Q4 2024 Edgewell Personal Care Co Earnings Call
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After todays presentation, there will be an opportunity to ask questions.
Speaker Change: So I'll ask a question you May press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two please.
Speaker Change: Please note this event is being recorded.
Speaker Change: I would now like to turn the conference over to Chris Gough Vice President Investor Relations. Please go ahead.
Chris Gough: Good morning, everyone and thank you for joining us this morning for <unk> fourth quarter and fiscal year 2024 earnings call with me. This morning are Rod Little our President and Chief Executive Officer, and Dan Sullivan, Our Chief operating and financial Officer, Rod will kick off the call then hand, it over to Dan to discuss our 2024 results.
Chris Gough: And full year fiscal 2025 outlook before we transition to Q&A.
Chris Gough: This call 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.
Chris Gough: This might include future sales earnings advertising and promotional spending product launches savings and costs related to restructuring and repositioning actions acquisitions and integrations changes to our working capital metrics currency fluctuations commodity costs category value future plans for return of capital to shareholders.
Speaker Change: And Mark any such statements are forward looking statements for the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1095, which reflect our current views with respect to future events plans or prospects. These statements are based on assumptions and are subject to various risks and uncertainties, including those described.
Good day, and welcome to <unk> fourth quarter and fiscal year 'twenty 'twenty four earnings conference call.
Speaker Change: All participants will be in listen only mode.
Speaker Change: Should you need assistance. Please take another conference specialist preparation English Torquay fully pace right.
Chris Gough: Grabbed under the caption risk factors in our annual report on 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.
After todays presentation, there will be an opportunity to ask questions Jessica.
Jessica: So I'll ask a question you might push Star then one on your telephone keypad.
Jessica: To withdraw your question. Please press Star then two.
Jessica: Please note this event is being recorded.
Chris Gough: These risks may cause our actual results to be materially different from those expressed or implied by our forward looking statements. We.
Speaker Change: I'd now like to turn the conference over to Chris Gough Vice President Investor Relations. Please go ahead.
Chris Gough: 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.
Speaker Change: Good morning, everyone and thank you for joining us this morning for <unk> fourth quarter and fiscal year 2024 earnings call.
Chris Gough: During this call we will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the Investor Relations section of our website.
Speaker Change: With me. This morning are Rod Little our President and Chief Executive Officer, and Dan Sullivan, Our Chief operating and financial Officer, Rod will kick off the call then hand, it over to Dan to discuss our 2024 results and full year fiscal 2025 outlook before we transition to Q&A.
Speaker Change: This call is being recorded and will be available for replay via our website www dot <unk> dot com.
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.
Speaker Change: During the call we may make statements about our expectations for future plans and performance.
Speaker Change: This might include future sales earnings advertising and promotional spending product launches savings and costs related to restructuring and repositioning actions acquisitions and integrations changes to our working capital metrics currency fluctuations commodity costs category value future plans for return of capital to shareholders.
Chris Gough: However management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business.
Rob: With that I'd like to turn the call over to Rob.
Rob: Thank you Chris Good morning, everyone and thanks for joining us on our fourth quarter and fiscal 2024 year end earnings call.
Rob: Our results in fiscal 'twenty for further demonstrate the progress we are making in transforming our business and the effectiveness of our strategy and business model, we launched four years ago.
Speaker Change: And more and more.
Speaker Change: Such statements are forward looking statements for the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1995, which reflect our current views with respect to future events plans or prospects. These statements are based on assumptions and are subject to various risks and uncertainties, including those described under the caption.
Rob: For fiscal 'twenty, four we achieved slight organic net sales growth meaningfully expanded adjusted gross margins and deliver double digit adjusted earnings per share growth at constant currency for the second consecutive year.
Jessica: Risk factors in our annual report on 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.
Rob: In the face of a heightened competitive landscape in an increasingly cautious consumer.
Rob: We accelerated organic growth across our international businesses.
Jessica: 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.
Traduce category, leading innovation in the U S Sun care category and deepened our participation globally across the men's and women's grooming segments.
Rob: Yeah, it's inflation normalized we saw meaningful flow through from our productivity and pricing initiatives.
Jessica: During this call we will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the Investor Relations section of our website.
Chris Gough: Both key pillars of our business model in which collectively drove gross margin accretion and strong bottom line results.
Chris Gough: We delivered healthy earnings growth and our substantial cash flow generation supported our efforts to both delever and buyback shares.
In 2024, we delivered our fourth consecutive year of organic net sales growth.
Jessica: non-GAAP information is provided as a supplement to.
Speaker Change: Not as a substitute for or superior to measures of financial performance prepared in accordance with GAAP.
Chris Gough: Although the growth was less than recent years and slightly below our expectations.
Speaker Change: However management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business.
Chris Gough: Accordingly, our topline results were underpinned by compelling performance in three distinct areas of the business.
Speaker Change: With that I'd like to turn the call over to Rob.
Chris Gough: First our international markets, which grew over 7% and now make up about 40% of our total revenue.
Rob: Thank you Chris Good morning, everyone and thanks for joining us on our fourth quarter and fiscal 2024 year end earnings call.
Chris Gough: Second our right to wind portfolio in North America grew 3% with our leading Sun care and grooming portfolios, both growing mid single digits and third the ability brand continued to win and women's shave gaining 260 basis points of share while beginning its journey towards becoming.
Rob: Results in fiscal 'twenty for further demonstrate the progress we are making in transforming our business and the effectiveness of our strategy and business model, we launched four years ago.
Speaker Change: For fiscal 'twenty, four we achieved slight organic net sales growth meaningfully expanded adjusted gross margins and deliver double digit adjusted earnings per share growth at <unk>.
Chris Gough: What we believe will be the pre eminent women's lifestyle brand as it entered select women's grooming categories with Walmart.
Speaker Change: Constant currency for the second consecutive year.
Speaker Change: In the face of a heightened competitive landscape in an increasingly cautious consumer we accelerated organic growth across our international businesses.
Chris Gough: Together these businesses, representing nearly 70% of total company sales grew mid single digits for the year, which we believe represents a clear path for durable growth moving forward.
Speaker Change: Introduced category, leading innovation in the U S Sun care category.
So while work remains across select areas of our U S shave and Fem care portfolios. The majority of our business is healthy growing and performing well in market.
Speaker Change: And deepened our participation globally across the men's and women's grooming segments.
Speaker Change: Yeah, it's inflation normalized we saw meaningful flow through from our productivity and pricing initiatives.
Chris Gough: While the top line growth profile for the year was below our expectations gross margin accretion outperformed and the strength of our operating model was clear as we delivered 18% adjusted earnings per share growth.
Speaker Change: <unk> key pillars of our business model in which collectively drove gross margin accretion and strong bottom line results, we delivered healthy earnings growth and our substantial cash flow generation supported our efforts to both delever and buy back shares.
Chris Gough: As part of our transformation, we have been relentless on productivity efforts disciplined on cost and cash management and increasingly agile and price and revenue management all of which will continue to be at the core of how we will manage this business going forward.
Speaker Change: In 2024, we delivered our fourth consecutive year of organic net sales growth.
Speaker Change: Though the growth was less than recent years and slightly below our expectations.
Speaker Change: Importantly, our topline results were underpinned by compelling performance in three distinct areas of the business.
Chris Gough: While the results we posted this year demonstrate that our strategy is gaining increasing traction our journey and transformation of the business is ongoing.
Speaker Change: First our international markets, which grew over 7% and now make up about 40% for a total revenue.
