the quarter and our market share increased 10 basis points driven by share gains in branded women's systems as Billy continued to scale at retail while also growing in newly activated online channels.

Daniel J. Sullivan: In the Races and Blades category, consumption was flat in the quarter, and our market share increased 10 basis points. Driven by share gains in branded women's systems, as Billie continued to scale at retail, while also growing a newly activated online channel. In the quarter, the brand reached a 14 percent share at Walmart and a seven percent share on Amazon.

Speaker Change: In the quarter the brand reached a 14 share at Walmart and a seven share on Amazon and in the most recent scanner data is now the number three brand in the set at target and Cvs.

Daniel J. Sullivan: And in the most recent scanner data, it is now the number three brand in the set at Target and CVS. Despite the heightened competitive environment within the women's category, our branded volume share gains of 210 basis points were above the industry average. Men's systems and disposables market shares were essentially flat in the, Sun and skin care organic net sales increased about 1%, as mid-single-digit growth in sun care was partially offset by declines in North America grooming and skin care. North American sun care growth was over 5% driven by higher volume. International sun care sales increased just over 5% as well, despite experiencing almost 70% growth last year, driven primarily by higher prices. In the US, the sun care category was up approximately 8%, and our share was essentially flat. Rooming organic net sales decreased 2.6% as bulldog growth in Europe was more than offset by declines in CREMO in the U.S. as we cycled certain MDD launches a year ago. Wet One's organic net sales declined 1.3%, and our share grew to approximately 77%. Femcare organic net sales were down 11.2% for the quarter, primarily reflecting lower volume.

Speaker Change: Despite the heightened competitive environment within the women's category, our branded volume share gains of 210 basis points, we're above recent trend.

Speaker Change: Men's systems and disposables market shares were essentially flat in the quarter.

Sun and skin care organic net sales increased about 1% as mid single digit growth in Sun care was partially offset by declines in North America grooming and skin.

Speaker Change: North America Sun care growth was over 5% driven by higher volumes.

Speaker Change: International Sun care sales increased just over 5% as well despite cycling almost 70% growth last year, driven primarily by higher pricing.

Speaker Change: In the U S Sun care category was up approximately 8% and our share was essentially flat.

Speaker Change: Rooming organic net sales decreased two 6% as bulldog growth in Europe was more than offset by declines in criminal in the U S. As we cycled certain MVD launches a year ago.

Speaker Change: Once organic net sales declined one 3% and our share grew to approximately 77%.

Speaker Change: Fem care organic net sales were down 11, 2% for the quarter, primarily reflecting lower volumes consumption.

Daniel J. Sullivan: Consumption in the category was up 1.5%, or half the rate of the previous 52 weeks, and our share of the market declined 1 point. In the quarter, we cycled competitive out of stocks a year ago and felt the impact of retailer inventory buydown, in part a result of the Carefree Masterbrand launch happening later in the quarter. However, increased promotional intensity in the tampons category as competition returned to the shelf and the magnitude of the retailer de-stocking caused a higher than expected drag on organic sales and share performance in the quarter. Now moving down the P&L. Gross margin rate on an adjusted basis increased 30 basis points, inclusive of 70 basis points of favorable currency, approximately 380 basis points of productivity savings, and 210 basis points of price gain.

Speaker Change: Consumption in the category was up one 5% or half the rate of the previous 52 weeks and our share of the market declined one point.

Speaker Change: In the quarter, we cycled competitive out of stocks a year ago and felt the impact of retailer inventory buy downs in part a result of the carefree Master brand launch happening later in the spring.

Speaker Change: However, increased promotional intensity and the tampon category as competition returned to shelf and the magnitude of the retailer destocking caused the higher than expected drag on organic sales and share performance in the quarter.

Speaker Change: Now moving down the P&L.

Speaker Change: Margin rate on an adjusted basis increased 30 basis points inclusive of 70 basis points of favorable currency.

Speaker Change: Approximately 380 basis points of productivity savings and 210 basis points of price gains, partially offset 520 basis points of transitory cost headwinds related to unfavorable absorption and heightened unit cost inflation trapped in inventory.

Daniel J. Sullivan: Partially offset 520 basis points of transitory cost headwinds related to unfavorable absorption and heightened unit cost inflation trapped in inventory, core gross inflation pressures of about 70 basis points and 40 basis points of negative mix and other items. A&P expenses were 9.9% of net sales, 10 basis points higher than the prior year. Adjusted SG&A increased 110 basis points in rate of sale last year as higher incentive compensation and people-related costs, and the impact of unfavorable currency movements were only partly offset by savings realized from ongoing operational efficiency programs and sales costs. Adjusted operating income was $35.7 million compared to $37.3 million last year, a decrease of approximately 4%. Gap diluted net earnings per share were $0.09 compared to $0.24 in the first quarter of fiscal 23, and adjusted earnings per share were $0.24 compared to $0.32 in the prior year period.

Speaker Change: Core gross inflation pressures of about 70 basis points, and 40 basis points of negative mix and other items.

Speaker Change: A&P expenses were nine 9% of net sales 10 basis points higher than the prior year.

Speaker Change: Adjusted SG&A increased 110 basis points in rate of sale versus last year as higher incentive compensation and people related costs and the impact of unfavorable currency movements were only partly offset by savings realized from ongoing operational efficiency programs and sales leverage.

Speaker Change: Adjusted operating income was $35 $7 million compared to $37 $3 million last year, a decrease of approximately 4%.

Speaker Change: GAAP diluted net earnings per share were <unk> <unk>.

Speaker Change: Compared to 24 in the first quarter of fiscal 'twenty, three and adjusted earnings per share were 24 cents compared to 32 cents in the prior year period.

Daniel J. Sullivan: Currency movements had no material impact on adjusted earnings per share, as currency benefits within operating profit were offset by lower hedge gains within other income and expense. Adjusted EBITDA was $57.2 million, compared to $64.5 million in the prior year. Net cash used from operating activities for the quarter was $72.9 million compared to $86.3 million in the prior year period.

Speaker Change: Currency movements had no material impact on adjusted earnings per share as currency benefits within operating profit were offset by lower hedge gains within other income and expense.

Speaker Change: Adjusted EBITDA was $57 $2 million.

Speaker Change: Third to $64 5 million in the prior year.

Speaker Change: Net cash used from operating activities for the quarter was $72 9 million compared to $86 3 million in the prior year period.

