FinanceLooker

Excrept from filing document 2024-09-30

The aggregate market value of the voting and non voting common equity held by non affiliates of the registrant as of March 31 2024 the last day of the registrant s most recently completed second fiscal quarter was 1 871 912 250
Certain portions of the registrant s definitive proxy statement for its 2024 annual meeting of shareholders to be filed with the Securities and Exchange Commission within 120 days after September 30 2024 are incorporated by reference into Part III of this report
We own or have rights to use trademarks and trade names that we use in conjunction with the operation of our business which appear throughout this Annual Report on Form 10 K Solely for convenience we only use the or symbols the first time any trademark or trade name is mentioned We may also refer to brand names trademarks service marks and trade names of other companies and organizations and these brand names trademarks service marks and trade names are the property of their respective owners
Unless we indicate otherwise we base the information concerning our industry contained or incorporated by reference herein on our general knowledge of and expectations concerning the industry Our market position market share and industry market size are based on our estimates using internal data and data from various industry analyses our internal research and adjustments and assumptions that we believe to be reasonable We have not independently verified data from industry analyses and cannot guarantee its accuracy or completeness In addition we believe that data regarding the industry market size and our market position and market share within such industry provides general guidance but are inherently imprecise Further our estimates and assumptions involve risks and uncertainties and are subject to change based on various factors including those discussed in the Risk Factors section of this document These and other factors could cause results to differ materially from those expressed in the estimates and assumptions
This Annual Report on Form 10 K contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward looking statements made by or on behalf of Edgewell Personal Care Company or any of our businesses Forward looking statements may appear throughout this report including without limitation the following sections Management s Discussion and Analysis Risk Factors and the Notes to the Consolidated Financial Statements Forward looking statements generally can be identified by the use of words or phrases such as believe expect expectation anticipate may could intend estimate plan target predict likely will should forecast outlook strategy or other similar words or phrases These statements are not based on historical facts but instead reflect our expectations estimates or projections concerning future results or events including without limitation the future earnings and performance of the Company or any of our businesses Many factors outside our control could affect the realization of these estimates These statements are not guarantees of performance and are inherently subject to known and unknown risks uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements We cannot assure you that any of our expectations estimates or projections will be achieved The forward looking statements included in this report are only made as of the date of this report and we disclaim any obligation to publicly update any forward looking statement to reflect subsequent events or circumstances except as required by law You should not place undue reliance on these statements Factors that could cause fluctuations in our actual results include but are not limited to the following
the ability to successfully manage global financial risks including foreign currency fluctuations currency exchange or pricing controls and localized volatility our level of indebtedness and the various covenants related thereto and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payment
the ability to successfully manage the financial legal reputational and operational risks associated with third party relationships such as our suppliers contract manufacturers distributors contractors and external business partners
the ability to rely on and maintain key Company and third party information and operational technology systems networks and services and maintain the security and functionality of such systems networks and services and the data contained therein
the ability to successfully manage current and expanding regulatory and legal requirements and matters including without limitation those laws and regulations involving product liability product and packaging composition manufacturing processes intellectual property labor and employment antitrust privacy cybersecurity and data protection artificial intelligence tax the environment due diligence risk oversight accounting and financial reporting and to resolve new and pending matters within current estimates
In addition other risks and uncertainties not presently known to us or that we presently consider immaterial could significantly affect the forward looking statements The list of factors above is illustrative but not exhaustive All forward looking statements should be evaluated with the understanding of their inherent uncertainty Additional risks and uncertainties include those detailed from time to time in our publicly filed documents including in Item 1A Risk Factors of Part I of this Annual Report on Form 10 K
Edgewell Personal Care Company and its subsidiaries is one of the world s largest manufacturers and marketers of personal care products in the Wet Shave Sun and Skin Care and Feminine Care segments With operations in approximately 20 countries our products are widely available in more than 50 countries
We were incorporated in the State of Missouri on September 23 1999 and prior to April 2000 were a wholly owned subsidiary of Ralston Purina Company On April 1 2000 all of the outstanding shares of our common stock were distributed to shareholders of Ralston Purina Company and we became an independent publicly owned company During the years that followed we implemented a strategy of acquiring several personal care brands which created the foundation for the company we are today
In 2003 we completed the acquisition of the Schick Wilkinson Sword business SWS from Pfizer Inc the second largest manufacturer and marketer of men s and women s wet shave products in the world at that time Our portfolio of wet shave products includes Hydro and Quattro men s shaving systems Hydro Silk Quattro for Women Intuition and Silk Effects Plus women s shaving systems and the Hydro Quattro Xtreme 3 Slim Twin Slim Triple Skintimate and Extra3 disposables SWS has over 100 years of history in the shaving products industry with a reputation for high quality and innovation in shaving technology SWS products are sold throughout the world
In 2007 we acquired Playtex Products Inc Playtex a leading manufacturer and marketer of well recognized brands such as Playtex feminine care products Wet Ones pre moistened wipes and Banana Boat and Hawaiian Tropic sun care products thereby expanding our branded consumer products portfolio
In 2009 we completed the acquisition of the Edge and Skintimate shave preparation brands from S C Johnson Son Inc adding market leading United States based U S shave preparation brands to our existing wet shave product portfolio In 2010 we completed the acquisition of American Safety Razor LLC ASR a leading global manufacturer of private label and value wet shaving razors and blades and specialty blades
Strengthening our company s feminine care product portfolio in 2013 we acquired the Stayfree pad Carefree liner and o b tampon feminine hygiene brands in the U S Canada and the Caribbean from Johnson Johnson
In 2015 we completed the separation of our Household Products business which manufactures and markets batteries and portable lighting into a separate publicly owned company the Spin or the Separation We completed the tax free Separation by distributing 100 of the outstanding shares of common stock of Energizer SpinCo Inc to our shareholders The newly formed company assumed the name Energizer Holdings Inc New Energizer and began trading under the symbol ENR on the New York Stock Exchange NYSE Edgewell retained the Personal Care business and trades on the NYSE under the symbol EPC Following the Separation we do not beneficially own any shares of New Energizer In connection with the Separation we changed our name to Edgewell Personal Care Company on June 30 2015
In recent years we have entered the men s grooming and skin care markets through several acquisitions On October 31 2016 we completed the acquisition of Bulldog Skincare Holdings Limited Bulldog a men s grooming and skincare company based in the United Kingdom U K On March 1 2018 we completed the acquisition of Jack Black L L C Jack Black a men s luxury skincare company based in the U S On September 2 2020 we completed the acquisition of Cremo Holding Company LLC Cremo a U S based masstige men s grooming brand On November 29 2021 we completed the acquisition of Billie Inc Billie a high quality shaving and premium body care brand which strengthens our women s Wet Shave and grooming product portfolio the Billie Acquisition These more recent acquisitions have created opportunities to expand our personal care portfolio into the growing global grooming category and have allowed us to leverage our international geographic footprint
We manage our business in three operating segments Wet Shave Sun and Skin Care and Feminine Care Segment performance is evaluated based on segment operating profit exclusive of general corporate expenses share based compensation costs costs associated with restructuring initiatives and other items that are not representative of management s view on how segment performance is evaluated Information regarding the product portfolios of these segments is included within the following discussion Financial information regarding each of our reportable segments as well as other geographical information is included in Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations and in Note 20 of Notes to Consolidated Financial Statements included within Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10 K
Wet Shave products are sold under the Schick Wilkinson Sword Edge Skintimate Billie Shave Guard and our custom brands group formerly sold under our Shave Guard and Personna brands We manufacture and distribute Schick and Wilkinson Sword razor systems composed of razor handles and refillable blades and disposable shave products for men and women While we market our wet shave products throughout the world our primary markets are the U S Canada Japan Germany France and the U K We believe we hold the number two global market share position in wet shaving The category is highly competitive with brands vying for consumer loyalty and retail shelf space
Billie s strong direct to consumer and digital capabilities have underpinned its strong growth which positioned the brand well for its initial expansion into U S brick and mortar in 2022 The Billie brand complements and strengthens Edgewell s position in the women s shaving category adding to our portfolio of strong brands such as Schick Intuition Hydro Silk and Skintimate
We also manufacture distribute and sell a complete line of private label and disposable razors shaving systems and replacement blades These private label wet shave products including emerging direct to consumer DTC brands are sold primarily under a retailer s store name or under our value brand names such as Edgewell Custom Brands
Sun and Skin Care products are sold under the Banana Boat Hawaiian Tropic Bulldog Jack Black Cremo and Wet Ones brand names We market Sun Care products under the Banana Boat and Hawaiian Tropic brands and believe these brands on a combined basis hold a leading market share position in the U S Sun Care category We largely compete across the full spectrum of Sun Care categories general protection sport kids baby tanning and after sun Outside of the U S we believe we are also the leading Sun Care manufacturer in Mexico with significant presence in Australia and Canada We expect to continue to drive our worldwide Sun and Skin Care business through product innovation increased distribution and geographic expansion
We offer Wet Ones antibacterial hand wipes and other related products as the leader in the U S portable hand wipes category We expect to utilize our position as market leader to further scale the business and use innovation to increase growth
We have acquired a portfolio of men s grooming skin care products that have grown under our direction Our Bulldog skincare products are purpose built for men and were created to work simply and efficiently while dealing with issues specific to men s skin Since acquiring Bulldog we have expanded sales geographically and we continue to commit resources to further growth and distribution for the brand We acquired the Jack Black brand and obtained a footprint in the luxury men s skincare market and continue to use resources at our disposal to grow the Jack Black brand globally Our Cremo products compete in the masstige category for men s grooming and offer a complete line of barber quality beard hair and skin care products
In Feminine Care we market products under the Playtex Stayfree Carefree and o b brands We offer tampons under the Playtex Gentle Glide 360 Playtex Sport Playtex and o b brands We also market pads and liners under the Stayfree and Carefree brands We believe we are one of the top three manufacturers of feminine care products in North America with unique competitive product technologies and well known brands that address complementary consumer needs We expect to continue to invest in innovation in our feminine care brands
The personal care product categories in which we compete are highly competitive both in the U S and in most international markets as large manufacturers with global operations and new entrants attempting to disrupt the market compete for consumer acceptance and increasingly limited retail shelf space Competition is based upon several factors including but not limited to brand quality and perception product formulation and performance customer service and price and promotion
The global shaving products category is comprised of wet shave blades and razors electric shavers and shaving gels and creams With our established brands and product lines and global presence we believe we compete effectively in this segment Our principal competitors in the global wet shave business are The Procter Gamble Company which owns the Gillette brand and is the leading company in the global wet shave segment The Bic Group which is expanding beyond its historical strength in the disposable segment and Dorco which competes primarily in the private label segment We also compete with newer entrants to the Wet Shave market for both DTC and traditional retail shelf space including Harry s Flamingos Estrid Athena Club Perio Barbasol and PureSilk brands Beiersdorf Nivea branded women s wet shave product in Germany and numerous other online start ups
The markets for sun and skin care are also highly competitive characterized by the frequent introduction of new products accompanied by major advertising and promotional programs Our competitors in these markets consist of a large number of domestic and foreign companies including Bayer AG and Kenvue
The Sun Care category is highly regulated and competitive and increasingly interacts with and is impacted by trends in the skin category With our balanced Sun Care portfolio depth of product formulation and manufacturing expertise and global presence we believe we compete effectively across markets We intend to continue to compete by leveraging our formulation and manufacturing expertise driving product innovation building differentiated brand equity and focusing on in store visibility
The global men s skin care market is expected to continue to grow with increased demand for men s personal care products Our competitors in this market include large companies such as Kenvue L Oréal S A The Estee Lauder Companies Inc and Unilever and numerous other smaller companies We compete in the market by creating simple and effective skin care products with natural ingredients at multiple price points through our Bulldog and Cremo skin care products and in the luxury men s skin care market with Jack Black
The markets for feminine care and other personal products are characterized by large manufacturers with global presence as well as new market entrants and is likewise very competitive with a large number of domestic and foreign competitors including The Procter Gamble Company and Kimberly Clark Corp With our acquisition of the Stayfree Carefree and o b brands we expanded our presence within the feminine care product category and became one of the top three manufacturers in North America We compete by having a portfolio of well known brands that address complementary consumer needs
Our products are marketed primarily through a direct sales force and supplemented by strategic exclusive and non exclusive distributors and wholesalers In the U S Japan China Australia and larger markets in Western Europe and Latin America we have dedicated commercial organizations reflecting the scale and importance of these businesses to our Company In several countries where we do not have dedicated commercial organizations we utilize third party distributors and wholesalers As a result of increased competition through the expansion of online markets we have established e commerce operations across several business lines including global Schick com websites providing men s and women s shaving products Bulldog Jack Black and Billie DTC sites and an acceleration of e commerce sales in China through our partnership with T Mall We distribute our products to consumers through numerous retail locations worldwide including mass merchandisers and warehouse clubs food drug and convenience stores and military stores and both traditional and modern trade customers outside of the United States
Although a large percentage of our sales are attributable to a relatively small number of retail customers only Walmart Inc and its subsidiaries Walmart as a group account for more than 10 of our consolidated annual net sales Walmart accounted for approximately 17 2 of our net sales in fiscal 2024 Purchases by Walmart included products from all of our segments Target Corporation represented approximately 9 5 of net sales for our Sun and Skin Care segment and 9 8 for our Feminine Care segment respectively
Generally orders are shipped within a month of their order date Because of the short period of time between order and shipment dates the dollar amount of current backlog is not material and is not considered to be a reliable indicator of future sales volume
Customer orders for Sun Care products within our Sun and Skin Care segment are highly seasonal which has historically resulted in higher sun care sales to retailers in the United States during the late winter through mid summer months Within our Wet Shave segment sales of women s products are moderately seasonal with increased consumer demand in the spring and summer months See Our business is subject to seasonal volatility in Item 1A Risk Factors
The principal raw materials used in our products include steel various plastic resins plastic based components textile fibers and non woven fabrics organic and inorganic chemicals soap based lubricants and plastic pulp based packaging These materials are sourced on a regional or global basis as applicable and are mostly available from multiple sources Price and availability of our raw materials fluctuate over time While we have confidence our supply assurance plans adequately support our current operational needs we cannot predict the future with certainty Both price and supply are subject to risk from global socio and macroeconomic influences such as but not limited to force majeure loss or impairment to key manufacturing sites transportation government regulation currency or other unforeseen circumstances In the past we have largely avoided significant interruption in the availability of our input materials and believe that our extensive experience and global reach in procurement will continue to allow us to manage these risks effectively
We own a number of U S and international trademarks which we consider of substantial importance and which are used individually or in conjunction with our other trademarks These include but are not limited to Edgewell Schick Schick Hydro Schick Hydro Silk Hydro Connect Wilkinson Sword Intuition Quattro Xtreme 3 Billie Protector Silk Effects Slim Twin Edge Skintimate Personna Banana Boat Hawaiian Tropic Bulldog Jack Black Cremo Gentle Glide Sport Sport Level Protection Wet Ones Stayfree Carefree and o b As a result of the Playtex acquisition we also own royalty free licenses in perpetuity to the Playtex trademark in the U S and in many international jurisdictions related to certain feminine hygiene and other products but excluding certain baby care and apparel related products We consider the protection of our trademarks to be important to our business
Our ability to compete effectively in the Wet Shave Sun and Skin Care and Feminine Care personal care segments depends in part on our ability to maintain the proprietary nature of technology and manufacturing processes through a combination of patent and trade secret protection non disclosure agreements and licensing agreements We own or license a considerable number of patents patent applications and other technology from third parties which we believe are important to our business These relate primarily to shaving product improvements and additional features feminine care hygiene products including digital and applicator tampons pads and liners sunscreen formulations and manufacturing processes
As of September 30 2024 we owned either directly or beneficially 301 unexpired U S patents which have a range of expiration dates from October 2024 to February 2040 and we had 73 pending U S patent applications We routinely prepare additional patent applications for filing in the U S and actively pursue foreign patent protection in various countries As of September 30 2024 we owned either directly or beneficially 1 220 foreign patents having a range of expiration dates from October 2024 to August 2049 and we had 145 pending patent applications in foreign countries
We rely on trademark trade secret patent and copyright laws to protect our intellectual property rights We cannot be sure that these intellectual property rights will be effectively utilized or if necessary successfully asserted There is a risk that we will not be able to obtain and perfect our own intellectual property rights or where appropriate license intellectual property rights from others
We are subject to various federal state local and foreign laws and regulations by governmental agencies intended to protect the public health and environment including those governing the manufacture use discharge and disposal of hazardous materials labeling and notice requirements related to consumer exposure to certain chemicals and requirements for the recycling of our products and their packaging These agencies include but are not limited to i the U S Food and Drug Administration the FDA and equivalent international agencies that regulate ingredients in consumer products ii the U S Environmental Protection Agency EPA and equivalent international agencies that regulate our manufacturing facilities and iii the Chemical Registration Notification authorities that regulate chemicals that we use in or transport to the various countries in which we manufacture and or market our products We have seen an increase in registration and reporting requirements concerning the use of certain chemicals in a number of countries such as the Registration Evaluation Authorization and Restriction of Chemicals REACH regulations in the European Union the E U which may impact our products
Contamination has been identified at certain of our current and former facilities as well as third party waste disposal sites and we are conducting investigation and remediation activities in relation to such properties In connection with certain sites we have received past notices from the EPA state agencies and private parties seeking contribution that we have been identified as a potentially responsible party PRP under the Comprehensive Environmental Response Compensation and Liability Act of 1980 CERCLA and as a result we may be required to share in the cost of cleanup with respect to a number of federal Superfund sites In addition to potential costs to clean up our own properties we may also be required to share in the cost of cleanup with respect to state designated sites and certain international locations
The amount of our ultimate liability in connection with those sites may depend on many factors including the volume and toxicity of material contributed to the site the number of other PRPs and their financial viability and the remediation methods and technology to be used Total environmental capital expenditures and operating expenses from known environmental liabilities are not expected to have a material adverse effect on our total capital and operating expenditures cash flows earnings or competitive position Current environmental spending estimates could be modified as a result of changes in our plans or our understanding of the underlying facts changes in legal requirements including any requirements related to global climate change or other factors
The U S Toxic Substances Control Act of 1976 TSCA and similar laws in other jurisdictions are intended to ensure that chemicals do not pose unreasonable risks to human health or the environment TSCA requires the EPA to maintain the TSCA registry listing chemicals manufactured or processed in the United States Chemicals not listed on the TSCA registry cannot be imported into or sold in the U S until registered with the EPA TSCA also sets forth specific reporting recordkeeping and testing rules for chemicals including requirements for the import and export of certain chemicals as well as other restrictions relevant to our business Pursuant to these laws the EPA from time to time issues Significant New Use Rules or SNURs when it identifies new uses of chemicals that could pose risks to human health or the environment and also requires pre manufacture notification of new chemical substances that do not appear on the TSCA registry When we import chemicals into the U S we must ensure that chemicals appear on the TSCA registry prior to import participate in the SNUR process when a chemical we import requires testing data and report to the EPA information relating to quantities identities and uses of imported chemicals
Many European countries as well as the E U have been very active in adopting and enforcing environmental regulations As such it is possible that new regulations may increase the risk and expense of doing business in such countries
REACH requires manufacturers and importers of chemical substances to register such substances with the European Chemicals Agency the ECHA and enables European and national authorities to track such substances Depending on the amount of chemical substances to be manufactured or imported and the specific risks of each substance REACH requires different sets of data to be included in the registration submitted to the ECHA Registration of substances with the ECHA imposes significant recordkeeping requirements that can result in significant financial obligations for companies such as ours to import products into Europe REACH is accompanied by legislation regulating the classification labeling and packaging of chemical substances and mixtures
strategy includes clear targets across our brands operations and supply chain as well as our workforce and communities These 2030 targets include i 100 renewable electricity use and carbon neutrality across our global operations ii reducing use of virgin petroleum based plastic content packaging and select products iii using 100 recyclable compostable or reusable plastic packaging and iv pursuing zero waste to landfills across manufacturing facilities We also regularly review our key sustainability priority areas to keep them relevant to our business
