Edgewell Personal Care Company (EPC) Bundle
Understanding Edgewell Personal Care Company (EPC) Revenue Streams
Understanding Edgewell Personal Care Company’s Revenue Streams
Net sales for the fiscal year 2024 were $2,253.7 million, an increase of $2.1 million, or 0.1%, compared to fiscal year 2023.
Organic net sales increased by 0.2% year-over-year, driven primarily by a 7.3% growth in international markets, which was partially offset by a 3.8% decline in North America.
Revenue Sources Breakdown
The primary revenue streams for the company are categorized into three segments:
- Wet Shave: Includes Men's Systems, Women's Systems, Disposables, and Shave Preps.
- Sun and Skin Care: Covers Sun Care, Wet Ones, Bulldog, Jack Black, and Cremo.
- Feminine Care: Comprises Tampons, Pads, and Liners.
| Segment | Net Sales FY 2023 (in millions) | Net Sales FY 2024 (in millions) | Organic Growth (%) |
|---|---|---|---|
| Wet Shave | $1,230.9 | $1,229.3 | (0.1) |
| Sun and Skin Care | $705.5 | $740.8 | 5.0 |
| Feminine Care | $315.2 | $283.6 | (10.0) |
| Total | $2,251.6 | $2,253.7 | 0.1 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects the following trends:
- Fiscal Q4 2024 net sales were $517.6 million, a decrease of 3.1% from fiscal Q4 2023.
- For the full fiscal year 2024, net sales increased by 0.1% compared to the previous year.
- Organic net sales for fiscal Q4 2024 decreased by 2.8%.
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to the overall revenue in fiscal year 2024 is as follows:
| Segment | Percentage Contribution to Total Revenue (%) |
|---|---|
| Wet Shave | 54.5 |
| Sun and Skin Care | 32.8 |
| Feminine Care | 12.6 |
Analysis of Significant Changes in Revenue Streams
Fiscal year 2024 saw notable changes in revenue streams:
- Wet Shave segment net sales decreased by $1.6 million, marking a 0.1% decline.
- Sun and Skin Care segment experienced a 5.0% increase, contributing to overall revenue growth.
- Feminine Care faced a significant decline, with net sales down by 10.0% compared to the previous year.
The company ended fiscal year 2024 with a gross profit of $955.7 million, resulting in a gross margin of 42.4%, which is an improvement from 41.8% in the prior year. This reflects the company's effective cost management strategies despite fluctuating sales in certain segments.
A Deep Dive into Edgewell Personal Care Company (EPC) Profitability
A Deep Dive into Edgewell Personal Care Company's Profitability
Gross Profit: For the fiscal year ended September 30, 2024, the gross profit was $955.7 million, compared to $940.8 million in the previous year. The gross margin as a percentage of net sales was 42.4%, an increase of 60 basis points year-over-year.
Operating Profit: The operating income for the same period was $199.3 million, down from $227.0 million in the prior fiscal year. This reflects an operating margin of 8.8%.
Net Profit: The net earnings for the fiscal year were $98.6 million, translating to a diluted earnings per share (EPS) of $1.97, compared to $114.7 million or $2.21 per diluted share in the previous year.
Trends in Profitability Over Time
Examining the trends, the gross profit margin has shown improvement, increasing from 41.8% in the previous fiscal year to 42.4% in 2024. However, the operating income has declined, reflecting challenges in maintaining profitability amid rising costs and competitive pressures.
| Fiscal Year | Gross Profit ($ million) | Gross Margin (%) | Operating Income ($ million) | Operating Margin (%) | Net Earnings ($ million) | Diluted EPS ($) |
|---|---|---|---|---|---|---|
| 2024 | 955.7 | 42.4 | 199.3 | 8.8 | 98.6 | 1.97 |
| 2023 | 940.8 | 41.8 | 227.0 | 10.1 | 114.7 | 2.21 |
Comparison of Profitability Ratios with Industry Averages
The company’s gross margin of 42.4% exceeds the industry average of approximately 36.0%. The operating margin of 8.8% is also higher than the industry average of 7.0%, indicating better operational efficiency relative to peers.
Analysis of Operational Efficiency
In terms of operational efficiency, the selling, general, and administrative expenses (SG&A) for the year amounted to $430.1 million, representing 19.1% of net sales, up from 18.2% in the previous year. This increase was primarily driven by higher personnel costs and legal expenses.
The adjusted SG&A as a percentage of net sales remained stable, indicating effective cost management despite rising expenses. The company recorded $36.0 million in pre-tax restructuring and repositioning expenses aimed at improving operational efficiency.
| Expense Type | 2024 Amount ($ million) | 2023 Amount ($ million) | Change (%) |
|---|---|---|---|
| SG&A | 430.1 | 409.6 | +5.4 |
| Restructuring Expenses | 36.0 | 16.6 | +116.5 |
Overall, the company's ability to maintain a strong gross margin amidst rising costs reflects its focus on strategic pricing and cost management initiatives. The ongoing operational adjustments are expected to further enhance profitability in the upcoming fiscal periods.
