EDGEWELL PERSONAL CARE Co: Form 10-Q for the period ended Dec 31, 2025

(Amounts in millions, except per share data, unaudited)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the accompanying notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on November 18, 2025 (the “2025 Annual Report”). 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 within “Forward-Looking Statements” below and in Item 1A. Risk Factors and “Forward-Looking Statements” included within our 2025 Annual Report.

Non-GAAP Financial Measures

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, including adjusted gross margin, adjusted selling general and administrative (“SG&A”), adjusted operating income, adjusted EBIT (as defined below), adjusted effective tax rate, adjusted net earnings, and adjusted diluted net earnings, 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. We view the use of non-GAAP measures that exclude 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.

The following provides additional detail on our non-GAAP measures for the periods presented:

• 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.
• Segment profit is impacted by fluctuations in translation and transactional foreign currency. The impact of currency was applied to segments using management’s best estimate.

All comparisons are with the same period in the prior year, unless otherwise noted.

Industry and Market Data

Unless we indicate otherwise, we base the information contained or incorporated by reference herein, concerning our industry on our general knowledge and expectations. Our market position, market share, and industry market size are estimates based on internal and external 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 industry, market size, market position and market share data within our industry provides general guidance but is inherently imprecise and has not been verified by any independent source. Further, our estimates and assumptions involve risks and uncertainties and are subject to change based on various factors, including those discussed in Item 1A. Risk Factors in Part I of our 2025 Annual Report. These and other factors could cause results to differ materially from those expressed in the estimates and assumptions. You are cautioned not to place undue reliance on this data.

Retail sales for purposes of market size, market position and market share information are based on retail sales in U.S. dollars.

Trademarks and Trade Names

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 Quarterly Report on Form 10-Q. We may also refer to brand names, trademarks, service marks and trade names of other companies and organizations, which are the property of their respective owners.

Executive Summary

Feminine Care Divestiture

On November 12, 2025, we entered into an agreement to sell our Feminine Care segment to Essity, a leading global health and hygiene company based in Sweden for $340.0. On February 2, 2026, we closed the transaction and received proceeds of approximately $340 million on a cash-free and debt-free basis. In connection with closing of the transaction, we and Essity entered into a transition services agreement for the provision of certain services to support the transition of the Feminine Care segment following the closing. The divestiture of the Feminine Care segment is a key step to transform Edgewell into a more focused, agile and consumer-driven personal care company. In the first quarter of fiscal 2026, the assets and liabilities of the former Feminine Care segment were classified as held for sale and the former Feminine Care segment’s results are presented as discontinued operations. This change was applied on a retrospective basis.

All amounts, percentages and disclosures for all periods presented reflect only the continuing operations of Edgewell unless otherwise noted.

First Quarter of Fiscal 2026

The following is a summary of results from continuing operations for the first quarter of fiscal 2026, as compared to the corresponding periods in fiscal 2025. In addition to net sales, net loss from continuing operations and earnings per share (“EPS”) from continuing operations for the periods presented were also impacted by certain costs or income, as described in the table below. The impact of these items on reported net loss from continuing operations and EPS from continuing operations are provided as a reconciliation of net loss from continuing operations and EPS from continuing operations to adjusted net loss from continuing operations and adjusted diluted EPS from continuing operations, both of which are non-GAAP measures.

• Net sales in the first quarter of fiscal 2026 increased $7.7, or 1.9%, to $422.8, as compared to the prior year quarter. Organic net sales decreased $1.9, or 0.5%. Organic sales growth in North America was 0.7%, driven by volume growth in Sun Care and Grooming, partially offset by lower volumes and unfavorable pricing in Wet Shave and Skin Care. Organic sales in international markets declined 1.6%, largely driven by volume declines in Sun Care and Wet Shave, primarily reflecting an anticipated change in the quarterly phasing of Wet Shave sales in Japan, and Sun Care sales in distributor markets.
• Net (loss) earnings from continuing operations in the first quarter of fiscal 2026 were $(29.2) compared to $(10.1) in the prior year quarter. On an adjusted basis, net (loss) earnings from continuing operations for the first quarter of fiscal 2026 were $(7.6) compared to $(4.8) in the prior year quarter. Adjusted net loss increased primarily due to a decrease in gross margin, partially offset by higher sales.
• Diluted net (loss) earnings per share from continuing operations during the first quarter of fiscal 2026 were $(0.63) compared to $(0.21) in the prior year quarter. On an adjusted basis, diluted net earnings per share from continuing operations during the first quarter of fiscal 2026 were $(0.16) compared to $(0.10) in the prior year quarter.