We are making progress on our goals including in priority areas such as sustainable products and packaging ingredient stewardship responsible sourcing reducing waste protecting the health and safety of our teammates and embracing diversity equity and inclusion across the organization among others However there is no guarantee that we will achieve all of our sustainability priorities on or before 2030 as our progress towards these priorities may be impacted by various factors beyond our control
Sustainability related disclosures included in this Annual Report our Proxy Statement and our sustainability reports are informed by standards and guidelines such as the Global Reporting Initiative GRI and the Task Force on Climate related Financial Disclosures TCFD The materiality thresholds in those standards and guidelines may differ from the concept of materiality for purposes of the federal securities laws and disclosures required by the U S Securities and Exchange Commission s SEC rules in this Annual Report on Form 10 K Additional information related to our social and environmental sustainability matters can be found at www edgewell com pages sustainability The information contained on or that may be accessed through our website is not part of and not incorporated into this Annual Report on Form 10 K
At Edgewell we are committed first and foremost to people our employees the consumers who use our products the suppliers and retailers who partner with us and the communities in which we operate As of September 30 2024 we had approximately 6 700 employees with 2 100 based in the United States Certain of our employees outside of the U S are represented by unions or works councils We have cultivated a culture that is centered around our guiding purpose of Making Useful Things Joyful supported by a set of values and behaviors that guide organizational actions and decisions
We believe our foundational values of People First Move Forward Listen Up and Speak Up and Own It Together support a culture of celebration agility authenticity inclusion and collaboration This culture promotes trust and teamwork which results in bold and aggressive goals smart risks and an environment where innovation and ideation thrive We continue to reinforce these foundational values through several key initiatives such as our performance management process which incorporates a 360 degree Values Assessment that evaluates each employee s performance not only on the results achieved but on how they achieve them and an internal global recognition and service anniversary platform As recognition of the progress we ve made in living our foundational values we have received notable recognition in the following ways
Recipient of the Environmental Protection Agency s SmartWay Excellence Award as a true industry leader in freight and supply chain environmental performance and energy efficiency one of only 18 shipper companies to receive the award in 2024
The wellbeing of our people remains a primary focus and we believe that the most productive people are those who are at their best both physically and mentally Our employees have access to many programs to support their wellbeing including onsite biometric screening cancer screening weight loss programs and education mental and emotional health awareness and support through our global Employee Assistance Program and work life balance through flextime remote and hybrid working arrangements and parental leave among others Ensuring a positive meaningful working experience for our employees that is reflective of our purpose and values is central to our business operations We continually monitor employee retention rates and believe our progressive human resources policies learning and development talent management workplace health and safety wellbeing programs and community engagement and support activities enable us to attract and retain key personnel 2024 saw the launch of a Be Well Community of Expertise and a Be Well Global Wellbeing Resource Center with the goal of fostering a culture of well being and caring by supporting employees physical social financial and emotional fitness
We believe that developing and maintaining a strong safety culture is one of the major keys to our continued success Additionally facilities have continued an existing machine safety program and assessment initiative including completing any remaining assessments and implementing fixes for identified items Finally our manufacturing sites have revitalized their Alive and Well program and initiatives over the last year with some facilities rolling the program out to other levels in their organization
We remain committed to creating a work environment where every individual feels respected connected valued and empowered We recruit the best people for the job regardless of gender race ethnicity or other protected traits and it is our policy to comply fully with all domestic foreign and local laws relating to discrimination in the workplace Our diversity equity and inclusion DEI principles are reflected in our values and behaviors and we continually look for ways to support our global workforce our consumers and the communities we serve
Continued with Mitigating Unconscious Bias training which is delivered globally to our People Leaders as well as providing opportunities for our teammates to receive mini lessons on issues that are important to them
Overall DEI is an important part of our Sustainable Care 2030 strategy and we will build upon the commitments to promote an open and inclusive culture where everyone is treated fairly and with respect so that we can attract and retain the best talent Our commitment to DEI was recognized in the following ways in 2024
We understand that to attract and retain great people we must listen to and engage them regularly Each year we conduct an anonymous employee experience survey to gauge our progress and identify the areas in the employee experience where we excel and areas for improvement Our overall positivity score has continued to increase year over year Specifically confidence in Edgewell s future a sense of belonging and a belief that Edgewell provides opportunities to achieve a meaningful work life balance all increased year over year
In addition to global themes our employee experience survey results identified diverse priorities at the functional country and team levels Our goal is to support our People Managers in taking accountability for their results and to empower them to make changes at a local level to improve the employee experience
has served as President and Chief Executive Officer since March 1 2019 Mr Little previously served as our Chief Financial Officer beginning in March 2018 Prior to joining Edgewell Mr Little served as Chief Financial Officer of HSNi from January 2017 to December 2017 and as Executive Vice President and Chief Financial Officer of Elizabeth Arden Inc from April 2014 to November 2016 Prior to joining Elizabeth Arden Mr Little spent 17 years with Procter Gamble where he held numerous positions of increasing responsibility in Procter Gamble s divisional and corporate finance organization ultimately serving as the chief finance officer of their global salon professional division from 2009 until 2014 Mr Little also served for five years in the United States Air Force prior to joining Procter Gamble in 1997
has served as Chief Financial Officer CFO since April 1 2019 and President Europe and Latin America since October 1 2022 Effective August 6 2024 Mr Sullivan was also appointed as Chief Operating Officer Prior to joining Edgewell Mr Sullivan served as Executive Vice President and Chief Financial Officer of Party City Holdco Inc Previously Mr Sullivan spent six years from 2010 to 2016 with Ahold USA Inc where he held positions of increasing responsibility within their control and finance divisions ultimately serving as Executive Vice President and Chief Financial Officer from 2013 to 2016 Prior to that Mr Sullivan spent 13 years at Heineken N V most recently as the Chief Financial and Operating Officer of Heineken USA Mr Sullivan is a Certified Public Accountant
has served as Chief Supply Chain Officer since June 1 2020 Prior to his current role Mr Hibbert was Vice President Global Supply Chain Operations from February 2018 through May 2020 Before joining Edgewell in 2018 Mr Hibbert served as the Executive Vice President of Supply Chain for Safety Kleen Systems Inc from 2015 through 2018 and he held various roles of increasing responsibility such as Senior Vice President Supply Chain at Central Garden and Pet Company Supply Chain Consultant at Chemtura BioLab Inc and Supply Chain Vice President Home and Garden Division at Spectrum Brands Inc
has served as Chief Legal Officer and Corporate Secretary since February 28 2022 Ms Langley has also served as Chief People Officer since November 6 2023 Prior to joining Edgewell Ms Langley served as General Counsel Corporate Secretary and Compliance Officer of Société Bic S A commonly known as BIC a global manufacturer and distributor of consumer goods products Prior to becoming General Counsel Ms Langley held positions of increasing responsibility within their legal function both in the United States and internationally Ms Langley served as General Counsel BIC International Group Supply Chain Emerging Markets Anti Corruption Compliance Officer from 2019 to 2021 General Counsel BIC International Group Stationery Anti Corruption Compliance Officer Latin America Middle East Africa from 2016 to 2019 and General Counsel BIC International Developing Markets from 2015 to 2016 Prior to joining BIC Ms Langley served as Senior Counsel at Diageo plc from 2008 to 2015
has served as Chief Accounting Officer since March 18 2024 Prior to joining Edgewell Mr Dunham was Senior Director and Assistant Corporate Controller for the Whirlpool Corporation a publicly traded home appliances manufacturing company a position he has held since March 2022 Prior to this position Mr Dunham served as Director North America Region Controller from July 2020 to February 2022 Director Global Accounting Policies and Procedures from August 2019 to June 2020 and Director External Reporting and Benefits Accounting from August 2017 to February 2020 Prior to joining Whirlpool Mr Dunham spent 15 years with PricewaterhouseCoopers where he held various senior roles He is also a Certified Public Accountant
will become Chief Financial Officer effective December 1 2024 succeeding Mr Sullivan in the role Ms Weissman has served as Senior Vice President Finance and Business Strategy since 2019 Prior to joining Edgewell Ms Weissman served as Chief Financial Officer of Party City Retail a subsidiary of Party City Holdco Inc from March 2017 to 2019 Previously Ms Weissman spent six years from 2011 to 2017 with Ahold USA Inc where she held positions of increasing responsibility within their control and finance divisions ultimately serving as Senior Vice President Strategy Financial Planning and Analysis from 2014 to 2017 Prior to that Ms Weissman spent 12 years at Heineken N V most recently as Vice President Finance and Strategic Planning Ms Weissman began her career at Ernst Young and is a Certified Public Accountant
Our website address is www edgewell com We are not including the information contained on our website as part of or incorporating it by reference into this filing We make available to the public on our website free of charge our Annual Reports on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K and amendments to those reports filed or furnished pursuant to Section 13 a or 15 d of the Securities Exchange Act of 1934 as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC Accordingly investors should monitor our website in addition to our SEC filings and public webcasts These items are available at www edgewell com under Investors News and Events
The following risks and uncertainties could materially adversely affect our business results of operations financial condition and cash flows We may amend or supplement the risk factors described below from time to time in other reports we file with the SEC
Pricing and availability of raw materials energy shipping labor and other services needed for our business can be volatile due to general economic conditions including inflation supplier capacity restraints geopolitical developments changes in supply and demand natural disasters energy costs health epidemics or pandemics labor shortages and turnover production levels currency fluctuations governmental actions including import and export requirements such as new or increased tariffs sanctions quotas or trade barriers port congestions or delays transport capacity restraints cybersecurity incidents or other disruptions of key manufacturing sites acts of terrorism and other factors beyond our control There is no certainty that we will be able to offset future cost increases This volatility can significantly affect our production costs and may therefore have a material adverse effect on our business results of operations and financial condition
If such cost pressures persist or exceed our estimates and we are not able to increase the prices of our products or achieve cost savings to offset such cost increases our operating margins would be negatively impacted In addition even if we increase the prices of our products in response to increases in the cost of commodities or other cost increases we may not be able to sustain such price increases Sustained price increases may lead to declines in volume as competitors may not adjust their prices or customers may reduce consumption due to pay the higher prices which could lead to sales and market share declines Our projections may not accurately predict the potential negative volume impact of price increases which could adversely affect our business financial condition and results of operations
Our future performance depends in significant part upon the continued service of our executive officers and other key personnel The loss of the services of one or more of our executive officers or other key employees could have a material adverse effect on our business prospects financial condition and results of operations Our success also depends on our continuing ability to attract retain and develop highly qualified personnel Competition for such personnel is intense and there can be no assurance that we can retain and motivate our key employees or attract and retain other highly qualified personnel in the future
The categories in which we operate are largely mature and highly competitive both in the U S and globally as a number of companies compete for consumer acceptance limited retail shelf space and e commerce opportunities Because of the highly competitive environment in which we operate as well as increasing omni channel retailer concentration our customers frequently seek to obtain pricing concessions or better trade terms resulting in either reduction of our gross margins or losses of distribution to lower cost competitors Competition is based upon brand perceptions product performance and innovation customer service and price Our ability to compete effectively may be affected by a number of factors including
several of our competitors including The Procter Gamble Company Unilever Kenvue and others may have substantially greater financial marketing research and development and other resources and greater market share in certain segments than we do which could provide them with greater scale and negotiating leverage with retailers and suppliers
The manufacturing packaging labeling storage distribution advertising and sale of our products are subject to extensive regulation For example a number of our products are regulated by health authorities both in the U S and in the E U such as the U S FDA and by consumer protection organizations such as the U S Consumer Product Safety Commission These regulatory frameworks focus on our ingredients as well as the safety and efficacy of our products Similarly the advertising and marketing of our products is regulated by agencies such as the U S Federal Trade Commission All of these regulatory frameworks exist at the federal state and local level in the U S as well as in foreign countries where we sell our products New or more restrictive regulations or more restrictive interpretations of existing regulations are likely and could lead to additional compliance costs and could have an adverse impact on our business Additionally a finding that we are in violation of or not in compliance with applicable laws or regulations could subject us to material civil remedies including fines damages injunctions or product recalls or criminal sanctions Even if a claim is unsuccessful is not merited or is not fully pursued the negative publicity surrounding such assertions could jeopardize our reputation and brand image and have a material adverse effect on our businesses as well as require resources to rebuild our reputation
We must comply with various environmental laws and regulations in the jurisdictions in which we operate including those relating to the handling and disposal of solid and hazardous wastes and the remediation of contamination associated with the use and disposal of hazardous substances A release of such substances due to an accident or intentional act could result in substantial liability to governmental authorities or to third parties Pursuant to certain environmental laws we could be subject to joint and several strict liability for contamination relating to our or our predecessors current or former properties or any of their respective third party waste disposal sites In addition to potentially significant investigation and remediation costs any such contamination can give rise to claims from governmental authorities or other third parties for natural resource damage personal injury property damage or other liabilities We have incurred and will continue to incur capital and operating expenses and other costs to comply with environmental laws and regulations including remediation costs relating to our current and former properties and third party waste disposal sites As new laws and regulations are introduced we could become subject to additional environmental liabilities in the future that could cause a material adverse effect on our results of operations or financial condition
Our Company may be named a party to legal proceedings or may be subject to product liability or other claims that can result in significant expenses fines product recalls or withdrawals and reputational damage which would affect our results of operations and financial condition In the ordinary course of business the Company and its subsidiaries are subject to numerous claims and lawsuits involving various issues such as patent disputes current and historical product liability claims claims that our product manufacturing sales and marketing practices violate various consumer protection laws both in the U S and internationally and claims arising out of alleged defects in our products including property damage bodily injury or other adverse effects While the Company believes it has substantial defenses in these matters it is not feasible to predict the ultimate outcome of litigation The Company could in the future be required to pay significant amounts as a result of settlements or judgments in these matters including matters where the Company could be held jointly and severally liable among other defendants In addition to the risk of monetary judgments not covered by insurance product liability claims could result in negative publicity that could harm our products reputation and in certain cases require a product recall Product recalls or product liability claims and any subsequent remedial actions could have a material adverse effect on our business reputation brand value results of operations and financial condition
Litigation in general and class action and multi district litigation in particular can be expensive and disruptive Some of these matters may include large numbers of plaintiffs may involve parties seeking large or indeterminate amounts including punitive or exemplary damages and may remain unresolved for several years Although we maintain product liability insurance this insurance does not cover all types of claims particularly claims other than those involving personal injury or property damage or claims that exceed the amount of insurance coverage Further we may not be able to maintain such insurance in sufficient amounts on desirable terms or at all in the future
There is increased focus from certain investors customers consumers employees and other stakeholders concerning corporate citizenship and sustainability matters From time to time we announce certain initiatives including goals regarding our focus areas which include environmental matters packaging responsible sourcing social investments and diversity equity and inclusion We could fail or be perceived to have failed in our achievement of such initiatives or goals or we could fail in accurately reporting our progress on such initiatives and goals Such failures could be due to changes in our business e g shifts in business among distribution channels or acquisitions Moreover the standards by which citizenship and sustainability efforts and related matters are measured are evolving and certain areas are subject to assumptions which could change over time In addition we could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters Adverse incidents related to corporate citizenship or sustainability matters could impact the value of our brands the cost of our operations and our relationships with existing and future investors which could have a material adverse effect on our business In addition in recent years investor advocacy groups and certain institutional investors have placed increasing importance on sustainability If as a result of their assessment of our sustainability practices certain investors are unsatisfied with our actions or progress they may reconsider their investment in our Company At the same time there also exists anti ESG sentiment among certain stakeholders and government institutions and we may face scrutiny reputational risk product boycotts lawsuits or market access restrictions from these parties regarding our sustainability initiatives
Increasing focus on sustainability matters has resulted in and is expected to continue to result in evolving legal and regulatory requirements including mandatory due diligence disclosure and reporting requirements as well as a variety of voluntary disclosure frameworks and standards We have incurred and are likely to continue to incur increased costs complying with such standards and regulations particularly given the lack of convergence among standards In addition our processes and controls may not always comply with evolving standards and regulations for identifying measuring and reporting sustainability metrics our interpretation of reporting standards and regulations may differ from those of others and such standards and regulations may change over time any of which could result in significant revisions to our goals or reported progress in achieving such goals In addition methodologies for reporting our data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third party data changing assumptions changes in the nature and scope of our operations including from acquisitions and divestitures and other changes in circumstances Any failure or perceived failure whether or not valid to pursue or fulfill our sustainability goals and aspirations or to satisfy various sustainability reporting standards or regulatory requirements within the timelines we announce or at all could increase the risk of litigation or result in regulatory actions
The vast majority of our total net sales are from products bearing proprietary trademarks and brand names In addition we own or license from third parties a considerable number of patents patent applications and other technology We rely on trademark trade secret patent and copyright laws to protect our intellectual property rights There is a risk that we will not be able to obtain and perfect or maintain our own intellectual property rights or where appropriate license intellectual property rights necessary to support new product introductions In addition even if such rights are protected in the U S the laws of some other countries in which our products are or may be sold do not protect intellectual property rights to the same extent as the laws of the U S Our intellectual property rights could be invalidated circumvented or challenged in the future and we could incur significant costs in connection with legal actions relating to such rights As patents expire we could face increased competition or decreased royalties either of which could negatively impact our operating results If other parties infringe our intellectual property rights they may dilute the value of our brands in the marketplace which could diminish the value that consumers associate with our brands which may harm our sales
Legislative changes in applicable tax laws policies and regulations or unfavorable resolution of tax matters may result in additional tax liabilities which could adversely impact our cash flows and results of operations
Our businesses are subject to taxation in the U S and multiple foreign jurisdictions The impact of any legislative tax law policy or regulation changes by federal state local and foreign authorities may result in additional tax liabilities which could adversely impact our cash flows and results of operations Significant estimation and judgment are required in determining our provisions for taxes in the U S and jurisdictions outside the U S In the ordinary course of our business there are transactions and calculations in which the ultimate tax determination is uncertain We are regularly under audit by tax authorities and although we believe our tax positions are defensible and our tax provision estimates are reasonable the final outcome of tax audits and related litigation could be materially different than that reflected in our income tax provisions and accruals The unfavorable resolution of any audits or litigation could have an adverse impact on future operating results and our financial condition More aggressive and assertive tax collection policies particularly in jurisdictions outside the U S may
increase the costs of resolving tax issues and enhance the likelihood that we will have increased tax liabilities going forward In addition international tax reform remains a priority with the Organization for Economic Cooperation and Development s Action Plan on Base Erosion Profit Shifting and other proposed foreign jurisdictional tax law changes Given the uncertainty of the possible changes and their potential interdependency we are unable to determine the net consolidated impact of changes in global tax legislation if any
We rely extensively on information technology systems in order to conduct business including some that are managed by third party service providers These systems include but are not limited to programs and processes relating to internal and external communications ordering and managing materials from suppliers converting materials to finished products shipping products to customers processing transactions summarizing and reporting results of operations and complying with regulatory legal or tax requirements These information technology systems could be damaged or cease to function properly due to the poor performance or failure of third party service providers catastrophic events power outages network outages failed upgrades or other similar events If our business continuity plans do not effectively resolve such issues on a timely basis we may suffer interruptions in conducting our business which may adversely impact our operating results