Daniel J. Sullivan: We ended the quarter with $214 million in cash on hand, access to the $207 million undrawn portion of our credit facility, and a net debt leverage ratio of 3.8 times. In the quarter, share repurchases totaled $15 million, and we continued our quarterly dividend payout and declared another cash dividend of 15 cents per share for the first quarter. In total, we returned nearly $23 million to shareholders during the quarter. Now, turning to our outlook for fiscal 2024. As Rod mentioned earlier, with a good start to the fiscal year and strong fundamentals in place, we have increased confidence in our ability to meet our previously provided outlook, which reflects sustainable top line growth, gross margin accretion, and double-digit constant currency adjusted EPS growth.

Speaker Change: We ended the quarter with $214 million in cash on hand access to the $207 million Undrawn portion of our credit facility and a net debt leverage ratio of three eight times.

Speaker Change: In the quarter share repurchases totaled $15 million and we continued our quarterly dividend payout and declared another cash dividend of <unk> 15 per share for the first quarter.

Speaker Change: In total we returned nearly $23 million to shareholders during the quarter.

Speaker Change: Now turning to our outlook for fiscal 2024.

Speaker Change: As Rod mentioned earlier with a good start to the fiscal year and strong fundamentals in place we have increased confidence in our ability to meet our previously provided outlook.

Speaker Change: Which reflects sustainable top line growth gross margin accretion and double digit constant currency adjusted EPS growth.

Daniel J. Sullivan: The macro environment remains challenging, with an uncertain geopolitical and economic backdrop, potential risks from further supply chain disruption, and a lack of clarity around the durability of the consumer resiliency that we have seen thus far. And while FX remains volatile, our assumption for currency impacts for the full fiscal year is unchanged from our prior outlook. For the fiscal year, we still anticipate organic net sales growth in the 2 to 4% range. Our outlook for gross margin accretion is unchanged as we continue to anticipate an increase of approximately 80 basis points or 100 basis points at constant exchange rates. There is no change to our full-year view for the elements that underpin our gross margin profile, including inflationary headwinds, productivity savings, pricing, and FX. Justice Dibadj's settlement is still expected to be in the range of $340 to $352 million.

Speaker Change: The macro environment remains challenging with an uncertain geopolitical and economic backdrop potential risks from further supply chain disruptions and a lack of clarity around the durability of the consumer resiliency that we've seen thus far.

Speaker Change: And while FX remains volatile our assumption for currency impacts for the full fiscal year is unchanged from our prior outlook.

Speaker Change: For the fiscal year, we still anticipate organic net sales growth in the 2% to 4% range.

Speaker Change: Our outlook for gross margin accretion is unchanged as we continue to anticipate an increase of approximately 80 basis points or 100 basis points at constant currency.

Speaker Change: There was no change to our full year view for the elements that underpin our gross margin profile, including inflationary headwinds productivity savings pricing and FX.

Speaker Change: Adjusted EBITDA is still expected to be in the range of $340 million to $352 million.

Operator: Justin DPS is still expected to be in the range of $2.65 to $2.85, inclusive of approximately 20 cents per share of currency headwinds. In terms of phasing, we continue to expect similar organic sales growth rates between half one and half two, and we now expect 35% of our full year EPS in half one and 65% in half two. For more information related to our Fiscal 2024 Outlook, I would refer you to the press release that we issued earlier this morning. And now, I'd like to return the call to the operator for the Q&A. We will now begin the Q&A. To ask a question, you may press the star, then one on your telephone key. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: Adjusted EPS is still expected to be in the range of $2 65.

Speaker Change: To $2 85.

Speaker Change: Inclusive of approximately <unk> 20 per share of currency headwinds.

Speaker Change: In terms of phasing, we continue to expect similar organic sales growth rates between half one and half two and we now expect 35% of our full year EPS in half one at 65% in half two.

Speaker Change: For more information related to our fiscal 2024 outlook I will refer you to the press release that we issued earlier this morning, and now I would like to return the call to the operator for the Q&A session.

Speaker Change: Yeah.

Speaker Change: We will now begin the Q&A.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question is from Nik Modi with RBC Capital Markets. Please go ahead.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question is from Nik Modi with RBC capital markets.

Nik Modi: Please go ahead.

Nik Modi: Thanks. Good morning, everyone. Just a quick clarification, Dan, if you don't mind, obviously, pretty good results on earnings relative to kind of where I think most people were. And you held the guidance. Is that just because of the pull forward in Japan? I just want to make sure I just understand exactly what's going on just from a cadence perspective.

And good morning, everyone.

Nik Modi: Just a quick clarification, Dan if you don't mind just.

Nik Modi: Obviously, you had pretty good results on earnings relative to kind of where I think most people were.

Nik Modi: And you held the guidance is that just because of the pull forward in Japan I just want to make sure I understand exactly what's going on just from a cadence perspective and in the broader question is just obviously international 50% of your business.

Daniel J. Sullivan: And then the broader question is just, you know, obviously, 50% of your business is international, and you have a lot of change. You know, what inning are we in in terms of the full foundation being set from some of your new operators in those markets and the new reporting structure, just to understand kind of how much more progress you can actually make in that market. Hey, good morning, Nick. Thanks for the question. I'll take them in reverse order.

Nik Modi: Have a lot of change.

Nik Modi: Inning are we in in terms of like the whole foundation being set from southern Union operators in those markets in the new reporting structure.

Nik Modi: Understand kind of how much more progress you can you can actually make enough in that market.

Speaker Change: Yeah, Hey, good morning, Nick Thanks for the question I'll take them in reverse order I'll start with international because you're right. We've been on this journey now for a little over a year rod alluded to it in his prepared remarks. So the first thing we did was bring the market's closer to us and changed the reporting lines, eliminating a layer within the previous international leadership team.

Daniel J. Sullivan: I'll start with the international. Because you're right, we've been on this journey now for a little over a year. Rod alluded to it in his prepared remarks. So the first thing we did was bring the markets closer to us and change the reporting lines, eliminating a layer within the previous international leadership team and essentially bringing that business closer to the management table here in the US. The second step is that we've made meaningful leadership changes across three really important markets, China, Japan, and Europe. That was about a year ago as well.

Speaker Change: And essentially bring that business closer to the management table here in the U S. The second step is we've made meaningful leadership changes across three really important markets, China, Japan, and Europe that was about a year ago as well what you're seeing now is a combination of those effects.

Daniel J. Sullivan: What you're seeing now is a combination of those effects, new strategies that have been developed and are being executed, and they're playing out differently in each market, right? For example, you have the changes we made to wholesaler and wholesaler inventory in Japan a year ago. We've got a new organization in Europe with a new strategy, and so I think there are a lot of really good things happening. If I had to peg it, I would say we're in the middle innings.