Three Months Ended December 31, 2025

27

Three Months Ended December 31, 2024

(1) EBIT is defined as Loss before income taxes.

Operating Results

The following table presents changes in net sales for the first quarter of fiscal 2026, as compared to the corresponding periods in fiscal 2025, and provides a reconciliation of organic net sales to reported amounts.

Net Sales

For the first quarter of fiscal 2026, net sales increased $7.7, or 1.9%, to $422.8, including a $9.6, or 2.4%, favorable impact from currency movements, as compared to the prior year quarter. Organic net sales decreased $1.9, or 0.5%. Organic sales growth in North America was 0.7%, driven by volume growth in Sun Care and Grooming, partially offset by lower volumes and unfavorable pricing in Wet Shave and Skin Care. Organic sales in international markets declined 1.6%, largely driven by volume declines in Sun Care and Wet Shave, primarily reflecting an anticipated change in the quarterly phasing of Wet Shave sales in Japan, and Sun Care sales in distributor markets.

Gross Profit

Gross profit was $161.0 during the first quarter of fiscal 2026, compared to $172.5 in the prior year quarter, a decrease of $11.5, or 6.7%. Gross margin as a percent of net sales for the first quarter of fiscal 2026 decreased 350-basis points, to 38.1%. Adjusted gross margin, as a percent of net sales, decreased 210-basis points. Productivity savings of approximately 240-basis points and favorable currency movements were more than offset by 450-basis points of core inflation, tariffs, volume absorption and 75-basis points of unfavorable mix and other.

Selling, General and Administrative Expense

Selling, general and administrative (“SG&A”) expense was $102.4, or 24.2%, of net sales in the first quarter of fiscal 2026 compared to $99.6, or 24.0%, of net sales in the prior year quarter. Adjusted SG&A was 23.7% of net sales, flat to the prior year quarter, which was primarily driven by higher people costs and unfavorable currency impacts, partly offset by lower consulting and corporate expenses.

Advertising and Sales Promotion Expense

Advertising and sales promotion (“A&P”) expense for the first quarter of fiscal 2026 was $45.6, a decrease of $0.5, or 1.1%, compared to $46.1 in the prior year quarter. A&P was 10.8% of net sales, compared to 11.1% in the prior year quarter.

Research and Development Expense

Research and development (“R&D”) expense for the first quarter of fiscal 2026 was $13.8, an increase of $0.4, or 3.0%, compared to $13.4 in the prior year quarter. As a percentage of net sales, R&D expense was 3.3% in the first quarter of fiscal 2026, compared to 3.2% in the prior year quarter.

Restructuring and Related Charges

In fiscal 2026, the Company continues to take specific actions to strengthen its operating model, simplify the organization and improve manufacturing and supply chain efficiency through restructuring actions, including streamlining the Company’s operations and supply chain by consolidating its Mexico facilities and Wet Shave operations. As a result of these actions, we expect to incur pre-tax charges of approximately $65 in fiscal 2026. We incurred $18.1 and $4.1 during the first three months of fiscal 2026 and 2025, respectively. Other restructuring related charges of $5.8 and $0.5 associated with the operation and supply chain actions were recorded in costs of products sold and selling, general and administrative expenses, respectively, during the first quarter of fiscal 2026.

See Note 3 to the Condensed Consolidated Financial Statements for additional information.

Interest Expense Associated with Debt

Interest expense associated with debt for the first quarter of fiscal 2026 was $19.3, an increase of $0.5, or 2.7%, compared to $18.8 in the prior year quarter. The increase in interest expense was the result of higher borrowing levels on the Company’s U.S. Revolving Credit Facility.

Other (Income) Expense, net

Other (income) expense, net, was $(1.3) compared to $3.2 in the prior year quarter. Currency hedge and remeasurement losses were $0.9 in the current quarter, compared to losses of $2.0 in the prior year quarter. The current year quarter included $0.5 of other project gains, compared to $1.8 of expense in the prior year quarter. Adjusted other (income) expense, net was $0.7 compared to $2.3 in the prior year quarter.

Income Tax Benefit on Continuing Operations

The continuing operations effective tax rate for the first quarter of fiscal 2026, was 20.9%, compared to 20.6% in the prior year quarter. Both periods reflect a tax benefit on a loss. The fiscal 2026 effective tax rate reflects more favorable discrete and unusual items resulting in a larger tax benefit compared to fiscal 2025. On an adjusted basis, the effective tax rate was 34.7% (tax benefit on a loss), up from the prior year quarter adjusted effective tax rate of 7.8% (tax benefit on a loss).