Periodically we also need to upgrade our information technology systems or adopt new technologies If such a new system or technology does not function properly or otherwise exposes us to increased cybersecurity breaches and failures it could affect our ability to order materials make and ship orders and process payments in addition to other operational and information integrity and loss issues Further if the information technology systems networks or service providers we rely upon fail to function properly or cause operational outages or aberrations or if we or one of our third party providers suffer significant unavailability of key operations or inadvertent disclosure of lack of integrity of or loss of our sensitive business or stakeholder information due to any number of causes ranging from catastrophic events or power outages to improper data handling security incidents or employee error or malfeasance and our business continuity plans do not effectively address these failures on a timely basis we may be exposed to reputational competitive operational financial and business harm as well as litigation and regulatory action The costs and operational consequences of responding to the above items and implementing remediation measures could be significant and could adversely impact our results
Our systems and networks as well as those of our retailer customers suppliers service providers and banks may become the target of advanced cyber attacks or information security breaches which will pose a risk to the security of our services systems networks and supply chain as well as to the confidentiality availability and integrity of data of our Company employees customers or consumers and disrupt our operations or damage our facilities or those of third parties As cybersecurity threats rapidly evolve in sophistication and become more prevalent globally we are continually increasing our attention and efforts to these potential threats We assess potential threats and vulnerabilities and make investments seeking to address them including ongoing monitoring and updating of networks and systems increasing specialized information security skills deploying employee security training and updating security policies for our Company and our third party providers However because the techniques tools and tactics used in cyber attacks frequently change and may be difficult to detect for periods of time we may face difficulties in anticipating and implementing adequate preventative measures or fully mitigating harms after such an attack As a result a cyber attack could negatively impact our net sales and increase our operating and capital costs In addition our employees frequently access our suppliers and customers systems and we may be liable if our employees are the source of any breaches in these third party systems It could also damage our reputation with retailer customers and consumers and diminish the strength and reputation of our brands or require us to pay monetary penalties
Walmart together with its subsidiaries is our largest customer accounting for 17 2 of our net sales in fiscal 2024 Generally sales to our top customers are made pursuant to purchase orders and we do not have supply agreements or guarantees of minimum purchases from them As a result these customers may decrease their level of purchases from us at any time The loss or a substantial decrease in the volume of purchases by any of our top customers would harm our sales and profitability Increasing customer concentration could result in reduced sales outlets for our products as well as greater negotiating pressures and pricing requirements
In recent years an omnichannel strategy in both in the U S and internationally has gained increasing importance This trend has resulted in the increased size and influence of large highly consolidated retail customers including internet based retailers who may demand lower pricing special packaging or impose other commercial requirements on us These business demands may relate to inventory practices logistics or other aspects of the customer supplier relationship Some of our high volume customers have sought to obtain pricing and other concessions and better trade terms To the extent we provide concessions or better trade terms to those customers our margins are reduced Further if we are unable to effectively respond to the demands of our customers these customers could reduce their purchases of our products and increase their purchases of products from competitors which would harm our sales and profitability In addition reductions in inventory by our customers including as a result of consolidations in the retail industry or our customers managing their working capital requirements could result in reduced orders for our products and adversely affect our results of operations for the financial periods affected by such reductions
Protracted unfavorable market conditions have caused many of our customers to more critically analyze the number of brands they sell which could lead to the retailer reducing or discontinuing certain of our product lines particularly those products that were not number one or two in their category
In the normal course of business we may initiate projects which change our manufacturing footprint or our operations in order to gain production and distribution efficiencies and reduce costs The execution of cost savings initiatives may present a number of significant risks including
Because of these and other factors we cannot predict whether we will realize the anticipated benefits of these initiatives and if we do not our business and results of operations may be adversely affected
We conduct business on a global basis with nearly 44 of our net sales in fiscal 2024 originating outside the U S and a significant portion of our production capacity and cash are located overseas Consequently we are subject to a number of risks associated with doing business in foreign countries including
the ability to repatriate foreign based cash effectively for strategic needs in the U S as well as the heightened counterparty internal control and country specific risks associated with holding cash overseas
We are currently dependent on third party manufacturers to manufacture certain products for our business Our business could suffer as a result of a third party manufacturer s inability to produce our products for us on time or to our specifications
There is also a possibility that third party manufacturers which produce a portion of our products could discontinue production with little or no advance notice or experience financial problems or problems with product quality or timeliness of product delivery resulting in manufacturing delays or disruptions regulatory sanctions product liability claims or consumer complaints The inability of a third party manufacturer to ship orders in a timely manner in desirable quantities or to meet our safety quality and social compliance standards or regulatory requirements could have a material adverse impact on our business While certain of our relationships with these third parties are subject to minimum volume commitments whereby the third party manufacturer has committed to produce and we have committed to purchase a minimum quantity of product we may nonetheless experience situations where such manufacturers are unable to fulfill their obligations under our agreements
Our manufacturing facilities supply channels or other business operations may be subject to disruption from events beyond our control and we may be unable to implement maintain and ramp efficient and cost effective manufacturing capabilities at current and any future manufacturing locations
Operations of our manufacturing and packaging facilities worldwide and of our corporate offices and the methods we use to obtain supplies and to distribute our products may be subject to disruption for a variety of reasons including availability of raw materials work stoppages industrial accidents disruptions in logistics loss or impairment of key manufacturing sites product quality or safety issues licensing requirements and other regulatory issues trade disputes between countries in which we have operations and acts of war terrorism pandemics fire earthquake hurricanes flooding or other natural disasters The supply of our raw materials may be similarly disrupted If a major disruption were to occur it could result in delays in shipments of products to customers or suspension of operations We maintain business interruption insurance to potentially mitigate the impact of business interruption but such coverage may not be sufficient to offset the financial or reputational impact of an interruption
Likewise we will need to implement maintain and ramp efficient and cost effective manufacturing capabilities at current and any future manufacturing locations Failure to do so may impact our brands business prospects financial condition and operating results
We depend on the continuing reputation and success of our brands particularly the Schick Wilkinson Sword Billie Edge Skintimate Playtex Wet Ones Banana Boat Hawaiian Tropic Bulldog Cremo Jack Black Stayfree Carefree and o b brands
Our operating results could be adversely affected if one of our leading brands suffers damage to its reputation due to real or perceived quality issues Further the success of our brands can suffer if our marketing plans or new product offerings do not improve or have a negative impact on our brands image or ability to attract and retain consumers Additionally if claims made in our marketing campaigns become subject to litigation alleging false advertising it could damage one or several of our brands cause us to alter our marketing plans in ways that may materially and adversely affect sales or result in the imposition of significant damages against us Further a boycott or other campaign critical of us through social media or otherwise could negatively impact our brands reputation and consequently our products sales
Customer orders for sun care products within our Sun and Skin Care segment are highly seasonal which has historically resulted in higher sun care sales to retailers during the late winter through mid summer months Accordingly our sales financial performance working capital requirements and cash flow may experience volatility during these periods Further purchases of our sun care products can be significantly impacted by unfavorable weather conditions during the summer period and as a result we may suffer decreases in net sales if conditions are not favorable for use of our products which could in turn have a material adverse effect on our financial condition results of operation and cash flows Within our Wet Shave segment sales of women s products are moderately seasonal with increased consumer demand in the spring and summer months
Our financial performance depends on our ability to anticipate and respond to consumer trends and changes in consumer preferences New product introductions may not be as successful as we anticipate which could have a material adverse effect on our business prospects results of operations financial condition and or cash flows
We have a rigorous process for the continuous development and evaluation of new product concepts led by executives in marketing sales research and development product development operations legal and finance However consumer preference and spending patterns change rapidly and cannot be predicted with certainty There can be no assurance that we will anticipate and respond to trends for consumer products effectively Each new product launch including those resulting from our product development process carries risks as well as the possibility of unexpected consequences including
our marketing promotional advertising and or pricing strategies for our new products may be less effective than planned and may fail to effectively reach the targeted consumer base or engender the desired consumption of the products by consumers
we may incur costs exceeding our expectations as a result of the continued development and launch of new products including for example unanticipated levels of research and development costs advertising promotional and or marketing expenses sales return expenses or other costs related to launching new products
we may experience a decrease in sales of certain of our existing products as a result of newly launched products the impact of which could be exacerbated by shelf space limitations and or any shelf space loss
Each of the risks referred to above could delay or impede our ability to achieve our sales objectives which could have a material adverse effect on our business prospects results of operations financial condition and or cash flows
We have a material amount of goodwill trademarks and other intangible assets as well as other long lived assets which are periodically evaluated for impairment in accordance with current accounting standards Declines in our profitability and estimated cash flows related to specific intangible assets as well as potential changes in market valuations for similar assets and market discount rates may result in an impairment charge which could have an adverse impact on our operating results
Our access to capital markets to raise funds through the sale of debt or equity securities is subject to various factors including general economic and financial market conditions A significant reduction in market liquidity and general economic conditions
could impact access to funding and increase associated borrowing costs which could reduce our earnings and cash flows Additionally disruptions in financial markets could reduce our access to debt and equity capital markets negatively affecting our ability to implement our business plan and strategy
Our access to debt financing at competitive risk based interest rates is partly a function of our credit ratings The major credit rating agencies periodically evaluate our creditworthiness and have assigned us credit ratings These ratings are based on a number of factors which include our financial strength and financial policies as well as our strategies operations and execution A downgrade to our credit ratings could have a material impact on our business including increasing our interest rates limiting our access to public debt markets limiting the institutions willing to provide us credit facilities more restrictive credit arrangements and making any future credit facilities or credit facility amendments more costly and difficult to obtain
As of September 30 2024 our debt level was 1 3 billion We may be required to dedicate a substantial portion of our cash to debt service thereby reducing funds available to fund working capital capital expenditures acquisitions and investments and other general corporate purposes Our failure to make scheduled interest payments or to repay or refinance the indebtedness at maturity or obtain additional financing as needed could have a material adverse effect on our business Approximately 1 3 billion 98 of our debt balance as of September 30 2024 is borrowed at fixed interest rates ranging from 4 125 to 5 50 with maturity dates in 2028 and thereafter
Additionally certain of our debt instruments are subject to certain financial and other covenants including debt ratio tests We may be in breach of such covenants in the event of future declines in our operating cash flows or earnings performance foreign currency movements or other events In the event of such breach our lenders may be entitled to accelerate the related debt as well as any other debt to which a cross default provision applies and we could be required to seek amendments or waivers under the debt instruments or to refinance the debt There is no assurance that we would obtain such amendments or waivers or effect such refinancing or that we would be able to do so on terms similar to those of our current debt instruments The covenants and financial ratio requirements contained in our debt instruments could also
place us at a competitive disadvantage relative to our competitors that have greater financial flexibility or limit among other things our ability to borrow additional funds as needed or take advantage of business opportunities as they arise
Our Revolving Credit Facility See Liquidity and Capital Resources for details contains customary representations and warranties and affirmative and negative covenants including limitations on additional indebtedness dividends and other distributions entry into new lines of business use of loan proceeds restrictions on liens on the assets of the Company and our subsidiaries transactions with affiliates and dispositions The breach of any of these covenants could result in a default under the Revolving Credit Facility as defined below In addition the Revolving Credit Facility contains customary events of default that include among others non payment of principal interest or fees violation of covenants inaccuracy of representations and warranties failure to make payment on or defaults with respect to certain other material indebtedness bankruptcy and insolvency events material judgments and change of control provisions Upon the occurrence of an event of default and after the expiration of any applicable grace period payment of any outstanding loans under the Revolving Credit Facility could be accelerated and the lenders thereunder could foreclose on their security interests in the assets of the Company and certain of our subsidiaries
We have completed a number of acquisitions and we expect to continue making acquisitions if appropriate opportunities arise Acquisitions could be a key use of our cash and a potential driver of future sales and profit growth If we can complete future acquisitions we may face challenges in consolidating functions and effectively integrating procedures personnel product lines and operations in a timely and efficient manner The integration process can be complex and time consuming may be disruptive to our existing and acquired businesses and may cause an interruption of or a loss of momentum in the business Even if we can successfully complete the integration of acquired businesses into our operations there is no assurance that anticipated cost savings synergies or revenue enhancements will be realized within the expected time frame or at all Such acquisitions may result in potentially dilutive issuances of our equity securities the incurrence of additional
debt restructuring charges impairment charges contingent liabilities amortization expenses related to intangible assets and increased operating expenses which could adversely affect our results of operations and financial condition
The Company has several defined benefit pension plans covering employees in the U S and certain employees in other countries The funding obligations for our pension plans are impacted by the performance of the financial markets interest rates and governmental regulations While the pension benefit earned to date by active participants under our legacy U S pension plan was frozen effective January 1 2014 and retirement service benefits no longer accrue under this retirement program and
in 2023 under our Canadian defined benefit pension plan we derecognized the assets and projected benefit obligation our pension obligations are expected to remain significant If the investment of plan assets does not provide the expected long term returns if interest rates or other assumptions change or if governmental regulations change the timing or amounts of required contributions to the plans we could be required to make additional pension contributions which may have an adverse impact on our liquidity our ability to comply with debt covenants and may require recognition of increased expense within our financial statements
We have a cybersecurity program to assess identify and manage risks from cybersecurity threats This includes multiple tools and processes for assessing identifying and managing material risks from cybersecurity threats
A multi functional enterprise cyber security and Infrastructure team reviews and assesses top cybersecurity risks This assessment is shared with members of senior management including the CFO and Senior Vice President SVP IT and helps guide the Company s cybersecurity operational priorities and strategy In addition cybersecurity risks are integrated into the Company s broader Enterprise Risk Management program and when identified are reported to relevant business and governance leaders within the Company for appropriate action
To support the ongoing identification and management of cybersecurity issues the Company provides information security employee training conducts global and targeted phishing simulation campaigns and conducts tabletop exercises The Company also deploys a combination of security tools and experts to help prevent detect contain eradicate and recover from potential cybersecurity issues and cyber attacks Further the Company engages third party consultants and services for cyber threat intelligence insights and assessments of its cybersecurity risk posture and governance
The Company s third party intake process incorporates cybersecurity risk into the assessment of our third party vendors when we engage a new vendor or experience a change in relationship with an existing vendor Further the Company s cybersecurity team conducts reviews of its third party vendors depending on the vendor s risk profile as determined by its cybersecurity team
As a global company we manage a variety of cybersecurity threats and cannot wholly eliminate the risk of adverse impacts from such incidents However as of the date of this Form 10 K we have not identified any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy results of our operations or financial condition For additional information on the risks from cybersecurity threats that we have faced in the past and expect to continue to face in the future please refer to the Risk Factors in Part I Item 1A of this Form 10 K
As part of our overall risk management program we have adopted our Information Security Policy which details the overall risk based framework and governance for the management and security of our information technology assets and information The policy applies to everyone who accesses our data or information resources and all of our information systems and resources including third parties we engage Our program aligns with the NIST 2 0 cybersecurity framework
Our Board of Directors are part of the Company s Cyber Response Task Force and table top simulations Additionally the Board of Directors have delegated to the Audit Committee oversight responsibility of our risk management program including cybersecurity business continuity IT operational resilience and data privacy The Audit Committee has specific responsibility for reviewing the status of the security of the Company s electronic data processing information systems related to the Company s people assets and information systems The Audit Committee receives regular updates from the SVP IT about information security and systems security programs and plans including emerging trends and progress on overall enterprise cybersecurity programs and priorities These updates occur at least two times a year with interim updates as needed Additionally we have protocols by which certain cybersecurity incidents are reported promptly to the Chief Executive Officer or the Audit Committee as appropriate A Cyber dashboard is also provided to the Board of Directors quarterly
The Information Security organization reports into the SVP IT and includes a dedicated team of centralized information security experts with extensive cybersecurity knowledge and experience to manage the cyber risk under the leadership of the Director of Information Security
We have adopted a cybersecurity incident response plan that is designed to provide a framework across all functions for a coordinated identification and response to security incidents The plan specifies the process for identifying validating classifying documenting and responding to cybersecurity events as well as determining whether reporting of an event is appropriate under regulatory standards Internal reporting and escalation protocols are in place to ensure the involvement of the SVP IT other senior leaders and the Audit Committee as appropriate Under the plan we conduct tabletop exercises to test our preparedness and our incident response process and we provide ongoing training
As a global company serving customers in multiple countries and territories we routinely experience a wide variety of cybersecurity incidents As of the date of this Form 10 K we have not experienced a cybersecurity incident that has materially affected or is reasonably likely to materially affect our business strategy results of operation or financial condition Additional information on cybersecurity risks we face is discussed in Item 1A Risk Factors which should be read in conjunction with the information in this section
As of September 30 2024 we owned or leased 55 properties 29 in the U S and 26 globally Eleven of these properties are used as production plants consisting of 1 8 million square feet that is owned and 1 3 million square feet that is leased Five of these plants are located in the U S and six are in other countries Seven of these plants are used exclusively by our Wet Shave segment one by our Feminine Care segment two by our Sun and Skin Care segment and one is shared by our Wet Shave and Sun and Skin Care segments We also have 15 warehouses consisting of 0 1 million square feet that is owned and 0 8 million square feet that is leased We operate from 29 different offices throughout the world totaling 0 6 million square feet all of which are leased and includes our corporate headquarters in Shelton Connecticut We believe all of our facilities are well maintained and suitable for the operations conducted in them
We and our subsidiaries are subject to a number of legal proceedings in various jurisdictions arising out of our operations during the ordinary course of business Many of these legal matters are in preliminary stages and involve complex issues of law and fact and may proceed for protracted periods of time The amount of liability if any from these proceedings cannot be determined with certainty We review our legal proceedings and claims regulatory reviews and inspections on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions We establish accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated and disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued if such disclosure is necessary for our financial statements to not be misleading We do not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated Based upon present information we believe that our liability if any arising from such pending legal proceedings asserted legal claims and known potential legal claims which are likely to be asserted is not reasonably likely to be material to our financial position results of operations or cash flows taking into account established accruals for estimated liabilities
In January 2018 our Board of Directors approved an authorization to repurchase up to 10 0 million shares of our common stock This authorization replaced a prior share repurchase authorization from May 2015 The following table sets forth the purchases of our Company s securities by our Company and any affiliated purchasers within the meaning of Rule 10b 18 a 3 17 CFR 240 10b 18 a 3 during the fourth quarter of fiscal 2024
There were 3 751 shares purchased during the quarter related to the surrender of shares of common stock to our Company to satisfy tax withholding obligations in connection with the vesting of restricted stock equivalents
During fiscal 2024 we repurchased 1 570 584 shares of common stock under the share repurchase authorization from January 2018 for 58 5 million Future share repurchases if any would be made in the open market privately negotiated transactions or otherwise in such amounts and at such times as we deem appropriate based upon prevailing market conditions business needs and other factors
During fiscal 2024 we repurchased 210 729 shares related to the surrender of shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock equivalent awards
During the quarter ended September 30 2024 our executive officers and directors had no equity trading arrangements nor were there any adoptions terminations or modifications to a Rule 10b5 1 equity trading plan or any non Rule 10b5 1 equity trading arrangements as defined in Item 408 of Regulation S K