Debt vs. Equity: How Edgewell Personal Care Company (EPC) Finances Its Growth
Debt vs. Equity: How Edgewell Personal Care Company Finances Its Growth
Overview of the company's debt levels:
The company has a total long-term debt of $1,275.0 million as of September 30, 2024, down from $1,360.7 million in 2023. Short-term debt stands at $24.5 million, resulting in a total gross debt of $1,299.5 million.
| Debt Type | Amount (in millions) |
|---|---|
| Long-term Debt | $1,275.0 |
| Short-term Debt | $24.5 |
| Total Gross Debt | $1,299.5 |
Debt-to-Equity Ratio:
The debt-to-equity ratio is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Shareholders' Equity
Total shareholders' equity as of September 30, 2024, is $1,584.1 million. Thus, the debt-to-equity ratio is:
Debt-to-Equity Ratio = $1,299.5 million / $1,584.1 million = 0.82.
This ratio is below the industry average of approximately 1.0, indicating a relatively lower reliance on debt for financing compared to peers.
Recent debt issuances and credit ratings:
As of the latest fiscal year, the company reported a net debt leverage ratio of 3.1x. Interest expense associated with debt was $73.1 million for the fiscal year 2024, down from $76.4 million in fiscal 2023.
| Metric | Value |
|---|---|
| Net Debt Leverage Ratio | 3.1x |
| Interest Expense (FY 2024) | $73.1 million |
| Interest Expense (FY 2023) | $76.4 million |
Balancing debt financing and equity funding:
The company maintains a balanced approach to financing its operations through a mix of debt and equity. For the fiscal year ending September 30, 2024, it returned approximately $90 million to shareholders, consisting of $59 million in share repurchases and $31 million in dividends. This indicates a commitment to returning value to shareholders while managing its debt levels effectively.
As of the end of fiscal 2024, the company had $209 million in cash on hand and access to an additional $386 million revolving credit facility, allowing for operational flexibility and the ability to manage its financing needs effectively.
| Financing Activity | Amount (in millions) |
|---|---|
| Cash on Hand | $209.0 |
| Revolving Credit Facility Access | $386.0 |
| Total Shareholder Returns (FY 2024) | $90.0 |
Assessing Edgewell Personal Care Company (EPC) Liquidity
Assessing Edgewell Personal Care Company's Liquidity
Current and Quick Ratios
The current ratio for Edgewell Personal Care Company as of September 30, 2024, is calculated as follows:
| Current Assets (in millions) | Current Liabilities (in millions) | Current Ratio |
|---|---|---|
| 936.0 | 563.6 | 1.66 |
The quick ratio, which excludes inventories from current assets, is as follows:
| Quick Assets (in millions) | Current Liabilities (in millions) | Quick Ratio |
|---|---|---|
| 458.7 | 563.6 | 0.81 |
Analysis of Working Capital Trends
For the fiscal year ending September 30, 2024, the working capital is calculated as:
| Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|
| 936.0 | 563.6 | 372.4 |
The increase in working capital reflects a modest improvement in the company's liquidity position compared to the previous year. This is supported by a slight decrease in current liabilities, which amounted to $523.4 million as of September 30, 2023.
Cash Flow Statements Overview
Overview of cash flows for the twelve months ended September 30, 2024:
| Cash Flow Type | Cash Flow (in millions) |
|---|---|
| Operating Activities | 231.0 |
| Investing Activities | (62.4) |
| Financing Activities | (179.4) |
The net cash from operating activities for the fiscal year was $231.0 million, reflecting a positive trend driven by favorable changes in working capital. In contrast, net cash used in financing activities increased due to share repurchases and dividend payments totaling approximately $90 million.
Potential Liquidity Concerns or Strengths
As of the latest quarter, the company holds $209 million in cash and cash equivalents, with access to an additional $386 million revolving credit facility. The net debt leverage ratio stands at 3.1x, indicating a manageable level of debt relative to earnings before interest, taxes, depreciation, and amortization (EBITDA).
Despite the quick ratio being below 1, the company’s access to credit and cash reserves mitigates immediate liquidity concerns. Continued monitoring of cash flows and working capital management will be essential for sustaining liquidity in the upcoming fiscal year.
Is Edgewell Personal Care Company (EPC) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: As of the latest financial reports, the trailing twelve months (TTM) P/E ratio is approximately 25.7.
Price-to-Book (P/B) Ratio: The current P/B ratio stands at 2.0, indicating a premium over its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is approximately 12.5, reflecting the company's valuation in relation to its earnings before interest, taxes, depreciation, and amortization.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 25.7 |
| P/B Ratio | 2.0 |
| EV/EBITDA Ratio | 12.5 |
Stock Price Trends: Over the past 12 months, the stock price has fluctuated between a low of $35.00 and a high of $45.50. As of the latest closing price, it stands at $40.25.
Dividend Yield: The annual dividend declared is $0.60 per share, resulting in a dividend yield of 1.5%.
Payout Ratio: The dividend payout ratio is approximately 19.8%, indicating a conservative approach to returning capital to shareholders.
| Dividend Metric | Value |
|---|---|
| Annual Dividend | $0.60 |
| Dividend Yield | 1.5% |
| Payout Ratio | 19.8% |
Analyst Consensus: The consensus among analysts currently rates the stock as a Hold, with some suggesting potential for upside based on expected growth in organic sales and earnings.
