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(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 theSEC onNovember 19, 2021 (the "2021 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 2021 Annual Report.
Forward-Looking Statements
This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf ofEdgewell Personal Care Company ("Edgewell," "we" or "our Company") or any of our businesses. Forward-looking statements generally can be identified by the use of words or phrases such as "believe," "expect," "expectation," "anticipate," "may," "could," "intend," "belief," "estimate," "plan," "target," "predict," "likely," "will," "should," "forecast," "outlook," 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 our Company or any of our businesses, and the integration of theBillie, Inc. ("Billie") acquisition and expected benefits from this transaction, including growth opportunities and cost savings. 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. In addition, other risks and uncertainties not presently known to us or that we presently consider immaterial could significantly affect the forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. 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 our 2021 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 such as restructuring costs, acquisition and integration costs, and other non-standard items. 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, including the acquisition of Billie, 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.
The following provides additional detail on our non-GAAP measures:
•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 and the impact
of the Billie acquisition.
•Organic net sales will be unfavorably impacted in fiscal 2022 by the Billie
acquisition as sales that were previously reported as third party sales to
Billie are now included as inter-company sales.
•Segment profit will be unfavorably impacted in fiscal 2022 as a result of a
change in the timing of profit recognition due to the Billie acquisition.
Subsequent to the acquisition of Billie, profit previously earned on sales to
Billie will be deferred until Billie sells to a third party.
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•Additionally, we utilize "adjusted" non-GAAP measures including gross profit,
SG&A, operating income, income taxes, net earnings, and diluted earnings per
share internally to make operating decisions. The following items are excluded
when analyzing non-GAAP measures: restructuring and related costs, acquisition
and integration costs, stock keeping unit ("SKU") rationalization charges, legal
settlements and other non-standard items.
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 2021 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
Trademarks and
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.
Impact of the COVID-19 Pandemic
Throughout the novel coronavirus 2019 ("COVID-19") pandemic, we have taken and
continue to take significant measures to protect our employees and businesses,
while remaining in compliance with local and national guidelines.
The Company's top priority during this time continues to be ensuring the health
and welfare of our employees and additional health and safety measures have been
put in place at all of our manufacturing locations. To date, we have not
experienced a material operational disruption across our manufacturing or
distribution facilities.
The prolonged COVID-19 pandemic environment has resulted in increased supply
chain challenges across labor management, product procurement and distribution.
The continued duration and severity of the COVID-19 pandemic may cause further
disruptions related to our key suppliers, increase procurement and distribution
costs and impact our ability to hire and retain employees, which may result in
higher labor costs going forward. However, the impact, timing and severity of
potential disruptions cannot be reasonably estimated at this time.
We expect to maintain adequate liquidity, and we will continue to assess the
impact that the COVID-19 pandemic has on our liquidity needs and current
economic market conditions. As noted within "Liquidity and Capital Resources"
below, the COVID-19 pandemic has not had a significant impact on our liquidity,
cash flows or capital resources.
Significant Events
Acquisitions
On November 29, 2021 , the Company completed the acquisition of Billie, a leading
U.S. based consumer brand company that offers a broad portfolio of personal care
products for women, for a purchase price of $309.4 , net of cash acquired. We
purchased Billie utilizing a combination of cash on hand and drawing on our U.S.
revolving credit facility due 2025 ("Revolving Credit Facility"). As a result,
Billie became a wholly owned subsidiary of the Company. Refer to Note 2 of Notes
to Condensed Consolidated Financial Statements for further discussion.
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Executive Summary
The following is a summary of key results for the third quarter and first nine
months of fiscal 2022 compared to the prior year period. Net earnings and
earnings per share ("EPS") for the periods presented were impacted by
restructuring and related costs, acquisition and integration costs, and other
non-standard items, 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.