Speaker Change: New strategies that have been developed and are being executed and theyre playing out differently in each market right. You've got the changes we made in wholesaler in wholesaler inventory in Japan, a year ago, We've got a new organization in Europe with our new strategy.

Speaker Change: So I think theres a lot of really good things happening if I had to peg it.

Speaker Change: I would say we're in the middle innings, we like what we've done over the last year to 18 months, but certainly we're bullish on continued upside across all of our international business before I go on Rod anything you would add to that.

Daniel J. Sullivan: We like what we've done over the last year to 18 months but are certainly bullish on continued upside across all of our international business. Before I go on, Rod, anything you would add to that? Yeah, I think, Nick, Dan's captured it well.

Rod Ryan Little: Nick <unk> captured it well what I would double click on though is the importance of leadership, having the right local leadership, that's fit to win capable to win locally.

Rod Ryan Little: What I would double-click on, though, is the importance of leadership, having the right local leadership that's fit to win, capable of winning locally. And we've done that now in the key markets, not only with the leaders themselves, but building out much more capable teams below them. I won't mention the market by name, but we have one market where we have an entirely new leadership team in place that's now been in place for over a year. We're starting to see the fruits of that. The final thing I'll mention relative to international business is there's a big opportunity from here, and I think this is the back end innings part of what's to come, to have our innovation be fit for purpose for more local Asian and European markets as opposed to exporting U.S. ideas or innovating towards a global consumer that frankly doesn't exist. And so I think that's to come as we look towards 25 and six. We remain bullish on the internet. Yeah, and then, Nik, just to pick up the question on holding on the outlook, I think there's a couple of points I would make.

Rod Ryan Little: And we've done that now in the key markets not only with the leaders themselves, but building out much more capable teams below them I won't mention the market by name, but we have one market, where we have an entirely new leadership team in place that has now been in place for over a year, we're starting to see the fruits of.

Rod Ryan Little: That is the final thing I'll mentioned relative to international is Theres, a big opportunity from here and I think this is the backend earnings.

Rod Ryan Little: Part of what's to come.

Rod Ryan Little: To have our innovation be fit for purpose for low more local Asian, and European markets as opposed to exporting U S ideas.

Rod Ryan Little: We're innovating towards a global consumer that frankly doesn't exist and so I think thats to come as we look towards <unk> 25, and six we remained bullish on international yes.

Speaker Change: And then Nick just to pick up the question on on holding on the outlook. I think there is there is a couple of points I would make one what.

Daniel J. Sullivan: One, you know, what we were really encouraged by in the quarter was the gross margin profile. Some of that is timing and phasing of what we have pulled forward into the quarter that we had phased for later in the year. That's just a reality.

Nick: What we were really encouraged by in the quarter was the gross margin profile. Some of that is timing and phasing of what we have pulled forward into the quarter that we had faced for later in the year. That's just a reality I think the general sentiment, though is we're one quarter in we haven't yet gotten into the sun season in the U S, which we all know what that can mean for.

Daniel J. Sullivan: I think the general sentiment, though, is we're one quarter in. We haven't yet gotten into the sun season in the U.S., and we all know what that can mean for our business. And so we're just being prudent here about where we are in the year, what line of sight we have. We're confident. We feel really good with the start of the year and some of the underlying execution. But given the business that lies ahead of us, particularly in the sun, we obviously chose to hold the guy. It makes total sense. Thanks, guys. I'll pass it on.

Nick: Our business and so we're just being prudent here about where we are in the year. What line of sight. We were confident we feel really good with the start of the year and some of the underlying execution, but given the business that lies ahead of us, particularly in Sun.

Nick: We obviously chose to hold the guidance.

Speaker Change: Makes total sense, thanks, guys I'll pass it on.

Speaker Change: Thank you Nick Operator next question please.

Operator: Thank you, Nick. Operator, next question, please. The next question is from Olivia Tong with Raymond James. Please go ahead.

Speaker Change: Next question is from Olivia Tong with Raymond James. Please go ahead.

Speaker Change: Great.

Olivia Tong: Great. Thanks. Good morning.

Olivia Tong: Thanks, Good morning.

Daniel J. Sullivan: I wanted to understand a little bit about what came in better than expected on the expense line. You were pretty clear in the guide for this quarter, sort of giving us caution around some of the inventory and some of the SG&A, sort of being more in line with Q2 and Q3 of last year. So what sort of worked better than you thought?

Olivia Tong: Yeah understand a little bit about.

Olivia Tong: What came in better than expected on the expense line.

Olivia Tong:

Olivia Tong: We're pretty clear on the guide for the next quarter and sort of keeping those classes caution around some of the inventory and Timothy.

Olivia Tong: SG&A sort of being more in line with Q2, and Q3 of last year or so.

Olivia Tong: And what what sort of worked better than you thought and.

Daniel J. Sullivan: You know, as you think about, you just sort of, you know, de facto gave us a guide for Q2, which would suggest that in order to sort of stay in the range, Q3 and Q4 have to come in a little bit. Just, you know, talk a little bit about the puts and takes there, if you wouldn't mind. Thank you. Yeah, good morning, Olivia.

Olivia Tong: As you think about.

Olivia Tong: You just sort of the fact that the guide for Q2.

Olivia Tong: Which would suggest that in order to sort of stay in the range to three in Q4 have to come in a little bit just talk a little bit about them about.

Olivia Tong: About the puts and takes there.

Speaker Change: Thank you.

Speaker Change: Yeah sure look I think that the.

Daniel J. Sullivan: Sure. Look, I think the surprise, if you will, in Q1 was all in the margins and profile. And it was obviously a good surprise, but it was the reflection of really good execution by the team on both the cost side of the ledger, so productivity worked harder for us and delivered more than we had expected, and on the revenue side, both in price and what we call SRGM. And I think there's sort of three factors that I would point to, and I'll kind of tick through them in order of magnitude, recognizing all three carry with them some As I mentioned, the first item is productivity. The team did an excellent job with execution.

Speaker Change: Surprise, if you will in Q1 was all in the margin profile and it was.

Speaker Change: A good surprise, but it was the reflection of really good execution by the team on both the cost side of the ledger. So productivity worked harder for us and delivered more than we had expected and on the revenue side, both in price and what we call ESR G M and.

Speaker Change: And I think theres sort of three factors that I would point to in all kind of tick through them in order of magnitude recognizing all three carry with.

Speaker Change: With them some some phasing benefit that doesn't necessarily change the year, but certainly it was a benefit in the quarter as I mentioned in the first item is productivity.