Chris Gough: As a result last quarter, we announced a series of leadership team and organizational changes designed to strengthen our operating model streamline decision, making and improved enterprise execution, all of which we believe will better position us to deliver on our overarching strategy to drive.
Speaker Change: Our right to wind portfolio in North America grew over 3% with our leading Sun care and grooming portfolios, both growing mid single digits and third the Billy brand continued to win and women's shave, gaining 260 basis points of share while beginning its journey towards becoming one.
Chris Gough: Table top and Bottomline growth.
Chris Gough: More specifically these changes are critical to our five primary priorities as we enter the new fiscal year.
Speaker Change: What we believe will be the pre eminent women's lifestyle brand as it entered select women's grooming categories with Walmart.
Chris Gough: First and foremost our focus is on strengthening our right to play that shave and fem categories in the United States to better compete and win over the longer term.
Speaker Change: Together these businesses, representing nearly 70% of total company sales grew mid single digits for the year, which we believe represents a clear path for a durable growth moving forward.
Chris Gough: We have elevated the priority appointing in U S shave and Fem care and our increased focus here will lead to an improved trends and competitiveness are.
Speaker Change: So while work remains across select areas of our U S shave and fem care portfolios.
Chris Gough: A big part of this renewed focus around winning in these categories in the U S begins with leadership.
Speaker Change: Majority of our business is healthy growing and performing well in market.
Speaker Change: While the top line growth profile for the year was below our expectations gross margin accretion outperformed and the strength of our operating model was clear as we delivered 18% adjusted earnings per share growth as.
Chris Gough: We've recently announced a new leader for North America, Jessica Spence and I'm thrilled to welcome just to our team. She is a seasoned and accomplished leader with an impressive brand building an operational background balanced with a strong track record of driving revenue and profit growth.
Speaker Change: As part of our transformation, we have been relentless on productivity efforts disciplined on cost and cash management and increasingly agile and price and revenue management all of which will continue to be at the core of how we will manage this business going forward.
Chris Gough: I'm confident that she will strengthen our north American business and position us as a key innovator brand builder and retail partner within the industry.
Chris Gough: Second we must continue to fortify and accelerate our consumer centric innovation platform as.
Speaker Change: While the results we posted this year demonstrate that our strategy is gaining increasing traction our journey and transformation of the business is ongoing.
Chris Gough: As we increase our focus on the consumer and accelerate our speed to market. Our near term pipeline remains robust after launching category, leading innovation in the U S. Sun care in 2024, with our banana boat 360 spray products, we're seeing the intended impact when we reshaped our innovation.
Speaker Change: As a result last quarter, we announced a series of leadership team and organizational changes designed to strengthen our operating model streamline decision, making and improved enterprise execution, all of which we believe will better position us to deliver on our overarching strategy to drive.
Speaker Change: Jim just over a year ago and created a more locally driven agile platform.
Speaker Change: Our outlook for the coming year includes meaningful top line contribution from innovation with.
Speaker Change: Table top and Bottomline growth.
Speaker Change: More specifically these changes are critical to our five primary priorities as we enter the new fiscal year.
Chris Gough: With the expansion of Wilkinson Sword Master brand in Europe. The launch of the ship first brand in Japan, further shame or body expansion for the $1 billion criminal brands and broader product introductions for the banana boat and Hawaiian Tropic brands in the United States.
Speaker Change: First and foremost our focus is on strengthening our right to play that shave and fem categories in the United States to better compete and win over the longer term.
Speaker Change: We have elevated the priority appointing in U S shave and Fem care.
Chris Gough: Our third priority is to continue to strengthen and leverage growth across our international businesses. We.
Speaker Change: Our increased focus here will lead to an improved trends and competitiveness are.
Chris Gough: We've significantly improved our leadership capability across our international markets. We now have a very talented set of leaders and teams in place to deliver consistent growth and value creation as we move forward.
Speaker Change: A big part of this renewed focus around winning in these categories in the U S begins with leadership.
Speaker Change: We've recently announced a new leader for North America, Jessica Spence and I'm thrilled to welcome just to our team. She is a seasoned and accomplished leader with an impressive brand building an operational background balanced with a strong track record of driving revenue and profit growth.
Chris Gough: Our local leadership teams have a broader voice and innovation.
Chris Gough: Ample investment and are now executing on the strategies that they have developed and we ended 2024 with a three year cumulative average growth rate of over 6%, which tells us that our new operating model is working.
Speaker Change: I'm confident that she will strengthen our north American business and position us as a key innovator brand builder and retail partner within the industry.
Chris Gough: And we believe we have a long runway for growth internationally, including another year of mid single digit organic growth for the business in fiscal 'twenty five.
Speaker Change: Second we must continue to fortify and accelerate our consumer centric innovation platform as.
Chris Gough: Our fourth priority is related to operations and the work of our supply chain, we're doubling down on a clear strength and accelerating efforts to drive meaningful year on year gross margin accretion as a catalyst to increase marketing and commercial investment and profit recovery.
Speaker Change: As we increase our focus on the consumer and accelerate our speed to market our near term pipeline remains robust.
Speaker Change: You're launching category, leading innovation in the U S Sun care in 2024, with our banana boat $3 60 spray products, we're seeing the intended impact when we reshaped our innovation engine just over a year ago and created a more locally driven agile platform.
Chris Gough: We are confident that we can continue to drive 200 to 300 basis points per year and productivity savings and we remain committed to returning the business to pre Covid gross margin levels are 45 plus percent.
Speaker Change: Our outlook for the coming year includes meaningful top line contribution from innovation with.
Chris Gough: We are equally committed to improving service levels as we continue on our path to becoming a world class supply chain organization and ultimately a preferred partner of our customers.
Speaker Change: With the expansion of Wilkinson Sword Master brand in Europe. The launch of the ship first brand in Japan further shave a body of expansion for the $1 billion criminal brands and broader product introductions for the banana boat and Hawaiian Tropic brands in the United States.
Chris Gough: Dan is now overseeing all aspects of this effort and I am confident that under his leadership and with the already demonstrated strength. We have in this area that we will meet these objectives.
Speaker Change: Our third priority is to continue to strengthen and leverage growth across our international businesses. We've.
Chris Gough: And lastly, we are focused on our people, we have significantly improved our talent capabilities and company profile.
Speaker Change: We've significantly improved our leadership capability across our international markets. We now have a very talented set of leaders and teams in place to deliver consistent growth and value creation as we move forward.
Chris Gough: Our employer brand is much stronger than it was four years ago.
Chris Gough: We start the new fiscal year with record engagement scores with a nearly 80% positivity rate across the organization.
Speaker Change: Our local leadership teams have a broader voice and innovation.
Speaker Change: Ample investment and are now executing on the strategies that they have developed and we ended 2024 with the three year cumulative average growth rate of over 6%, which tells us that our new operating model is working.
Chris Gough: And having been recognized externally as the second best company to work for in America.
Chris Gough: 400 ranked in the midsized company category.
Chris Gough: We're proud of this recognition and we're seeing it play out not only in our engagement scores, but also in record low levels of employee turnover.
Speaker Change: And we believe we have a long runway for growth internationally, including another year of mid single digit organic growth for the business in fiscal 'twenty five.
Chris Gough: Accordingly, such external recognition serves as an important enabler in terms of recruiting top talent to the organization and we have seen in leadership roles across Europe, Japan, and China and most recently with Justice arrival last month in North America.
Speaker Change: Our fourth priority is related to operations and the work of our supply chain, we're doubling down on our clear strength and accelerating efforts to drive meaningful year on year gross margin accretion as a catalyst to increase marketing and commercial investment and profit recovery.
Chris Gough: So as we think about the future and our ability to deliver on our commitments.
