Edgewell Personal Care Co. - 10-Q Summary (Q2 2026)
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026 (Second Quarter of Fiscal 2026). Edgewell Personal Care Company operates in two primary segments: Wet Shave (Schick, Wilkinson Sword) and Sun and Skin Care (Banana Boat, Hawaiian Tropic, Jack Black). A material event during this period was the divestiture of the Feminine Care segment to Essity on February 2, 2026, for approximately $340 million. Results for this segment are now reported as discontinued operations.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Sales | $519.5M | $516.6M | $942.3M | $931.7M |
| Gross Profit | $216.9M | $236.9M | $377.9M | $409.4M |
| Gross Margin % | 41.8% | 45.9% | 40.1% | 43.9% |
| Operating Income (Loss) | $18.4M | $49.0M | $(0.5)M | $58.3M |
| Net Income (Loss) - Continuing Ops | $4.0M | $20.8M | $(25.2)M | $10.7M |
| Net (Loss) Income - Total | $(10.6)M | $29.0M | $(76.3)M | $26.9M |
| Diluted EPS - Continuing Ops | $0.09 | $0.43 | $(0.54) | $0.22 |
| Cash and Equivalents | $299.7M | (Balance Sheet as of Mar 31, 2026) | ||
| Long-Term Debt | $1,244.4M | (Balance Sheet as of Mar 31, 2026) |
Liquidity: The company holds $299.7M in cash and cash equivalents. The U.S. Revolving Credit Facility was fully paid down using proceeds from the Feminine Care divestiture, leaving $418.8M in available revolver capacity.
Material Changes vs. Prior Period
- Revenue: Net sales increased 0.6% QoQ and 1.1% YTD, driven by favorable currency impacts (+3.0% QoQ). However, organic sales declined 2.4% in Q2 and 1.6% YTD due to lower volumes in Wet Shave and Sun Care in North America.
- Profitability: Operating income dropped significantly due to higher restructuring charges ($14.0M in Q2 vs. $11.8M prior year) and inflationary pressures. Gross margin contracted by 410 basis points in Q2.
- Discontinued Operations: The sale of the Feminine Care segment resulted in a net loss of $14.6M in Q2 and $51.1M YTD, primarily due to a $37.4M goodwill impairment charge and tax provisions related to the divestiture.
- Debt: Total borrowings decreased from $1,419.5M (Sep 2025) to $1,285.1M (Mar 2026) following the repayment of the revolving credit facility.
Guidance, Outlook, and Risks
- Restructuring: Management expects to incur approximately $90M in pre-tax restructuring charges for Fiscal 2026 to streamline operations, including consolidating Mexico facilities and North American Wet Shave operations.
- Outlook: Adjusted net earnings from continuing operations were $27.8M in Q2 (down from $32.9M prior year). Management cites lower gross profit and higher operating expenses as headwinds, partially offset by lower interest expense.
- Tariff Refunds: Following a Supreme Court ruling on IEEPA tariffs, the company is evaluating potential refunds for previously paid tariffs. No asset has been recognized yet due to uncertainty regarding timing and amount.
- Risks: Key risks include raw material inflation, supply chain disruptions (Middle East conflict), currency fluctuations, and the ability to offset cost increases through pricing or productivity.
Investor Verification Checklist
- Divestiture Impact: Verify the final tax implications and transition service agreement (TSA) revenue recognition ($6.7M recognized in Q2) following the Feminine Care sale.
- Organic Volume Trends: Confirm the sustainability of volume declines in North America Wet Shave and Sun Care segments despite international growth.
- Restructuring Execution: Monitor the $90M restructuring plan execution and its impact on future operating margins and cash flow.
- Tariff Refund Status: Track the administrative process for IEEPA tariff refunds, which could provide a future non-cash or cash benefit.
- Capital Allocation: Review the use of remaining divestiture proceeds ($84.9M remaining for share repurchases) and dividend sustainability ($0.15/share quarterly).