Speaker Change: The team did an excellent job on execution the accelerated certain initiatives that we had phased later in our plans.

Daniel J. Sullivan: They accelerated certain initiatives that we had phased later in our plans and really are executing at a high level. I think what was a bit of a surprise, which is timing in the quarter, is where global procurement was able to land certain global contracts, rebate programs, and settlements that we had planned for later in the year that hit us in the quarter in a good way, but really good execution. I think the second thing I would point to is the mix.

Speaker Change: And really are executing at a high level I think what was a bit of a surprise, which is timing in the quarter is where global procurement was able to land certain global contracts rebate programs and settlements.

Speaker Change: We had planned for later in the year that hit us in the quarter and a good way, but really good execution I think the second thing I would point to is mix anytime you see this level of growth in shave right. We grew wet shave over 8% in the quarter.

Daniel J. Sullivan: Anytime you see this level of growth in shave, we grew wet shave over 8% in the quarter, and particularly internationally in Japan, where we had price increases attached to it, you get a mixed benefit for the business. That is all entirely timing for us. And then the third piece is warehouse and distribution costs, which is a little bit of both. I think really good structural execution.

Speaker Change: And particularly internationally in Japan, where we had price increases attached to it you got a mix benefit for the business that is all entirely timing for US and then the third piece is warehouse and distribution costs, which is a little bit of both I think really good structural execution. We are seeing rates come down we are seeing inflation easing.

Daniel J. Sullivan: We are seeing rates come down. We are seeing inflation easing. We also shipped heavy.

Speaker Change: We also shipped heavy were very productive in our in our shipments in terms of full truckloads. So I put all that together I would say to you. The 200 basis point margin accretion in the quarter was more than we had profile then I would say roughly 75% of that is likely timing 25% of that is structural.

Daniel J. Sullivan: We're very productive in terms of full truckloads. So I put all that together, and I would say the 200 basis point margin accretion in the quarter was more than we had profiled, and I would say roughly 75% of that is likely timing, and 25% of that is structural. That was really what we saw in the quarter.

Speaker Change: That was really what we saw in the quarter on the expense lines G&A A&P and otherwise as we mentioned also in FX lined up pretty much what we had expected.

Daniel J. Sullivan: On the expense lines, G&A, A&P, and otherwise, as we mentioned also in FX, lined up pretty much with what we had. Great, thanks. And just following up on advertising, obviously, advertising plus or minus flattest this quarter, the guide would suggest that, you know, there's more of an increase as the year progresses. Can you talk about, you know, the categories in particular that you expect to see really ramp up with respect to advertising? Yeah, good morning, Olivia. Rod here.

Speaker Change: Great. Thanks, just following up on advertising, obviously advertising plus or minus flattish this quarter.

Speaker Change: The guide would suggest that.

Speaker Change: Thanks, Marvin increases in your proactive can you just talk about the category in particular that you're.

Speaker Change: You would expect to see them.

Speaker Change: Really ramp up with respect to the advertising.

Yes, good morning, Olivia Rod here we.

Rod Ryan Little: We have the bulk of our innovation program for the year to come in front of us. We talked about Billy Body launching yesterday and today as we launch into brick and mortar and online with a new line of body products that we're very excited about. So that will be a net increase in investment in advertising and support behind that. We have what we believe is the number one innovation, the biggest and most disruptive innovation in sun care coming this year with Banana Boat 360 coverage mist. It's an alternative spray product for those that like sea spray. They're typically propellant-driven, not great for the environment.

Marvin: We have the bulk of our innovation.

Marvin: Program for the year to come in is in front of US we've talked about Billy body.

Marvin: Launching actually yesterday.

And today, as we launch and to brick and mortar and online with the new line of body products that we're very excited about so that will be a net increase in investment in advertising and support behind that we have what we believe is the number one <unk>.

Marvin: <unk>, the biggest and most disruptive innovation in Sun care coming this year.

Marvin: On Banana boat 360, <unk> coverage missed.

Marvin: It's an alternative spray product for those that like C spray.

Marvin: They're typically propellant driven not great for the environment. This is a sustainable non propellant driven spray. It's what we believe is superior spray formulation, it's exclusive on banana boat.

Rod Ryan Little: This is a sustainable, non-propellant-driven spray. It's, we believe, a superior spray formulation. It's exclusive to Banana Boat.

Rod Ryan Little: Beyond all the other innovation we have coming on sun care, that's the number one thing that comes. You'll see us start to ramp up investment behind that as we come into the big spring and summer months. And the final piece is a carefree master brand re-platforming where we have a major product upgrade coming to our carefree pads business. Less plastic, more sustainable, more absorbent.

Marvin: Beyond all the other innovation, we have coming on Sun care Thats. The number one thing that comes Youll see us start to ramp up investment behind that as we come into the big spring and summer months and the final piece is a carefree master brand re platforming, where we have a major product upgrade coming on our carefree pads business.

Marvin: This.

Marvin: Plastic more sustainable more absorbent.

Rod Ryan Little: We have a major simplification as part of that where we're collapsing the stay-free brand under carefree, so effectively going two brands into one with very strong retailer support and absolute clarity on the target for that new brand and positioning. It's MOMS, and we've got a very emotive campaign that we're going to put in place and spend against to drive that brand. So that's all still to come, and that's what I think you'll see coming in Q2 through the balance. Great. Thank you. Best of luck to you. Thank you, Olivia.

Marvin: A major simplification as part of that where we're collapsing the stay free brand under carefree, so effectively going one two brands into one with very strong retailer support and absolute clarity on the target for that new brand and positioning its moms and we've got a very emotive campaign.

Marvin: That we're going to put in place in spending against.

Marvin: To drive that brand. So that's all still to come and that's why I think you'll see coming in Q2 through the balance of <unk>.

Speaker Change: Thank you best of luck.

Speaker Change: Thank you Olivia.

Rod Ryan Little: Operator, next question please. The next question is from Bill Chappell with Trust Securities. Please go ahead.

Speaker Change: Operator next question. Please the next question is from Bill Chappell with Truth Securities. Please go ahead.

Bill Schmitz: Thanks. Good morning. Good morning, Bill. I have two questions. One, back on women's in the U.S., what's kind of the line of sight beyond Walmart in terms of shelf space gains for this year? You know, do you think you can move, you know, have a similar type move for Billy in terms of total share? Are we narrowing the gap further with where you are at Walmart? Or, you know, is it less of a share gain than we saw last year? Morning, Bill.

Bill Schmitz: Thanks, Good morning.

