by a return to normalized growth trends in international and continued growth in North America. We also continue to expect material gross margin expansion in the fourth quarter, driven primarily by significant productivity savings, the cycling of one-time costs from a year ago, and favorable foreign exchange. While we have modestly reduced our full year gross margin rate outlook to reflect a somewhat more challenging cost environment and the impact of lower international sales in the third quarter, we continue to expect gross margin expansion for the full year. Importantly, we remain committed to our planned level of investment behind the business as our expectations for AMP are largely unchanged. We expect favorable SG&A and financing items to provide some offset. Overall, our outlook remains consistent with the framework we outlined at the beginning of the year. While the operating environment remains dynamic, we continue to expect stronger fourth quarter performance, gross margin expansion, and adjusted EBITDA and adjusted EPS and free cash flow that remain largely in line with prior expectations. Just as importantly, we are maintaining our planned investment levels behind our brands and strategic priorities while continuing to improve productivity and offset external pressures. With that context, I'll walk through the core metrics of our Fiscal 26 Outlook. Organic net sales are expected to be in the range of flat to plus 50 basis points. Adjusted EPS is expected to be in the range of $1.80 to $2 per share. Adjusted EBITDA is expected to be in the range of $250 to $260 million. Adjusted free cash flow excluding the impacts of FemCare divestiture is expected to be approximately $80 to $110 million. And we expect adjusted net debt leverage to end the year in the range of 3.3 to 3.4 times, which includes an estimated 0.3 to 0.4 negative turn impact from temporary FemCare divestiture timing and related items. Taken together, we believe the actions we've implemented position the business well to finish Fiscal 26 on a strong note and enter Fiscal 27 from a position of strength. For the specific guidance ranges, I would refer you to the press release issued earlier today. With that, I'll turn the call over to the operator for Q&A.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw it, please press star, then two. At this time, we will pause momentarily to assemble the roster. And the first question comes from Peter Grom with UBS. Great. Thank you.

Good morning, everybody. Hope you're doing well. So I wanted to start just on the top line and maybe just thinking about the fourth quarter a little bit. So can you maybe just help us understand the confidence behind the implied, you know, acceleration in the fourth quarter, especially kind of given the weaker wet shave in international adults in 3Q?

Yeah. Good morning, Peter. Thank you for the question there. I mean, that's the focus for us. It's been the focus. We've said from the beginning of the year we provided the guide that this was going to be a back half inflection to growth. You see the result for Q3, and as we look to Q4, implied is an acceleration in Q4 off of Q3. I think we feel confident in that. All segments of the portfolio, from a branded perspective, are growing in Q3. We see that continuing in Q4. Q3, as you would have seen, was impacted by what is more of a transitory impact around supply chain, primarily around private label products into both Europe and Latin America. And as we cycle that and look to Q4, that improves. And July is a data point that we have line of sight to, and we've seen what we expected there in July. So I think we feel good about Q4. The other thing you're doing, you're seeing our A&P spend for the year be unchanged. We've not changed or reduced that spend on a four-year basis. There is a profile shift as we looked at the execution from Q3 to Q4. So implied in the forward-looking guide is more spend in Q4 as well, which gives us confidence with the campaigns we have in place, July in the books, and that spend that we can deliver the step up. I don't know if you'd add anything, Fran?

Yeah, I think you covered all the points, Rod. Maybe a finer point on Q3 performance for international. We do view this as transitory. The impact was probably about 350 to 400 basis points to international. So, their run rate would have been right around 3%, which is where we expected them to be. And looking ahead to Q4, we're expecting mid-single-digit growth, which is in line with our overall expectations, especially on a back-ended sun season.

Great. And then I guess, you know, I know we're not getting guidance today, and the category, you know, category growth remains volatile. But I guess as you look forward to 27, you know, do you believe you're kind of exiting 26 with a better underlying growth profile than maybe the results reported in 3G would suggest?

