Edgewell Personal Care(EPC) - 2023 Q2 - Quarterly Report

Financial Performance - Net sales for the first six months of fiscal 2023 increased 5.6% to $1,067.5 million, with organic net sales rising 7.6$598.4 million, with organic net sales up 11.4% driven by increased pricing and volumes [102]. - Net earnings in the second quarter of fiscal 2023 were $19.0 million, down from$23.2 million in the prior year quarter, while adjusted net earnings increased to $29.0 million from$27.0 million [102]. - Net earnings for the first six months of fiscal 2023 were $30.9 million, down from$34.4 million in the prior year period, with adjusted net earnings at $45.0 million compared to$50.2 million [104]. - Gross profit for the second quarter of fiscal 2023 was reported at $241.7 million, with a GAAP effective tax rate of 26.9$430.7 million, compared to $420.0 million in the prior year, with a gross margin of 40.3$200.9 million, or 18.8% of net sales, compared to $198.2 million, or 19.6$108.8 million, a decrease of 7.3 million from the prior year, with A&P as a percent of net sales at 10.2% compared to 11.5% [112]. - Research and development expense for the first six months of fiscal 2023 was 27.8 million, maintaining 2.6% of net sales, consistent with the prior year [113]. - Interest expense associated with debt for the first six months of fiscal 2023 was $40.6 million, up from$35.3 million in the prior year, due to higher interest rates and increased debt [115]. - The effective tax rate for the first six months of fiscal 2023 was 27.0%, compared to 20.5% in the prior year, reflecting an unfavorable mix of earnings in higher tax rate jurisdictions [117]. Acquisitions and Impact - The acquisition of Billie, Inc. was completed on November 29, 2021, for a purchase price of $309.4 million [98]. - Organic net sales will be negatively impacted in October and November of fiscal 2023 due to the Billie acquisition, as sales previously reported as third-party sales are now inter-company sales [91]. - Net sales for the first six months of fiscal 2023 were$1,067.5 million, an increase of 5.6%, driven by a $12.0 million contribution from the Billie acquisition and a$32.0 million unfavorable impact from currency movements [106]. Segment Performance - Wet Shave segment profit for the first six months of fiscal 2023 was $70.5 million, a decrease of 10.9$26.4 million, or 14.4%, with organic net sales up $27.5 million, or 15.0$20.7 million, or 34.9%, with organic net sales increasing by $21.0 million, or 35.4$39.9 million, a decrease of $2.4 million, or 5.6$12.0 million, an increase of $10.1 million, or 531.7$1.9 million during the first six months of fiscal 2023, compared to cash used of $39.9 million in the prior year [147]. - Net cash used by investing activities was$20.0 million during the first six months of fiscal 2023, significantly lower than $325.7 million in the prior year [148]. - Total borrowings as of March 31, 2023, were$1,447.5 million, including $195.2 million tied to variable interest rates [139]. - As of March 31, 2023, the company had outstanding variable-rate debt of$195.2 million related to its Revolving Credit Facility and international notes payable [157]. - A one-percent increase in applicable interest rates would result in an approximate $2.0 million increase in annual interest expense on variable-rate debt instruments [157]. Corporate Governance and Compliance - The company utilizes non-GAAP measures to provide insights into operational results, excluding costs related to restructuring, acquisitions, and other non-standard items [90]. - The company emphasizes the importance of non-GAAP measures for internal decision-making and believes they provide more transparency for investors [90]. - The company expects to incur approximately$19 million in charges related to its operating model redesign in fiscal 2023, with $6.0 million incurred in the first six months [118]. - Corporate expenses for Q2 fiscal 2023 were$17.0 million, or 10.2% of net sales, compared to $17.2 million, or 8.2% of net sales in the prior year [135]. - As of March 31, 2023, the company was in compliance with the provisions and covenants associated with its debt agreements [144]. - There have been no open derivative or hedging instruments for future purchases of raw materials or commodities as of March 31, 2023 [157]. - The company's assessment of market risk sensitivity has not materially changed since the 2022 Annual Report [158].