Chris Gough: I've never been more confident than I am now that we can deliver consistent and reliable growth and value creation over the coming years.
Speaker Change: We are confident that we can continue to drive 200 to 300 basis points per year and productivity savings and we remain committed to returning the business to pre Covid gross margin levels are 45 plus percent.
Chris Gough: And so we're excited about the year ahead.
Chris Gough: As we look to fiscal 2025 with good momentum across our international businesses and right to win portfolio in the U S. A strengthened leadership team and increased focus on excellent execution across the organization.
Speaker Change: We are equally committed to improving service levels as we continue on our path to becoming a world class supply chain organization and ultimately a preferred partner of our customers.
Speaker Change: Dan is now overseeing all aspects of this effort and I am confident that under his leadership and with the already demonstrated strength. We have in this area that we will meet these objectives.
Chris Gough: We anticipate low single digit organic top line growth further gross margin and profit expansion and ultimately increase value creation for our shareholders and now I'd like to ask Dan to take you through our fourth quarter and fiscal year results and discuss our outlook for fiscal 'twenty five Dan.
Speaker Change: And lastly, we are focused on our people, we have significantly improved our talent capabilities and company profile.
Speaker Change: Our employer brand is much stronger than it was four years ago.
Dan Sullivan: Thanks, Ron and good morning, everyone as Rod mentioned and as we've seen play out this year, our broader strategies continue to yield good results.
Speaker Change: We start the new fiscal year with record engagement scores with nearly 80% positivity rate across the organization.
Dan Sullivan: With modest topline growth driven by continued momentum across international markets strong operational fundamentals, good cost management and disciplined capital allocation, we drove meaningful earnings per share growth for the full year.
Speaker Change: And having been recognized externally as the second best company to work for in America.
Speaker Change: 400 ranked in the midsized company category.
Speaker Change: We're proud of this recognition and we are seeing it play out not only in our engagement scores, but also in record low levels of employee turnover.
Dan Sullivan: Key highlights of our fiscal 'twenty. Four performance include mid single digit top line growth across the combination of our international business right to wind portfolio in the U S and Billy brand.
Speaker Change: Importantly, such external recognition serves as an important enabler in terms of recruiting top talent to the organization and we have seen in leadership roles across Europe, Japan and China.
Dan Sullivan: 140 basis points of year over year gross margin gains underpinned by outsized productivity savings of about 280 basis points.
Dan Sullivan: Adjusted operating margin expansion of 100 basis points, while incrementally investing in our brands.
Speaker Change: Most recently with just his arrival last month in North America.
Dan Sullivan: $175 million in free cash flow generation, which enabled us to adequately fund the business support capital allocation strategies and Delever to just over three times.
Speaker Change: So as we think about the future and our ability to deliver on our commitments.
Speaker Change: I've never been more confident than I am now that we can deliver consistent and reliable growth and value creation over the coming years.
Dan Sullivan: In a year, where top line growth was below our expectations. The inherent strength of our business model was clear highlighted by year over year gross margin accretion incremental investment in our brands, a disciplined approach to cost and capital deployment and meaningful earnings per share growth.
Speaker Change: And so we're excited about the year ahead.
Speaker Change: As we look to fiscal 2025 with good momentum across our international businesses and right to win portfolio in the U S. A strengthened leadership team and increased focus on excellent execution across the organization.
Chris Gough: As we exited the year the external environment in which were operating is mixed the consumer remains cautious and in the U S consumption across our categories slowed through the year made worse last quarter by unfavorable weather, which dampened the final months of the Sun season.
Speaker Change: We anticipate low single digit organic top line growth further gross margin and profit expansion and ultimately increase value creation for our shareholders and now I'd like to ask Dan to take you through our fourth quarter and fiscal year results and discuss our outlook for fiscal 'twenty five Dan.
Chris Gough: Inflation, though moderating remains and is largely driven by labor and more modest increases in commodities.
Dan Sullivan: Thanks, Rob and good morning, everyone as Rod mentioned and as we've seen play out this year, our broader strategies continue to yield good results.
Chris Gough: The currency environment continues to be volatile and is expected to be a further headwind to earnings in 2025.
Chris Gough: Operationally, we've accelerated our recovery efforts from certain supply challenges across our grooming skin, and perhaps businesses, which negatively impacted fourth quarter organic sales and we've already seen improved in stock conditions on shelf.
Dan Sullivan: With modest top line growth driven by continued momentum across international markets strong operational fundamentals, good cost management and disciplined capital allocation, we drove meaningful earnings per share growth for the full year.
Speaker Change: Key highlights of our fiscal 'twenty. Four performance include mid single digit top line growth across the combination of our international business right to wind portfolio in the U S and Billy Brett.
Chris Gough: Entering the new fiscal year, we will continue to be relentless on commercial and operational execution across the organization.
Chris Gough: Now, let me turn to the detailed results for the quarter.
Speaker Change: 140 basis points of year over year gross margin gains underpinned by outsized productivity savings of about 280 basis points.
Chris Gough: Organic net sales decreased two 8% a strong performance across international markets and continued growth in Sun care was more than offset by declines in North America, wet shave and fem care and wet ones.
Speaker Change: Adjusted operating margin expansion of 100 basis points, while incrementally investing in our brands.
Speaker Change: At $175 million in free cash flow generation, which enabled us to adequately fund the business support capital allocation strategies and Delever to just over three times.
Chris Gough: International growth of two 4% was better than expected widespread and primarily driven by volume gains.
Chris Gough: Greater China and distributor markets experienced double digit growth and oceana saw high single digit growth contributing to the overall international performance.
Speaker Change: In a year, where top line growth was below our expectations. The inherent strength of our business model was clear highlighted by year over year gross margin accretion incremental investment in our brands, a disciplined approach to cost and capital deployment and meaningful earnings per share growth.
Chris Gough: Organic sales in North America declined about 6% with growth in the quarter limited to our Sun care business.
Chris Gough: Wet shave organic net sales were down about 1%.
Chris Gough: S growth across men's and women's systems was offset by declines in perhaps in disposables.
Speaker Change: We exited the year the external environment in which were operating is mixed the consumer remains cautious and in the U S consumption across our categories slowed through the year made worse last quarter by unfavorable weather, which dampened the final months of the Sun season.
Chris Gough: International wet shave grew 3% with both price and volume gains, reflecting continued category health solid distribution outcomes and strong end market brand activation.
Speaker Change: Inflation, though moderating remains and is largely driven by labor and more modest increases in commodities the.
Chris Gough: In North America, wet shave organic net sales declined five 5% and continued to be negatively impacted by sluggish category and channel dynamics, particularly in the highly promotional drug channel.
Speaker Change: The currency environment continues to be volatile and is expected to be a further headwind to earnings in 2025.
Chris Gough: The women shave category return to growth so it remained competitive and promotional.
Speaker Change: Operationally, we've accelerated our recovery efforts from certain supply challenges across our grooming skin, and perhaps businesses, which negatively impacted fourth quarter organic sales and we've already seen improved in stock conditions on shelf.
Chris Gough: Our results across perhaps were negatively impacted in the quarter by transitory supply challenges largely across our third party manufacturing network and related to the edge brand.
Speaker Change: Entering the new fiscal year, we will continue to be relentless on commercial and operational execution across the organization.
Chris Gough: As mentioned, we've taken the appropriate steps to address these issues with our supplier have seen steady improvement in stock levels and do not anticipate further supply headwinds in 2025.
Speaker Change: Now, let me turn to the detailed results for the quarter Org.
Chris Gough: In the U S razors and blades category consumption was down 2% in the quarter with continued heightened declines in the drug channel.
