Barclays Global Consumer Staples Conference Edgewell Personal Care - - PowerPoint PPT Presentation

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Edgewell Personal Care Company

September 5, 2018

Barclays Global Consumer Staples Conference

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Unless the context otherwise requires, references in this presentation to “Edgewell,” “we,” “our,” and “the Company” refer to Edgewell Personal Care Company, a Missouri corporation, and its consolidated subsidiaries. Forward-looking statements are not based on historical facts but instead reflect the Company's expectations, estimates or projections concerning future results or events, including, without limitation, the future earnings and performance of the Company or any of its businesses. 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 the Company's actual results to differ materially from those indicated by those statements. The Company cannot assure you that any of its expectations, estimates or projections will be achieved. The forward-looking statements included in this presentation are only made as of the date of this presentation and the Company disclaims any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. Numerous factors could cause the Company's actual results and events to differ materially from those expressed or implied by forward-looking statements. In addition, other risks and uncertainties not presently known to the Company or that it considers immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those detailed from time to time in the Company's publicly filed documents, including the Company's annual report on Form 10-K for the year ended September 30, 2017 and its quarterly reports on Form 10-Q for the quarters ended December 31, 2017, March 31, 2018, and June 30, 2018.

Forward-Looking Statements

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While the Company reports financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"), this discussion also includes Non-GAAP measures. These Non-GAAP measures are referred to as "adjusted“, "organic" or “underlying” and exclude items such as impairment charges, the disposition of the Playtex gloves business, the impact of the Tax Cuts and Jobs Act (the "Tax Act"), costs associated with the acquisition and integration of Jack Black, L.L.C. ("Jack Black"), restructuring charges and amortization of intangibles. Reconciliations of Non-GAAP measures, including reconciliations of measures related to the Company's fiscal 2018 financial outlook, can be found in the Company’s earnings releases for the third quarter of fiscal 2018 and full year fiscal 2017. 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. The Company uses this Non-GAAP information internally to make operating decisions and believes it is helpful to investors because it allows more meaningful period-to-period comparisons of ongoing operating results. The information can also be used to perform 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 a component in determining management's incentive compensation. Finally, the Company believes this information provides a higher degree of transparency. For definitions of these terms and reconciliations to GAAP measures, refer to the Company’s earnings release for the third quarter of the 2018 fiscal year and other materials that can be found on its Investor Relations website at http://ir.edgewell.com.

Non-GAAP Financial Measures

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Strategic Overview David Hatfield, CEO and Chairman Project Fuel and Financials Rod Little, CFO Reinvestment Priorities Colin Hutchison, COO

Agenda

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• Portfolio of competitive and profitable brands
• Since the launch of Edgewell in July 2015, have gained market share in challenging

categories

• Innovating and launching compelling new products
• Executing strategic growth initiatives
• Evolving categories create challenges and opportunities
• New entrants increase competition and pricing pressure
• Accelerating shift to new channels, digital and customization
• Taking proactive steps to drive change
• Strengthened Board and management team
• Conducted a comprehensive review of the business
• Implementing Project Fuel and Transformation
• Expect $225M in annual gross savings by the end of fiscal 2021 to fund

growth, transformation and margin expansion

Today’s Key Messages

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Feminine Care Infant Care

Strong Brands

Wet Shave Sun & Skin Care

60% 19% 15% 6%

Wet Shave Sun & Skin Femcare Infant & Other

24% 20% 25% 20% 11%

Private Label Branded Men’s Systems Branded Women’s Systems Branded Disposables Shave Prep

Wet Shave has strong representation across sub-segments* Strong consumer brands across multiple segments* Geographic Mix

48% International 52% USA

Overview of Edgewell

* Fiscal 2017 mix

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Fuel Growth

• Colleague Engagement
• Enhanced Organizational Capabilities
• Systematic Cost Reduction
• ZBS, Productivity

Re-configure into Growth Opportunities

• Grow Share in E-Retail, Growth Channels
• Expand International Footprint / Scale
• Build E-Comm & Digital Capabilities
• Enter New Growth Categories via M&A

Focus on the Fundamentals

• Build Brand Equity/ Consumer Engagement
• Compelling Innovation
• Leverage the Full Portfolio
• Category Solutions

Strategy for Growth

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Led by a Full Portfolio of Innovation

Focus on the Fundamentals

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Bulldog / Jack Black

International Sun Care International Expansion eCommerce Shave Innovation

Investments in Strategic Growth Initiatives are Working

• Approx. 20% of EPC Sales (2018E)
• International Expansion (1)
• International Sun Care
• eCommerce (all segments)
• Bulldog/Jack Black

(1) Includes Latin America, Asia Pacific (excluding Japan and Australia), Eastern & Central Europe and Middle East & Africa.