The following graph compares the cumulative five year total return provided to shareholders of the Company s common stock relative to the cumulative total returns of the S P Midcap 400 index and the S P Household Products index An investment of 100 with reinvestment of all dividends and other distributions is assumed to have been made in our common stock and in each of the indices on September 30 2019 and its relative performance is tracked through September 30 2024 These indices are included only for comparative purposes as required by SEC rules and do not necessarily reflect management s opinion that such indices are an appropriate measure of the relative performance of our common stock They are not intended to forecast possible future performance of our common stock nor is our historical common stock price performance necessarily indicative of our future common stock price performance
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the accompanying notes included in this Annual Report on Form 10 K The following discussion may contain forward looking statements that reflect our plans estimates and beliefs and involve risks uncertainties and assumptions Our actual results could differ materially from those discussed in these forward looking statements Factors that could cause or contribute to these differences include those discussed in Item 1A Risk Factors and Forward Looking Statements included within this Annual Report on Form 10 K
While we report financial results in accordance with GAAP this discussion also includes non GAAP measures These non GAAP measures are referred to as adjusted or organic and exclude items which are considered by the Company as unusual or non recurring and which may have a disproportionate positive or negative impact on the Company s financial results in any particular period Reconciliations of non GAAP measures are included within this Management s Discussion and Analysis of Financial Condition and Results of Operations
This non GAAP information is provided as a supplement to not as a substitute for or as superior to measures of financial performance prepared in accordance with GAAP We use this non GAAP information internally to make operating decisions and believe it is helpful to investors because it allows more meaningful period to period comparisons of ongoing operating results Given certain significant events we view the use of non GAAP measures that take into account the impact of these unique events as particularly valuable in understanding our underlying operational results and providing insights into future performance The information can also be used to perform trend analysis and to better identify operating trends that may otherwise be masked or distorted by the types of items that are excluded This non GAAP information is also a component in determining management s incentive compensation Finally we believe this information provides more transparency
We analyze net sales and segment profit on an organic basis to better measure the comparability of results between periods Organic net sales and organic segment profit exclude the impact of changes in foreign currency translation
Additionally we utilize adjusted non GAAP measures including adjusted gross margin adjusted selling general and administrative SG A adjusted operating income adjusted effective tax rate adjusted net earnings and adjusted diluted net earnings per share internally to make operating decisions
The following is a summary of key results for fiscal 2024 2023 and 2022 Net earnings and diluted earnings per share EPS for the time periods presented were impacted by certain costs or income as described in the table below The impact of these items on reported net earnings and EPS are provided as a reconciliation of net earnings and EPS to adjusted net earnings and adjusted diluted EPS both of which are non GAAP measures
in fiscal 2024 increased 2 1 or 0 1 to 2 253 7 including a 2 2 or 0 1 unfavorable impact due to currency movements Organic net sales increased 4 3 or 0 2 as 7 3 growth in international markets reflecting both increased volumes and price was partially offset by a 3 8 decrease in North America organic net sales primarily reflecting volume declines in Feminine Care Wet Shave and Wet Ones partially offset by organic growth across Sun Care and Grooming
during fiscal 2024 was 1 97 compared to earnings of 2 21 in the prior fiscal year On an adjusted basis as illustrated in the table below net earnings per diluted share during fiscal 2024 were 3 05 compared to 2 59 in the prior year
For fiscal 2024 net sales were 2 253 7 an increase of 2 1 or 0 1 including a 2 2 or 0 1 unfavorable impact due to currency movements Organic net sales increased 4 3 or 0 2 as 7 3 growth in international markets reflecting both increased volumes and price was partially offset by a 3 8 decrease in North America organic net sales primarily reflecting volume declines in Feminine Care Wet Shave and Wet Ones partially offset by organic growth across Sun Care and Grooming
Gross profit was 955 7 in fiscal 2024 as compared to 940 8 in fiscal 2023 an increase of 14 9 or 1 6 Gross margin for fiscal 2024 was 42 4 of net sales compared to 41 8 in the prior year period Adjusted gross margin increased 140 basis points as productivity savings of approximately 280 basis points and favorable price of approximately 115 basis points more than offset core inflation and
SG A was 430 1 or 19 1 of net sales in fiscal 2024 compared to 409 6 or 18 2 of net sales in the prior year period Adjusted SG A increased 40 basis points to 18 5 of net sales primarily driven by higher people expenses legal costs and broker costs partially offset by operational efficiency savings lower bad debt expense and lower incentive compensation expense
For fiscal 2024 Advertising and Sales Promotion Expense A P was 232 0 up 2 9 or 1 3 compared to fiscal 2023 A P was 10 3 of net sales for fiscal 2024 compared with 10 2 in fiscal 2023 The increase in A P was primarily due to incremental investment in Women s grooming and Sun Care partially offset by Wet Shave
We incurred 36 0 in restructuring charges in fiscal 2024 consisting largely of severance project implementation and other exit costs This includes a 15 6 restructuring charge related to certain operational and organizational steps designed to streamline the Company s operations and supply chain by consolidating its current Mexico operations in Obregon and Mexico City into a single facility in Aguascalientes Mexico We expect to incur restructuring charges of approximately 29 in fiscal 2025
Interest expense associated with debt for fiscal 2024 was 76 5 a decrease of 2 0 or 2 5 as compared to 78 5 in fiscal 2023 The decrease in interest expense was the result of a lower overall debt balance on the Company s Revolving Credit Facility partially offset by higher interest rates
Other expense income net was expense of 1 9 in fiscal 2024 compared to expense of 0 8 in fiscal 2023 which included currency hedge and remeasurement gains of 8 3 in fiscal 2024 compared to 12 7 in fiscal 2023 Current year expense reflects lower pension expense compared to the prior period a loss on investment and higher interest income Prior year expense includes the loss on the settlement of the Canada defined benefit pension plan of 7 9
Income taxes which include federal state and foreign taxes were 18 5 and 22 3 of Earnings before income taxes in fiscal 2024 and 2023 respectively The fiscal 2024 effective tax rate reflects a favorable mix of earnings in lower tax rate jurisdictions and the impact of a change in the Company s prior estimates On an adjusted basis the effective tax rate for fiscal 2024 was 20 3 compared to 23 0 in the prior year
Our effective tax rate is highly sensitive to the mix of countries from which earnings or losses are derived Declines in earnings in lower tax rate jurisdictions earnings increases in higher tax rate jurisdictions or repatriation of foreign earnings or operating losses in the future could increase future tax rates Additionally adjustments to prior year tax provision estimates could increase or decrease future tax provisions
Segment performance is evaluated based on segment profit excluding certain U S GAAP items that management does not believe are indicative of ongoing operating performance due to their unusual or non recurring nature and which may have a disproportionate positive or negative impact on the Company s financial results in any particular period Financial items such as interest income and expense are managed on a global basis at the corporate level and therefore are excluded from segment profit The exclusion of such charges from segment results reflects management s view on how management monitors and evaluates segment operating performance generates future operating plans and makes strategic decisions regarding the allocation of capital
Our operating model includes some shared business functions across segments including product warehousing and distribution transaction processing functions and in most cases a combined sales force and management teams We apply a fully allocated cost basis in which shared business functions are allocated between segments
The following tables present changes in segment net sales and segment profit for fiscal 2024 and 2023 and also provides a reconciliation of organic segment net sales and organic segment profit to reported amounts For a reconciliation of Segment profit to Earnings before income taxes see Note 20 of Notes to Consolidated Financial Statements
Wet Shave net sales for fiscal 2024 were 1 229 3 a decrease of 1 6 or 0 1 as compared to the prior year period including 4 6 or 0 3 unfavorable impact from currency Organic net sales increased 3 0 or 0 2 driven by a 7 3 increase in International organic sales driven by both higher volumes and price North America sales declined 7 2 primarily due to lower volumes North America sales were impacted by continued weak category and channel dynamics particularly in the highly promotional drug channel along with heightened competitive dynamics in Women s shave as well as significant declines in Shave Preps and Disposables
Wet Shave segment profit for fiscal 2024 was 203 9 an increase of 45 6 or 28 8 and inclusive of a 1 8 or 1 1 unfavorable impact from currency Organic segment profit increased 47 4 or 29 9 reflecting higher gross margin and lower marketing expense
Sun and Skin Care net sales for fiscal 2024 were 740 8 an increase of 35 3 or 5 0 Organic net sales increased 32 8 or 4 6 driven by Sun Care growth of 9 1 in International markets and 6 1 in North America as well as 5 5 growth in global Grooming These increases were partially offset by lower sales in Wet Ones primarily due to unfavorable volume impact related to a fire at our Sidney Ohio manufacturing plant
Sun and Skin Care segment profit for fiscal 2024 was 131 3 a decrease of 6 1 or 4 4 Organic segment profit decreased 7 3 or 5 3 primarily driven by higher SG A and marketing expenses partially offset by higher gross margins
During fiscal 2024 corporate expenses were 65 7 or 2 9 of net sales compared to 68 7 or 3 1 of net sales in the prior year The decrease in corporate expenses was primarily due to lower incentive compensation expense partially offset by higher people expenses
During fiscal 2024 and 2023 we incurred 36 0 and 17 1 respectively in restructuring and repositioning expenses consisting largely of severance project implementation and other exit costs This includes a 15 6 charge in fiscal 2024 related to certain operational and organizational steps designed to streamline the Company s operations and supply chain by consolidating its current Mexico operations in Obregon and Mexico City into a single facility in Aguascalientes Mexico For further information see Note 3 of Notes to Consolidated Financial Statements
On December 1 2023 a fire occurred at our Wet Ones manufacturing plant in Sidney Ohio There were no injuries reported and damage was limited to a single manufacturing process As a consequence of the fire damage there was a partial shutdown of the operations that manufacture Wet Ones raw materials During fiscal 2024 we incurred 12 2 in incremental costs related to material charges increased labor and absorption and other inefficiency costs as a result of the fire
During fiscal 2024 we settled legal matters for certain class action advertising claims resulting in a charge of 3 9 During fiscal 2023 we settled a legal matter which resulted in a gain of 4 9 related to an intellectual property claim against a third party and also received a favorable court ruling regarding an international VAT matter which resulted in a gain of 2 2 from a release of the reserve previously established For further information see Note 19 of Notes to Consolidated Financial Statements
During fiscal 2023 the Company released a reserve of 1 7 related to certain accrued expenses associated with the write off of inventory for certain Wet Ones SKUs This charge was included in Cost of products sold in the Consolidated Statements of Earnings and Comprehensive Income Also during fiscal 2023 the Company recorded a charge of 7 9 related to the wind up of its Canadian defined benefit pension plan For further information see Note 14 of Notes to Consolidated Financial Statements
At September 30 2024 we had cash of 209 1 a significant portion of which was located outside the U S Given our extensive international operations a significant portion of our cash is denominated in foreign currencies Refer to Note 18 of Notes to Consolidated Financial Statements for a discussion of the primary currencies to which the Company is exposed We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed We generally repatriate a portion of current year earnings from select non U S subsidiaries only if the economic cost of the repatriation is not considered material
Our cash is deposited with multiple counterparties which consist of major financial institutions We consistently monitor positions with and credit ratings of counterparties both internally and by using outside ratings agencies
On April 2 2024 the Restatement Date the Company and certain subsidiaries of the Company entered into a Restatement Agreement the Restatement Agreement with Bank of America N A as administrative agent and collateral agent BofA and the several lenders from time to time party thereto together with BofA the Lenders which amended and restated the Company s Credit Agreement dated as of March 28 2020 as previously amended by that certain Amendment No 1 to Credit Agreement dated as of February 6 2023 and as otherwise amended amended and restated supplemented or otherwise modified prior to the Restatement Date the Credit Facility All of the 425 0 of revolving facility commitments under the Credit Facility the Existing Revolving Facility Commitments were replaced with an equal amount of new revolving facility commitments the Replacement Revolving Facility Commitments collectively with the Existing Revolving Facility Commitments the Revolving Credit Facility having substantially similar terms as the Existing Revolving Facility Commitments except that the maturity date of the Replacement Revolving Facility Commitments will be the earlier of i April 2 2029 and ii a March 2 2028 if the aggregate outstanding amount of the Company s 5 500 Senior Notes due 2028 is greater than 150 0 as of such date and b December 29 2028 if the aggregate outstanding amount of the Company s 4 125 Senior Notes due 2029 is greater than 150 0 of as such date in each case subject to certain exceptions Refer to Note 13 of Notes to Consolidated Financial Statement for additional discussion
On February 6 2023 we amended our Revolving Credit Facility to transition from using the London Interbank Offered Rate LIBOR to the Secured Overnight Financing Rate SOFR as LIBOR is no longer available as of June 30 2023
On August 5 2024 we entered into the Seventh Amendment to that certain Master Accounts Receivable Purchase Agreement between Edgewell Personal Care LLC and MUFG Bank LTD the Accounts Receivable Facility which amended the pricing index used to determine the purchase price for subject receivables from the Bloomberg Short Term Bank Yield Index BSBY to Term Secured Overnight Financing Rate SOFR The applicable margin that is added to the SOFR pricing index specific for each obligor was unchanged Except as noted above all other material terms conditions obligations covenants or agreements contained in the Accounts Receivable Facility are unmodified in all respects and continue in full force and effect
Effective February 7 2022 we increased the maximum receivables sold facility amount under the Sixth Amendment to the Accounts Receivable Facility to 180 0 from 150 0 Refer to Note 11 of Notes to the Consolidated Financial Statements for further discussion on the Accounts Receivable Facility
On August 5 2022 we entered into that certain Master Receivable Assignment Agreement between the Company s wholly owned subsidiary Schick Japan K K and Concerto Receivables Corporation the Purchaser Tokyo Branch a subsidiary of MUFG Bank LTD the Japan Agreement The Japan Agreement allows us to assign third party accounts receivable to the
Purchaser and allows for the sale of up to 3 000 approximately 20 0 using the exchange rate as of September 30 2023 with limits set between individual customers The terms of the agreement expire one year after the date of execution and will be renewed annually unless either party notifies of its intent not to renew The assigned receivables will be discounted using the funding rate from the Tokyo Interbank Market plus 1 1
Historically we have generated and expect to continue to generate favorable cash flows from operations Our cash flows are affected by the seasonality of our Sun Care business typically resulting in higher net sales and increased cash generated in the second and third quarter of each fiscal year We believe our cash on hand cash flows from operations and borrowing capacity under the Revolving Credit Facility will be sufficient to satisfy our future working capital requirements interest payments R D activities capital expenditures and other financing requirements for at least the next 12 months We will continue to monitor our cash flows spending and liquidity needs
Short term financing needs primarily consist of working capital requirements and interest payments on our long term debt Long term financing needs will depend largely on potential growth opportunities including acquisition activity and repayment or refinancing of our long term debt obligations Our long term liquidity may be influenced by our ability to borrow additional funds renegotiate existing debt and raise equity under terms that are favorable to us We may from time to time seek to repurchase shares of our common stock Such repurchases if any will depend on prevailing market conditions our liquidity requirements contractual restrictions and other factors
In fiscal 2025 we expect our total capital expenditures to be in the range of 60 to 70 primarily on maintenance and productivity efforts across manufacturing facilities new product development and information technology system enhancements While we intend to fund these capital expenditures with cash generated from operations we may also utilize our borrowing facilities
During fiscal 2024 we did not make any contributions to our pension and post retirement plans Due to the election of certain terms of the American Rescue Plan Act we were not required to make any cash contributions to our pension and postretirement plans in fiscal 2023 Pension contributions required beyond fiscal 2025 represent future pension payments to comply with local funding requirements in the U S only The projected contributions for the U S pension plans total 6 5 in fiscal 2025 7 0 in fiscal 2026 5 0 in fiscal 2027 4 5 in fiscal 2028 and 4 2 in fiscal 2029 Estimated contributions beyond fiscal 2029 are not determinable The Company may also elect to make discretionary contributions
The Revolving Credit Facility governing our outstanding debt at September 30 2024 contains certain customary representations and warranties financial covenants covenants restricting our ability to take certain actions affirmative covenants and provisions relating to events of default Under the terms of the Revolving Credit Facility the ratio of our indebtedness to our earnings before interest taxes depreciation and amortization EBITDA as defined in the agreement and detailed below cannot be greater than 4 0 to 1 0 however there is an exception for acquisition activity In addition under the Revolving Credit Facility the ratio of our EBITDA to total interest expense must exceed 3 0 to 1 0 If we fail to comply with these covenants or with other requirements of the Revolving Credit Facility the lenders have the right to accelerate the maturity of the debt Acceleration under one of our facilities would trigger cross defaults on our other borrowings Under the Revolving Credit Facility EBITDA is defined as net earnings as adjusted to add back interest expense income taxes depreciation and amortization all of which are determined in accordance with GAAP In addition the Revolving Credit Facility allows certain non cash charges such as stock award amortization and asset write offs including but not limited to impairment and accelerated depreciation and operating expense reductions or synergies to be added back in determining EBITDA for purposes of the indebtedness ratio Total debt and interest expense are calculated in accordance with GAAP
Cash flow from operating activities was 231 0 in fiscal 2024 as compared to 216 1 in fiscal 2023 The increase in fiscal 2024 was driven by favorable changes in working capital partially offset by decreased earnings
Cash flow used by investing activities was 62 4 in fiscal 2024 as compared to 50 5 in fiscal 2023 Capital expenditures were 56 5 during fiscal 2024 compared to 49 5 in the prior year period The increase in cash used by investing activities is also due to an outflow of 6 5 for an investment in a business
Net cash used by financing activities was 179 4 in fiscal 2024 as compared to 146 5 in fiscal 2023 During fiscal 2024 we had net borrowings of 88 0 under the Revolving Credit Facility compared to 33 0 in the prior year period During fiscal 2024 we repurchased 58 5 of our common stock under our 2018 Board authorization to repurchase our common stock the Repurchase Plan compared to 75 2 in the prior year period Dividend payments totaled 30 7 in fiscal 2024 compared to 31 5 in the prior year period We had financing outflows for employee equity awards held for taxes totaling 7 3 in fiscal 2024 compared to 9 0 in the prior year period
On October 31 2024 the Board declared a quarterly cash dividend of 0 15 per common share for the fourth fiscal quarter of 2024 The dividend will be paid on January 8 2025 to shareholders of record as the close of business on December 3 2024
Management recognizes that inflationary pressures may have an adverse effect on our company through higher material costs labor and transportation costs asset replacement costs and related depreciation healthcare and other costs We continued to navigate the challenging and uncertain inflationary environment and resultant cost pressure with a combination of productivity efforts to achieve efficiencies and lower costs to our Cost of products sold and SG A expenses and increase focus on revenue management We can provide no assurance that such mitigation will be available in the future
Customer orders for sun care products within our Sun and Skin Care segment are highly seasonal This has historically resulted in higher sun care sales to retailers during the late winter through mid summer months Within our Wet Shave segment sales of women s products are moderately seasonal with increased consumer demand in the spring and summer months See Our business is subject to seasonal volatility in Item 1A Risk Factors
Certain net sales and costs of our international operations are denominated in the local currency of the respective countries As such sales and profits from these subsidiaries may be impacted by fluctuations in the value of these local currencies relative to the U S dollar We also have significant intercompany financing arrangements that may result in gains and losses in our results of operations In an effort to mitigate the impact of currency exchange rate effects we may hedge certain operational and intercompany transactions however our hedging strategies may not fully offset gains and losses recognized in our results of operations
We are subject to a number of legal proceedings in various jurisdictions arising out of our operations during the ordinary course of business Many of these legal matters are in preliminary stages and involve complex issues of law and fact and may proceed for protracted periods of time The amount of liability if any from these proceedings cannot be determined with certainty We review legal proceedings and claims regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions We establish accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated and discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued if such disclosure is necessary for its financial statements to not be misleading We do not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated Based upon present information we believe that the Company s liability if any arising from such pending legal proceedings asserted legal claims and known potential legal claims which are likely to be asserted is not reasonably likely to be material to its financial position results of operations or cash flows when taking into account established accruals for estimated liabilities
We have significant contractual obligations to fulfill our business operations including the repayment of short and long term debt periodic interest payments minimum levels of pension funding and other obligations including payments for various leases of real estate vehicles and equipment and minimum fixed costs to be paid to third party logistics vendors We are also party to various service and supply contracts that generally extend one to three months These arrangements are primarily individual short term purchase orders for routine goods and services at market prices which are part of our normal operations and are reflected in historical operating cash flow trends These contracts can generally be canceled at our option at any time We do not believe such arrangements will adversely affect our liquidity position In addition we have various commitments related to service and supply contracts that contain penalty provisions for early termination Because of the short period between order and shipment date generally less than one month for most of our orders the dollar amount of current backlog is not material and is not considered to be a reliable indicator of future sales volume Generally sales to our top customers are made pursuant to purchase orders and we do not have supply agreements or guarantees of minimum purchases from them As a result these customers may cancel their purchase orders or reschedule or decrease their level of purchases from us at any time As of September 30 2024 we do not believe such purchase arrangements or termination penalties will have a significant effect on our results of operations financial position or liquidity position in the future
Our operations like those of other companies are subject to various federal state local and foreign laws and regulations intended to protect public health and the environment These regulations relate primarily to worker safety air and water quality underground fuel storage tanks and waste handling and disposal Accrued environmental costs at September 30 2024 and 2023 were 7 9 and 9 3 respectively It is difficult to quantify with reasonable certainty the cost of environmental matters particularly remediation and future capital expenditures for environmental control equipment Total environmental capital expenditures and operating expenses are not expected to have a material effect on our total capital and operating expenditures consolidated earnings or competitive position However current environmental spending estimates could be modified as a result of changes in our plans or our understanding of underlying facts changes in legal requirements including any requirements related to global climate change or other factors