Bill Schmitz: Morning Bill.

Bill Schmitz: I guess two questions.

Bill Schmitz: Back on women in the U S.

Bill Schmitz: What's kind of the line of sight in the what used to.

Bill: Beyond Walmart in terms of shelf space gains for this year do you think you can move.

Speaker Change: We have the similar type.

Speaker Change: Move for Billy in terms of total share are we nearing the gap further with where you are at Walmart or is it less of a share gain.

What we saw last year.

Good morning, Bill I think just relative to last year less of a share gain just given what's already in the base now.

Rod Ryan Little: I think just relative to last year, less of a share gain, just given what's already in the base now. But as it relates to billing and distribution, there's some additional incremental distribution coming online this year around some of the regional players. All the big ones are covered.

Speaker Change: But as it relates to Billy and distribution. There is some additional incremental distribution coming online this year around some of the regional players.

Speaker Change: All the big ones are covered.

Rod Ryan Little: You know, we're effectively national, but there's a little more fill-in to come. And then there's a couple of channels, a channel specifically that we've just turned on and online. And then, you know, there's always the club opportunity potentially out there for incremental distribution and coverage.

We're effectively national but theres, a little more fill in to come and then there is there is a couple of channels that channel specifically.

Speaker Change: That we just turned on in online and then there's always the club opportunities potentially out there.

Speaker Change: For incremental distribution and coverage and then the.

Rod Ryan Little: And then we think the bigger play over time, Beyond Shave, is really realizing the opportunity around a broader lifestyle brand and playing a much broader portfolio, which we think the brand has the right to do. So is there a plan to step up marketing and advertising behind Billy this year now that you are kind of on a national platform, or that's been building through all the last year anyway? You will see an increased investment behind Billy this year that starts effectively. Got it. And then when I was following up on the FinCare route, I mean, I understand you have a new strategy and are working on that. Dempter seems to have had probably 10 different new strategies over the past 15-20 years I've followed it. So, I mean, what gives you confidence that these kinds of volumes can stabilize again or actually grow? Yeah, this is not a new strategy bill with what's happening on Carefree.

Speaker Change: We think the bigger play over time beyond shape is really realizing the opportunity around a broader lifestyle brand and playing a much broader portfolio beyond Shay, which we think the brand has the right to do.

Speaker Change: So is there a plan to step up marketing advertising behind really this year now that you are kind of on a national platform or that's been building through all of last year anyways.

Speaker Change: You will see in <unk>.

Speaker Change: Increased investment behind Billy this year that starts effectively now.

Speaker Change: Got it and then one follow up on the Fem care right.

Speaker Change: Right I mean, I understand you have a new strategy and working on that but it's Tim here seems to have had 10.

Speaker Change: 10 different new strategies over the past 15 to 20 years.

Speaker Change: Followed it so I mean, what gives you confidence that kind of volumes can can stabilize again or actually grow.

Speaker Change: Yeah. This is not a new strategy bill with what's happening on care free. This is part of the strategy put in place.

Rod Ryan Little: This is part of the strategy put in place a couple of years ago, with a new dedicated team in place to do that. We've had clarity of strategy, and consistency, I think, of execution against that strategy, which was first, just stabilize the business, take some cost out, and stabilize the business. We've very much now moved into the phase of building better innovation and product performance focused around, you know, better product formulation, and better targeting of who we're talking to. So that's where we are in the phase of the journey.

Speaker Change: A couple of years ago with a new dedicated team in place to do that we've had clarity of strategy consistency I think of execution against that strategy, which was first just stabilize the business.

Speaker Change: Some cost out stabilize the business, we very much now moved into the phase of.

Speaker Change: Building.

Speaker Change: <unk> innovation product performance focused around.

Speaker Change: Claims.

Speaker Change: Better product formulation better targeting of who we're talking to so thats, where we are in the phase of the journey.

Rod Ryan Little: You're rightly pointing out, I think, Bill, a question or what could be a concern about what's really going on and whether we can be successful in FemCare. Let me start by saying I completely believe we can be successful in FemCare and we will be successful in FemCare and that we can maintain unit volume growth at least in line with category or ideally ahead of category over time. Right?

Speaker Change: You're rightly pointing out I think Billy a question or what could be a concern of what's really going on and can we be successful in fem care. Let me start by saying I completely believe we can be successful in fem care and we will be successful in fem care and that we can maintain unit.

Speaker Change: Volume growth at least in line with category or ideally ahead of category over time right. So you've had what's traditionally been a low single digit growth category and if you hold share within that position you're going to grow low single digits, all else being equal we're coming off a period since the beginning.

Rod Ryan Little: So you've had what's traditionally been a low single-digit growth category. If you hold shares within that position, you're going to grow low single-digits, all else being equal. We're coming up on a period since the beginning of the pandemic where this category has been disrupted. If you go back to day one of the pandemic, that was one of the shelves that emptied out at the very beginning.

Getting of the pandemic, where this category has been disrupted if you go back to day one of the pandemic.

Speaker Change: Fem care that was one of the shelves that emptied out at the very beginning we had supply disruptions. We the category not just us the competitive set and as recently as in the period, we just lapped year ago, we had competitors out of stock, where we were benefiting from that position because we were in stock which drove.

Rod Ryan Little: We had supply disruptions; we, the category, not just us, the competitive set, and as recently as in the period we just lapped a year ago, we had competitors out of stock, where we were benefiting from that position because we were in stock, which drove the double-digit growth in the period a year ago. We're lapping that today, so when you take year-ago growth with where we are today, we're actually at that low single-digit growth place on a two-year stack basis in the quarter just finished. The good news for us all, I think it'll be less messy going forward, is I think a lot of that is behind us in the category, and what we now cycle for RQ2, 3, and 4 is much more like-for-like, where consumption and our reported sales trends ought to match in a much closer way, not only for us, but also for competition. I hope that that helps. That does it. Thanks for the color.

Speaker Change: The double digit growth in the period a year ago, we're lapping that today. So when you take year ago growth with where we are today, we're actually at that low single digit growth place on a two year stack basis in the quarter. Just finished the good news for US all I think it'll be less messy going forward is I think a lot of that is.

Speaker Change: Behind us in the category and what we now cycle for our Q2, three and four it is much more like for like.

Speaker Change: Our consumption and our reported sales trends up to match in a much closer way not only for us but also for competition as we go forward hope that helps.

Speaker Change: That does thanks for the color.

Rod Ryan Little: You bet. Thank you, Bill. Operator, next question, please. The next question is from Chris Carey with Wells Fargo Securities. Please go ahead.