Third Quarter of Fiscal 2022
•Net sales in the third quarter of fiscal 2022 increased 8.7% to$623.8 . Organic net sales increased 9.0% compared to the prior year quarter, with growth across all segments including strong growth inSun Care , Feminine Care and Women's shave across both North American and International markets. •Net earnings in the third quarter of fiscal 2022 were$30.5 compared to$40.8 in the prior year quarter. On an adjusted basis, net earnings for the third quarter of fiscal 2022 were$45.8 compared to$49.2 in the prior year quarter. Adjusted earnings declined compared to the prior year quarter despite higher net sales, due to lower gross margins from inflationary pressures including higher materials, labor, and warehousing and distribution costs. •Net earnings per diluted share during the third quarter of fiscal 2022 were$0.57 compared to$0.74 in the prior year quarter. On an adjusted basis, net earnings per diluted share during the third quarter of fiscal 2022 were$0.86 compared to$0.89 in the prior year quarter. Three Months Ended June 30, 2022 Gross Profit SG&A Operating Income EBIT(1) Income taxes Net Earnings Diluted EPS GAAP - Reported$ 240.6 $ 92.7 $ 49.9$ 36.3 $ 5.8 $ 30.5$ 0.57 Restructuring and related costs - 0.4 3.9 3.9 0.9 3.0 0.06 Acquisition and integration costs - 0.9 0.9 0.9 0.3 0.6 0.01 SKU rationalization charges 22.5 - 22.5 22.5 5.5 17.0 0.32 Legal settlement - (7.5) (7.5) (7.5) (1.8) (5.7) (0.11) Sun Care reformulation costs - - 0.6 0.6 0.2 0.4 0.01
Total Adjusted Non-GAAP
70.3$ 56.7 $ 10.9 $
45.8$ 0.86 GAAP as a percent of net sales 38.6 % 14.9 % 8.0 % GAAP effective tax rate 16.1 % Adjusted as a percent of net sales 42.2 % 15.9 % 11.3 % Adjusted effective tax rate 19.3 % Three Months Ended June 30, 2021 Gross Profit SG&A Operating Income EBIT(1) Income taxes Net Earnings Diluted EPS GAAP - Reported$ 270.3 $ 97.5 $ 71.1$ 53.9 $ 13.1 $ 40.8$ 0.74 Restructuring and related costs 0.2 2.8 8.2 8.2 2.0 6.2 0.11 Acquisition and integration costs - 1.3 1.3 1.3 0.3
1.0 0.02 UK tax rate increase - - - - (1.2) 1.2 0.02 Total Adjusted Non-GAAP$ 270.5 $ 93.4 $
80.6$ 63.4 $ 14.2 $
49.2$ 0.89 GAAP as a percent of net sales 47.1 % 17.0 % 12.4 % GAAP effective tax rate 24.2 % Adjusted as a percent of net sales 47.2 % 16.3 % 14.0 % Adjusted effective tax rate 22.4 %
(1) EBIT is defined as Earnings before Income taxes.
First Nine Months of Fiscal 2022
•Net sales for the first nine months of fiscal 2022 increased 5.9% to$1,634.8 . Organic net sales increased 4.8% compared to the prior year period, due to growth inSun Care globally, growth in Wet Shave in International markets and growth in Women's shave, Feminine Care and Grooming inNorth America . 24 -------------------------------------------------------------------------------- •Net earnings for the first nine months of fiscal 2022 were$64.9 compared to$72.9 in the prior year. On an adjusted basis, net earnings for the first nine months of fiscal 2022 were$96.0 compared to$111.0 in the prior year period. Adjusted earnings were down due to higher cost of goods sold from inflationary pressures, higher A&P and increased Selling, General and Administrative ("SG&A") expense, largely related to amortization costs associated with the Billie acquisition. •Net earnings per diluted share during the first nine months of fiscal 2022 were$1.20 compared to$1.32 in the prior year period. On an adjusted basis, as illustrated in the following table, net earnings per diluted share during the first nine months of fiscal 2022 were$1.77 compared to$2.01 in the prior year quarter.