The methods estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements Specific areas among others requiring the application of management s estimates and judgment include assumptions pertaining to accruals for consumer and trade promotion programs pension and postretirement benefit costs future cash flows associated with impairment testing of goodwill and other long lived assets uncertain tax positions the reinvestment of undistributed foreign earnings and tax valuation allowances On an ongoing basis we evaluate our estimates but actual results could differ materially from those estimates
Our most critical accounting estimates are revenue recognition pension and other postretirement benefits the valuation of long lived assets including property plant and equipment income taxes including uncertain tax positions and valuation related to goodwill and intangible assets A summary of our significant accounting policies is contained in Note 2 of Notes to Consolidated Financial Statements This listing is not intended to be a comprehensive list of all of our accounting policies
Our revenue is generated by the sales of finished products to customers Those sales primarily contain a single performance obligation and revenue is recognized at a single point in time when that control of goods passes to the customer which is predominantly on the date of receipt by the customer
The Company allows for returns of products under limited circumstances Customers are required to pay for the Sun Care product purchased during the season under the required terms Under certain circumstances we allow customers to return Sun Care products that have not been sold by the end of the Sun Care season which is normal practice in the Sun Care industry At the time of sale we reduce net sales and cost of products sold for anticipated returns based upon an estimated return level The timing of returns of Sun Care products can vary in different regions based on climate and other factors However the majority of returns occur in the U S from September through January following the summer Sun Care season We estimate the level of Sun Care returns as the Sun Care season progresses using a variety of inputs including historical experience consumption trends during the Sun Care season obsolescence factors including expiration dates and inventory positions at key retailers We monitor shipment activity and inventory levels at key retailers during the season in an effort to more accurately estimate potential returns This allows us to manage shipment activity to our customers especially in the latter stages of the Sun Care season to reduce the potential for returned product The level of returns may fluctuate from our estimates due to several factors including but not limited to weather conditions customer inventory levels and competitive
activity Based on our fiscal 2024 Sun Care shipments each percentage point change in our returns rate would have impacted our reported net sales by 4 7 and our reported operating income by 4 8 At September 30 2024 and 2023 our reserve on the Consolidated Balance Sheet for returns was 50 3 and 53 5 respectively
We offer a variety of trade promotional programs primarily to our retail customers designed to promote sales of our products Such programs require periodic payments and allowances based on estimated results of specific programs and are recorded as a reduction to net sales We accrue at the time of sale the estimated total payments and allowances associated with each transaction Additionally we offer programs directly to consumers to promote the sale of our products Promotions which reduce the ultimate consumer sale prices are recorded as a reduction of net sales at the time the promotional offer is made generally using estimated redemption and participation levels The actual amounts paid may be different from such estimates These differences which have historically not been significant are recognized as a change in estimate in a subsequent period
The determination of our obligation and expense for pension and other postretirement benefits is dependent on certain assumptions developed by us and used by actuaries in calculating such amounts Assumptions include among others the discount rate the expected long term rate of return on plan assets and future salary increases where applicable Actual results that differ from assumptions made are recognized on the balance sheet and subsequently amortized to earnings over future periods Significant differences in actual experience or significant changes in macroeconomic conditions resulting in changes to assumptions may materially affect pension and other post retirement obligations In determining the discount rate we use the yield on high quality bonds that coincide with the cash flows of our plans estimated payouts For our U S plans which represent our most significant obligations we use the Mercer yield curve in determining the discount rates
We utilize a spot discount rate approach to estimate service and interest components of net periodic benefit cost for our pension benefits The spot discount rate approach applies the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows and is a more precise application of the yield curve spot rates used in the traditional single discount rate approach
Of the assumptions listed above changes in the expected long term rate of return on plan assets and changes in the discount rate used in developing plan obligations will likely have the most significant impact on our annual earnings prospectively Based on plan assets at September 30 2024 a one percentage point decrease or increase in expected asset returns would increase or decrease our pension expense by approximately 4 2 In addition it may increase and accelerate the rate of required pension contributions in the future Uncertainty related to economic markets and the availability of credit may produce changes in the yields on corporate bonds rated as high quality As a result discount rates based on high quality corporate bonds may increase or decrease leading to lower or higher pension obligations respectively A one percentage point decrease in the discount rate would increase pension obligations by approximately 49 5 at September 30 2024
As allowed under GAAP our U S qualified pension plan uses market related value which recognizes market appreciation or depreciation in the portfolio over five years thereby reducing the short term impact of market fluctuations
We have historically provided defined benefit pension plans to our eligible employees former employees and retirees We fund our pension plans in compliance with the Employee Retirement Income Security Act of 1974 or local funding requirements
We periodically evaluate our long lived assets including property plant and equipment goodwill and intangible assets for potential impairment indicators Judgments regarding the existence of impairment indicators including lower than expected cash flows from acquired businesses are based on legal factors market conditions and operational performance Future events could cause us to conclude that impairment indicators exist We estimate fair value using valuation techniques such as discounted cash flows This requires management to make assumptions regarding future income working capital and discount rates which would affect the impairment calculation
Our annual effective income tax rate is determined based on our income statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes Tax law requires certain items to be included in the tax return at different times than the items reflected in our financial statements Some of these differences are permanent
such as expenses that are not deductible in our tax return and some differences are temporary reversing over time such as depreciation expense These temporary differences create deferred tax assets and liabilities
Deferred tax assets generally represent the tax effect of items that can be used as a tax deduction or credit in future years for which we have already recorded the tax benefit in our income statement Deferred tax liabilities generally represent tax expense recognized in our financial statements for which payment has been deferred the tax effect of expenditures for which a deduction has already been taken in our tax return but has not yet been recognized in our financial statements or assets recorded at estimated fair value in business combinations for which there was no corresponding tax basis adjustment
We estimate income taxes and the effective income tax rate in each jurisdiction that we operate This involves estimating taxable earnings specific taxable and deductible items the likelihood of generating sufficient future taxable income to utilize deferred tax assets the portion of the income of foreign subsidiaries that is expected to be remitted to the U S and be taxable and possible exposures related to future tax audits Deferred tax assets are evaluated on a subsidiary by subsidiary basis to ensure that the asset will be realized Valuation allowances are established when the realization is not deemed to be more likely than not Future performance is monitored and when objectively measurable operating trends change adjustments are made to the valuation allowances accordingly To the extent the estimates described above change adjustments to income taxes are made in the period in which the estimate is changed
We operate in multiple jurisdictions with complex tax and regulatory environments which are subject to differing interpretations by the taxpayer and the taxing authorities At times we may take positions that management believes are supportable but are potentially subject to successful challenges by the appropriate taxing authority We evaluate our tax positions and establish liabilities in accordance with guidance governing accounting for uncertainty in income taxes We review these tax uncertainties in light of the changing facts and circumstances such as the progress of tax audits and adjust them accordingly
Certain business acquisitions have resulted in the recording of goodwill and trade names and brands which are not amortized At September 30 2024 and 2023 we had goodwill of 1 338 6 and 1 331 4 respectively We have indefinite lived trade names and brands with a carrying value of approximately 597 7 and 592 9 at September 30 2024 and 2023 respectively We perform our annual impairment assessment for goodwill and indefinite lived intangible assets as of July 1st and more frequently if indicators of impairment exist We consider qualitative factors to assess if it is more likely than not that the fair value for goodwill or indefinite lived intangible assets is below the carrying amount We may also elect to bypass the qualitative assessment and perform a quantitative assessment
In conducting a qualitative assessment the Company analyzes a variety of events and factors that may influence the fair value of the reporting unit or indefinite lived intangible asset including but not limited to the results of prior quantitative assessments performed macroeconomic conditions industry and market considerations cost factors overall financial performance share price and other relevant factors Significant judgment is used to evaluate the totality of these events and factors to make a determination of whether it is more likely than not that the fair value of the reporting unit or indefinite lived intangible is less than its carrying value
For our annual impairment assessment as of July 1 2024 the Company elected to bypass the qualitative assessment and perform a quantitative assessment to evaluate certain goodwill reporting units and certain trade names and brands The Company elected to perform a qualitative assessment on the other goodwill reporting units and indefinite lived intangible assets noting no events that indicated that the fair value was less than the carrying value that would require a quantitative impairment assessment
The income approach uses the discounted cash flow method and incorporates each reporting unit s projections of estimated operating results and future cash flows and a market participant discount rate based on a weighted average cost of capital The projections for future cash flows are based on the company s annual business and long term strategic plan to determine a five year period of forecasted cash flows The financial projections reflect management s best estimate of economic and market conditions over the five year projected period including forecasted revenue growth EBITDA margin tax rate capital
The market approach uses the guideline public company method to calculate the fair value of each reporting unit by applying earnings multiples to the operating performance of each reporting unit The multiples are derived from comparable publicly traded companies with operating and investment characteristics similar to the reporting unit The multiples are adjusted given the specific characteristics of the reporting unit including its position in the market relative to the guideline companies and applied to the reporting unit s operating data to arrive at an indication of fair value
We also corroborate the fair value through a market capitalization reconciliation to determine whether the implied control premium is reasonable based on recent market transactions and other qualitative considerations
The key assumptions for the market and income approaches used to determine fair value of the reporting units are updated at least annually Those assumptions and estimates include market multiples determination of comparable publicly traded companies discount rates terminal growth rates and future levels of revenue growth and EBITDA margins based upon our annual business and strategic plan The assumptions used for the income approach include a weighted average cost of capital of 11 0 and terminal growth rates of 2 50
Based on the results of our annual quantitative assessment performed as of July 1 2024 the fair values of our Wet Shave Skin Care and Feminine Care reporting units exceeded their respective carrying values by 29 29 and 21 respectively
If actual results are not consistent with management s estimates and assumptions a material impairment charge of goodwill could occur which would have a material adverse effect on our consolidated financial statements
The Company elected to bypass the qualitative assessment and perform a quantitative assessment of the Schick and Bulldog trade names We performed a qualitative test of impairment for all other indefinite lived intangible assets
In performing a quantitative assessment of these trade names we estimate the fair value using the relief from royalty method which requires assumptions related to projected revenues from our annual and strategic plans assumed royalty rates that could be payable if we did not own the trade name or brand and a market participant discount rate based on a weighted average cost of capital If the estimated fair value of the indefinite lived intangible asset is less than its carrying value we would recognize an impairment loss
The key assumptions used in our relief from royalty model included revenue growth rates the discount rate terminal growth rate and assumed royalty rate Revenue growth assumptions are based on historical trends and management s expectations for future growth by brand The discount rates were based on a weighted average cost of capital utilizing industry market data of similar publicly traded companies Terminal growth rates are based on industry market data We estimated royalty rates based on the operating profits of the brand The assumptions used for the relief from royalty method include a weighted average cost of capital of 11 25 terminal growth rate ranging from 0 25 to 2 50 and royalty rates ranging from 2 0 to 5 0
Based on the results of our annual quantitative assessment performed as of July 1 2024 the fair values of our Schick and Bulldog trade names exceeded their respective carrying values by 70 and 14 respectively
If actual results are not consistent with management s estimate and assumptions a material impairment charge of our trade names and brands could occur which could have a material adverse effect on our consolidated financial statements
Determining the fair value of a reporting unit and indefinite lived intangible assets requires the use of significant judgment estimates and assumptions While we believe that the estimates and assumptions underlying the valuation methodologies are reasonable these estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of the charge The results of an impairment analysis are as of a point in time There is no assurance that actual future earnings or cash flows of the reporting units will not decline significantly from these projections
The market risk inherent in our financial instruments and positions represents the potential loss arising from adverse changes in currency rates commodity prices interest rates and our stock price The following risk management discussion and the estimated amounts generated from the sensitivity analysis are forward looking statements of market risk assuming certain adverse market conditions occur Company policy allows derivatives to be used only for identifiable exposures and therefore we do not enter into hedges for trading purposes where the sole objective is to generate profits
A significant share of our sales is tied to currencies other than the U S dollar our reporting currency As such a weakening of currencies relative to the U S dollar can have a negative impact to reported earnings Conversely strengthening of currencies relative to the U S dollar can improve reported results The primary currencies to which we are exposed include the euro the Japanese yen the British pound the Canadian dollar and the Australian dollar
We do business in certain developing markets which may be susceptible to greater volatility of inflation and currency exchange rates as well as government pricing and import controls While the activity is not considered material in relation to the consolidated company as a whole there could be negative impacts to operating results in certain markets if inflationary pressures exchange volatility and government controls negatively impact our ability to operate effectively and profitably
At September 30 2024 we maintained a cash flow hedging program related to foreign currency risk These derivative instruments have a high correlation to the underlying exposure being hedged and have been deemed highly effective by the Company for accounting purposes in offsetting the associated risk
We enter into forward currency contracts to hedge the cash flow uncertainty associated with currency fluctuations These transactions are accounted for as cash flow hedges We had unrealized pre tax gains of 2 4 and 4 4 at September 30 2024 and 2023 respectively on these forward currency contracts accounted for as cash flow hedges included in Accumulated other comprehensive loss AOCI Assuming foreign exchange rates versus the U S dollar remain at September 30 2024 levels over the next 12 months the majority of the pre tax gain included in AOCI at September 30 2024 is expected to be included in Other expense income net Contract maturities for these hedges extend into fiscal year 2026 There were 64 open foreign currency contracts at September 30 2024 with a notional value of 106 5
Our foreign subsidiaries enter into internal and external transactions in the ordinary course of business that create non functional currency balance sheet positions at the foreign subsidiary level These exposures are generally the result of intercompany purchases intercompany loans and to a lesser extent external purchases and are revalued in the foreign subsidiary s local currency at the end of each period Changes in the value of the non functional currency balance sheet positions in relation to the foreign subsidiary s local currency result in an exchange gain or loss recorded in Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income The primary currency to which our foreign subsidiaries are exposed is the U S dollar
To mitigate these balance sheet exposures we enter into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes Any gains or losses on these contracts are expected to be offset by exchange gains or losses on the underlying exposure thus they are not subject to significant market risk The change in the estimated fair value of the foreign currency contracts resulted in gains of 0 4 and 3 0 for fiscal 2024 and 2023 respectively which were recorded in Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income There was one open foreign currency derivative contract with a notional value of 9 0 which was not designated as a cash flow hedge at September 30 2024
We use raw materials that are subject to price volatility At times we have used and may in the future use hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain materials and commodities At September 30 2024 there were no open derivative or hedging instruments for future purchases of raw materials or commodities
Our exposure to interest rate risk relates primarily to our variable rate debt instruments which currently bear interest based on LIBOR plus margin As of September 30 2024 our outstanding debt included 34 0 related to our Revolving Credit Facility and international variable rate note payable Assuming a one percent increase in the applicable interest rates annual interest expense would increase by approximately 0 3
The preparation and integrity of the financial statements of Edgewell Personal Care Company the Company are the responsibility of its management These statements have been prepared in conformance with generally accepted accounting principles GAAP in the United States of America and in the opinion of management fairly present the Company s financial position results of operations and cash flows
The Company maintains accounting and internal control systems which it believes are adequate to provide reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition and that financial records are reliable for preparing financial statements The selection and training of qualified personnel the establishment and communication of accounting and administrative policies and procedures and a program of internal audits are important elements of these control systems
The Board of Directors through its Audit Committee consisting solely of non management directors meets periodically with management internal audit and the independent auditors to discuss audit and financial reporting matters To ensure independence our auditor PricewaterhouseCoopers LLP has direct access to the Audit Committee
We have audited the accompanying consolidated balance sheets of Edgewell Personal Care Company and its subsidiaries the Company as of September 30 2024 and 2023 and the related consolidated statements of earnings and comprehensive income of changes in shareholders equity and of cash flows for each of the three years in the period ended September 30 2024 including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended September 30 2024 appearing under Item 15 2 collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of September 30 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of September 30 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended September 30 2024 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of September 30 2024 based on criteria established in
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in Management s Report on Internal Control over Financial Reporting appearing under Item 9A Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that i relates to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
As described in Notes 2 and 9 to the consolidated financial statements the Company s consolidated goodwill balance as of September 30 2024 was 1 338 6 million and the goodwill associated with the Sun and Skin Care and Feminine Care segments was 355 4 million and 206 2 million respectively Goodwill from the Skin Care reporting unit makes up a significant portion of the goodwill related to the Sun and Skin Care segment Management performs their annual impairment assessment for goodwill as of July 1 or more frequently if indicators of impairment exist The goodwill impairment test compares a reporting unit s fair value to its carrying amount When a quantitative test is performed management estimates each reporting unit s fair value using a weighted income approach and market approach As disclosed by management determining the fair value of a reporting unit requires the use of significant judgment estimates and assumptions The income approach uses the discounted cash flow method and the key assumptions include discount rates terminal growth rates and future levels of revenue growth and EBITDA margins The market approach uses the guideline public company method to calculate the fair value of each reporting unit by applying earnings multiples to the operating performance of each reporting unit and the key assumptions include market multiples and determination of comparable publicly traded companies
The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Skin Care and Feminine Care reporting units is a critical audit matter are i the significant judgment by management when developing the fair value estimate of the Skin Care and Feminine Care reporting units ii a high degree of auditor judgment subjectivity and effort in performing procedures and evaluating management s significant assumptions related to revenue growth rates and discount rate used in the discounted cash flow method for the Skin Care reporting unit and revenue growth rates terminal growth rate EBITDA margins and discount rate used in the discounted cash flow method for the Feminine Care reporting unit and iii the audit effort involved the use of professionals with specialized skill and knowledge
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to management s goodwill impairment assessments including controls over the valuation of the Company s reporting units These procedures also included among others i testing management s process for developing the fair value estimate of the Skin Care and Feminine Care reporting units ii evaluating the appropriateness of the discounted cash flow method used by management iii testing the completeness and accuracy of underlying data used in the discounted cash flow method and iv evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates and discount rate for the Skin Care reporting unit and revenue growth rates terminal growth rate EBITDA margins and discount rate for the Feminine Care reporting unit Evaluating management s assumptions related to revenue growth rates for the Skin Care reporting unit and revenue growth rates and EBITDA margins for the Feminine Care reporting unit involved evaluating whether the assumptions used by management were reasonable considering i the current and past performance of the Skin Care and Feminine Care reporting units ii the consistency with external relevant industry forecasts and macroeconomic conditions iii management s historical forecasting accuracy iv management s objectives and strategies and v whether the assumptions were consistent with evidence obtained in other areas of the audit Professionals with specialized skill and knowledge were used to assist in evaluating i the appropriateness of the Company s discounted cash flow method and ii the reasonableness of the discount rate assumptions for the Skin Care and Feminine Care reporting units
Edgewell Personal Care Company and its subsidiaries collectively Edgewell or the Company is one of the world s largest manufacturers and marketers of personal care products in the wet shave sun and skin care and feminine care categories With operations in over 20 countries the Company s products are widely available in more than 50 countries
consists of products sold under the Schick Wilkinson Sword Edge Skintimate Billie Shave Guard and our custom brands group formerly sold under our Shave Guard and Personna brands as well as non branded products The Company s wet shave products include razor handles and refillable blades disposable shave products and shaving gels and creams