Speaker Change: Organic net sales decreased two 8% a strong performance across international markets and continued growth in Sun care was more than offset by declines in North America, wet shave and fem care and wet ones.
Chris Gough: Our market share decreased 110 basis points overall.
Chris Gough: The <unk> brand achieved 140 basis points of share growth and continues to perform well at retail.
Speaker Change: International growth of two 4% was better than expected widespread and primarily driven by volume gains.
Chris Gough: The branch has attained a 16 share at Walmart and 11 share at target and a 10 share in drug and food.
Speaker Change: Greater China and distributor markets experienced double digit growth and oceana saw high single digit growth contributing to the overall international performance.
Chris Gough: Sun and skin care organic net sales decreased three 5% as 3% growth in Sun was more than offset by declines in skin and grooming.
Speaker Change: Organic sales in North America declined about 6% with growth in the quarter limited to our Sun care business.
Chris Gough: In the U S Sun care category consumption declined about 6% in the quarter as end of season weather disappointed.
Speaker Change: Wet shave organic net sales were down about 1%.
Speaker Change: S growth across men's and women's systems was offset by declines in perhaps in disposables.
Chris Gough: Final seasonal replenishment orders from retailers or muted and as such organic growth in the quarter of about 6% was well below our previous expectations.
Speaker Change: International wet shave grew 3% with both price and volume gains, reflecting continued category health solid distribution outcomes and strong end market brand activation.
Chris Gough: Grooming organic net sales declined about 3% as declines in criminal and Jack Black sales were partially offset by the continued rollout of Billy's body care launch at retail and Bulldog growth in international markets.
Speaker Change: In North America, wet shave organic net sales declined five 5% and continued to be negatively impacted by sluggish category and channel dynamics, particularly in the highly promotional drug channel.
Chris Gough: One is organic net sales declined about 22% and our share was approximately 73% as our ramp up efforts after the fire in our protection facility lagged previous expectations.
Speaker Change: The women shave category return to growth.
Speaker Change: Remained competitive and promotional.
Speaker Change: Our results across perhaps were negatively impacted in the quarter by transitory supply challenges largely across our third party manufacturing network and related to the edge brand.
Chris Gough: In the current quarter, we've meaningfully improved throughput and added commensurate labor to allow for increased production and we expect that over the course of this quarter, we will return to normalized levels of stock across the trade on all skus.
Speaker Change: As mentioned, we've taken the appropriate steps to address these issues with our supplier have seen steady improvement in stock levels and do not anticipate further supply headwinds in 2025.
Chris Gough: Fem care organic net sales were down about 9% with performance well below expectations.
Speaker Change: In the U S razors and blades category consumption was down 2% in the quarter with continued heightened declines in the drug channel.
Chris Gough: Consumption in the category was up 3%, mostly driven by 7% growth in pads.
Speaker Change: Our market share decreased 110 basis points overall.
Chris Gough: Our overall penetration is the lowest in the categories, where we compete more heavily namely tampons and liners consumption was down 3% and flat respectively.
Speaker Change: The <unk> brand achieved 140 basis points of share growth and continues to perform well at retail.
Speaker Change: The branch has attained a 16 share at Walmart and 11 share at target and a 10 share in drug and food.
Chris Gough: Overall the category remains promotional.
Chris Gough: Now moving down the P&L.
Speaker Change: Sun and skin care organic net sales decreased three 5% as 3% growth in Sun was more than offset by declines in skin and grooming.
Chris Gough: Adjusted gross margin rate increased 40 basis points or a 60 basis point increase in constant currency.
Chris Gough: We realized approximately 290 basis points of productivity savings, which were partially offset by 50 basis points of higher promotions.
Speaker Change: In the U S Sun care category consumption declined about 6% in the quarter as end of season weather disappointed.
Chris Gough: 100 basis points of core gross inflation and volume absorption and 80 basis points of mix and other headwinds.
Speaker Change: Final seasonal replenishment orders from retailers or muted and as such our organic growth in the quarter of about 6% was well below our previous expectations.
Chris Gough: A&P expenses were eight 5% of net sales up from seven 5% last year.
Speaker Change: Rooming organic net sales declined about 3% as declines in criminal and Jack Black sales were partially offset by the continued rollout of Billy's body care launch at retail and Bulldog growth in international markets.
Chris Gough: Adjusted SG&A was flat in rate of sale versus last year as strong operational efficiency savings and lower incentive compensation expense offset higher people and consulting expenses and the impact of lower net sales.
Speaker Change: Wet ones organic net sales declined about 22% and our share was approximately 73% as our ramp up efforts after the fire in our protection facility lagged previous expectations.
Chris Gough: Adjusted operating income was $56 million compared to $61 $4 million last year adjusted operating margin decreased 70 basis points due to increased brand spend.
Speaker Change: In the current quarter, we've meaningfully improved throughput and added commensurate labor to allow for increased production and we expect that over the course of this quarter, we will return to normalized levels of stock across the trade on all skus.
Chris Gough: GAAP diluted net earnings per share were <unk> 17, compared.
Chris Gough: Compared to 58 in the fourth quarter of fiscal 'twenty, three and adjusted earnings per share were <unk> 72.
Chris Gough: Compared to <unk> 73 in the prior year quarter.
Chris Gough: Currency movements had an approximate penny per share favorable impact in the quarter as translational currency headwinds to operating profit were more than offset by higher year over year hedge and balance sheet remeasurement gains within other income and expense below operating profit.
Speaker Change: Fem care organic net sales were down about 9% with performance well below expectations.
Speaker Change: Consumption in the category was up 3%, mostly driven by 7% growth in pads.
Speaker Change: Our overall penetration is the lowest in the categories, where we compete more heavily namely tampons and liners consumption was down 3% and flat respectively.
Chris Gough: Adjusted EBITDA was $78 $9 million inclusive of zero point $4 million of favorable currency impact compared to $84 4 million in the prior year.
Speaker Change: Overall the category remains promotional.
Chris Gough: Net cash provided by operating activities was $231 million for the full year, an increase of 7% compared to the prior year.
Speaker Change: Now moving down the P&L.
Speaker Change: Adjusted gross margin rate increased 40 basis points or a 60 basis point increase in constant currency.
Chris Gough: We ended the quarter with $209 million in cash on hand access to the $386 million Undrawn portion of our credit facility and a net debt leverage ratio of three one times.
Speaker Change: We realized approximately 290 basis points of productivity savings, which were partially offset by 50 basis points of higher promotions.
Speaker Change: 100 basis points of core gross inflation and volume absorption and 80 basis points of mix and other headwinds.
Chris Gough: During the fiscal year, we paid down $88 million on our revolver as we prioritize deleveraging as part of our disciplined capital allocation strategy.
Speaker Change: A&P expenses were eight 5% of net sales up from seven 5% last year.
Chris Gough: In the quarter share repurchases totaled $18 $3 million and we continued our quarterly dividend payout and declared another cash dividend of <unk> 15 per share for the fourth quarter.
Speaker Change: Adjusted SG&A was flat in rate of sale versus last year as strong operational efficiency savings and lower incentive compensation expense offset higher people and consulting expenses and the impact of lower net sales.
Chris Gough: In total we returned $25 $7 million to shareholders during the quarter.
Speaker Change: Adjusted operating income was $56 million compared to $61 $4 million last year adjusted operating margin decreased 70 basis points due to increased brand spend.
Chris Gough: Now, let me turn briefly to our full year results.
Chris Gough: Organic net sales for the year increased <unk>, 2%.