Nine Months Ended
Operating
Gross Profit SG&A Income EBIT(1) Income taxes Net Earnings Diluted EPS
GAAP - Reported $ 660.6 $ 290.9 $ 123.4 $ 79.6 $ 14.7 $ 64.9 $ 1.20
Restructuring and related
costs - 0.6 9.8 9.8 2.5 7.3 0.14
Acquisition and integration
costs 0.8 7.2 8.0 8.0 0.8 7.2 0.13
SKU rationalization charges 22.5 - 22.5 22.5 5.5 17.0 0.31
Legal settlement - (7.5) (7.5) (7.5) (1.8) (5.7) (0.11)
Value-added tax settlement
costs - 3.4 3.4 3.4 1.1 2.3 0.04
Sun Care reformulation costs 3.5 - 4.1 4.1 1.1 3.0 0.06
Total Adjusted Non-GAAP
$ 119.9 $ 23.9 $ 96.0
GAAP as a percent of net
sales 40.4 % 17.8 % 7.5 % GAAP effective tax rate 18.5 %
Adjusted as a percent of net
sales 42.0 % 17.6 % 10.0 % Adjusted effective tax rate 20.0 %
Nine Months Ended June 30, 2021
Operating
Gross Profit SG&A Income EBIT(1) Income taxes Net Earnings Diluted EPS
GAAP - Reported $ 705.3 $ 284.0 $ 175.6 $ 98.6 $ 25.7 $ 72.9 $ 1.32
Restructuring and related
costs 0.3 6.2 18.1 18.1 4.4 13.7 0.25
Acquisition and integration
costs 1.3 3.3 4.6 4.6 1.1 3.5
0.06
Cost of early retirement of long-term debt - - - 26.1 6.4 19.7 0.36 UK tax rate increase - - - - (1.2) 1.2 0.02 Total Adjusted Non-GAAP$ 706.9 $ 274.5 $ 198.3 $ 147.4 $ 36.4 $ 111.0 $ 2.01 GAAP as a percent of net sales 45.7 % 18.4 % 11.4 % GAAP effective tax rate 26.1 % Adjusted as a percent of net sales 45.8 % 17.8 % 12.8 % Adjusted effective tax rate 24.8 %
(1) EBIT is defined as Earnings before Income taxes.
Operating Results
The following table presents changes in net sales for the third quarter and first nine months of fiscal 2022, as compared to the corresponding period in fiscal 2021, and provides a reconciliation of organic net sales to reported amounts.
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Net Sales Net Sales -Total Company Period EndedJune 30, 2022 Q3 % Chg Nine Months % Chg Net sales - fiscal 2021$ 573.7 $ 1,544.1 Organic 51.4 9.0 % 73.8 4.8 % Impact of Billie acquisition, net 21.1 3.7 % 55.3 3.6 % Impact of currency (22.4) (4.0) % (38.4) (2.5) % Net sales - fiscal 2022$ 623.8 8.7 %$ 1,634.8 5.9 % For the third quarter of fiscal 2022, net sales were$623.8 , an increase of 8.7%, including a$21.1 or 3.7% impact from the acquisition of Billie and a$22.4 or 4.0% unfavorable impact from currency movements. Organic net sales increased 9.0%, reflecting increased volumes and higher pricing in the quarter.North America organic net sales increased 9.3% and International organic net sales increased 8.4%. For the first nine months of fiscal 2022, net sales were$1,634.8 , an increase of 5.9%, including a$55.3 or 3.6% impact from the acquisition of Billie and a$38.4 or 2.5% unfavorable impact from currency movements. Organic net sales increased 4.8% driven by increases across multiple product lines including Wet Shave,Sun Care , Grooming and Feminine Care. The increases were offset by declines in volumes inSkin Care .
For further discussion regarding net sales, including a summary of reported versus organic changes, see “Segment Results.”
Gross Profit
Gross profit was$240.6 during the third quarter of fiscal 2022, compared to$270.3 in the prior year quarter. Gross margin as a percent of net sales for the third quarter of fiscal 2022 was 38.6%. Included in Cost of products sold was a$22.5 charge for the write-off of inventory for certain Wet Ones SKUs and a related contract termination charge. Adjusted gross margin percentage was 42.2% compared to 47.2% in the prior year quarter, a decline of 500-basis points compared to the prior year quarter, as a 440-basis point net impact from higher commodity and transportation related costs net of productivity savings, and a 190-basis point combined impact from negative mix, higher trade spend and unfavorable currency, were only partly offset by the benefit from pricing. Gross profit was$660.6 during the first nine months of fiscal 2022, compared to$705.3 in the prior year period. Gross margin as a percent of net sales for the first nine months of fiscal 2022 was 40.4% compared to 45.7% in the prior year period. Included in Cost of products sold was a$22.5 charge for the write-off of inventory for certain Wet Ones SKUs and a related contract termination charge. Adjusted gross margin percentage was 42.0%, down 380-basis points from 45.8% in the prior year period, driven by commodity inflation, higher warehousing and distribution expenses, and unfavorable product mix, which were partially offset by favorable pricing.