Speaker Change: Thank you Bill operator next question please.

Speaker Change: The next question is from Chris Carey with Wells Fargo Securities. Please go ahead.

Chris Carey: Good morning. So just two questions, but I wanted to start with gross margin. So if I adjust the gross margin for the inventory impact this quarter, obviously, the underlying run rate was quite a bit higher, you know, closer to 46% gross margin. It sounds like, obviously, there was quite a bit of pull forward. Um, but you're also implying, I guess, roughly 43% gross margins for the rest of the year. What's really driving that down sequentially, is that, um.., is that all productivity you expect to get worse? Maybe thoughts on inflation. So just contextualizing, you know, why the underlying run rate set down would be helpful that I'm following. Yeah, hey, Chris.

Chris Carey: Hi, good morning, So just two questions, but I wanted to start with gross margin.

Chris Carey: So if I adjust the gross margin for the inventory impact this quarter, obviously, the underlying run rate was quite a bit higher.

Chris Carey: Closer to a 46% gross margin it sounds like obviously, there was quite a bit of pull forward.

Chris Carey: But you're also implying I guess roughly 40 threep per se gross margins for the rest of the year, what's what's really driving that down sequentially is that.

Chris Carey: Is that is that all productivity you expect mix to get worse.

Chris Carey: Maybe your thoughts on inflation, so just contextualize.

Chris Carey: Why the underlying run rate would be.

Speaker Change: It would be helpful. Then I have a follow up.

Yeah, Hey, Chris. Thanks for the question look I think we have to put Q1 in proper context for what structural versus what's timing, which I think I did in the previous question, but I think if you'd look at the elements that underpin the margin Q1, we.

Daniel J. Sullivan: Thanks for the question. Look, I think we have to put Q1 in proper context for what's structural versus what's timing, which I think I did in the previous question. But I think if you look at the elements that underpin the margin, Q1, we expect, would likely be our strongest quarter for productivity savings and price realization. That's not to say that those won't drive quarters two through four, but the impact will be less.

Speaker Change: We expect would likely be our strongest quarter for productivity savings are strongest quarter for price realization.

Speaker Change: Not to say that those won't drive quarters, two through four but the impact will be will be less and so you'll start to see that scale down again, partly that is timing, but also partly that is just structural the way productivity and pricing are profiled in equally though you will see inflation continued to east maybe at a bit of a slower rate.

Daniel J. Sullivan: And so you'll start to see that scale down. Again, partly that is timing, but also partly that is just structural, the way productivity and pricing are profiled. Similarly, though, you will see inflation continue to ease, maybe at a bit of a slower rate over time. And so, when you put all that together, I would summarize it this way.

Speaker Change: Over time, and so I think when you put all of that together.

Speaker Change: Summarize it this way I think we're super encouraged about the way the team executed and the gains that we saw in the quarter were hesitant to use Q1 as a proxy for the full year given some of the timing dynamics underway productivity and price will phase back half of the year, but we're certainly confident as we look at our full year outlook and.

Daniel J. Sullivan: I think we're super encouraged about the way the team executed and the gains that we saw in the quarter. However, we're hesitant to use Q1 as a proxy for the full year, given some of the timing dynamics and the way productivity and price will phase back in the second half of the year. But we're certainly confident as we look at our full year outlook in terms of the margin profile that we laid out, which was essentially 100 basis points, constant currency gain. Okay, that's helpful, regarding organic sales growth for the year. There's a lot of moving pieces between Strengthen international markets declines in North America this quarter. Obviously, wet shave had a very strong quarter offset by, you know, sun care with the kind of sun and skin being, you know, kind of maybe more neutral in the quarter.

Speaker Change: Terms of the margin profile that we laid out which was essentially 100 basis points constant currency gain.

Speaker Change: Okay. That's helpful regarding organic sales growth for the year.

Speaker Change: There's a lot of moving pieces between strength in international markets declines in North America. This quarter, obviously wet shave had a very strong quarter.

Speaker Change: Offset by phone.

Speaker Change: Sun care with what kind of Sun and skin.

Speaker Change: Maybe more neutral in the quarter.

Speaker Change: How do we frame the way that you're viewing the business for the rest of the year I don't know if you can maybe offer some comments for expectations by segment, perhaps some expectations by.

Rod Ryan Little: How do we frame the way that you're viewing the business for the rest of the year? I don't know if you can maybe offer some comments on expectations by segment, perhaps some expectations by international versus North America. I'm just conscious that you were talking about mixed impact and gross margin in the quarter, and maybe that will change going forward. So can you maybe just offer a bit more context on the complexion of the top line between international and North America in some of your segments for the rest of the year? That would be helpful. Yeah, Chris, good morning. It's a good question, because there's a lot going on. But we try to make it very, very simple.

Speaker Change: By International versus North America, I'm, just conscious that you were talking about mix impacting gross margin in the quarter and maybe maybe that changes go forward. So you just.

Just can you maybe just offer a bit more context on the complexion of the topline between international and North America and some of your segments for the rest of the year would be helpful. Thanks.

Speaker Change: Yes, Chris Good morning, it's a good question because there's a lot going on but I'm trying to make it very very simple last year, our international business outgrew, our domestic U S business.

Rod Ryan Little: Last year, our international business outgrew our domestic US business by approximately double the rate. I would expect that to be about where we land this year, all else being equal in terms of, if you look on a full year basis. We have international growth ahead of our domestic US business as we kind of look at it together. What you saw in quarter one on the US business is by no means a proxy of what we, North America, as we report it, is a proxy going forward. I would expect to see sequential improvement in our North American business throughout the balance of the year, largely because the innovation to come is domestically, mostly here. We know we have better planogram outcomes around distribution outcomes for the balance of the year.

Chris: Let's call it approximately double the rate.

Chris: I would expect that to be about where we land. This year all else being equal in terms of if you look on a full year basis, we have international growing ahead of our domestic U S business as we kind of look at it together.

Chris: What you saw in quarter, one on the U S business is by no means a proxy of what we the North America as we reported is the proxy going forward.

Chris: I would expect to see continued sequential improvement in our north American business throughout the balance of the year largely because the innovation to come is the.

Chris: Domestically, it's mostly here, we know we have better plan O gram outcomes around distribution.

Chris: It comes in the balance of the year and so I think when we look at how the year sets up that particularly as you normalize for Fem care, which was half of the Q1 <unk>.