Future Outlook: For the fiscal year 2025, the company anticipates adjusted EPS in the range of $3.15 to $3.35, signifying a growth outlook of approximately 7% at midpoint.
| Analyst Consensus | Outlook |
|---|---|
| Rating | Hold |
| Projected Adjusted EPS (FY 2025) | $3.15 - $3.35 |
| Growth Rate | 7% (approx.) |
Key Risks Facing Edgewell Personal Care Company (EPC)
Key Risks Facing Edgewell Personal Care Company
Overview of Internal and External Risks
The company faces several internal and external risks that could impact its financial health. Key risks include:
- Industry Competition: The personal care industry is highly competitive, with significant pressure from both established brands and emerging competitors. This can lead to pricing pressures and reduced market share.
- Regulatory Changes: Changes in regulations regarding product safety and environmental compliance can impact production costs and product formulations.
- Market Conditions: Economic downturns can lead to decreased consumer spending on personal care products, affecting sales and profitability.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Declining Sales: For the fiscal fourth quarter 2024, net sales decreased by 3.1% to $517.6 million, largely driven by a 6% decline in North America.
- Segment Performance Variability: Organic net sales for Wet Shave decreased 1.1%, while Feminine Care saw a drop of 8.7%, reflecting significant declines in key product lines.
- Increased Costs: Selling, general and administrative expenses rose to $430.1 million, or 19.1% of net sales, compared to 18.2% in the prior year.
Mitigation Strategies
The company has outlined several strategies to mitigate risks, including:
- Cost Efficiency Programs: Pre-tax restructuring and repositioning expenses amounted to $36 million aimed at improving operational efficiencies.
- Product Innovation: The introduction of new products in the Sun Care category is intended to capture market share and respond to changing consumer preferences.
- International Market Focus: The company aims to strengthen its international business, which grew 7.3% in organic sales, to offset declines in North America.
| Risk Factor | Current Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Pricing pressures leading to decreased margins | Enhancing product innovation |
| Regulatory Changes | Increased compliance costs | Proactive engagement with regulatory bodies |
| Market Conditions | Reduced consumer spending | Diversifying product offerings |
| Declining Sales | Net sales down 3.1% | Focus on international growth |
| Increased Operating Costs | SG&A expenses at $430.1M | Implementing cost-cutting measures |
In summary, the company is navigating a complex landscape of risks that require ongoing management and strategic adaptation to maintain financial health and shareholder value.
Future Growth Prospects for Edgewell Personal Care Company (EPC)
Future Growth Prospects for Edgewell Personal Care Company
Analysis of Key Growth Drivers
Edgewell Personal Care Company is poised for growth through several key drivers:
- Product Innovations: The company has recently invested in reformulating its Sun Care products, which is expected to enhance market competitiveness.
- Market Expansions: The international markets saw a growth of 7.3% in organic net sales, which significantly offsets declines in North America.
- Acquisitions: The acquisition of Billie has integrated new product lines into the portfolio, expanding its reach in the women's grooming segment.
Future Revenue Growth Projections and Earnings Estimates
For fiscal 2025, Edgewell anticipates:
- Organic net sales growth: Projected between 1% to 3%.
- GAAP EPS: Expected in the range of $2.59 to $2.79.
- Adjusted EPS: Projected between $3.15 to $3.35, reflecting an increase of 7% year-over-year.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company is focusing on several strategic initiatives:
- Restructuring and Repositioning: Expected pre-tax charges of approximately $29 million to streamline operations.
- Advertising and Promotion Investments: Increased advertising expenses to $232 million, constituting 10.3% of net sales.
Competitive Advantages that Position the Company for Growth
Edgewell benefits from several competitive advantages:
- Strong Brand Portfolio: Well-established brands in grooming, skin care, and feminine care.
- Robust Cash Flow: Net cash from operating activities was $231 million for the twelve months ended September 30, 2024.
- Debt Management: The company ended the fiscal year with a net debt leverage ratio of 3.1x, indicating manageable debt levels.
| Financial Metrics | FY 2024 | FY 2025 Outlook |
|---|---|---|
| Net Sales | $2,253.7 million | Increase of approximately 1.7% to 3.7% |
| GAAP EPS | $1.97 | Projected between $2.59 to $2.79 |
| Adjusted EPS | $3.05 | Projected between $3.15 to $3.35 |
| Adjusted EBITDA | $353 million | Expected in the range of $356 to $368 million |
| Free Cash Flow | Approx. $185 million | Not explicitly forecasted |
Overall, the combination of product innovation, strategic acquisitions, and a solid financial foundation positions Edgewell for future growth as it navigates the evolving landscape of consumer goods.
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Updated on 16 Nov 2024
Resources:
- Edgewell Personal Care Company (EPC) Financial Statements – Access the full quarterly financial statements for Q4 2024 to get an in-depth view of Edgewell Personal Care Company (EPC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Edgewell Personal Care Company (EPC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.