Chris Gough: Our right to win portfolio grew about 5% fueled by nearly 7% growth in global Sun care, while our grooming brands grew almost 6% for the year.
Speaker Change: GAAP diluted net earnings per share were <unk> 17, compared.
Speaker Change: Compared to 58 in the fourth quarter of fiscal 'twenty, three and adjusted earnings per share were <unk> 72.
Chris Gough: Our right to play portfolio declined about 2% a slight growth in wet shave was offset by a 10% decline in fem care.
Speaker Change: Compared to <unk> 73 in the prior year quarter.
Speaker Change: Currency movements had an approximate penny per share favorable impact in the quarter as translational currency headwinds to operating profit were more than offset by higher year over year hedge and balance sheet remeasurement gains within other income and expense below operating profit.
Chris Gough: From a geographic perspective international markets organic net sales increased just over 7% equally driven by both volume and price gains.
Chris Gough: North America organic net sales decreased by about 4% as gains in pricing were offset by volume declines.
Speaker Change: Adjusted EBITDA was $78 9 million inclusive of zero point $4 million of favorable currency impact compared to $84 $4 million in the prior year.
Chris Gough: Adjusted gross margin rate increased 140 basis points year on year we.
Chris Gough: We generated productivity savings of 280 basis points and favorable price and strategic revenue management of 115 basis points.
Speaker Change: Net cash provided by operating activities was $231 million for the full year, an increase of 7% compared to the prior year. We ended the quarter with $209 million in cash on hand access to the $386 million Undrawn portion of our credit facility and a net debt leverage ratio of three one times.
Chris Gough: This more than offset core inflation and transitory cost headwinds related to unfavorable absorption and heightened unit cost inflation dropped an inventory of approximately 185 basis points as well as unfavorable mix of approximately 70 basis points.
Speaker Change: <unk>.
Speaker Change: During the fiscal year, we paid down $88 million on our revolver as we prioritize deleveraging as part of our disciplined capital allocation strategy.
Chris Gough: A&P expense was 10, 3% as our rate of sale and increase of 10 basis points over the prior year as we continue to invest in our brands.
Speaker Change: In the quarter share repurchases totaled $18 3 million and we continued our quarterly dividend payout and declared another cash dividend of <unk> 15 per share for the fourth quarter.
Chris Gough: Adjusted operating profit increased $21 3 million or approximately 9%.
Chris Gough: And adjusted operating margin for the year was 11, 9% up about 100 basis points in rate of sale.
Speaker Change: In total we returned $25 $7 million to shareholders during the quarter.
Chris Gough: The increase in adjusted operating income margin was attributable to gross margin accretion, partially offset by higher brand investment in people costs.
Speaker Change: Now, let me turn briefly to our full year results.
Speaker Change: Organic net sales for the year increased <unk>, 2%.
Chris Gough: Now turning to our outlook for fiscal 2025.
Speaker Change: Our right to win portfolio grew about 5% fueled by nearly 7% growth in global Sun care, while our grooming brands grew almost 6% for the year.
Chris Gough: As we look forward to fiscal 'twenty five our expectations are that we will again deliver results at or above our stated financial algorithm at constant currency and underpinned by another year of both meaningful gross margin accretion and free cash flow generation.
Speaker Change: Our right to play portfolio declined about 2% a slight growth in wet shave was offset by a 10% decline in fem care.
Speaker Change: From a geographic perspective international markets organic net sales increased just over 7% equally driven by both volume and price gains.
Chris Gough: For the fiscal year, we anticipate organic net sales growth to be in the range of 1% to 3%, excluding 70 basis points of currency tailwind.
Speaker Change: North America organic net sales decreased by about 4% as gains in pricing were offset by volume declines.
Chris Gough: We expect Q1 growth to be down just under 1% with low single digit growth expected in each of the final three quarters.
Speaker Change: Adjusted gross margin rate increased 140 basis points year on year we.
Chris Gough: Growth is expected to largely derived from volume gains. Although this will vary by geography and segment.
Speaker Change: We generated productivity savings of 280 basis points and favorable price and strategic revenue management of 115 basis points.
Chris Gough: We anticipate our right to win portfolio will continue to deliver mid single digit growth, while our right to play portfolio is expected to be essentially flat to slightly down.
Speaker Change: This more than offset core inflation and transitory cost headwinds related to unfavorable absorption and heightened unit cost inflation dropped an inventory of approximately 185 basis points as well as unfavorable mix of approximately 70 basis points.
Chris Gough: We expect international markets to deliver mid single digit organic sales growth with North America flat to slightly positive.
Chris Gough: As we look to adjusted gross margin, we anticipate about 75 basis points of year over year rate accretion or 90 basis points at constant currency.
Speaker Change: A&P expense was 10, 3% as our rate of sale and increase of 10 basis points over the prior year as we continue to invest in our brands.
Chris Gough: We expect gross margin to decline approximately 110 basis points in the first quarter due to trailing absorption charges from 2024, and the negative impact of transactional currency compared to the prior year on.
Speaker Change: Adjusted operating profit increased $21 $3 million or approximately 9%.
Speaker Change: And adjusted operating margin for the year was 11, 9% up about 100 basis points in rate of sale.
Chris Gough: On a constant currency basis, we anticipate gross margin to be flat in the first quarter when excluding an estimated 100 basis points of currency headwinds.
Speaker Change: The increase in adjusted operating income margin was attributable to gross margin accretion, partially offset by higher brand investment in people costs.
Chris Gough: For the full year, we expect approximately 290 basis points of productivity savings and 10 basis points of price gains to offset approximately 115 basis points of Cogs inflation 40 basis points impact from the unfavorable absorption 60 basis points of negative mix and other costs and 15 basis points of.
Speaker Change: Now turning to our outlook for fiscal 2025.
Speaker Change: As we look forward to fiscal 'twenty five our expectations are that we will again deliver results at or above our stated financial algorithm at constant currency and underpinned by another year of both meaningful gross margin accretion and free cash flow generation.
Chris Gough: Unfavorable currency.
Speaker Change: For the fiscal year, we anticipate organic net sales growth to be in the range of 1% to 3%, excluding 70 basis points of currency tailwind.
Chris Gough: We remain committed to investing in our brands through A&P to support our growth outlook with A&P expected increase in both dollars and rate of sale with the ladder, increasing by 50 basis points to approximately 10, 8%.
Speaker Change: We expect Q1 growth to be down just under 1% with low single digit growth expected in each of the final three quarters.
Chris Gough: Adjusted our adjusted operating profit margin is expected to increase approximately 40 basis points inclusive of 10 basis points of unfavorable FX, though we expect operating margin rate contraction in the first quarter.
Chris Gough: Other expense net is expected to be $7 million as we anticipate approximately $1 million in currency hedge loss compared with over $8 million of hedge and remeasurement gains in fiscal 'twenty four.
Chris Gough: This impact is the primary driver of the anticipated currency headwind to earnings for the year.
Chris Gough: Adjusted EPS is expected to be in the range of $3 15 to $3 35.
Chris Gough: Inclusive of approximately <unk> 18 per share of currency headwinds of which 10 is estimated for Q1.
Chris Gough: This represents a year over year EPS increase of about 7% at the midpoint of the range or 13% growth in constant currency.
Chris Gough: The EPS outlook reflects the impact of expected share repurchases of approximately $90 million and an assumed effective tax rate of 22%.
Chris Gough: Adjusted EBITDA is expected to be in the range of 356 million to $368 million inclusive of an estimated $11 million and currency headwinds on.
Chris Gough: On a constant currency basis, adjusted EBITDA growth at the midpoint of the range is expected to be approximately 6%.