Rod Ryan Little: And so I think as we look at how the year sets up, particularly as you normalize for FemCare, which was half of the Q1 delivery, you know, under delivery. As that normalizes, that kind of takes care of itself. So I think you'll see better North American performance in the balance of the year. I think you'll see the strength and international presence continue, albeit not at the absolute rate of growth we saw in the first quarter. Depending on weather, you ought to see a pretty resilient sun category.

Chris: Delivery under delivery as that normalizes that kind of takes care of itself. So I think youll see a better north American performance in the balance of the year I think youll see the strength in international continue, albeit not at the absolute rate of growth we saw in the first quarter.

Chris: Depending on whether you ought to see a pretty resilient Sun category Shave. We think continues to be on growth for us for the full year and you'll see again I think sequential improvement in both grooming and fem care as we cycle forward here through the balance of the year, Dan a few clarify or add anything.

Rod Ryan Little: Shave, we think, continues to be growth for us for the full year. And you'll see, again, I think sequential improvement in both grooming and FemCare as we cycle forward here through the balance of the year. Dan, I don't know if you'd clarify or add anything. No, I did.

Daniel J. Sullivan: No I, just maybe to put some context to have Chris we still think that the 3% midpoint on organics is largely how it'll phased by quarter. So we don't necessarily anticipate a change there and on the segment piece, we still anticipate sort of mid to high single digit growth on the right to wind portfolio and low single digit growth.

Chris Carey: Maybe to put some context on it, Chris, we still think that the 3% midpoint on organics is largely how it'll phase by quarter. So we don't necessarily anticipate a change there. And on the segment piece, we still anticipate, you know, sort of mid to high single-digit growth on the right to win portfolio and low single-digit growth on the right to play portfolio. Okay, that's helpful. Thank you. Thanks, Chris. Operator, question, please. The next question is from Susan Anderson with Canaccord Genuity. Please go ahead.

Daniel J. Sullivan: On the right to play portfolio.

Daniel J. Sullivan: Okay.

Daniel J. Sullivan: Okay.

Speaker Change: Helpful. Thank you.

Speaker Change: Thanks, Chris Cabrera simply.

Speaker Change: The next question is from Susan Anderson with Canaccord Genuity. Please go ahead.

Susan Kay Anderson: Hi, good morning, nice job on the quarter.

Susan Kay Anderson: Hi, good morning. Nice job on the quarter. I wanted to ask about men's grooming.

Susan Kay Anderson: Wanted to ask on the men's grooming I think silver is slightly down but I think you noted that Bulldog went to ask maybe if you could give a little bit more color on the drivers there and what drove that growth both domestic and international and then also I'm curious if you have any new products coming out in the category for the year.

Rod Ryan Little: I think sales are slightly down, but I think you know that Bulldog was up. Maybe you could give a little bit more color on the drivers there and what drove that growth, both domestic and international. Then also, I'm curious if you have any new products coming out in the category for the year. Good morning, Susan Thea.

Speaker Change: Good morning, Susan. Thank you for the question, yes, the grooming portfolio internationally had a very very strong quarter in large part led by Bulldog, which grew about 18% year over year. The brand has now reached number two in the U K ahead of new Nivea in.

Rod Ryan Little: Thank you for the question. Yeah, the grooming portfolio internationally had a very, very strong quarter, in large part led by Bulldog, which grew about 18% year over year. The brand has now reached number two in the UK, ahead of Nivea in the category, which is a significant accomplishment, and the team has worked very hard here. I would attribute it to three things.

Speaker Change: The category, which is a which is a significant accomplishment and the team has worked very hard here I would I would attribute it to three things continued distribution gains, which we had profiled in for the year.

Rod Ryan Little: Continued distribution gains, which we profiled for the year. Interesting innovation. We've introduced the new advanced line for Bulldog, which is a more premium priced skin set of products for the brand, which has been very well received initially.

Speaker Change: Interesting innovation, we've introduced the new advanced line for Bulldog, which is a more premium priced skin.

Speaker Change: Set of products for the brand, which has been very well received initially and then innovation. This year in the category, we're seeing it mostly in anti personal deodorant expansion a bit into hair care. So the brand continues to to really performed well in its home base and deliver some really excited growth.

Rod Ryan Little: And then innovation, this year in the category, we're seeing it mostly in antiperspirant deodorant expansion and a bit into hair care. So the brand continues to really perform well in its home base and deliver some really exciting growth. Okay, great, that's really helpful.

Speaker Change: Okay, Great. That's really helpful. And then also I wanted to ask just on transportation costs and the issues going on in the Red Sea, if you're expecting or what your expectations are for transportation for this year and then also just if you have any exposure to the issues there. Thanks.

Daniel J. Sullivan: And then also, I wanted to ask just about transportation costs and the issues going on in the Red Sea, if you're expecting those, or what your expectations are for transportation for this year, and then also just if you have any exposure to the issues there. Thank you. Yeah, so the exposure is fairly limited.

Speaker Change: Yeah. So the exposure is fairly limited it would essentially be shaved product that moves between Europe and in China.

Daniel J. Sullivan: It would essentially be, you know, shaved product that moves between Europe and China. And what we've seen to date is very little disruption and very little complexity. We have built up a bit of inventory. We have seen lead times expand a bit as we've had to go around the Cape as opposed to through the Red Sea. But so far, it has been de minimis in terms of implications for both cost and complexity.

Speaker Change: And what we've seen to date is a very little disruption and very little complexity. We have built a bit of inventory we have seen lead times expand a bit as we've had to go around the Cape as opposed to through the Red Sea. So far it has been de Minimis in terms of implications in both cost.

Speaker Change: And complexity, obviously the teams have taken the right steps to plan for it and we don't anticipate that there will be significant implications for the business. This year, but obviously like everyone else we're monitoring the situation.

Daniel J. Sullivan: Obviously, the teams have taken the right steps to plan for it, and we don't anticipate that there will be, you know, significant implications for the business this year. But obviously, like everyone else, we're monitoring the situation. Okay, great. Thanks so much.

Speaker Change: Okay, great. Thanks, so much good luck the rest of the year. Thank you. Thanks, Susan Operator next question. Please.

Susan Kay Anderson: Good luck for the rest of the year. Thank you. Thanks, Susan. Operator, next question, please. The next question is Peter Grom with UBS. Please go ahead. Thanks, operator. And good morning, everyone. Hope you're doing well.

Speaker Change: The next question is Peter Grom with UBS. Please go ahead.

Peter K. Grom: Thanks, operator, and good morning, everyone hope you're doing well so maybe one.