Re-configure into Growth Opportunities

Page 10 25.6 27.0 Q3’15 Q3’18

U.S. Razors & Blades Share Global Razors & Blades Share(1)

24.9 26.0 Q3’15 Q3’18

U.S. Sun Care Share

22.8 22.9 Q3’18 Q3’15

Sources: Nielsen xAOC; Global defined as select EPC markets; Category growth 2015 thru 2018 Q3 YTD (1) Understated due to exclusion of international private label.

Category growth

• 570bps

Category growth

• 300bps

Category growth +80bps

Increased Market Share in Core Segments, Despite Challenging Categories

+140 bps +10 bps +110 bps

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• As part of the Company’s annual strategic review process, the Board and management

team considered rapidly changing consumer, competitive and retail trends, their impact

• n Edgewell’s future performance, and potential opportunities created for Edgewell
• This review was conducted with the assistance of external advisors and included:

– A comprehensive review of all business segments, addressing performance in challenging category environments – Assessment of all value creation levers

• Following this review, the Edgewell Board and management team determined that

Project Fuel is the best path to drive value creation for all stakeholders

• Project Fuel is an enterprise-wide initiative to transform the Company's business and

cost structure, enabling investment for growth and margin expansion

• Management and the Board have been and will remain open minded and committed to

taking actions in the best interests of the Company and its shareholders

Driving Change

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Driving Improvement and Growth Through Project Fuel

Fuel Growth Re-configure into Growth Opportunities Focus on the Fundamentals

Executing on our strategic pillars

Faster Better Deeper

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Stephanie Lynn

VP, eCommerce

20+ years of eCommerce, digital marketing and database marketing experience Previously served as VP of eCommerce for Vineyard Vines

Paul Hibbert

VP, Global Supply Chain and Operations

25+ years of manufacturing, distribution, transportation, customer service, procurement and sales and operations planning experience Previously served as EVP of Supply Chain for Safety-Kleen Systems, Inc.

Key Leadership Changes Over the Past 16 Months

Colin Hutchison

Chief Operating Officer

30+ years of

• perational and

leadership experience in consumer goods 13 years with Edgewell, previously serving as VP of Commercial International

John Hill

Chief Human Resources Officer

30+ years business, management, cross- functional and leadership experience Previously led Edgewell’s North American commercial

• rganization

Rod Little

Chief Financial Officer

20+ years of global experience in consumer goods

• rganizations

Public company track record of driving results through business transformation

Marisa Iasenza

Chief Legal Officer

20+ years of experience in cross- border M&A, SEC reporting, corporate governance, corporate finance and compliance Previously served as SVP, General Counsel and Secretary at Harman International Industries

Anne-Sophie Gaget

VP, Global Strategy And Innovation

25+ experience in consumer goods industry, with marketing, general management and business transformation experience. Previously served as regional VP for South Europe, Middle-East and Africa.

A Refreshed Senior Leadership Team Focused on Execution and Creating Value

New to EPC

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David P. Hatfield

CEO and Chairman of the Board Edgewell Personal Care

• Leadership, strategy,

M&A, marketing, advertising

• Began career in Eveready

Battery division in 1988 Daniel J. Heinrich

EVP, CFO (Retired) The Clorox Company

• Strategy, business

development, operations, financial management, accounting principles, financial reporting

• 34+ years of experience in CPG

industry James C. Johnson

General Counsel (Retired) Loop Capital Markets LLC

• Legal, compliance, risk

management, corporate governance, executive compensation

• Extensive executive

management and leadership experience John C. Hunter

Chairman, President and CEO (Retired) Solutia, Inc.

• Risk management,

corporate governance and regulatory, sustainability, executive compensation

• Extensive experience as a

director in CPG companies

• R. David Hoover

Chairman and CEO (Retired) Ball Corporation

• Operations, finance
• CPG industry veteran with

insight into complex business, operational and financial issues Elizabeth Valk Long

Executive Vice President (Retired) Time Inc.

• Marketing, communications,

human resources, legal

• First female to be named

publisher at Time, Inc., extensive consumer marketing, customer service, distribution, production, human resources, legal affairs and communications experience Rakesh Sachdev

Chief Executive Officer Platform Specialty Products Corporation

• Finance, strategy,

management, accounting, financial reporting

• Nearly 30 years of

experience in leadership, finance, strategy and general management Joe O’Leary

President and COO (Retired) Petsmart, Inc.