Chris Gough: In terms of phasing, we anticipate that we will generate about two thirds of our full year adjusted EPS in half two of the fiscal year with Q1 adjusted EPS below the prior year.
Chris Gough: And finally free cash flow for the year is expected to be approximately $185 million.
Speaker Change: For more information related to our fiscal 'twenty five outlook I will refer you to the press release that we issued earlier this morning, and now I would like to turn the call back over to the operator for the Q&A session.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session to.
Chris Gough: To ask a question you May press Star then one on your telephone keypad.
Chris Gough: You're using a speakerphone please pick up your handset before pressing the star keys.
Speaker Change: Is that anytime you question has penetration and you would like to Julie a question. Please press star and then two.
Speaker Change: The first question is from Chris Carey of Wells Fargo Securities. Please go ahead.
Chris Carey: Hi, good morning.
Speaker Change: Hey, Chris Good morning, Chris.
Speaker Change: Can you go through your confidence levels on organic sales growth for fiscal 'twenty five.
Speaker Change: This has been an area of more volatility, including relative to your own expectations.
Speaker Change: Can you just talk about.
Speaker Change: Some of maybe the key drivers that are giving you that confidence to return to mid single digit growth in international that the North America business can stabilize maybe comment on shave, perhaps in fem care and if it doesn't come in in line with your expectations, which I know of course, it will just maybe add to that.
Speaker Change: Your confidence levels around profitability, if I just think about this year.
Speaker Change: <unk> came in a bit lower but profit remains quite strong so I'm just trying to balance.
Speaker Change: The tension between topline and bottom line and get your thoughts thanks.
Dan Sullivan: Yeah, Hey, Chris Good morning, It's Dan. Thank you for the question I'll start and then I'm going to hand, it to Rod I'll start with the second part of your question, which is sort of profit confidence here in the event that we.
Rod Little: We don't see it put that sales maybe fall short and I would actually reiterate what you said I think you saw this year for us meaning 2024 that we are we're pretty relentless on our productivity efforts. We are maniacal on our cost focus among G&A.
Rod Little: And so I think there are certainly levers that we have pulled and we'll continue to pull to drive the profit expectation.
Speaker Change: Is that anytime you question has penetration and you would like to withdraw your question. Please press Star then two.
Rod Little: In the event that that sales are challenged again, that's not that's not how we built the plan, but I think we've demonstrated.
Speaker Change: The first question is from Chris <unk> of Wells Fargo Securities. Please go ahead.
Rod Little: That capability if I go back to your first part because I think it's a fair question.
Chris <unk>: Hi, good morning.
Speaker Change: Hey, Chris before I address.
Speaker Change: Can you go through your confidence levels on organic sales growth for fiscal 'twenty five Steve.
Rod Little: Thinking about our business and where the growth comes I'm going to start with international I think there's probably three components here that are worth calling out before I hand, it to Rob one is international where we have a mid single digit growth profile on the business next year, its 40% of our growth I think our behavior in our in our abilities are very demonstrated consistent here.
Speaker Change: This has been an area of more volatility, including relative to your own expectations.
Speaker Change: Can you just talk about.
Speaker Change: Some of maybe the key drivers that are giving you that confidence to return to mid single digit growth in international that the North America business can stabilize maybe comment on shave, perhaps in fem care and if it doesn't come in in line with your expectations, which I know of course, it will just maybe add to that.
Rod Little: Year over years, and whenever we have a healthy line of sight to this between the brand activation work that is ongoing the innovation that's coming to market. There is some price built in that has already been executed and.
Rod Little: And candidly just team performing extremely well from from brand to shelf. So high confidence high line of sight there within the U S business, you know I would point to a couple of things that we see as tailwind one as Sean.
Speaker Change: Your confidence levels around profitability, if I just think about this year.
Speaker Change: <unk> came in a bit lower but profit remains quite strong so I'm just trying to balance.
Speaker Change: The tension between topline and bottom line and get your thoughts thanks.
Rod Little: This was essentially a sluggish flat season here in the U S had had a difficult start.
Speaker Change: Yeah, Hey, Chris Good morning, It's Dan. Thank you for the question I'll start and then I'm going to hand, it to Rod I'll start with the second part of your question, which is sort of profit confidence here in the event that we.
Rod Little: Difficult and but overall consumption was basically flat and so we're going up against.
Rod Little: Odd season, we would expect tailwind and consumption and then of course with innovation and brand work, we expect to gain share on the grooming side of the equation, which would be my third point, we are going to see Billy expands its body business. We are super excited about what we're doing with the CRO.
Speaker Change: We don't see it put that sales maybe fall short and I would actually reiterate what you said I think you saw this year for us meaning 2024 that we are we're pretty relentless on our productivity efforts. We are maniacal on our cost focus among G&A.
Speaker Change: And so I think there are certainly levers that we have pulled and we'll continue to pull to drive the profit expectation.
Rod Little: <unk> brand around innovation and NPD.
Rod Little: And then the last piece for me just latter backup to Billy which is in addition to its expansion into in the grooming categories on a more national level, we will launch a disbro product in shave there are a few pockets.
Speaker Change: In the event that sales are challenged again thats not thats not how we built the plan, but I think we've demonstrated.
Speaker Change: That capability if I go back to your first part because I think it's a fair question.
Speaker Change: Thinking about our business and where the growth comes I'm going to start with international I think there's probably three components here that are worth calling out before I hand, it to Rod one is international where we.
Rod Little: Left around distribution, which will close next year.
Rod Little: So I think theres, an Amazon growth, which we're super bullish about for the brands. So you've got a really good line of sight on international we've got what we think will be a healthier some season exciting things for us around 1 billion brand and the Chromo brand and then the last thing I would say is there's probably about a half a point that we would estimate of supply disruption we.
Rod Little: <unk> and 'twenty for that obviously wouldn't come back in 'twenty five so let me pause there and hand it to rod for his comments.
Rod Little: Hey, Chris Good morning, I would just add to what Dan said with a couple of things first very confident in the growth profile. We've put forward with the fiscal 'twenty five guide is as Dan called out we referenced in the script, we've got 70% of our business International.
Speaker Change: Sun grooming here in the U S.
Speaker Change: As Billy that's about 70% of our business all of that mid single digit plus growth rate, so rock solid with that.
Speaker Change: Lease.
Speaker Change: <unk> and <unk>, primarily here in the U S.
Speaker Change: Okay, what do we need to do with that business combine that business was down 2% last year, our right to play portfolio.
Speaker Change: And we've got it at flat essentially flat next year and so we're not projecting greatness with that business, but it's a two step up if we could deliver flat, which would effectively give you the growth.
Speaker Change: Great.
Speaker Change: We can do that.
Speaker Change: We've got just coming in.
Speaker Change: As a new leader to lead us through that I've been very close to the business.
Speaker Change: Over the last couple of months I've been out with retailers retailers are behind us want us to win so we have full retailer support.
Speaker Change: And we've got stronger teams in place below just now on those businesses activating and building those brands and portfolios. So I think.
Speaker Change: Nothing is ever certain in the future, we learned that everyday life, but I think we feel really good and that we've got it in the right place at 2% growth.
Speaker Change: Kind of what we've guided to for next year at the midpoint and as Dan said, if we don't get there well covered off on the profit line.
Speaker Change: <unk>.
Speaker Change: Alright, Thank you guys. Thanks.
Speaker Change: Thanks, Chris Operator next question please.
Speaker Change: The next question. We have is from Bill Chappell of <unk> Securities. Please go ahead.
Speaker Change: Thanks, Good morning.
Speaker Change: Hey.