Peter K. Grom: So maybe one quick housekeeping question and then another one on gross margin. First, just kind of the pull forward you mentioned in Japan, is there any way to kind of quantify that? I'm not sure if you mentioned that previously or not, but if you didn't, I could, it would be helpful if you could share that.

Peter K. Grom: Quick housekeeping question and then another one on gross margin.

Peter K. Grom: First just kind of the pull forward you mentioned in Japan is there any way to kind of quantify that I'm not sure. If you mentioned that previously or not but if you are getting.

Peter K. Grom: It'd be helpful. If you could share that and then specifically on gross margin.

Peter K. Grom: And then, you know, specifically on gross margin, several times throughout this call. You mentioned a good chunk of this was timing-related, but I would be curious whether, you know, the productivity performance this quarter gives you greater confidence that there could be, you know, further savings to unlock as we look ahead. Thanks.

Peter K. Grom: Several times throughout this call you mentioned a good chunk of this was timing related but I would be curious whether.

Peter K. Grom: Our activity performance.

Peter K. Grom: This quarter. It gives you greater confidence that there could be you know further savings to unlock as we look at thanks.

Rod Ryan Little: Yeah, Peter, good morning, on just the first part about Japan, I'll take it and put this down for the broader gross margin perspective. Look, we had a solid quarter in Japan, driven by really three things. One was the cycling period in the year ago period, so October, November, December, a year ago, so back to 22, that had relatively low shipments.

Speaker Change: Yeah, Hi, Peter Good morning, just the first part on Japan, all taken and flip it to Dan for the broader gross margin perspective.

Daniel J. Sullivan: Look we had a solid quarter in Japan, driven by really three things.

Daniel J. Sullivan: One was <unk>.

Daniel J. Sullivan: Cycling a period.

Daniel J. Sullivan: In the year ago period, So October November December.

Daniel J. Sullivan: A year ago, so back to 'twenty, two that had relatively low shipments because of the way we have traditionally phase of the business.

Rod Ryan Little: Because of the way we had traditionally phased the business, where we would have heavy promotion wholesale pushes in that August, September window, we're near the end of the year, was just a historical practice that frankly, I don't like and I don't, I don't think the team likes it. So we got out of that. And so think of it as we had an easy base to compare against, in the quarter one where we, you know, we put up good growth. That was, you know, I would call it in the range of $5 to $10 million as an easy comp.

Daniel J. Sullivan: Where we would have heavy promotion wholesale pushes in that August September window, we're near the end of the year. It was just a historical practice that frankly, I don't like and I don't I don't think the team like so we got out of that and so think of it as we had an easy base to comp.

Daniel J. Sullivan: In the quarter, one where we put up good growth.

That was.

Speaker Change: I would call it in the range of $5 million to $10 million.

Of an easy comp, but the bulk of the deliveries and the other two things our market growth that market has returned to growth. It had a delayed recovery coming out of the pandemic and we now have the market.

Rod Ryan Little: But the bulk of delivery then, the other two things are market growth. That market has returned to growth. It had a delayed recovery coming out of the pandemic, and we now have the market in high single-digit growth territory. At least that's where it was in the quarter just finished.

Speaker Change: High single digit growth territory at least that's where it was in the quarter just finished and we have incremental pricing and revenue management coming on top of that where we've taken a couple of rounds of pricing in Japan or in a market that hasn't seen much pricing activity over the last few years. So I was just catching up.

Rod Ryan Little: And we have incremental pricing and revenue management coming on top of that, where we've taken a couple rounds of pricing in Japan or in a market that hadn't seen much pricing activity over the last few years. So just catching up for inflation that's hit us in the P&L is now benefiting us. We had the cost, think of it; we had the cost in the P&L but not the pricing help. We're now seeing that flow.

Speaker Change: For inflation that hit us in the P&L is now benefiting us we had the cost think of it we had the cost in the P&L, but not the pricing help we're now seeing that flow and so I think we're optimistic on Japan for the future.

Rod Ryan Little: And so I think we're optimistic about Japan for the future, but not nearly at the rate of what you are seeing that we're now cycling like for like comps on how we're distributing and managing the business there. Yeah, on the margin piece, Peter, what I would say is, look, we're certainly encouraged by the results. And I think what we've demonstrated within our supply chain organization is that we go pretty hard after productivity savings, and we've got in excess of 100 different initiatives ongoing at any point in time.

Speaker Change: Not nearly at the rate of what you're seeing is we're now cycling like for like comps on how we're distributing in managing the business there.

Speaker Change: Yeah and on the margin piece, Peter what I would say is look we're certainly encouraged by the results and I think what we've demonstrated within our supply chain organization as we go pretty hard after productivity savings and we've got in excess of 100 different initiatives.

Speaker Change: Ongoing at any point in time, and I think that the team will continue to lean in and accelerate.

Daniel J. Sullivan: And I think that the team will continue to lean in and accelerate where they can. So could there be upside there? I think there could be, but it would likely be on the cost side.

Speaker Change: Where they can so could there be upside there I think there could be would likely more likely be on the cost side I think on the on the revenue side, we've got a pretty good line of sight for what we faced in all of our incremental pricing, which is mostly in international has been sold in now so theres no execution risk there, but I wouldn't anticipate.

Daniel J. Sullivan: I think on the revenue side, we've got a pretty good line of sight for what we phased in all of our incremental pricing, which is mostly international has been sold in now. So there's no execution risk there, but I wouldn't anticipate upside. So I guess the short answer to your question, I think we're certainly not ready to call it yet, especially with some of the challenges we see in the macro environment. But if it were to, it would be in productivity more likely than in revenue.

Speaker Change: <unk> upside so I guess short answer to your question I think it could be we're certainly not ready to call it yet, especially with some of the challenges we see in the macro environment, but if it were to comment would be in productivity more likely down in revenue.

Peter K. Grom: Thank you. Thank you, Peter. Operator, next question, please.

Speaker Change: Thank you. Thank you Peter Operator next question please.

Operator: At this time, there are no further questions. This concludes our question and answer session. I would like to turn the conference over to Rod Little, CEO, for any closing remarks. Thank you, everyone. I appreciate the time today and the continued interest in the company, and we'll talk to you in three months with an update on Q2. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: At this time there are no further questions.

Speaker Change: This concludes our question and answer session I would like to turn the conference over to Rod Little CEO for any closing remarks.

Rod Ryan Little: Yeah. Thank you everyone I appreciate the time today and the continued interest in the company and we will talk to you in three months with an update on Q2.

Speaker Change: Yeah.

Speaker Change: The conference has now concluded.

Speaker Change: You for attending today's presentation you may now disconnect.

Speaker Change: Yeah.