• Executive leadership,
• perations, marketing,

logistics

• 20+ years of CPG

experience and expertise in

• perations and logistics,

M&A and restructuring Gary K. Waring

Accounting Professional (Retired) Ernst & Young

• Accounting, audit,

financial reporting, corporate governance and regulatory, M&A, restructuring

• 35+ years of consulting

experience with increasing leadership and operating responsibilities Carla Hendra

Chief Executive Ogilvy Consulting

• Brand strategy, digital

marketing, data/analytics and long-term planning

• 25+ years of experience in

global B2B and B2C marketing New Members since 2015

Diverse, Experienced Board of Global Thought and Business Leaders

Effective October 1, 2018

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Faster Better Deeper

Driving Improvement and Growth Through Project Fuel

Re-configure into Growth Opportunities Focus on the Fundamentals

Executing on our strategic pillars

• Drive sustained revenue and profit

growth

• Grow market share by winning

with compelling innovation, increased agility, and digital transformation

• Generate increased shareholder

value

Objectives

Fuel Growth $225M in Annual Gross Savings

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Agenda

Strategic Overview David Hatfield, CEO and Chairman Project Fuel and Financials Rod Little, CFO Reinvestment Priorities Colin Hutchison, COO

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(1) As of August 7, 2018 Earnings Presentation. (2) Organic growth, excluding M&A, currency translation and Venezuela deconsolidation. (3) 2-year CAGR of underlying net sales. Underlying net sales reflect organic net sales, excluding the $34m impact in fiscal 2016 from the Company’s “go-to-market” initiative. (4) Free cash flow is defined as net cash flow from operating activities less capital expenditures. Free cash flow conversion is defined as free cash flow as a percentage of net earnings.

Sales Reported: -2.0% Organic: -3.5%(2) 2018 Estimate(1) Adjusted Operating Margin Expansion

• 120 basis points

Adjusted EPS Growth

• 12%

At mid-point of outlook

Earnings-to-Free-Cash- Flow Conversion Rate(4) 100%+ Reported: -2.5% Underlying: Flat(2)(3) 2015 – 2017 (CAGR)

Increased Increased

100%+

2018 Performance: A Mandate for Project Fuel

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2018 Sales Mix*

* Approximate sales mix based on 2018 Outlook as of August 7, 2018 earnings call

Net Sales

Growth Initiatives (Invest for Growth)

International Expansion International Sun Care eCommerce Bulldog / Jack Black

Challenged Businesses (Optimize ROI)

N.A. Branded Men’s Shave N.A. Shave Preps Feminine Care

20% 20% 60% Stable Businesses (Maintain/Grow)

N.A. Sun Care Private Label Shave N.A. Women’s and Disposables International Shave (Developed Markets) Infant/Other

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$250M $246M $107M(2) Fiscal 2016 Fiscal 2017 Fiscal 2018E(3)

(1) Free cash flow is defined as net cash flow from operating activities less net capital expenditures and proceeds from divestitures. (2) Includes $100M to fund International Pension Plans. (3) As of August 7, 2018 Earnings Presentation.

Total Free Cash Flow(1)

Strong Free Cash Flow

Target: 100%+ of Net Earnings

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Invest in the Business Acquisitions Share Repurchase Deleverage(2)

$60M $70M

Fiscal 2016 Fiscal 2017 Fiscal 2018E

$70M

$124 million $660 million(1)

(1) Fiscal 4Q2015 through Fiscal 3Q2018. (2) Debt Leverage defined as Net Debt-to-EBITDA (as defined per the terms of the Credit Agreement).

Fiscal 1Q2017: 3.53 x CapEx Spend $200 million 8.8 million shares Fiscal 3Q2018: 2.90 x

Capital Allocation Priorities

2 1 3

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Lower cost base in a competitive environment

1

Transform ways of working to promote agility

2

Reinvest in capabilities and growth areas

3

Fuel Transformation Objectives

Project Fuel was Undertaken to Transform our Business and to Accelerate Growth and Value Creation

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COGS A&P R&D SG&A

COGS Mix 52% Materials 26% Overhead 10% W&D 8% Labor 4% Other

Total Company Spend $1.9B

As of 2017 Fiscal Year

• Cost of Goods Sold

Project Fuel Spending Goals

• SG&A / R&D
• Brand Investment

(A&P, Trade, Price)

Project Fuel Will Impact All Areas of the Business

Lower cost base in a competitive environment

1

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$170M $80M

Approximately 75% of project savings within the first two fiscal years(1)

Fiscal 2019 Ops & Supply Chain A&P SG&A/R&D

$225M Annual Gross Savings

(1) Timing of project fuel savings between the 2019 and 2020 fiscal years may be refined as project plans are completed.