The accompanying Consolidated Financial Statements include the accounts of the Company and its controlled subsidiaries and have been prepared in accordance with United States U S generally accepted accounting principles GAAP under the rules and regulations of the U S Securities and Exchange Commission the SEC The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses Actual results may differ materially from those estimates All intercompany balances and transactions have been eliminated in consolidation and in the opinion of management all normal recurring adjustments considered necessary for a fair presentation have been included
On November 29 2021 the Acquisition Date the Company completed the acquisition of Billie Inc Billie the Acquisition a leading U S based consumer brand company that offers a broad portfolio of personal care products for women The results of Billie for the post acquisition period are included within the Company s results since the Acquisition Date For more information on the Acquisition see Note 3 of Notes to the Consolidated Financial Statements
Cash equivalents are considered to be highly liquid investments with a maturity of three months or less when purchased At September 30 2024 the Company had 209 1 in available cash and cash equivalents a significant portion of which was outside of the U S The Company has extensive operations outside of the U S including a significant manufacturing footprint The Company manages its worldwide cash requirements by reviewing available funds among the many subsidiaries through which it conducts its business and the cost effectiveness with which those funds can be accessed The repatriation of cash balances from certain of the Company s subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements however those balances are generally available without legal restrictions to fund ordinary business operations
The Consolidated Statements of Cash Flows are prepared using the indirect method which reconciles Net earnings to Net cash from operating activities The reconciliation adjustments include the removal of timing differences between the occurrence of operating receipts and payments and their recognition in Net earnings The adjustments also remove cash flows arising from investing and financing activities which are presented separately from operating activities Cash flows from foreign currency transactions and operations are translated at an average exchange rate for the period Cash flows from hedging activities are included in the same category as the items being hedged which are primarily operating activities Cash payments related to income taxes are classified as operating activities
Trade receivables are stated at their net realizable value The allowance for doubtful accounts reflects the Company s best estimate of probable losses inherent in the trade receivables portfolio determined on the basis of historical experience specific allowances for known troubled accounts and other currently available information Bad debt expense is included in Selling general and administrative expense SG A in the Consolidated Statements of Earnings and Comprehensive Income The Company has two accounts receivable factoring programs For further discussion see Note 11 of Notes to Consolidated Financial Statements
Capitalized software costs are included in Property plant and equipment net These costs are amortized using the straight line method over periods of related benefit ranging from three to seven years Expenditures related to capitalized software are included within Capital expenditures in the Consolidated Statements of Cash Flows
Property plant and equipment net PP E is stated at historical cost PP E acquired as part of a business combination is recorded at estimated fair value Expenditures for new facilities and expenditures that substantially increase the useful life of property including interest during construction are capitalized and reported as Capital expenditures in the accompanying Consolidated Statements of Cash Flows Maintenance repairs and minor renewals are expensed as incurred When property is retired or otherwise disposed of the related cost and accumulated depreciation are removed from the accounts and gains or losses on the disposition are reflected in Net earnings Depreciation is generally provided on the straight line basis by charges to earnings at rates based on estimated useful lives Estimated useful lives range from two to 10 years for machinery and equipment and three to 30 years for buildings and building improvements
Estimated useful lives are periodically reviewed and when appropriate changes are made and accounted for prospectively When certain events or changes in operating conditions occur asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts
The Company leases certain offices and manufacturing facilities warehouses employee vehicles and certain manufacturing related equipment A lease is defined as a contract or part of a contract that conveys the right to control the use of identified PP E over a contracted period in exchange for payment The Company evaluates if an arrangement is a lease as of the effective date of the agreement Certain leases include an option to either renew or terminate the lease For purposes of calculating lease liabilities these options are included within the lease term when it has become reasonably certain that the Company will exercise such options Operating lease ROU assets and operating lease liabilities are recorded based on the present value of minimum payments over the lease term at the effective date of the lease Any costs in excess of the minimum payments are expensed as incurred as variable lease cost
Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheet All recorded leases are classified as operating leases and lease expense is recognized on a straight line basis over the lease term The Company has elected as an accounting policy not to separate non lease components from lease components and instead account for these components as a single lease component For leases that do not provide an implicit rate the Company uses its secured incremental borrowing rate based on the information available for leases including the lease term and interest rate environment in the country in which the lease exists to calculate the present value of the future lease payments
The Company allocates the cost of an acquired business to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition The excess value of the cost of an acquired business over the estimated fair value of the assets acquired and liabilities assumed is recognized as goodwill The valuation of the acquired assets and liabilities will impact the determination of future operating results
The Company uses a variety of information sources to determine the value of acquired assets and liabilities including third party appraisers for the values and lives of property identifiable intangibles and inventories actuaries for defined benefit retirement plans and legal counsel or other experts to assess the obligations associated with legal environmental or other claims
We perform our annual impairment assessment for goodwill and indefinite lived intangible assets as of July 1st and more frequently if indicators of impairment exist We consider qualitative factors to assess if it is more likely than not that the fair value for goodwill or indefinite lived intangible assets is below the carrying amount We may also elect to bypass the qualitative assessment and perform a quantitative assessment
In conducting a qualitative assessment the Company analyzes a variety of events and factors that may influence the fair value of the reporting unit or indefinite lived intangible asset including but not limited to macroeconomic conditions industry and market considerations cost factors overall financial performance share price and other relevant factors
We have four reporting units for which we assess for impairment defined as Wet Shave Sun Care Skin Care and Feminine Care We evaluate goodwill for impairment using either a qualitative or quantitative assessment
When the qualitative assessment is not utilized and a quantitative test is performed we estimate each reporting unit s fair value using a weighted income approach and market approach The income approach uses the reporting unit s projections of estimated operating results and cash flows that are discounted using a market participant discount rate based on a weighted average cost of capital The market approach uses market multiples of comparable companies
The goodwill impairment test compares a reporting unit s fair value to its carrying amount If the fair value of the reporting unit exceeds its carrying amount no impairment loss is measured If the carrying amount of a reporting unit exceeds the reporting unit s fair value then a goodwill impairment loss is measured at the amount by which a reporting unit s carrying amount exceeds its fair value not to exceed the carrying amount of goodwill
When a quantitative test is performed we determine the fair value using one of two income approaches i the multi period excess earnings method or ii the relief from royalty method These methods require assumptions regarding future revenue and operating margin growth estimated returns on assets used in the operations including net working capital fixed assets and intangible assets market participant discount rates based on a weighted average cost of capital and assumed royalty rates if we did not own the trade name
Other definite life intangible assets have a remaining weighted average life of approximately eight years are amortized on a straight line basis over expected lives of three to 25 years These intangible assets are assessed for impairment when impairment indicators are present
The Company reviews long lived assets other than goodwill and other intangible assets for impairment when events or changes in business circumstances indicate that the remaining useful life may warrant revision or that the carrying amount of the long lived asset may not be fully recoverable The Company performs an undiscounted cash flow analysis to determine if impairment exists for an asset or asset group If impairment is determined to exist any related impairment loss is calculated based on estimated fair value Impairment losses on assets to be disposed of if any are based on the estimated proceeds to be received less cost of disposal
Our principal revenue streams can be divided into i sale of personal care products primarily through retailers in North America ii sale of personal care products through a combination of retailers and distributors internationally and iii production and sale of private brands products in North America and internationally that are made to customer specifications
The Company s revenue is generated from the sale of its products Revenue is recognized when the customer obtains control of the goods which occurs when the ability to use and obtain benefits from the goods are passed to the customer most commonly upon the delivery of goods to the customer Discounts are offered to customers for early payment and an estimate of discounts is recorded as a reduction of Net sales in the same period as the sale The Company s standard sales terms are final and returns or exchanges are not permitted with the exception of end of season returns for Sun Care products Reserves are established and recorded in cases where the right of return exists for a particular sale
The Company assesses the goods promised in its customers purchase orders and identifies a performance obligation to transfer goods or a bundle of goods that is distinct To identify the performance obligations the Company considers all the goods promised whether explicitly stated or implied based on customary business practices The Company s purchase orders are short term in nature lasting less than one year and contain a single delivery element For a purchase order that has more than one performance obligation the Company allocates the total consideration to each distinct performance obligation on a relative stand alone selling price basis The Company does not exclude variable consideration in determining the remaining value of performance obligations
The Company records sales at the time that control of goods pass to the customer The terms of these sales vary but the following conditions are applicable to all sales i the sales arrangement is evidenced by purchase orders submitted by customers ii the selling price is fixed or determinable iii title to the product has transferred iv there is an obligation to pay at a specified date without any additional conditions or actions required by the Company and v collectability is reasonably assured Simultaneously with the sale the Company reduces Net sales and Cost of products sold and reserves amounts on its Consolidated Balance Sheet for anticipated returns based upon an estimated return level in accordance with GAAP The Company also allows for returns of other products under limited circumstances Customers are required to pay for the Sun Care product purchased during the season under the required terms Under certain circumstances the Company allows customers to return Sun Care products that have not been sold by the end of the Sun Care season which is normal practice in the Sun Care industry The timing of returns of Sun Care products can vary in different regions based on climate and other factors However the majority of returns occur in the U S from September through January following the summer Sun Care season The Company estimates the level of Sun Care returns as the Sun Care season progresses using a variety of inputs including historical experience consumption trends during the Sun Care season obsolescence factors including expiration dates and inventory positions at key retailers The Company monitors shipment activity and inventory levels at key retailers during the Sun Care season in an effort to more accurately estimate potential returns This allows the Company to manage shipment activity to its customers especially in the latter stages of the Sun Care season to reduce the potential for returned product The Company also allows for returns of other products under limited circumstances Non Sun Care returns are evaluated each period based on communications with customers and other issues known as of period end The Company had a reserve for returns of 50 3 and 53 5 at September 30 2024 and 2023 respectively
In addition the Company offers a variety of programs such as consumer coupons and rebate programs primarily to its retail customers designed to promote sales of its products Such programs require periodic payments and allowances based on estimated results of specific programs and are recorded as a reduction to Net sales The Company accrues at the time of sale the estimated total payments and allowances associated with each transaction Additionally the Company offers programs directly to consumers to promote the sale of its products Promotions which reduce the ultimate consumer sale price are recorded as a reduction of Net sales at the time the promotional offer is made using estimated redemption and participation levels Taxes the Company collects on behalf of governmental authorities which are generally included in the price to the customer are also recorded as a reduction of Net sales The Company continually assesses the adequacy of accruals for customer and consumer promotional program costs not yet paid To the extent total program payments differ from estimates adjustments may be necessary Historically these adjustments have not been material
The timing of revenue recognition is based on completion of performance obligations through the transfer of goods Standard payment terms with customers require payment after goods have been delivered and risk of ownership has transferred to the customer The Company has contract liabilities as a result of advanced payments received from certain customers before goods have been delivered and all performance obligations have been completed Contract liabilities were 1 1 and 0 6 at September 30 2024 and 2023 respectively and were classified within Other current liabilities on our Consolidated Balance Sheets Substantially all of the amount deferred will be recognized within a year with the significant majority to be captured within a quarter following deferral
Trade receivables are stated at their net realizable value The allowance for doubtful accounts reflects the Company s best estimate of probable losses inherent in its trade receivables portfolio determined by historical experience specific allowances for known troubled accounts and other currently available information
The Company advertises and promotes its products through national and regional media and expenses such activities as incurred Advertising and sales promotion expense reported on the Consolidated Statements of Earnings and Comprehensive Income includes advertising costs of 127 1 116 0 and 125 8 for fiscal 2024 2023 and 2022 respectively
The Company grants restricted share equivalents RSE which generally vest over two to four years The estimated fair value of each grant is estimated on the date of grant based on the current market price of the Company s common shares The original estimate of the grant date fair value is not subsequently revised unless the awards are modified The Company has elected to recognize forfeiture of awards as they occur A portion of the RSE awards provide for the issuance of common stock to certain managerial staff and executive management if the Company achieves specified performance targets For Performance Restricted Share Equivalents PRSE the Company records estimated expense for performance based grants based on target achievement of performance metrics for the three year period for each respective program unless evidence exists that achievement above or below target for the applicable performance metric is more likely to occur For PRSE awards granted during fiscal 2024 2023 and 2022 awards will vest by comparing the Company s total shareholder return TSR during a certain three year period to the respective TSRs of companies in a selected performance peer group The expense recorded for these awards was recorded on a straight line basis based on the grant date fair value using a Monte Carlo simulation
Non qualified stock options Share Options are granted at the market price on the grant date and generally vest ratably over three years The Company calculates the fair value of total share based compensation for Share Options using the Black Scholes option pricing model which utilizes certain assumptions and estimates that have a material impact on the total compensation cost recognized in the Consolidated Financial Statements including the expected term expected share price volatility risk free interest rate and expected dividends The original estimate of the grant date fair value is not subsequently revised unless the awards are modified The Company has elected to recognize forfeiture of awards as they occur
The Company s annual effective income tax rate is determined based on its pre tax income statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes Tax law requires that certain items be included in its federal tax return at different times than the items are reflected in the financial statements Some of these differences are permanent such as expenses that are not deductible in the Company s tax return and some differences are temporary reversing over time such as depreciation expense These temporary differences create deferred tax assets and liabilities
Deferred tax assets generally represent the tax effect of items that can be used as a tax deduction or credit in future years for which the Company has already recorded the tax benefit in the Consolidated Statement of Earnings and Comprehensive
Income Deferred tax liabilities generally represent tax expense recognized in the Company s financial statements for which payment has been deferred the tax effect of expenditures for which a deduction has already been taken in its tax return but has not yet been recognized in its financial statements or assets recorded at estimated fair value in business combinations for which there was no corresponding tax basis adjustment
The Company estimates income taxes and the effective income tax rate in each jurisdiction that it operates This involves estimating taxable earnings specific taxable and deductible items the likelihood of generating sufficient future taxable income to utilize deferred tax assets the portion of the income of foreign subsidiaries that is expected to be remitted to the U S and be taxable and possible exposures related to future tax audits Deferred tax assets are evaluated on a subsidiary by subsidiary basis to ensure that the asset will be realized Valuation allowances are established when the realization is not deemed to be more likely than not Future performance is monitored and when objectively measurable operating trends change adjustments are made to the valuation allowances accordingly To the extent the estimates described above change adjustments to income taxes are made in the period in which the estimate is changed
The Company operates in multiple jurisdictions with complex tax and regulatory environments which are subject to differing interpretations by the taxpayer and the taxing authorities At times the Company may take positions that management believes are supportable but are potentially subject to successful challenges by the appropriate taxing authority The Company evaluates its tax positions and establishes liabilities in accordance with guidance governing accounting for uncertainty in income taxes The Company reviews these tax uncertainties in light of changing facts and circumstances such as the progress of tax audits and adjusts them accordingly
Certain financial instruments are required to be recorded at estimated fair value Changes in assumptions or estimation methods could affect the fair value estimates however the Company does not believe any such changes would have a material impact on its financial condition results of operations or cash flows Other financial instruments including cash and cash equivalents and short term borrowings including notes payable are recorded at cost which approximates estimated fair value The estimated fair values of long term debt and financial instruments are disclosed in Note 18 of Notes to Consolidated Financial Statements
Financial statements of foreign operations where the local currency is the functional currency are translated using end of period exchange rates for assets and liabilities and average exchange rates during the period for results of operations Related translation adjustments are reported as a component within accumulated other comprehensive loss in the shareholders equity section of the Consolidated Balance Sheets except as noted below
Gains and losses resulting from foreign currency transactions are included in Net earnings Foreign currency gains losses of 1 9 1 7 and 7 7 during fiscal 2024 2023 and 2022 respectively were included within Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income The Company uses foreign exchange FX instruments to reduce the risk of FX transactions as described below and in Note 18 of Notes to Consolidated Financial Statements
The Company uses financial instruments from time to time in the management of foreign currency interest rate and other risks that are inherent to its business operations Such instruments are not held or issued for trading purposes
FX instruments including forward currency contracts are used primarily to reduce cash transaction exposures and to a lesser extent to manage other translation exposures FX instruments are selected based on their risk reduction attributes costs and related market conditions The Company has designated certain foreign currency contracts as cash flow hedges for accounting purposes as of September 30 2024
At September 30 2024 the Company had 34 0 of variable rate debt outstanding In the past the Company has used interest rate swaps to hedge the risk of variable rate debt As of September 30 2024 the Company did not have any outstanding interest rate swap agreements
to update income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction The amendments in the ASU also remove disclosures related to certain unrecognized tax benefits and deferred taxes ASU 2023 09 is effective for fiscal years beginning after December 15 2024 The amendments may be applied prospectively or retrospectively and early adoption is permitted We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures
to expand reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses The amendments in the ASU require that a public entity disclose on an annual and interim basis significant segment expenses that are regularly provided to an entity s chief operating decision maker CODM a description of other segment items by reportable segment and any additional measures of a segment s profit or loss used by the CODM when deciding how to allocate resources Annual disclosures are required for fiscal years beginning after December 15 2023 Interim disclosures are required for periods within fiscal years beginning after December 15 2024 Retrospective application is required for all prior periods presented and early adoption is permitted We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures
which requires that a buyer in a supplier finance program disclose additional information about the program for financial statement users including a rollforward of those obligations The Company adopted the standard as of October 1 2023 except for amendments relating to the rollforward requirement which is effective for fiscal years beginning after December 15 2023
The Company has agreements with its suppliers in the ordinary course of business for such supplier finance programs which facilitate participating suppliers ability to finance payment obligations of the Company with designated third party financial institutions The Company is not a party to the arrangements between the suppliers and the third party financial institutions The Company s obligations to its suppliers including amounts due and scheduled payment dates are not impacted by suppliers decisions to finance amounts under these arrangements The payment terms under the programs range from 60 to 120 days As of September 30 2024 and September 30 2023 16 9 and 21 8 respectively were valid obligations under the various programs The obligations are presented as Accounts payable on the Condensed Consolidated Balance Sheets
On November 29 2021 the Company completed the Billie Acquisition for cash consideration of 309 4 net of cash acquired As a result of the Acquisition Billie became a wholly owned subsidiary of the Company The Company accounted for the Acquisition utilizing the acquisition method of accounting which requires assets and liabilities to be recognized based on estimates of their acquisition date fair values The determination of the values of the acquired assets and assumed liabilities including goodwill other intangible assets and deferred taxes requires significant judgement The Company has calculated fair values of the assets and liabilities acquired from Billie including goodwill intangible assets and working capital The Company completed the final fair value determination of the Acquisition in the fourth quarter of fiscal year 2022
The Company used variations of the income approach in determining the fair value of intangible assets acquired in the Billie Acquisition Specifically we utilized the multi period excess earnings method to determine the fair value of the definite lived customer relationships acquired and the relief from royalty method to determine the fair value of the definite lived trade name acquired Our determination of the fair value of the intangible assets acquired involved the use of significant estimates and assumptions related to revenue growth rates discount rates customer attrition rates and royalty rates Edgewell believes that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use