Selling, General and Administrative Expense
SG&A was$92.7 in the third quarter of fiscal 2022, or 14.9% of net sales, compared to$97.5 in the prior year quarter, or 17.0% of net sales. Included in SG&A was a$7.5 gain related to a favorable legal settlement. Adjusted SG&A as a percent of net sales was 15.9%, a decline of 40-basis points, as leverage from increased net sales, benefits from operational efficiency programs, and favorable currency translation more than offset the impact of the Billie acquisition, including amortization, and higher overall compensation expense. SG&A was$290.9 in the first nine months of fiscal 2022, or 17.8% of net sales, compared to$284.0 in the prior year period, or 18.4% of net sales. Included in SG&A was a$7.5 gain related to a favorable legal settlement. Adjusted SG&A as a percent of net sales was 17.6%, a decline of 20-basis points, driven largely by leverage related to higher total net sales and the benefit from operational efficiency programs. The decline was partially offset by additional costs incurred associated with the Billie acquisition, including amortization expense as well as overall inflation.
Advertising and Sales Promotion Expense
For the third quarter of fiscal 2022, A&P was$80.9 , down$1.0 compared to the prior year quarter of$81.9 . A&P as a percent of net sales was 13.0%, as compared to 14.3% in the prior year quarter as increased spending in support of Billie, Feminine Care and sun season execution were more than offset by lower spend in International markets, and the impact of currency translation. For the first nine months of fiscal 2022, A&P was$197.0 , up$5.5 compared to the prior year period. A&P as a percent of net sales was 12.1%, down from 12.4% in the prior year period. The increase in A&P expense was primarily driven by increases in support ofSun Care after the COVID-19 pandemic-related declines in the prior year and additional A&P expense for Grooming products. 26 --------------------------------------------------------------------------------
Research and Development Expense
Research and development expense ("R&D") for the third quarter of fiscal 2022
was $13.6 , compared to $14.6 in the prior year quarter. As a percent of net
sales, R&D was 2.2% in the third quarter of fiscal 2022 compared to 2.5% in the
prior year quarter. R&D for the first nine months of fiscal 2022 was $40.1 ,
compared to $42.6 in the prior year period. As a percent of net sales, R&D was
2.5% in the first nine months of fiscal 2022, compared to 2.8% in the prior year
period. R&D expense was down compared to the prior year driven primarily by
lower program spend.
Interest Expense Associated with Debt
Interest expense associated with debt for the third quarter of fiscal 2022 was$18.0 , compared to$16.4 in the prior year quarter. For the first nine months of fiscal 2022, interest expense was$53.3 compared to$51.1 in the prior year period. The increase in interest expense was the result of higher overall debt balance from draws on the Revolving Credit Facility in fiscal 2022 primarily to finance the acquisition of Billie.
Other (Income) Expense, net
Other (income) expense, net was income of$4.4 in the third quarter of fiscal 2022, compared to expense of$0.8 in the prior year quarter. Other (income) expense, net was income of$9.5 during the first nine months of fiscal 2022, compared to income of$0.2 during the first nine months of fiscal 2021. The increase in income was driven by favorable foreign currency hedge settlements compared to the prior year, which helped to offset other negative operational impacts from currency. Income Tax Provision The effective tax rate for the three and nine months endedJune 30, 2022 was 16.1% and 18.5%, respectively, compared to 24.2% and 26.1% in the prior year period, respectively. On an adjusted basis, the effective tax rate was 19.3% and 20.0% for the three and nine months endedJune 30, 2022 , respectively, and 22.4% and 24.8% for the three and nine months endedJune 30, 2021 , respectively. The fiscal 2022 effective tax rate and adjusted effective tax rate reflect a favorable mix of earnings in low tax jurisdictions and a favorable impact of a change in our prior estimates.
Operating Model Redesign
In fiscal 2022, we are taking specific actions to strengthen our operating model, simplify our organization and improve manufacturing and supply chain efficiency and productivity. As a result of these actions, we expect to incur one-time charges of approximately$15 in fiscal 2022. We incurred$3.9 and$9.8 during the third quarter and first nine months of fiscal 2022, respectively, primarily related to employee severance and benefit costs.