I think, Pierre, we feel good in that if you go back a year ago when we provided the guide for the year, there was an implied step up in the second half of the year. It was more in the range of our old algorithm that we had talked about, kind of in that low single-digit growth rate. And now we sit here in the back half of the year, and we have line of sight for the second half to that. And I think as we look at how we move forward, the brand momentum, the brand strength we have, how we're coming through the supply chain manufacturing change, that headwind here that you saw in Q3 is largely going to be behind us. We can't predict that perfectly. So I think if you look at the second half in total, we think that's a good proxy as we look out to 27 for top-line growth rate. We should be growing next year. We're not ready to give guidance on that. We'll do that next quarter. But we have increasing confidence that we can do that. And I'll tell you, part of what's different today than a couple of years ago is the absolute strength we have in some of our brands. Cremo's now 20-plus percent for the seventh consecutive quarter. In the quarter just finished, Cremo grew 70-plus percent at the top retailer. in North America is now a top three brand in all of men's. That brand has tripled and headed towards a quadruple in a very short period of time. That provides real tailwinds to us. The other brand strength piece I would call out is Hawaiian Tropic. A year ago, that was the number six brand in SunCare. Today, it's the number four brand in SunCare, and it's had the largest increase in household penetration in the category. So it shows you the teams that are building these brands are doing an excellent job. And then as we go out to retailers, we talked about distribution outcomes. We had net gains in distribution this year. There's no reason we can't have at least neutral or better gains as we look to next year. So I do think there's underlying strength. And Again, we feel good about branded shave. In the quarter just finished, private label shave was down 10%. Branded shave was up nearly one, right? And so as we sort the private label piece out, I think we feel good overall in our capabilities just being better to grow as we move forward.

Great. Thank you so much. I'll pass it on.

Thank you. Thanks, Peter.

Tom Brady, next question, please.

And of course, the question comes from Chris Carey with Wells Fargo Securities.

Good morning, everybody.

Morning.

I wanted to ask first about gross margin. I think in fiscal Q4, you're implied to deliver your best gross margin in at least five years. I think clearly there was a restructuring, not restructuring of the business, but your portfolio is different following the divestiture of feminine care. If you look at the last few quarters of gross margin delivery, inclusive of what's implied for Q4, it would be suggesting a decently higher run rate than what you're landing on the full year this year. Is there any reason why gross margins shouldn't be up next year, given that you're operating a structurally higher gross margin business? Or are there anomalies that you would highlight, namely into the back half of the year, gross margin, that won't repeat?

Chris? Yeah, no, Chris, let me just give some overall perspective, and then Fran can build on this. Look, part of the rationale in divesting Femcare is it was gross margin, profit dilutive, and it was a capital-intensive business, right? So strategically, we moved away from that, and we put our investments in the higher margin businesses that are less capital intensive. Strategically, directionally, that's where we're going. And so we have that fact as we go into next year. The other thing we have as we go into next year is we start to lap what is a net investment period and begin to realize some level of return on the plant manufacturing consolidation program. And so what we don't control and know is what is the inflation rate we face next year, right? That's an open input as you look at oil and the whole commodities complex. Where does that sit? So we're not going to give a guide for next year, but what I would tell you as we go into next year, I expect gross margin to be up year-over-year percentage points versus fiscal 26. So we're not going to give a specific range on that, but, yes, we should be up year-over-year with what we have line of sight to. So, Fran, I don't know what you would add to that or talk to you for.

Yeah. Thanks, Rod. So, Chris, I think when we look at Q4 and we talked about it at the last quarter, we always expected and have to, we would have gross margin acceleration that was concentrated in Q4. And when you double-click into Q4, it's two factors. One is really related to productivity initiatives and how they phased out in tariff mitigation, which we anticipated we'd be at run rate in Q4. And that's about a third of the uptick in gross margin. Two-thirds of it, though, is what we're cycling versus last year, which a significant portion is at that. and also one-time items where we had inventory adjustments and deflator changes. So when you really remove the cycling aspect of it, we're pretty much at the absolute run rate that we've seen in Q3 and what we're seeing in the full-year average. So structurally, we're in a healthy place. We just have to get rid of the noise in Q4 of what we're cycling versus the year before, which we're realizing disproportionately this quarter. I think when you press on to fiscal 27, as Rod said, we would expect that we would be accreting gross margin really based on the factors that we've had all along, significant productivity savings, more modest inflation, and continued focus on SRGM and mixed management with healthier brands going into fiscal 27. But we do know there's market volatility. And at the last quarter, we talked about oil and we tried to size it at that point in time. Clearly, these prices have been continually changing. So we're not giving a guidance in terms of what we're expecting as far as oil is concerned. But based on where the spot rate is right now, it is materially less than what we had quantified last quarter and definitely in a much more manageable place.

Okay, thank you. One follow-up would be, there were headlines during the quarter about an unsolicited offer and that the board had rejected the offer as insufficient. To the extent that you're able to comment, can you just talk about how you view the long-term opportunity at Edgewell and the value creation relative to perhaps how others may view the value of the company? Thanks so much.