Speaker Change: Good morning, I wanted to follow up on Sun care, and both from the quarter and kind of the health of the category.
Speaker Change: For the quarter.
Speaker Change: Historically, the even though it includes August July and August I mean, it's been a small quarter in terms of shipments.
Speaker Change: Surprised to hear that.
Speaker Change: It was well below plan, just because usually the seasons largely done. So maybe you can help me understand the expectations there and then second.
Speaker Change: I think this time last year you had the same have the same commentary we had a weak season do part to whether we have some good innovation, which you get market share. So it should be a tailwind in 2024 and it wasn't so you.
Speaker Change: You had fairly favorable comps and probably even more hebel comps so.
Speaker Change: And last this is a category that consumers can trade down in probably more than anything else that you sell so help me understand the health of this category and where you stand as we move into 'twenty five thanks.
Speaker Change: Nothing is ever certain in the future, we learned that everyday life, but I think we feel really good that we've got it in the right place at 2% growth.
Dan Sullivan: Yeah, Hey, Bill Good morning, It's Dan let me clear up a couple of things.
Speaker Change: The last quarter of Sun is actually not an unimportant quarter. It's a third of the category in the U S. Remember one of the benefits in this sort of post COVID-19 environment as consumers sort of extending their time outside in a way that they hadn't done pre pandemic and that has stuck and so.
Speaker Change: Kind of what we've guided to for next year at the midpoint and as Dan said, if we don't get there well covered off on the profit line.
Speaker Change: <unk>.
Speaker Change: Alright, Thank you guys. Thanks.
Speaker Change: Thanks, Chris Operator next question please.
Speaker Change: You know I think we should just be clear upfront a third of the category happens in that period for us that ends in the September quarter, we profiled it to be up 6% consumption year over year. It was down six and so it was a meaningful drag on us we estimate about two points of organic.
Speaker Change: The next question. We have is from Bill Chappell of <unk> Securities. Please go ahead.
Bill Chappell: Thanks, Good morning.
Speaker Change: Hey, good morning.
Speaker Change: I wanted to follow up on Sun care, and both from the quarter and kind of the health of the category.
Speaker Change: Shortfall to expectation in Q4 came from that <unk>.
Speaker Change: For the quarter.
Speaker Change: Historically, the even though it includes August July and August I mean, it's been a small quarter in terms of shipments kind of surprised to hear that.
Speaker Change: Consumption Miss.
Speaker Change: And ultimately impact on our organics because what you didn't see happened was the in season replenishment to replenishment three from from retail. So that's that piece in terms of sort of how do you think about the categories over time obviously.
Speaker Change: That it was well below plan just because usually the season is largely done. So maybe you can help me understand the expectations there and then second.
Speaker Change: <unk> with with Covid and coming out of the pandemic, but prior to 2004, you actually saw 6% growth two straight years 'twenty to 'twenty three it is a healthy category you get you get tripped up on the quarters and good starts to the season versus not and I'm not going to go back through last year's <unk>.
Speaker Change: I think this time last year you had the same have the same commentary we had a weak season do part to whether we have some good innovation, which you get market share. So it should be a tailwind in 2024 and it wasn't so.
Speaker Change: You had fairly favorable comps and probably even more cablecom. So.
Speaker Change: And last this is a category that consumers can trade down in probably more than anything else that you sell so help me understand the health of this category and where you stand as we move into 'twenty five thanks.
Speaker Change: Narrative, but we did not have a bullish view on last year's fourth quarter, because we already saw the weather impact hitting us sort of in that fourth of July period, and retailers had already pulled back on orders. So it was the expectations of this fourth quarter, we're very different than a year ago, having said that how do we.
Speaker Change: Yeah, Hey, Bill Good morning, It's Dan let me clear up a couple of things.
Speaker Change: The last quarter of Sun is actually not an unimportant quarter. It's a third of the category in the U S. Remember one of the benefits in this sort of post COVID-19 environment is consumers sort of extending their time outside in a way that they hadn't done pre pandemic and that has stuck and so.
Speaker Change: We view the quarter, we are the leading portfolio of brands here in the U S. We think the category naturally has a sort of 2% to 4% growth profile to it we brought meaningful innovation to the category this year and our <unk> 360 spray and so we're very very comfortable with how we thought about.
Speaker Change: You know I think we should just be clear upfront a third of the category happens in that period for us that ends in the September quarter, we profiled it to be up 6% consumption year over year. It was down six and so it was a meaningful drag on us we estimate about two points of organic.
Speaker Change: It for next year and not looking for greatness out of weather.
Speaker Change: But looking for.
Speaker Change: A more solid year in the 2% to 3% consumption range, rather than flat, which is what we saw this year and we have not seen a flat or declining.
Speaker Change: Shortfall to expectation in Q4 came from that <unk>.
Speaker Change: Year of some season since 2020, which we all know what drove that so thats our view on songs were quite bullish on it.
Speaker Change: Consumption Miss.
Speaker Change: And ultimately impact on our organic because what you didn't see happening was the in season replenishment to replenishment three from from retail. So that's that piece in terms of sort of how do you think about the categories over time obviously.
Speaker Change: But obviously weather plays a part, particularly in the fourth quarter that we saw brought anything that you would add to that I'd. Just reinforce we have a strong innovation pipeline. We are the leader we do everything ourselves in house from QA regulatory formulation manufacturing to the end of direct store delivery force, which is just I think best in class.
Speaker Change: Choppiness with with Covid and coming out of the pandemic, but prior to 'twenty four you actually saw 6% growth two straight years 'twenty to 'twenty three it is a healthy category you get you get tripped up on the quarters and good starts to the season versus not and I'm not going to go back through last year's <unk>.
Speaker Change: So we have strong capabilities here, we've got the mid tier pricing and our brands as Dan referenced and then back to the category more generally build a reason we're bullish on the category.
Speaker Change: As we have learned.
Speaker Change: People.
Speaker Change: Want to be active they want to focus on longevity health and wellness and SPF and Sun care.
Speaker Change: Narrative, but we did not have a bullish view on last year's fourth quarter, because we already saw the weather impact hitting us sort of in that fourth of July period, and retailers have already pulled back on orders. So it was the expectations of this fourth quarter, we're very different than a year ago, having said that how do we.
Speaker Change: Is one of the ways to.
Speaker Change: People do that and we've seen that.
Speaker Change: The regimen change.
Speaker Change: And Sun exposure causes aging, it's the number one cause of skin aging.
Speaker Change: Skin cancer rates in the U S are going up not down globally, theyre going up not down.
Speaker Change: We view the quarter, we are the leading portfolio of brands here in the U S. We think the category naturally has a sort of 2% to 4% growth profile to it we brought meaningful innovation to the category this year and our 360 spray and so we're very very comfortable with how we thought about.
Speaker Change: And so we think that sets up well long term for the category you had referenced trade down in your.
Speaker Change: Your question in.
Speaker Change: In this category actually the opposite is happening we're seeing trade up theres not significant private label exposure, we don't see people trading down to private label in fact people are willing to spend more in the category.
Speaker Change: It for next year and not looking for greatness out of weather.
Speaker Change: But looking for.
Speaker Change: A more solid year in the 2% to 3% consumption range, rather than flat, which is what we saw this year and we have not seen a flat or declining.
Speaker Change: As it evolves and so I think.
Speaker Change: This is a little different than a traditional daily use category in that respect.
Speaker Change: Got it thanks for the color.
Speaker Change: Year of some season since 2020, which we all know what drove that so that's our view on songs were quite bullish on it.
Speaker Change: Thank you Bill Thanks, Don Operator next question please.