(Loss) earnings from discontinued operations, net of tax

(Loss) earnings from discontinued operations, net of tax includes the results of the Feminine Care business that was held-for-sale in the first quarter of fiscal 2026.

The loss of $36.5 in the first quarter of fiscal 2026 compared to earnings of $8.0 in the prior year quarter. The loss in the first quarter of 2026 primarily includes the impact of the goodwill impairment charge of $37.4 and loss on held-for-sale of $3.8.

Segment Results

The following tables present changes in segment net sales and segment profit (loss) for the first quarter of fiscal 2026, compared to the corresponding period in fiscal 2025, and provide a reconciliation of organic segment net sales and organic segment profit (loss) to reported amounts. For a reconciliation of segment profit (loss) to Loss from continuing operations before income taxes, refer to Note 17 of Notes to Condensed Consolidated Financial Statements.

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.

Wet Shave

Wet Shave net sales for the first quarter of fiscal 2026 were $291.3, a decrease of $3.2, or 1.1%, as compared to the prior year quarter, including a $8.4, or 2.8%, favorable impact from currency. Organic net sales decreased $11.6, or 3.9%, as International markets declined 0.7% as a result of unfavorable phasing of Wet Shave sales in Japan, as anticipated, partly offset by higher pricing while North America declined 8.3% as a result of decreased volumes and increased promotional levels.

Wet Shave segment profit for the first quarter of fiscal 2026 was $42.2, a decrease of $4.4, or 9.4%, and inclusive of a $4.1, or 8.8%, favorable impact from currency. Organic segment profit decreased $8.5 million, or 18.2%, as lower gross margins were partly offset by lower marketing and SG&A expenses.

Sun and Skin Care

Sun and Skin Care net sales for the first quarter of fiscal 2026 increased $10.9, or 9.0%, as compared to the prior year quarter, including a favorable impact from foreign currency of $1.2, or 1.0%. Organic net sales increased $9.7, or 8.0%, driven by 19.5% growth in Sun Care, primarily driven by higher volumes in North America. Grooming increased 6.8% driven by increased volumes, led by nearly 27% growth in Cremo. In aggregate, the increase in organic sales was related to 14.8% growth in North America, partially offset by a 5.4% decline in International sales.

Sun and Skin Care segment loss for the first quarter of fiscal 2026 was $3.6, an increase of $0.2, or 5.9%, as compared to the prior year quarter, including a favorable impact from foreign currency of $0.3, or 8.8%. Organic segment loss increased $0.5 million, or 14.7%, driven by higher marketing, partly offset by higher gross profit.

General Corporate and Other Expenses

For the first quarter of fiscal 2026, corporate expenses were $75.5, or 17.9%, of net sales, compared to $55.9, or 13.5% in the prior year quarter.

During the first quarter of fiscal 2026, corporate expenses increased primarily related to higher people costs and unfavorable currency impacts, partly offset by lower consulting and corporate expenses. General corporate and other expenses includes indirect corporate overhead costs previously allocated to the Feminine Care segment.

During the first quarter of fiscal 2026, we recorded a charge of $1.0 related to a legal matter.

During the first quarter of fiscal 2026 and 2025, we recorded a gain of $1.5 and $0.9, respectively, for the fair value measurement of certain equity interests accounted for under the cost and equity methods.

Liquidity and Capital Resources

As of December 31, 2025, a significant portion of our cash balances 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 16 of Notes to Condensed 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.

Our total borrowings as of December 31, 2025 and September 30, 2025 were as follows:

Our Revolver utilization is summarized below.

As noted above, on February 2, 2026, we closed on the sale of our Feminine Care segment to Essity. We used proceeds from this sale to repay all outstanding borrowings under our Revolver. The remaining proceeds are expected to be used for continued investment in our core brands, capital expenditures and other growth initiatives. We estimate approximately $55 million of cash taxes to be paid on the tax gain from the sale.

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 businesses, typically resulting in higher net sales and increased cash generated in the second and third quarters of each fiscal year. We believe our cash on hand, including remaining proceeds from the sale of our Feminine Care segment, cash flows from operations and borrowing capacity under the U.S. Revolving Credit Facility will be sufficient to satisfy our future working capital requirements, interest payments, R&D activities, capital expenditures, and other capital requirements for at least the next 12 months. We will continue to monitor our cash flows, spending and liquidity needs. For more information on the U.S. Revolving Credit Facility and our other debt, see Note 11 to the Notes To Condensed Consolidated Financial Statements and Note 12 of the Notes to Consolidated Financial Statements in our 2025 Annual Report.