Look, Chris, we can't comment specifically on rumors or speculation in the market. So there's nothing to say or confirm relative to that story that broke mid-quarter. What I would tell you is, you know, as you can see in our numbers as they're evolving and in the line of sight we have towards 27, our focus is on building value organically. And we're increasingly confident we can grow sales, build margin, and improve the structural profitability of the company. We're laser focused on that. The board has a fiduciary duty. If there's ever something that comes inbound that can beat that organic plan, which we have financial advisors and legal advisors, we go through a very strict fiduciary process to consider anything that's inbound versus the value of the organic plan. And if it beats it, then it beats it, and the board would follow that through. And so I can assure you we're focused on building organic value. And if there's something added to that, I and the board are open to whatever that is.

Okay. All right. Thanks so much.

Thank you. Thank you, Chris. Operator, next question, please.

That comes from Susan Anderson with Cannon Court Genuity.

Hi, good morning. Thanks for taking my questions. I guess maybe I just wanted to follow up on the international weakness. It sounded like maybe it was mainly private label. I don't know if you could talk about just how the branded or Schick performed, particularly in Japan in the quarter. And then also the Billy data in the U.S. has been a little light of late. I guess just curious, is that brand, is it just more maturing of the brand or is it increased competition and what you're expecting out of the brand as we look forward?

Yeah, we'll take those in order. Again, I think the Q3 results, if you look at the international step back in the quarter, that was primarily private label. and shave. It was focused primarily in a couple of European markets and Latin America. Again, branded shave in the quarter grew in international in line with what we expected. So the weak spot there was uniquely limited to private label in a couple of markets. We have now solved much of that from a production capacity standpoint. Again, as we look to July, the step up we're expecting to internationally back in that mid-single-digit growth rate, we actually saw happen. And so we are confident that that part of this is transitory. Japan continues to be a strong market for us, exactly as we expected in the quarter. Japan will be in growth as you look at Q3, Q4 combined in that mid to high single digit rate. We have very strong innovation that's gone into Japan on the base hydro lines, both men's and women's. And we have new innovation coming in our Schick First Tokyo range that will hit towards the end of the fiscal year here. And so I think we feel really good about not only Japan, but international branded shave with the gap in private label, you know, closing off. As it relates to Billy, I'll let Fran give a couple of details there, but we feel really good about the business. We continue to grow share in every period. The absolute growth rate is slowing versus where it was a couple of years ago. But, again, the brand's growing. The brand is growing market share. And I'm excited about the portfolio and the innovation to come in, Billy, as we start to look at next year. We haven't had a focus on innovation in that brand over the last couple of years like we have now and what will be coming over what is a multi-year string of new innovation to come on that brand with what we think is some pretty breakthrough technology in shape. Fran, I don't know if we're missing anything.

Yeah, Susan, specifically on your Billy point, what we have seen in Shave is that Billy actually grew about low to mid-single digit in the quarter. We see continued share gains. And I think more importantly, what we're encouraged by is the increase in household penetration because that really does, you know, point to the structural health of the brand and supported by now a campaign that we just launched in Q3. So we really feel good about overall Billy's shave. There's some noise around Billy's grooming and portfolio in terms of what we're cycling versus last year. But shave, which is the core focus of Billy, has been performing in line with our expectations.

Okay, great. And then maybe just one follow-up on the sun care business and the strength we've seen there. I guess, should we expect any more replenishment or you think that's done for the season? And then just curious, any comments around inventory at retail in your categories, if you're seeing any de-stocking or anything?

Yeah, we expect some to grow in Q4 with what's implied here. It would suggest some replenishment into Q4. One of the things we've seen is the season has had a bit of a longer tail domestically here in the U.S. the last couple of years. So we do have that implied. What I would point you to on SunCare, though, is if you look at a year-to-date range and you take the quarterly noise out of it, the category is up about 1.5% year-to-date through the first nine months. Our performance is very much in line with that. We had planned, there's two different stories on the brands. We had planned Banana Boat to be down this year with some distribution changes, has come in as expected ahead of what is a multi-year restage of that brand. You've seen the marketing, the positioning change. We've just lit up a new campaign around Banana Boat. And then the big move as we launch into next year is a new packaging refresh, which is being super well received, obviously, by the consumers in the test markets, but also retailers are very positive on that. And then Hawaiian Tropic, I mentioned earlier, is now the number four brand in SunCare, up from number six a year ago, has grown 110 basis points on the year. And I think, you know, from a portfolio perspective, we feel good about what we take into next year.

Okay, great. Thank you so much. Thank you, Susan.