The acquired goodwill represented the value of expansion into new markets and channels of trade and is not deductible for tax purposes The intangible assets acquired consisted primarily of the Billie trade name and customer relationships with a weighted average useful life of 19 years All assets are included in the Company s Wet Shave segment
Billie contributed net sales and a loss before income taxes totaling 93 7 and 1 1 respectively for the post acquisition period ending September 30 2022 in the Consolidated Statements of Earnings and Comprehensive Income The loss before income taxes was driven primarily by amortization expense of acquired intangible assets
The following summarizes the Company s unaudited pro forma consolidated results of operations for the twelve months ended September 30 2022 as though the Billie Acquisition occurred on October 1 2021 The twelve months ended September 30 2022 include results of Billie over the full period presented
The unaudited pro forma consolidated results of operations were adjusted by pre tax amortization expense of 1 3 for the year ended September 30 2022 Additionally pro forma earnings for the twelve months ended September 30 2022 exclude 9 9 of pre tax acquisition costs which were included in the pro forma earnings for the twelve months ended September 30 2021 The pro forma earnings were also adjusted to reflect the capital structure as of the Acquisition Date and all pro forma adjustments have been included with related tax effects The unaudited pro forma consolidated results of operations are not necessarily indicative of the results obtained had the Billie Acquisition occurred on October 1 2020 or of those results that may be obtained in the future Amounts do not reflect any anticipated cost savings or cross selling opportunities expected to result from the Billie Acquisition
In fiscal 2024 the Company continued to take actions to strengthen its operating model simplify the organization and improve manufacturing and supply chain efficiency and productivity As a result of these actions the Company expects to incur restructuring and re positioning charges of approximately 11 in fiscal 2025 To date the Company has incurred restructuring and related charges as follows
In fiscal 2024 the Company announced certain operational and organizational steps designed to streamline the Company s operations and supply chain by consolidating its current Mexico operations in Obregon and Mexico City into a single facility in Aguascalientes Mexico As a result of these actions the Company is anticipating to incur restructuring and re positioning charges of 18 in fiscal 2025 and is expected to be completed by the second quarter of fiscal 2026
There were no material tax loss carryforwards that expired in fiscal 2024 Future expirations of tax loss carryforwards and tax credits if not utilized are not expected to be material from 2025 through 2041 The remaining tax loss carryforwards and credits have no expiration The valuation allowance is primarily attributable to tax loss carryforwards other carryforwards and certain deferred tax assets impacted by the deconsolidation of the Company s Venezuelan subsidiaries
The Company generally repatriates a portion of current year earnings from select non US subsidiaries only if the economic cost of the repatriation is not considered material No provision is made for additional taxes on undistributed earnings of foreign affiliates that are intended and planned to be indefinitely invested in the affiliate The Company intends to and has plans to reinvest these earnings indefinitely in its foreign subsidiaries to amongst other things fund local operations fund pension and other post retirement obligations fund capital projects and to support foreign growth initiatives including potential acquisitions As of September 30 2024 885 8 of foreign subsidiary earnings were considered indefinitely invested in those businesses If the Company repatriated any of the earnings it could be subject to withholding tax and the impact of foreign currency movements Accordingly it is not practical to calculate a specific potential tax exposure Applicable income and withholding taxes will be provided on these earnings in the periods in which they are no longer considered reinvested
Included in the unrecognized tax benefits noted above was 15 7 of uncertain tax positions that would affect the Company s effective tax rate if recognized The Company does not expect any material increases or decreases to its unrecognized tax benefits within 12 months of this reporting date In the Consolidated Balance Sheets unrecognized tax benefits are classified as Other liabilities non current to the extent that payments are not anticipated within one year
The Company classifies accrued interest and penalties related to unrecognized tax benefits in the income tax provision The accrued interest and penalties are not included in the table above The Company accrued 3 9 of interest net of the deferred
tax asset of 0 7 at September 30 2024 and 4 4 of interest net of the deferred tax asset of 0 8 at September 30 2023 Interest was computed on the difference between the tax position recognized in accordance with GAAP and the amount previously taken or expected to be taken in the Company s tax returns
The Company files income tax returns in the U S federal jurisdiction various cities and states and more than 30 foreign jurisdictions where the Company has operations In general U S federal income tax returns for tax years ended September 30 2021 and after remain subject to examination by the Internal Revenue Service the IRS With few exceptions the Company is no longer subject to state and local income tax examinations for years before September 30 2014 The status of international income tax examinations varies by jurisdiction At this time the Company does not anticipate any material adjustments to its financial statements resulting from tax examinations currently in progress
Basic earnings per share is based on the average number of common shares outstanding during the period Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation adjusted for the dilutive effect of share options RSE and PRSE awards
The Company performed its annual goodwill impairment analysis as of July 1 2024 The Company elected to perform a qualitative assessment of goodwill impairment for the Sun Care reporting unit and a quantitative assessment for the Wet Shave Skin Care and Fem Care reporting units Based on the results of the qualitative and quantitative assessments we determined there were no impairments of our reporting units
The Company also performed an impairment assessment in the fourth quarter of fiscal 2024 to determine if any significant events or changes in circumstances had occurred in our reporting units since the annual impairment testing date that would be considered a potential triggering event The Company did not identify any triggering events that would indicate the existence of an impairment of the reporting units
The Company s annual indefinite lived intangible assets impairment analysis was conducted on July 1 2024 The Company elected to bypass the qualitative assessment and perform a quantitative assessment of the Schick and Bulldog trade names We performed a qualitative test of impairment for all other indefinite lived intangible assets Based on the results of the quantitative and qualitative assessments we determined there were no impairments of the carrying values of the indefinite lived intangible assets
The Company also performed an impairment assessment in the fourth quarter of fiscal 2024 to determine if any significant events or changes in circumstances had occurred in our indefinite lived intangible assets since the annual impairment testing date that would be considered a potential triggering event The Company did not identify any triggering events that would indicate the existence of an impairment of the indefinite lived intangible assets
Lease expense is included in Cost of products sold or SG A expense based on the nature of the lease Short term lease expense and variable lease expense are excluded from this amount and are not material
In connection with the consolidation of the Mexico facilities See Note 4 of the Notes to Consolidated Financial Statements the Company entered into a lease agreement pursuant to which it had agreed to lease a 593 816 square foot manufacturing facility in Aguascalientes Mexico the Mexico Lease The Company recognized a right of use asset and lease liability of 31 6 as of September 30 2024 which was determined to be the commencement date as defined under ASC 842 Leases The Company elected the practical expedient which includes all lease costs as a lease component Monthly payments included in the lease liability are 0 4 adjusted annually for the increase in CPI The Company used a lease term of 182 months of which the first two months are rent free and an incremental borrowing rate of 11 64 The Mexico Lease contains one five year lease extension option The Company also has the option to enter into a subsequent 15 year lease agreement on substantially the same terms as the Mexico Lease the Subsequent Lease including an option to extend the term of the Subsequent Lease for an additional five years The Subsequent Lease was determined not to be reasonably certain to be exercised as of September 30 2024 As a result of the Mexico Lease the Company remeasured the existing lease liability for its Obregon Mexico facility as its lease option was no longer reasonably certain to be exercised which resulted in a reduction of the right of use asset and lease liability of 11 0
The Company participates in accounts receivable facility programs both in the United States and Japan These receivable agreements are between the Company MUFJ Bank LTD and the subsidiaries of both parties Transfers under the accounts receivable repurchase agreements are accounted for as sales of receivables resulting in the receivables being derecognized from the Consolidated Balance Sheet The purchaser assumes the credit risk at the time of sale and has the right at any time to assign transfer or participate any of its rights under the purchased receivables to another bank or financial institution The purchase and sale of receivables under these certain accounts receivable repurchase agreements is intended to be an absolute and irrevocable transfer without recourse by the purchaser to the Company for the creditworthiness of any obligor The Company has considered its performance obligation to collect and service the receivables sold in the United States and Japan The compensation received is considered acceptable servicing compensation and as such the Company does not recognize a servicing asset or liability
On August 5 2024 we entered into the Seventh Amendment to that certain Master Accounts Receivable Purchase Agreement between Edgewell Personal Care LLC and MUFG Bank LTD the Accounts Receivable Facility which amended the pricing index used to determine the purchase price for subject receivables from the Bloomberg Short Term Bank Yield Index BSBY to Term Secured Overnight Financing Rate SOFR The applicable margin that is added to the SOFR pricing index specific for each obligor was unchanged Except as noted above all other material terms conditions obligations covenants or agreements contained in the Accounts Receivable Facility are unmodified in all respects and continue in full force and effect
On August 5 2022 we entered into that certain Master Receivable Assignment Agreement between the Company s wholly owned subsidiary Schick Japan K K and Concerto Receivables Corporation the Purchaser Tokyo Branch a subsidiary of MUFG Bank LTD the Japan Agreement The Japan Agreement allows us to assign third party accounts receivable to the Purchaser and allows for the sale of up to 3 000 approximately 20 0 using the exchange rate as of September 30 2023 with limits set between individual customers The terms of the agreement expire one year after the date of execution and will be renewed annually unless either party notifies of its intent not to renew The assigned receivables will be discounted using the funding rate from the Tokyo Interbank Market plus 1 1
Accounts receivable sold under the Accounts Receivable Facility for the years ended September 30 2024 and 2023 were 1 176 1 and 1 162 7 respectively The trade receivables sold that remained outstanding under the Accounts Receivable Facility as of September 30 2024 and 2023 were 88 6 and 82 1 respectively The net proceeds received were included in both Cash provided by operating activities and Cash used by investing activities on the Condensed Consolidated Statements of Cash Flows The difference between the carrying amount of the trade receivables sold and the sum of the cash received is recorded as a loss on sale of receivables in Other income expense net in the Consolidated Statements of Earnings and Comprehensive Income For the years ended September 30 2024 and 2023 the loss on sale of trade receivables was 6 4 and 6 2 respectively
At September 30 2024 the balance for the Senior Notes due 2028 and the Senior Notes due 2029 are reflected net of debt issuance costs of 5 4 and 3 6 respectively At September 30 2023 the balance for the Senior Notes due 2028 and the Senior Notes due 2029 are reflected net of debt issuance costs of 6 9 and 4 4 respectively
At September 30 2024 and 2023 the Company also had outstanding short term notes payable with financial institutions with original maturities of less than 90 days of 24 5 and 19 5 respectively with variable weighted average interest rates of 3 8 and 3 9 respectively These notes were primarily outstanding international borrowings
On April 2 2024 the Restatement Date the Company and certain subsidiaries of the Company entered into a Restatement Agreement the Restatement Agreement we amended our with Bank of America N A as administrative agent and collateral agent BofA and the several lenders from time to time party thereto together with BofA the Lenders which amended and restated the Company s Credit Agreement dated as of March 28 2020 as previously amended by that certain Amendment No 1 to Credit Agreement dated as of February 6 2023 and as otherwise amended amended and restated supplemented or otherwise modified prior to the Restatement Date the Credit Facility
Pursuant to the Restatement Agreement all of the 425 0 of revolving facility commitments under the Credit Agreement the Existing Revolving Facility Commitments were replaced with an equal amount of new revolving facility commitments the Replacement Revolving Facility Commitments collectively with the Existing Revolving Facility Commitments the Revolving Credit Facility having substantially similar terms as the Existing Revolving Facility Commitments except that the maturity date of the Replacement Revolving Facility Commitments will be the earlier of i April 2 2029 and ii a March 2 2028 if the aggregate outstanding amount of the Company s 5 500 Senior Notes due 2028 is greater than 150 0 as of such date and b December 29 2028 if the aggregate outstanding amount of the Company s 4 125 Senior Notes due 2029 is greater than 150 0 of as such date in each case subject to certain exceptions
The U S revolving credit facility discussed above Revolving Credit Facility governing our outstanding debt at September 30 2024 contains certain customary representations and warranties financial covenants covenants restricting the Company s ability to take certain actions affirmative covenants and provisions relating to events of default Under the terms of the Revolving Credit Facility the ratio of the Company s indebtedness to earnings before interest taxes depreciation and amortization EBITDA as defined in the agreement and detailed below cannot be greater than 4 0 to 1 0 however there is an exception for acquisition activity In addition under the Revolving Credit Facility the ratio of the Company s EBITDA as defined in the credit agreement to total interest expense must exceed 3 0 to 1 Under the Revolving Credit Facility EBITDA is defined as net earnings as adjusted to add back interest expense income taxes depreciation and amortization all of which are determined in accordance with GAAP In addition the credit agreement allows certain non cash charges such as stock award amortization and asset write offs including but not limited to impairment and accelerated depreciation and operating expense reductions or synergies to be added back in determining EBITDA for purposes of the indebtedness ratio Total debt and interest expense are calculated in accordance with GAAP If the Company fails to comply with these covenants or with other requirements of the Revolving Credit Facility the lenders may have the right to accelerate the maturity of the debt Acceleration under the Revolving Credit Facility would trigger cross defaults on its other borrowings
The Company has several defined benefit pension plans covering employees in the U S and certain employees in other countries which are included in the information below The plans provide retirement benefits based on years of service and earnings The Company also sponsors or participates in a number of other non U S pension and postretirement arrangements including various retirement and termination benefit plans some of which are required by local law or coordinated with government sponsored plans which are not significant in the aggregate and therefore are not included in the information presented below
The Company initiated the wind up of its Canadian defined benefit pension plan Canada Plan in June 2021 On September 1 2021 Edgewell Personal Care Canada ULC EPC Canada as administrator of the Canada Plan entered into a buy in annuity purchase agreement Buy in Agreement with Brookfield Annuity Company Brookfield Annuity for certain members of the Canada Plan On January 25 2023 the Company received approval by the Financial Services Regulatory Authority of Ontario to wind up the Canada Plan Upon regulatory approval of the Canada Plan EPC Canada proceeded with purchasing annuities for the remaining Canada Plan participants and converting the Buy in Agreement to a buy out annuity purchase agreement Buy out Agreement which was purchased and funded by the Canada Plan on March 31 2023 The Company was relieved of its defined benefit pension obligation through its irrevocable commitment under the Buy out Agreement As of the settlement date the Company remeasured its assets and its projected benefit obligation associated with the Canada Plan Upon settlement the Company derecognized the assets projected benefit obligation and losses remaining in accumulated other comprehensive loss AOCI associated with the Canada Plan which resulted in a loss on settlement of 7 9 The loss was recorded in Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income for the fiscal year ended September 30 2023
Pension contributions required in fiscal 2025 and beyond represent future pension payments to comply with local funding requirements in the U S only The projected contributions for the U S pension plans total 6 5 in fiscal 2025 7 0 in fiscal 2026 5 0 in fiscal 2027 4 5 in fiscal 2028 and 4 2 in fiscal 2029 Estimated contributions beyond fiscal 2029 are not determinable The Company may also elect to make discretionary contributions
The accumulated benefit obligation for defined benefit pension plans was 439 0 and 398 1 at September 30 2024 and 2023 respectively The following table shows pension plans with an accumulated benefit obligation in excess of plan assets
Pension plan assets in the U S plan represent 69 of assets in all of the Company s defined benefit pension plans Investment policy for the U S plan includes a mandate to diversify assets and invest in a variety of asset classes to achieve that goal The U S plan s assets are currently invested in several funds representing most standard equity and debt security classes The broad target allocations are a equities including U S and foreign 44 and b debt securities including U S bonds 56 Actual allocations at September 30 2024 approximated these targets The U S plan held no shares of Company common stock at September 30 2024 Investment objectives are similar for non U S pension arrangements subject to local regulations
The service cost component of the net periodic cost associated with the Company s retirement plans is recorded to Cost of products sold and SG A in the Consolidated Statements of Earnings and Comprehensive Income The remaining net periodic cost is recorded to Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income
The following table sets forth the estimated fair value of the Company s pension assets segregated by level within the estimated fair value hierarchy Refer to Note 18 of Notes to Consolidated Financial Statements for further discussion on the estimated fair value hierarchy and estimated fair value principles
The Company s investment objective for defined benefit retirement plan assets is to satisfy its current and future pension benefit obligations The investment philosophy is to achieve this objective through diversification of the retirement plan assets with the goal of earning a suitable return with an appropriate level of risk while maintaining adequate liquidity to distribute benefit payments The diversified asset allocation includes equity positions as well as fixed income investments The increased volatility associated with equities is offset with higher expected returns while long duration fixed income investments help dampen the volatility of the overall portfolio Risk exposure is controlled by re balancing the retirement plan assets back to target allocations as needed Investment firms managing retirement plan assets carry out investment policy within their stated guidelines Investment performance is monitored against benchmark indices which reflect the policy and target allocation of the retirement plan assets
The Company sponsors a defined contribution plan which extends participation eligibility to the vast majority of U S employees Effective January 1 2014 the Company matches 100 of participants before tax or Roth contributions up to 6 of eligible compensation Amounts charged to expense during fiscal 2024 2023 and 2022 were 11 3 11 3 and 10 4 respectively and are reflected in SG A and Cost of products sold in the Consolidated Statements of Earnings and Comprehensive Income
As of September 30 2024 the Company had three share based compensation plans the Second Amended and Restated 2018 Stock Incentive Plan the Second A R 2018 Plan the Second Amended and Restated 2009 Incentive Stock Plan the 2009 Plan and the 2000 Incentive Stock Plan the 2000 Plan The 2000 Plan was superseded by the 2009 Plan which was then superseded by the 2018 Stock Incentive Plan which was then superseded by the Second Amended and Restated 2018 Stock Incentive Plan New awards granted after January 2024 are issued under the Second A R 2018 Plan The Second A R 2018 Plan provides for the award of performance restricted share equivalents PRSEs Restricted share equivalents RSEs or Share Options to purchase the Company s common stock to directors officers and employees of the Company The maximum number of shares authorized for issuance under the 2018 Pla
and RSEs may also be granted Option shares and prices and PRSEs and RSEs are adjusted in conjunction with stock splits and other recapitalizations including our 2015 separation from Energizer so that the holder is in the same economic position before and after these equity transactions
The Company uses the straight line method of recognizing compensation cost Total compensation costs charged against earnings before income taxes for the Company s share based compensation arrangements were 26 5 27 5 and 23 9 for fiscal 2024 2023 and 2022 respectively and were recorded in SG A The total income tax benefit recognized for share based compensation arrangements was 6 3 6 6 and 5 7 for fiscal 2024 2023 and 2022 respectively Restricted stock issuance and shares issued for share option exercises u
The Company estimates the grant date fair value of share option awards using the Black Scholes option pricing model The expected volatility is determined based on historical volatility The Company utilizes the simplified method in estimating the share option life as the Company does not have sufficient historical share option experience to estimate the share option life During fiscal 2024 and 2023 the Company grant
For PRSE awards granted subsequent to fiscal 2021 awards will vest by comparing the Company s TSR during a certain three year period to the respective TSRs of companies in a selected performance peer group Based upon the Company s ranking in its performance peer group a recipient of the PRSE award may earn a total award ranging from 0 to 200 of the target award The fair value of each PRSE was estimated on the grant date using a Monte Carlo simulation The assumptions for PRSE awards during the years ended September 30 2024 and 2023 are summarized in the following table
At September 30 2024 there were 300 0 shares of the Company s common stock authorized of which 3 4 shares were reserved for outstanding awards under the 2018 2009 and 2000 Plans The Company s Amended and Restated Articles of Incorporation authorize it to issue up to 10 0 shares of 0 01 par value preferred stock As of September 30 2024 there were no shares of preferred stock issued or outstanding
During fiscal 2024 the Company repurchased 1 6 shares of common stock under the January 2018 Board share repurchase authorization for 58 5 and has 3 0 shares of its common stock available for repurchase in the future under the Board s authorization Future share repurchases if any would be made in the open market privately negotiated transactions or otherwise in such amounts and at such times as we deem appropriate based upon prevailing market conditions business needs and other factors Additionally 0 2 shares were purchased related to the surrender of shares of common stock to satisfy tax withholding obligations in connection with the vesting of RSEs
Since September 30 2024 the Company repurchased 0 2 shares of common stock for 7 4 under the share repurchase Board authorization from January 2018 which allows the repurchase of up to 10 0 shares There are 3 0 common shares remaining available to be purchased
On October 31 2024 the Board declared a quarterly cash dividend of 0 15 per common share for the fourth fiscal quarter of 2024 The dividend will be paid on January 8 2025 to shareholders of record as the close of business on December 3 2024
In the course of ordinary business the Company enters into contractual arrangements also referred to as derivatives to reduce its exposure to foreign currency The Company has master netting agreements with all of its counterparties that allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default The Company manages counterparty risk through the utilization of investment grade commercial banks diversification of counterparties and its counterparty netting arrangements The section below outlines the types of derivatives that existed at September 30 2024 and 2023 respectively as well as the Company s objectives and strategies for holding derivative instruments
A significant share of the Company s sales is tied to currencies other than the U S dollar the Company s reporting currency As such a weakening of currencies relative to the U S dollar can have a negative impact to reported earnings Conversely strengthening of currencies relative to the U S dollar can improve reported results The primary currencies to which the Company is exposed include the euro the Japanese yen the British pound the Canadian dollar and the Australian dollar
Additionally the Company s foreign subsidiaries enter into internal and external transactions that create non functional currency balance sheet positions at the foreign subsidiary level These exposures are generally the result of intercompany purchases intercompany loans and to a lesser extent external purchases and are revalued in the foreign subsidiary s local currency at the end of each period Changes in the value of the non functional currency balance sheet positions in relation to the foreign subsidiary s local currency results in an exchange gain or loss recorded in Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income The primary currency to which the Company s foreign subsidiaries are exposed is the U S dollar