Segment Results
The following tables present changes in segment net sales and segment profit for the third quarter and first nine months of fiscal 2022, compared to the corresponding periods in fiscal 2021, and provide a reconciliation of organic segment net sales and organic segment profit to reported amounts. For a reconciliation of segment profit to Earnings before income taxes, refer to Note 15 of Notes to Condensed Consolidated Financial Statements. Our operating model includes some shared business functions across segments, including product warehousing and distribution, transaction processing functions and, in most cases, a combined sales force and management teams. We apply a fully allocated cost basis in which shared business functions are allocated between segments.
Net sales and segment profit activity related to Billie products were included in the Wet Shave segment for the post-acquisition period.
Wet ShaveNet Sales - Wet Shave Period EndedJune 30, 2022 Q3 % Chg Nine Months % Chg Net sales - fiscal 2021$ 304.9 $ 876.7 Organic 19.1 6.3 % 19.0 2.2 % Impact of Billie acquisition, net 21.1 6.9 % 55.3 6.3 % Impact of currency (18.8) (6.2) % (33.6) (3.9) % Net sales - fiscal 2022$ 326.3 7.0 %$ 917.4 4.6 % Wet Shave net sales for the third quarter of fiscal 2022 increased 7.0% compared to the prior year quarter, inclusive of a 6.9% increase from the acquisition of Billie and a 6.2% decline due to currency movements. Organic net sales increased$19.1 , or 6.3%, driven by increases in Men's and Women's Systems, Disposables, and Shave Preps. Organic net sales inNorth America 27 --------------------------------------------------------------------------------
increased 5.2%, reflecting higher volumes and price, while International organic net sales increased 7.1%, primarily driven by higher volumes.
Wet Shave net sales for the first nine months of fiscal 2022 increased 4.6%, inclusive of a 6.3% increase from the acquisition of Billie and a 3.9% decline due to currency movements. Organic net sales increased 2.2% compared to the prior year driven by increases in Women's Systems, Disposables, and Shave Preps, offset by declines in Men's Systems. Organic net sales in International markets increased 4.2% compared to declines inNorth America of 0.4%. Segment Profit - Wet Shave Period EndedJune 30, 2022 Q3 % Chg Nine Months % Chg Segment profit - fiscal 2021$ 43.1 $ 141.6 Organic 0.2 0.5 % (7.5) (5.3) % Impact of Billie acquisition, net (1.0) (2.3) % (8.6) (6.1) % Impact of currency (4.8) (11.2) % (8.9) (6.3) % Segment profit - fiscal 2022$ 37.5 (13.0) %$ 116.6
(17.7) %
Wet Shave segment profit for the third quarter of fiscal 2022 was$37.5 , down$5.6 , or 13.0%. Organic segment profit increased$0.2 , or 0.5%, reflecting lower A&P expense, partially offset by lower gross profit. Wet Shave segment profit for the first nine months of fiscal 2022 was$116.6 , down$25.0 , or 17.7%. Organic segment profit decreased$7.5 , or 5.3%, primarily due to inflationary pressures resulting in higher commodity costs and warehousing and distribution costs, partially offset by favorable pricing and lower A&P expense. Sun andSkin Care Net Sales - Sun andSkin Care Period EndedJune 30, 2022 Q3 % Chg Nine Months % Chg Net sales - fiscal 2021$ 195.2 $ 457.7 Organic 24.6 12.6 % 51.4 11.2 % Impact of currency (3.6) (1.8) % (4.8) (1.0) % Net sales - fiscal 2022$ 216.2 10.8 %$ 504.3 10.2 % Sun andSkin Care net sales for the third quarter of fiscal 2022 increased 10.8%. Organic net sales increased$24.6 , or 12.6%. The increase in organic net sales was largely driven bySun Care organic growth of approximately 15%, reflecting distribution gains inNorth America and continued category recovery in International markets. Additionally, Grooming organic net sales increased 7.5%, driven by 14% growth in International, while Wet Ones organic net sales returned to growth, increasing 7.4%. Sun andSkin Care net sales for the first nine months of fiscal 2022 increased 10.2%. Organic net sales increased$51.4 , or 11.2%. Organic net sales increases were driven by higherSun Care volumes, resulting in growth of 23% globally, partially offset by unfavorable trade and coupons. Men's Grooming increased 7%, driven by Cremo andJack Black . Wet Ones organic net sales declined 23%, driven by lower volumes as demand fell during the first six months of fiscal 2022 to pre-COVID-19 pandemic levels. Segment Profit - Sun andSkin Care Period EndedJune 30, 2022 Q3 % Chg Nine Months % Chg Segment profit - fiscal 2021$ 45.0 $ 86.4 Organic 2.2 4.9 % 6.9 8.0 % Impact of currency (0.6) (1.3) % (0.7) (0.8) % Segment profit -fiscal 2022$ 46.6 3.6 %$ 92.6
7.2%
Segment profit for the third quarter of fiscal 2022 was$46.6 , an increase of$1.6 . Organic segment profit increased$2.2 , as higher sales inSun Care were partially offset by inflationary cost pressures and higher A&P spend.