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.

As of December 31, 2025, we were in compliance with the provisions and covenants associated with our debt agreements.

Cash Flows

A summary of our cash flow activities is provided in the following table:

Operating Activities

Cash flow used for operating activities was $125.9 during the first three months of fiscal 2026, compared to $115.6 during the prior year quarter. The increase in cash used for operating activities was largely driven by changes in net working capital and lower earnings.

Investing Activities

Net cash used for investing activities was $9.9 during the first three months of fiscal 2026, compared to $15.7 during the prior year quarter. The decrease in cash used was primarily due to a decrease in capital expenditures, which were $11.6 during the first three months of fiscal 2026, compared to $16.8 in the prior year quarter.

Financing Activities

Net cash provided by financing activities was $133.4 during the first three months of fiscal 2026, compared to $109.9 in the prior year quarter. During the first three months of fiscal 2026, we had net borrowings of $137.0 under the U.S. Revolving Credit Facility, compared to net borrowing of $165.0 in the prior year quarter. Dividend payments totaled $7.4 in the first three months of fiscal 2026, compared to $7.9 in the prior year quarter. We had no share repurchases in the first three months of fiscal 2026, compared to $30.3 in the prior year quarter.

Share Repurchases

On November 13, 2025, the Board approved an authorization to repurchase for up to $100.0, superseding the previous share repurchase authorization from January 2018, when the Board approved an authorization to repurchase up to 10.0 shares of the Company's common stock. The full $100.0 authorized by the Board in November 2025 is available for future share repurchases. Any future share repurchases, if any, would be made in the open market, privately negotiated transactions or otherwise permitted, and in such amounts and at such times as the Company deems appropriate based upon prevailing market conditions, business needs and other factors. During the first three months of fiscal 2026, we did not repurchase any shares under the share repurchase plan. For more information, see Note 14 of the Notes to Condensed Consolidated Financial Statements.

Dividends

Dividend activity for the three months ended December 31, 2025 was as follows:

On February 5, 2026, the Board declared a quarterly cash dividend of $0.15 per common share for the first fiscal quarter of 2026. The dividend will be payable on April 8, 2026 to shareholders of record as the close of business on March 6, 2026.

Dividends declared during the three months ended December 31, 2025 totaled $7.0. Payments made for dividends during the three months ended December 31, 2025 totaled $7.4.

Commitments and Contingencies

Contractual Obligations

As of December 31, 2025, we had outstanding borrowings of $277.0 under the U.S. Revolving Credit Facility, which matures in 2029. As noted above, following the closing of the sale of the Feminine Care segment, we repaid all outstanding borrowings under the U.S. Revolving Credit Facility. As of December 31, 2025, future minimum repayments of fixed debt are: $750.0 in fiscal 2028 and $500.0 in fiscal 2029.

There have been no other material changes in our contractual obligations since the presentation in our 2025 Annual Report.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 1 of the Notes to Condensed Consolidated Financial Statements.

Critical Accounting Estimates

Our critical accounting estimates are fully described in our 2025 Annual Report. The preparation of these financial statements requires us to make estimates and assumptions. These estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates. There have been no significant changes to our critical accounting estimates since September 30, 2025.

(Amounts in millions)

The market risk inherent in our financial instruments and positions represents the potential loss arising from adverse changes in currency rates, commodity prices, and interest rates. At times, we enter into contractual arrangements (derivatives) to reduce these exposures. For further information on our foreign currency derivative instruments, refer to Note 16 of Notes to our Condensed Consolidated Financial Statements.

As of December 31, 2025, 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 Secured Overnight Financing Rate (SOFR) plus margin. As of December 31, 2025, our outstanding variable-rate debt included $308.4 related to the U.S. Revolving Credit Facility and international, variable-rate notes payable. Assuming a one-percent increase in the applicable interest rates, annual interest expense on these variable-rate debt instruments would increase approximately $3.1.

There have been no material changes in our assessment of market risk sensitivity since our presentation of Quantitative and Qualitative Disclosures About Market Risk in our 2025 Annual Report.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under 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 December 31, 2025. Based on that evaluation, our CEO and CFO concluded that, as of that date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are likely to materially affect, our internal control over financial reporting.

For a discussion of potential risks and uncertainties related to us, see the information included in Part I, Item 1A, "Risk Factors" of our 2025 Annual Report. There have been no material changes to the risk factors disclosed in our 2025 Annual Report.