Speaker Change: The next question, we have is from Olivia Tong of Raymond James. Please go ahead.
Speaker Change: But obviously weather plays a part, particularly in the fourth quarter that we saw brought anything that you would add to that I'd. Just reinforce we have a strong innovation pipeline. We are the leader we do everything ourselves in house from QA regulatory formulation manufacturing to the end of direct store delivery force, which is which is I think best in class.
Olivia Tong: Thanks, Good morning.
Speaker Change: I wanted to ask about your visibility and the building blocks on your fiscal 'twenty five sales outlet for 1% to 3% organic and then looked at such an acceleration going because you mentioned in your prepared remarks, a lot of a lot about Q1, being sluggish sales and EBITDA and EPS down.
Speaker Change: So we have strong capabilities here, we've got the mid tier pricing at our brands as Dan referenced and then back to the category more generally build the reason we're bullish on the category.
Speaker Change: Obviously, the supply chain challenges you had high promotion in wet shave the over indexing to drive them.
Speaker Change: And you've got a new head of North America. So it seems like you've built in some some some.
Speaker Change: As we have learned.
Speaker Change: People.
Speaker Change: Want to be active they want to focus on longevity health and wellness and SPF and Sun care.
Speaker Change: It sounds like ability in Q1, but obviously a fair bit of expectation for the sales to grow as the year progresses. So maybe you know even if you could talk about new product pipeline are or the cadence that'd be helpful. Thank you.
Speaker Change: Is one of the ways to help people do that and we've seen that in the regimen change.
Speaker Change: Yes, good morning, Olivia it's Ron here. Thanks for the question and you're right on we are going to have a sequential improvement.
Speaker Change: And Sun exposure causes aging, it's the number one cause of skin aging and skin cancer rates in the U S are going up not down globally going up not down and so we think that sets up well long term for the category.
Speaker Change: As we go with Q1 as we've guided I think is as we had talked with Chris's question earlier from wells.
Speaker Change: Ed referenced trade down in your.
Speaker Change: We're confident in our ability to deliver the growth profile I won't go back through the building blocks, we laid out there, but I'll come at it from a different angle.
Speaker Change: And your your question.
Speaker Change: In this category actually the opposite is happening we're seeing trade up theres not significant private label exposure, we don't see people trading down to private label in fact people are willing to spend more in the category.
Speaker Change: From an innovation standpoint, we are much more confident in our ability to drive growth via our innovation platform one year ago, we eliminated our global team, we moved to a local market model with innovation.
Speaker Change: Local insights better innovation to deliver on those insights.
Speaker Change: Patients faster, it's better accepted than planned out with our retail partners getting better customer buy at a better than market results.
Speaker Change: 0.2 examples we have.
Speaker Change: From the back half of this year as we go into next year that give us some tailwind. The FERC is the Wilkinson sword shave campaigns in Europe.
Speaker Change: We launched that campaign.
Speaker Change: In the summer it's been very successful we've invested behind it and we're seeing momentum in our Wilkinson shave brand in Europe behind that campaign very locally oriented.
Speaker Change: Very well done by the team the second one I'll call out is the shift first Tokyo brand, we launched a new brand in Japan aimed at capturing and engaging first time users in the category as you know we're the leader in Japan, we should be operating like the leader and driving category growth we have.
Speaker Change: Done that in this case by getting younger consumers more interested in the category. It's an amazing razor all around safety, it's driven huge responsiveness around social media channels and engagement with younger consumers in Japan to date is the best brand launch.
Speaker Change: We've seen in Japan since separation and we just launched that brand in September and so we have a lot of goodness to come as we get into the year and we have more things like that coming across the year out of the local innovation model. So that's innovation. The other piece that has nothing to do with innovation for fiscal 'twenty five.
Speaker Change: But everything to do with lapping an easy comp is in Fem care, we're going to step up from a minus 10% organic net sales in fiscal 'twenty four two essentially flat in fem care. If you take what we've gotten our guide and we already have line of sight to do that the category will grow 1% to 2%, we're going to be much more in line.
Speaker Change: With category growth rates.
Speaker Change: Playtex sport is in a good spot relative to category carefree liners is in a good spot relative to category. The step up we will see or the decline that we won't see we'll be at our pads business, where we will continue to build out the carefree pad volume it takes time to move consumers.
Speaker Change: We're confident we can do that and and the other thing that gives us confidence is we've had good retailer response.
Speaker Change: Our participation in the category and our plans for the future again beyond fiscal 'twenty five getting out to 'twenty six 'twenty seven one of our most robust pipelines that we have in our portfolio is in fem care and so I think we remain confident in the category and our ability to step up in 'twenty, five and I don't know Olivia.
Speaker Change: Only thing I would add just you got to you asked the question on Q1, it's a good one let me just try to give you the headlines there.
Speaker Change: In any quarter of course, there are things you are cycling and you would recall in 2023 fourth quarter, we made a decision to take inventory out of Japan and reset the wholesaler business model. If you will that benefit actually played out in the first quarter of 'twenty four because you've got a level of orders that you wouldn't have gone.
Speaker Change: We were up 80% in Japan last year Q1, we're cycling that now Thats worth about a point there is a timing element of course right. Some of the drivers of growth for us, namely the ability brand expansion and body much of the pricing in international that comes in Q2 and beyond.
Speaker Change: So you don't get that benefit in Q1, and then to Rob's point on Fem care, we've got work to do here.
Speaker Change: We are absolutely expecting sequential improvement, but won't see year over year growth until half two of the fiscal so hopefully that helps you with how we're thinking about Q1.
Speaker Change: Great very helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: Operator next question please.
Speaker Change: Alright. The next question we have is from Susan Anderson of Canaccord Genuity. Please go ahead.
Speaker Change: Hi, Good morning, Alex <unk> on for Susan a question on the gross margin. So you did a lot of good work. This year next year. Another 75 bps is there anything structural though that's changed between now and before the pandemic to get to that mid Forty's range.
Speaker Change: And then I think you called out a 115 bps of Cogs inflation for next year can.
Speaker Change: Can you break out the drivers of that and does that include any potential tariff hike. Thank you.
Dan Sullivan: Yes, good morning, it's Dan.
Speaker Change: I'd say as we think about the margin profile, we're going to continue to control. The two levers that we control, which is productivity and price.
Dan Sullivan: What youre seeing next year 2025 is accelerated productivity gains, but less realization from price. That's just the nature of the categories in the markets in which we're in.
Dan Sullivan: The difficult part to predict in linking it back to your pre Covid versus post COVID-19.
Dan Sullivan: As around inflationary pressures and and FX, we are thinking about an inflationary picture.
Dan Sullivan: For 25, it looks a lot like 20 for some of the pieces may be are different but we're in the 100 basis point headwind range were in the 2% to 3% of Cogs inflation range. How we get there is low single digit inflation on raws mid single digit inflation on labor and likely deflationary on warehouse and distribution. So.
Dan Sullivan: Again, we've demonstrated our capabilities here I think we committed to getting the business back to them.
Dan Sullivan: Pre COVID-19 levels of gross margin at least and certainly based on what we've now done in 24, where the margin is clearly inflected and know how we're thinking about 25, we're confident on that path.
Speaker Change: Thanks, Alex Operator next question please.
Speaker Change: At this stage there are no further questions and I would like to turn the conference back over to Rod little for any closing comments.
Rod Little: Thank you everyone. We appreciate the continued interest and investment in the company.
Rod Little: All the best to you for the holidays, and we'll give you an update in Fab C. Then.
Speaker Change: That concludes today's conference. Thank you for joining US you may now disconnect your lines.