Segment profit for the first nine months of fiscal 2022 was
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Feminine CareNet Sales - Feminine Care Period EndedJune 30, 2022 Q3 % Chg Nine Months % Chg Net sales - fiscal 2021$ 73.6 $ 209.7 Organic 7.7 10.5 % 3.4 1.6 % Impact of currency - - % - - % Net sales - fiscal 2022$ 81.3 10.5 %$ 213.1 1.6 %
Feminine Care net sales for the third quarter of fiscal 2022 increased
Feminine Care net sales for the first nine months of fiscal 2022 increased
Segment Profit - Feminine Care Period EndedJune 30, 2022 Q3 %Chg Nine Months
%Chg
Segment profit -fiscal 2021$ 13.7 $ 28.1 Organic (4.8) (35.1) % (9.0) (32.0) % Impact of currency (0.1) (0.7) % - - % Segment profit - fiscal 2022$ 8.8 (35.8) %$ 19.1
(32.0) %
Feminine Care segment profit for the third quarter of fiscal 2022 was$8.8 , a decrease of$4.9 , or 35.8%, largely driven by lower gross profit, reflecting higher commodity and transportation related costs, as well as increased A&P support.
Feminine Care segment profit for the first nine months of fiscal 2022 was
a decrease of
General Corporate and Other Expenses
Quarter Ended June 30, Nine Months Ended June 30,
2022 2021 2022 2021
Corporate expenses $ 14.8 $ 15.7 $ 42.8 $ 41.2
Restructuring and related costs 3.9 8.2 9.8 18.1
Acquisition and integration costs 0.9 1.3 8.0 4.6
SKU rationalization charges 22.5 - 22.5 -
Legal settlement (7.5) - (7.5) -
Value-added tax settlement costs - - 3.4 -
Sun Care reformulation costs 0.6 - 4.1 -
Cost of early retirement of long-term debt - - - 26.1
General corporate and other expenses $ 35.2 $ 25.2 $ 83.1 $ 90.0
% of net sales 5.6 % 4.4 % 5.1 % 5.8 %
For the third quarter of fiscal 2022, corporate expenses were $14.8 , or 2.4% of
net sales, compared to $15.7 , or 2.7% of net sales. For the first nine months of
fiscal 2022, corporate expenses were $42.8 , or 2.6% of net sales, compared to
$41.2 , or 2.7% of net sales. For the third quarter of fiscal 2022, the decline
in corporate expense was primarily due to lower discretionary spending. For the
nine months ended June 30, 2022 , the increase in corporate expense was primarily
due to higher salary and benefit costs.
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Liquidity and Capital Resources
AtJune 30, 2022 , a portion of our cash balances were located outside theU.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies. Refer to Note 14 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.
The counterparties that hold our deposits consist of major financial institutions. We consistently monitor positions with, and the credit ratings of, counterparties both internally and by using outside ratings agencies.
Our total borrowings were$1,389.9 atJune 30, 2022 , including$139.9 tied to variable interest rates. Our total borrowings atSeptember 30, 2021 were$1,276.5 . We had outstanding borrowings of$121.0 under the Revolving Credit Facility atJune 30, 2022 , primarily to fund the acquisition of Billie. Taking into account outstanding letters of credit of$6.5 , as ofJune 30, 2022 ,$297.5 was available under the Revolving Credit Facility. We had outstanding international borrowings, recorded in Notes payable, of$18.9 and$26.5 as ofJune 30, 2022 andSeptember 30, 2021 , respectively.