The Company has interest rate risk with respect to interest expense on variable rate debt At September 30 2024 the Company had 34 0 of variable rate debt outstanding which consisted primarily of outstanding borrowings under the Revolving Credit Facility in the U S
Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of accounts receivable The Company generally does not require collateral from customers The Company s largest customer Walmart Inc and its affiliates collectively Walmart accounted for approximately 17 2 of consolidated net sales in fiscal 2024 No other customer accounted for more than 10 of the Company s consolidated net sales Purchases by Walmart included products from all of the Company s segments Additionally in fiscal 2024 Target Corporation represented approximately 9 5 of consolidated net sales for the Sun and Skin Care segment and 9 8 of consolidated net sales for the Feminine Care segment respectively
Within the Wet Shave segment the Company s razor and blades represented 49 3 49 0 and 51 1 of consolidated net sales during fiscal 2024 2023 and 2022 respectively and within the Sun and Skin Care segment sun care products represented 21 5 20 0 and 18 5 of consolidated net sales during each of fiscal 2024 2023 and 2022
At September 30 2024 the Company maintained a cash flow hedging program related to foreign currency risk These derivative instruments have a high correlation to the underlying exposure being hedged and have been deemed highly effective by the Company for accounting purposes in offsetting the associated risk
The Company entered into a series of forward currency contracts to hedge cash flow uncertainty associated with currency fluctuations These transactions are accounted for as cash flow hedges The Company had unrealized pre tax losses of 2 4 and gains of 4 4 at September 30 2024 and 2023 respectively on these forward currency contracts that are accounted for as cash flow hedges included in AOCI Assuming foreign exchange rates versus the U S dollar remain at September 30 2024 levels over the next 12 months the majority of the pre tax loss included in AOCI at September 30 2024 is expected to be included in Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income Contract maturities for these hedges extend into fiscal year 2026 At September 30 2024 there were 64 open foreign currency contracts with a total notional value of 106 5
The Company has entered into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes to hedge balance sheet exposures and thus are not subject to significant market risk The change in estimated fair value of the foreign currency contracts resulted in gains of 0 4 3 0 and 8 2 for fiscal 2024 2023 and 2022 respectively which were recorded in Other expense income net in the Consolidated Statements of Earnings and Comprehensive Income At September 30 2024 there was one open foreign currency derivative contract not designated as a cash flow hedge with a total notional value of 9 0
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified in one of the following three categories
Under the fair value accounting guidance hierarchy an entity is required to maximize the use of quoted market prices and minimize the use of unobservable inputs The following table sets forth the Company s financial assets and liabilities which are carried at fair value that are measured on a recurring basis during the period all of which are classified as Level 2 within the fair value hierarchy
At September 30 2024 and 2023 the Company had no Level 1 or Level 3 financial assets or liabilities other than pension plan assets which contained certain assets classified as Level 1 Refer to Note 14 of Notes to Consolidated Financial Statements for the fair value hierarchy of the pension plan assets
At September 30 2024 and 2023 the fair market value of fixed rate long term debt was 1 180 0 and 1 028 6 respectively compared to its carrying value of 1 250 0 in each period The estimated fair value of the fixed rate long term debt is estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements There was no variable rate debt excluding revolving credit facilities as of September 30 2024 The estimated fair values of long term debt excluding the Revolving Credit Facility has been determined based on Level 2 inputs
Due to the nature of cash and cash equivalents and short term borrowings including notes payable carrying amounts on the balance sheets approximate fair value Additionally the carrying amount of the Revolving Credit Facility which are classified as long term debt on the balance sheet approximate fair value due to the revolving nature of the balances The estimated fair value of cash and cash equivalents short term borrowings and the Revolving Credit Facility have been determined based on Level 2 inputs
As of September 30 2024 the estimated fair value of foreign currency contracts is the amount that the Company would receive or pay to terminate the contracts considering first the quoted market prices of comparable agreements or in the absence of quoted market prices factors such as interest rates currency exchange rates and remaining maturities The estimated fair value of the deferred compensation liability is determined based upon the quoted market prices of the investment options that are offered under the plan
During the year ended September 30 2024 the Company settled legal matters for certain class action advertising claims which resulted in a loss of 3 9 This was included in SG A in the Consolidated Statements of Earnings and Comprehensive Income
During the year ended September 30 2023 the Company settled a legal matter which resulted in a gain of 4 9 related to an intellectual property claim against a third party This was included in SG A in the Consolidated Statements of Earnings and Comprehensive Income The Company received payment for the intellectual property claim settlement in fiscal 2023
Additionally during the year ended September 30 2023 the Company received a favorable court ruling regarding an international VAT matter which the plaintiff has no ability to appeal As the Company had previously recorded an accrual for this matter based on its best estimate of the facts and circumstances at that time the result of the favorable court ruling was a release of the reserve established which resulted in a gain of 2 2 This was included in SG A in the Consolidated Statements of Earnings and Comprehensive Income
During the year ended September 30 2022 the Company settled certain legal matters which resulted in a gain of 7 5 related to intellectual property claims against a third party This was included in SG A in the Consolidated Statements of Earnings and Comprehensive Income The Company received payment for the settlement in fiscal 2022
The Company and its subsidiaries are subject to a number of legal proceedings in various jurisdictions arising out of its operations during the ordinary course of business Many of these legal matters are in preliminary stages and involve complex issues of law and fact and may proceed for protracted periods of time The amount of liability if any from these proceedings cannot be determined with certainty The Company reviews its legal proceedings and claims regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions The Company establishes accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated and discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued if such disclosure is necessary for its financial statements to not be misleading The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated Based upon present information the Company believes that its liability if any arising from such pending legal proceedings asserted legal claims and known potential legal claims which are likely to be asserted is not reasonably likely to be material to its financial position results of operations or cash flows when taking into account established accruals for estimated liabilities
Contamination has been identified at certain of the Company s current and former facilities as well as third party waste disposal sites and the Company is conducting investigation and remediation activities in relation to such properties In connection with certain sites the Company has received notices from the U S Environmental Protection Agency state agencies and private parties that it has been identified as a potentially responsible party PRP under the Comprehensive Environmental Response Compensation and Liability Act of 1980 CERCLA and may be required to share in the cost of cleanup with respect to a number of federal Superfund sites The Company may also be required to share in the cost of cleanup with respect to state designated sites and certain international locations as well as any of its own properties
Accrued environmental costs at September 30 2024 and 2023 were 7 9 and 9 3 respectively and were recorded in Other Current Liabilities and Other Liabilities within the Consolidated Balance Sheets The amount of the Company s ultimate liability in connection with those sites may depend on many factors including the volume and toxicity of material contributed to the site the number of other PRPs and their financial viability and the remediation methods and technology to be used Total environmental capital expenditures and operating expenses are not expected to have a material effect on the Company s total capital and operating expenditures cash flows earnings or competitive position Current environmental spending estimates may be modified as a result of changes in the Company s plans or its understanding of the underlying facts changes in legal requirements including any requirements related to global climate change or other factors
Many European countries as well as the European Union have been very active in adopting and enforcing environmental regulations As such it is possible that new regulations may increase the risk and expense of doing business in such countries
Segment performance is evaluated based on segment profit excluding certain U S GAAP items that management does not believe are indicative of ongoing operating performance due to their unusual or non recurring nature and which may have a disproportionate positive or negative impact on the Company s financial results in any particular period Financial items such as interest income and expense are managed on a global basis at the corporate level and therefore are excluded from segment profit The exclusion of such charges from segment results reflects management s view on how management monitors and evaluates segment operating performance generates future operating plans and makes strategic decisions regarding the allocation of capital Refer to Note 1 of Notes to Consolidated Financial Statements for further discussion
The Company s operating model includes some shared business functions across the segments including product warehousing and distribution transaction processing functions and in most cases a combined sales force and management teams The Company applies a fully allocated cost basis in which shared business functions are allocated among the segments Such allocations are estimates and do not represent the costs of such services if performed on a stand alone basis
Includes Restructuring and repositioning expenses of nil 0 2 and 0 1 included within COGS and 0 1 0 3 and 0 8 within SG A for fiscal 2024 2023 and 2022 respectively related to actions to strengthen our operating model
Includes COGS of 3 3 nil and 0 8 for fiscal 2024 2023 and 2022 respectively and SG A of 2 8 7 5 and 9 1 for fiscal 2024 2023 and 2022 respectively related to costs associated with the acquisition of Billie Inc on November 29 2021
In fiscal 2022 we recorded a charge of 22 5 in COGS for the write off of certain Wet Ones SKUs and related contract termination charges In fiscal 2023 we released a reserve of 1 7 related to certain accrued expenses associated with the write off of inventory related to these SKUs Wet Ones products are included within the Sun and Skin Care segment
Includes pre tax research and development R D costs of 4 4 3 3 and nil for fiscal 2024 2023 and 2022 related to the reformulation recall and destruction of certain Sun Care products In fiscal 2023 we released a reserve of 1 4 related to certain accrued expenses associated with the recall and destruction of certain Sun Care products within COGS In fiscal 2022 we recorded costs of 3 5 related to the reformulation recall and destruction of certain Sun Care products within COGS
On December 1 2023 a fire occurred at our Wet Ones manufacturing plant in Sidney Ohio There were no injuries reported and damage was limited to a single manufacturing process As a consequence of the fire damage there was a partial shutdown of the operations that manufacture Wet Ones raw materials In fiscal 2024 the Company incurred 12 2 in costs related to incremental material charges labor and absorption as a result of the fire within COGS
Includes pre tax SG A of 3 9 for fiscal 2024 for the settlement of certain legal matters Includes pre tax income in SG A of 6 3 net of other costs of 0 8 in fiscal 2023 related to the favorable resolution of legal matters
Includes pre tax SG A of 5 3 for fiscal 2024 related to certain corporate project costs Includes pre tax SG A of 0 4 for fiscal 2023 related to the write off of assets associated with a prior year divestiture
The Company s international net sales are derived from customers in numerous countries with no sales to any individual foreign country exceeding 10 of the Company s total Net sales For information on customer concentration and product concentration risk see Note 18 of Notes to Consolidated Financial Statements
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 as amended the Exchange Act is recorded processed summarized and reported within the specified time periods and that such information is accumulated and communicated to management including our Chief Executive Officer CEO and Chief Financial Officer CFO as appropriate to allow timely decisions regarding required disclosure
Our management with the participation of our CEO and CFO evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Exchange Act as of September 30 2024 Based on that evaluation our CEO and CFO concluded that as of that date our disclosure controls and procedures were effective
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined under Exchange Act Rules 13a 15 f and 15d 15 f The Company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles GAAP for external purposes The Company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the Company s assets that could have a material effect on the financial statements Internal control over financial reporting because of its inherent limitations may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate Management conducted an assessment of the effectiveness of the Company s internal control over financial reporting based on the framework set forth in
2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission Based on the Company s assessment management has concluded that internal control over financial reporting as of September 30 2024 was effective
The Company s internal control over financial reporting as of September 30 2024 has been audited by PricewaterhouseCoopers LLP an independent registered public accounting firm as stated in their report that appears herein
There were no changes in our internal control over financial reporting during the quarter ended September 30 2024 that have materially affected or are likely to materially affect our internal control over financial reporting
Information regarding our directors will be included in our definitive proxy statement for our annual meeting of shareholders which will be filed with the United States Securities and Exchange Commission SEC within 120 days after September 30 2024
We have adopted business practices and standards of conduct that are applicable to all employees including our CEO and CFO We have also adopted a code of business conduct applicable to our Board of Directors The codes have been posted on the Investor section of our website at www edgewell com In the event that an amendment to or a waiver from a provision of one of the codes of ethics occurs and it is determined that such amendment or waiver is subject to the disclosure provisions of Item 5 05 of Current Report on Form 8 K we intend to satisfy such disclosure by posting such information on our website for at least a 12 month period
Information regarding the compensation of our named executive officers and directors will be included in our definitive proxy statement for our annual meeting of shareholders which will be filed with the SEC within 120 days after September 30 2024
Information regarding individuals or groups that own more than five percent of our common shares as well as information regarding the security ownership of our executive officers and directors information relating to securities authorized for issuance under equity compensation plans and other shareholder matters will be included in our definitive proxy statement for our annual meeting of shareholders which will be filed with the SEC within 120 days after September 30 2024
Information regarding transactions with related parties and director independence will be included in our definitive proxy statement for our annual meeting of shareholders which will be filed with the SEC within 120 days after September 30 2024
Information regarding the services provided by and fees paid to PricewaterhouseCoopers LLP PCAOB ID 238 our independent auditors will be included in our definitive proxy statement for our annual meeting of shareholders which will be filed with the SEC within 120 days after September 30 2024
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and as of the date indicated
Separation and Distribution Agreement by and between the Company and Energizer Holdings Inc dated as of June 25 2015 incorporated by reference to Exhibit 2 1 to the Company s Current Report on Form 8 K filed June 29 2015
Tax Matters Agreement by and between the Company and Energizer Holdings Inc dated as of June 26 2015 incorporated by reference to Exhibit 2 2 to the Company s Current Report on Form 8 K filed June 29 2015
Employee Matters Agreement by and between the Company and Energizer Holdings Inc dated as of June 25 2015 incorporated by reference to Exhibit 2 3 to the Company s Current Report on Form 8 K filed June 29 2015
Transition Services Agreement by and between the Company and Energizer Holdings Inc dated as of June 25 2015 incorporated by reference to Exhibit 2 4 to the Company s Current Report on Form 8 K filed June 29 2015
Agreement and Plan of Merger by and among Edgewell Personal Care Company Callahan Corp Harry s Inc and the Person party thereto solely in its capacity as the Stockholder Representative dated as of May 8 2019 incorporated by reference to Exhibit 2 1 to the Company s Current Report on Form 8 K filed May 13 2019
Membership Interest Purchase Agreement by and among Edgewell Personal Care Company solely for purposes of Section 13 17 Edgewell Personal Care LLC Cremo Holding Company LLC the sellers named therein and the Joint Holder Representatives named therein dated as of August 1 2020
Indenture dated as of May 19 2011 by and among the Company the guarantors named therein and The Bank of New York Mellon Trust Company N A as trustee incorporated by reference to Exhibit 4 1 of the Company s Current Report on Form 8 K filed May 19 2011
First Supplemental Indenture dated as of May 19 2011 by and among the Company the guarantors named therein and The Bank of New York Mellon Trust Company N A as trustee incorporated by reference to Exhibit 4 2 of the Company s Current Report on Form 8 K filed May 19 2011
Second Supplemental Indenture including the Form of Note dated as of May 24 2012 by and among the Company the guarantors named therein and The Bank of New York Mellon Trust Company N A as trustee incorporated by reference to Exhibit 4 2 to the Company s Current Report on Form 8 K filed May 24 2012
Credit Agreement dated June 1 2015 by and among the Company as borrower JPMorgan Chase Bank N A as administrative agent and Bank of America N A The Bank of Tokyo Mitsubishi UFJ Ltd and Citibank N A as co syndication agents incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed June 1 2015
Omnibus Amendment No 1 dated as of September 25 2015 to Credit Agreement and Subsidiary Guaranty by and among Edgewell Personal Care Company as borrower Edgewell Personal Care Brands LLC as new subsidiary borrower certain other subsidiaries of Edgewell as subsidiary guarantors JPMorgan Chase Bank N A as administrative agent Bank of America N A The Bank of Tokyo Mitsubishi UFJ Ltd and Citibank N A as co syndication agents and the various lenders who are a party thereto incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed September 29 2015
Amendment No 2 to Credit Agreement by and among Edgewell Personal Care Company as borrower Edgewell Personal Care Brands LLC as subsidiary borrower certain other subsidiaries of Edgewell Personal Care Company as subsidiary guarantors JPMorgan Chase Bank N A as administrative agent and the various lenders who are a party thereto incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed April 29 2016
Amendment No 3 to Credit Agreement dated as of March 13 2017 by and among Edgewell Personal Care Company as borrower Edgewell Personal Care Brands LLC as subsidiary borrower certain other subsidiaries of Edgewell Personal Care Company as subsidiary guarantors JPMorgan Chase Bank N A as administrative agent Bank of America N A as syndication agent and the various lenders who are a party thereto incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed March 14 2017
Increasing Lender Supplement dated as of March 13 2017 by and among The Bank of Tokyo Mitsubishi UFJ Ltd as increasing lender Edgewell Personal Care Company as borrower and JPMorgan Chase Bank N A as administrative agent incorporated by reference to Exhibit 10 2 to the Company s Current Report on Form 8 K filed March 14 2017
Credit Agreement by and among Edgewell Personal Care Netherlands B V as borrower the Company and The Bank of Tokyo Mitsubishi UFJ Ltd as Administrative Agent incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed June 15 2015
Amendment No 1 dated as of September 25 2015 to Credit Agreement by and among Edgewell Personal Care Netherlands B V Edgewell Personal Care Company the institutions listed on the signature pages thereto and the Bank of Tokyo Mitsubishi UFJ Ltd as the administrative agent for the lenders referred to therein incorporated by reference to Exhibit 10 2 to the Company s Current Report on Form 8 K filed September 29 2015
Master Accounts Receivable Purchase Agreement dated as of September 15 2017 among Edgewell Personal Care LLC as the Seller Edgewell Personal Care Company as Guarantor and The Bank of Tokyo Mitsubishi UFJ Ltd New York Branch as the Purchaser incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed September 19 2017
Sixth Amendment to Master Accounts Receivable Purchase Agreement dated as of February 7 2022 between the Company and MUFG Bank Ltd incorporated by reference to Exhibit 10 4 to the Company s Quarterly Report on Form 10 Q for the quarter ended December 31 2022
Seventh Amendment to Master Accounts Receivable Purchase Agreement dated as of August 5 2024 between the Company and MUFG Bank Ltd incorporated by reference to Exhibit 10 8 to the Company s Quarterly Report on Form 10 Q filed on August 6 2024
Credit Agreement dated as of March 28 2020 by and among inter alia the Company the subsidiaries of the Company from time to time parties thereto the lenders from time to time parties thereto MUFG as syndication agent TD as joint lead arranger and BofA as administrative agent and collateral agent incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed April 2 2020
Restatement Agreement dated as of April 2 2024 among Edgewell Personal Care Company each of the guarantors party thereto Bank of America N A as Administrative Agent the Issuing Bank and each Refinancing Lender party thereto incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed April 2 2024
Indenture dated as of May 22 2020 among Edgewell Personal Care Company the guarantors party thereto and the Trustee incorporated by reference to Exhibit 4 1 to the Company s Current Report on Form 8 K filed May 22 2020
Indenture dated as of March 8 2021 among Edgewell Personal Care Company the guarantors party thereto and the Trustee incorporated by reference to Exhibit 4 1 to the Company s Current Report on Form 8 K filed March 8 2021
Trademark License Agreement by and between the Company and Energizer Brands LLC dated June 25 2015 incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed June 29 2015
Trademark License Agreement by and between the Company and Wilkinson Sword GmbH as licensors and Energizer Holdings Inc dated June 25 2015 incorporated by reference to Exhibit 10 2 to the Company s Current Report on Form 8 K filed June 29 2015
January 1 2015 Restatement of the Company s Executive Savings Investment Plan incorporated by reference to Exhibit 10 21 to the Company s Annual Report on Form 10 K for the year ended September 30 2015
Amendment to the Company s Executive Savings Investment Plan effective July 1 2015 incorporated by reference to Exhibit 10 12 to the Company s Quarterly Report on Form 10 Q for the quarter ended June 30 2015
2010 Restatement of the Company s Supplemental Executive Retirement Plan dated October 15 2010 incorporated by reference to Exhibit 10 54 of Amendment No 1 to the Company s Annual Report on Form 10 K A filed May 16 2011
First Amendment to the 2010 Restatement of the Company s Supplemental Executive Retirement Plan effective July 1 2015 incorporated by reference to Exhibit 10 24 to the Company s Annual Report on Form10 K for the year ended September 30 2015
Second Amendment to the 2010 Restatement of the Company s Supplemental Executive Retirement Plan effective July 1 2015 incorporated by reference to Exhibit 10 13 to the Company s Quarterly Report on Form 10 Q for the quarter ended June 30 2015
2009 Restatement of the Company s Deferred Compensation Plan as amended and restated effective as of January 1 2009 incorporated by reference to Exhibit 10 of the Company s Annual Report on Form 10 K for the year ended September 30 2008
Amendment No 3 to 2009 Restatement of the Company s Deferred Compensation Plan dated November 7 2011 incorporated by reference to Exhibit 10 59 to the Company s Annual Report on Form 10 K for the year ended September 30 2012
Amendment No 4 to the 2009 Restatement of the Company s Deferred Compensation Plan incorporated by reference to Exhibit 10 60 to the Company s Annual Report on Form 10 K for the year ended September 30 2012
Amendment to the 2009 Restatement of the Company s Deferred Compensation Plan effective July 1 2015 incorporated by reference to Exhibit 10 14 to the Company s Quarterly Report on Form 10 Q for the quarter ended June 30 2015
Separation and General Release Agreement entered into on October 6 2023 by and between John N Hill and Edgewell Personal Care Company incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed October 11 2023
Separation and General Release Agreement entered into on July 31 2024 by and between Eric O Toole and Edgewell Personal Care Company incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed August 6 2024
The following materials from the Edgewell Personal Care Company Annual Report on Form 10 K formatted in inline eXtensible Business Reporting Language iXBRL i the Consolidated Statements of Earnings and Comprehensive Income for the years ended September 30 2022 2023 and 2024 ii the Consolidated Balance Sheets at September 30 2023 and 2024 iii the Consolidated Statements of Cash Flows for the years ended September 30 2022 2023 and 2024 iv Consolidated Statements of Changes in Shareholders Equity for the period from October 1 2021 to September 30 2024 and v Notes to Consolidated Financial Statements for the year ended September 30 2024

Company Name	EDGEWELL PERSONAL CARE Co Vist SEC web-site
Category	PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS
Trading Symbol	EPC