Thanks, Susan. Operator, next question, please. Thank you. And that comes from Olivia Tong with Raymond James.

Great. Thanks. Good morning. I know the backdrop is obviously pretty dynamic at the moment between the consumer constraints and higher costs, as well as the actions you're taking, like the manufacturing consolidation. So understood that you narrowed the full year 26 range. That said, it clearly implies a pretty wide range of potential results for Q4. So can you talk about what underlying expectations you have that gets you from one end to the other, given that, you know, some of the supply chain things that you mentioned, you feel like you've remedied, you have pretty good line of sight with respect to both the cost, the gross margin acceleration, as well as the advertising shifts. um and then just for fiscal 27 i know we'll get a fuller outlook next quarter but you did mention that you're in a stronger position than you have been for several years so you know as you see it today just specifically on organic sales you're back to growth in north america you did provide some clarity in terms of gross margin optimism so would love a little bit more color in terms of

your puts and takes on on the organic sales line thank you sure um good morning olivia so from a From an overall consumer perspective, I think similar to some others that reported before us, we're seeing similar things. Remarkable resilience here. The categories, if you look at the average aggregate growth rate average, a little bit of slowing, a little more competitiveness, but not a meaningful change in terms of, you know, trend change and direction. So I think consumer continues to hang in there. You're absolutely right on the higher cost. Tariffs are not hurting us, right, as we go forward. here, and then we've got this potential emplacement around the whole oil complex. So that's what we face. Our Q4 guide, I guess what's implied, if you look at it here, I would have you focused on the midpoint, right? That's what we're focused on, making sure we deliver and are working very hard to beat that. That's what we set out at the beginning of the year. That has not changed. The ranges around it have, more than anything, reflecting the dynamism in the market and just the volatility that I think warrants a bit of a wider range versus normal times. And that's up and down, right? So I think it's appropriate for where we are. I'll come back to the sales growth thought for next year. But, Fran, anything to add to the guide range piece?

I think you covered it, Rod. You know, as we look back to half two, our midpoint of our guide has not really changed, right? There's been some phasing shifts between Q3 and Q4 for expectations for the year. And that's what we're focused on. We've just tightened the range to really focus on volatility that could happen. But more importantly, we've been consistently delivering over the last few quarters in line with our expectations and feel really good as we go forward into Q4.

And looking at that sales line for next year, Olivia, I think there's a couple of things going on. Overall categories, we're seeing a little bit of a slowdown. If you look forward and look at what are people projecting, not only domestically in the U.S., but across European markets, in our categories, there's a view that there may be a little bit of a slowdown coming at us. We'll plan accordingly, right? We're not going to plan for categories to accelerate from here, certainly. So from a planning basis, I think that's how we're looking at it, stable, potentially a little slower growth in our categories. But as we've referenced on the call earlier, what we take into next year is stable, if not growing distribution in aggregate globally. We take in stronger brand health with growing household penetration in many of our brands. And we take into next year significantly improved capabilities in our frontline commercial sales and marketing teams across the board that we just have confidence in. And so when you stack that up, I don't want to give a range or a number or predict anything next year, but, you know, back to this low single digits growth rate, that ought to be achievable, right, as we build our plans and work towards giving you all a guide three months from now.

Great. Thank you.

Thank you.

Thank you, Olivia. Operator, next question, please.

There are no more questions in the queue. I would like to turn our comments back over to Rob Little for any closing comments.

All right. Hey, thank you, everybody, for taking the time to be with us this morning. We're pleased, you know, with where we are this year against the commitments we made at the beginning of the year, given the environment we're operating in to have line of sight to deliver the commitment we made at the beginning of the year. There's three things driving that. more consistent delivery around top line and how we're planning and the investment approach we've taken where we're investing significantly more in advertising and promotion behind our brands. Second, we're building more and more resiliency into our plans. And I think you see that as we face headwinds, some external, some self-inflicted from time to time. We're now in a planning stance where we're able to offset that. And that's what we want to continue going forward. And I think as we have more parts of the portfolio winning and stronger, it becomes incrementally easier to do that. And third, we are very focused on improving structural profitability in the company. We'll talk more about that next quarter. But as we look to simplify our operations, improve productivity, and lower our cost base, as we bring that together with some top-line momentum, we think we have an opportunity to not only invest but also build margin. So anyway, we'll talk in November. Thanks for the time. And our year-end call in November, we'll provide more color towards 27. Thank you.

Thank you.

Thank you. That concludes today's conference. Thank you for attending today's presentation, and we now just connect your lines.