Effective
Historically, we have generated, and expect to continue to generate, positive cash flows from operations. Our cash flows are affected by the seasonality of ourSun Care products, typically resulting in higher net sales and increased cash generated in the second and third quarter of each fiscal year. While we cannot reasonably estimate the full impact of the COVID-19 pandemic will have on our cash flows, we believe our cash on hand, cash flows from operations and borrowing capacity under our 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. To date, the COVID-19 pandemic has not had a significant impact on our liquidity or capital resources. However, the COVID-19 pandemic has led to disruption and volatility in the global capital markets, which, depending on future developments, could impact our capital resources and liquidity in the future. Short-term financing needs consist primarily of working capital requirements and principal 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 on 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
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Cash Flows
A summary of our cash flow activities is provided in the following table:
Nine Months Ended June 30,
2022 2021
Net cash from (used by):
Operating activities $ 72.4 $ 155.9
Investing activities (337.6) (26.1)
Financing activities (21.4) (59.9)
Effect of exchange rate changes on cash (11.0) 2.9
Net (decrease) increase in cash and cash equivalents $ (297.6) $ 72.8
Operating Activities
Cash flow from operating activities was $72.4 during the first nine months of
fiscal 2022, compared to $155.9 during the prior year period. The decrease in
cash flows versus the same period in the prior year was driven by a larger net
working capital build.
Investing Activities
Cash flow used by investing activities was $337.6 during the first nine months
of fiscal 2022, compared to $26.1 used during the prior year period. We
completed the acquisition of Billie for $309.4 , net of cash acquired, in fiscal
2022. Additionally, we collected $5.0 of proceeds from the sale of the Infant
and Pet Care business during the first nine months of fiscal 2022, compared to
$7.5 in the prior year period. Capital expenditures were $37.4 during the first
nine months of fiscal 2022, compared to $34.1 in the prior year period.
Financing Activities
Net cash used by financing activities was$21.4 during the first nine months of fiscal 2022, compared to$59.9 in the prior year period. During the first nine months of fiscal 2022, we had net borrowings of$121.0 under our Revolving Credit Facility, primarily to fund the acquisition of Billie. We repurchased$110.1 of our common stock under our 2018 Board authorization to repurchase our common stock (the "Repurchase Plan") compared to$9.2 in the prior year period. Dividend payments totaled$24.7 in the first nine months of fiscal 2022, compared to$16.7 in the prior year period. We had financing outflows for employee equity awards held for taxes totaling$10.4 in the first nine months of fiscal 2022, compared to$4.0 in the prior year period. In fiscal 2021, we replaced our$500 2022 Senior Notes with the issuance of$500 2029 Senior Notes. Additional financing cash outflows incurred in fiscal 2021 were related to costs of early debt retirement of the 2022 Senior Notes totaling$26.1 and debt issuance costs of$6.5 . Share Repurchases During the first nine months of fiscal 2022, we repurchased 2.9 shares of our common stock for$110.1 . We have 6.9 shares remaining under the Repurchase Plan. 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. Dividends OnFebruary 4, 2022 , the Board declared a quarterly cash dividend of$0.15 per common share for the first fiscal quarter. The dividend was paidApril 5, 2022 , to stockholders of record as of the close of business onMarch 8, 2022 .
On
Dividends declared during the nine months endedJune 30, 2022 totaled$24.7 . Payments made for dividends during the nine months endedJune 30, 2022 totaled$24.7 . OnJuly 29, 2022 , the Board of Directors declared a quarterly cash dividend of$0.15 per common share for the third fiscal quarter. The dividend will be payable onOctober 5, 2022 to shareholders of record as of the close of business onSeptember 2, 2022 . 31 --------------------------------------------------------------------------------
Commitments and Contingencies Contractual Obligations AtJune 30, 2022 , we had outstanding borrowings of$121.0 under the Revolving Credit Facility. As ofJune 30, 2022 , future minimum repayments of debt were:$121.0 in fiscal 2025,$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 2021 Annual Report.
Critical Accounting Policies
Our critical accounting policies and estimates are fully described in our Annual Report on Form 10-K for the year endedSeptember 30, 2021 , as filed with theSecurities and Exchange Commission ( the "SEC") onNovember 19, 2021 . 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 policies and estimates sinceSeptember 30, 2021 . 32
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