Project Fuel: Estimated Gross Savings

Fiscal 2020 Fiscal 2021

Total Estimated Costs and CapEx

• One-Time Costs: $120M - $130M
• CapEx: approx. $70M
• Timing: 80%+ incurred by end of

fiscal 2019 Balanced Approach to Investment and Margin Expansion

• Overcome rising inflation and
• ther Commodity costs
• Increase Brand Investment
• Margin Expansion

Project Fuel: Rapid Return on One-Time Costs

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• Retain, sharpen external focus: consumer and customer
• Streamline targeted enterprise wide processes
• Simplify organization, drive accountability / entrepreneurialism
• Leverage digital to speed innovation, consumer insight, brand salience

Project Fuel: Building a More Agile and Modern CPG Company

Transform ways of working to promote agility

2

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Project Fuel Will Provide Resources for Growth

Reinvest in capabilities and growth areas

3

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Strategic Overview David Hatfield Project Fuel Rod Little Reinvestment Priorities Colin Hutchison

Agenda

Strategic Overview David Hatfield, CEO and Chairman Project Fuel and Financials Rod Little, CFO Reinvestment Priorities Colin Hutchison, COO

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Reposition and Grow Wet Shave

Focus on the Fundamentals Re-configure into Growth Opportunities

Reinvestment Priorities

Drive eCommerce and Digital Across the Portfolio Accelerate Sun and Skin Care Growth International Expansion

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5.9 6.2 5.8 7.9 8.4 9.1 8.4 9.0 9.4 9.4 8.9 9.1 8.8 1.2 1.1 0.9 18.5 19.0 17.9 17.8 17.4 17.6 17.6 17.4 18.3 17.2 17.2 17.6 18.2

Q3’15 Q3’16 Q1’16 Q4’15 25.6 Q2’16 Q2’17 26.4 Q4’16 Q1’17 Q3’17 Q3’18 Q4’17 Q1’18 Q2’18 24.6 25.7 25.8 26.7 26.1 26.4 27.7 26.6 26.1 26.7 27.0 Schick Private Label Wilkinson Sword

Nielsen Industry Growth EPC $ Share of Razors and Blades Nielsen

Sources: Nielsen XAOC Not e: Quart ers are EPC fiscal year end Sept ember 30.

• 4.0%
• 5.2%
• 6.1%
• 9.1%
• 10.1%
• 7.7%
• 8.2%
• 6.4%
• 4.0%
• 2.9%

Q3’16 Q4’17 Q2’17 Q4’16 Q1’17 Q1’18 Q3’17 2017 Q2’18 Q3’18 U.S. R&B xAOC

EPC U.S. R&B Share Performance Resilient: Investment Required for Growth Going Forward

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Exclusive Partnership B&M & DTC with New Brands Extend Frame of Reference: Hair

Leverage Unique Portfolio & Brands Across All Price Tiers

Ultimate Technologies – Performance Seekers “Good enough” with Purposed Brand & Design Millennials Value Pragmatists New New

New Shave Strategy

Focus on the Fundamentals

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Men’s: Hydro Body Women’s: Intuition f.a.b. Disposables: Xtreme Pivot Ball Women’s: Bare by Schick Leveraging cartridge technologies for more consumer needs Handle innovation that improves consumer experience Using hair & blades expertise to unlock new consumer usage

Focus on the Fundamentals

Shave: Consumer-centric Innovation

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f.a.b. Launch

 Staggered launch in 8 markets globally  f.a.b. helping grow share/improve trends in 4 of 5 key markets  Global $ growth of total intuition franchise +14% across 14 markets

Looking Ahead: Driving Growth with f.a.b.:

 Improving packaging & optimizing marketing mix based on year 1 learnings  Expanding distribution to Central Europe and Rest of Asia  Line extensions

Shave: Lead Women Innovation

Focus on the Fundamentals

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Unlimited customized handle options Mach 3 fits reinvigoration plan: 84% of trialists are repeaters (US) More Exclusive Approach to Customers: B&M, online Increased DTC partnerships Largest blades tech portfolio Entering new countries: Russia, India, South Korea, Brazil

New

Shave: More Customer Solutions

Focus on the Fundamentals

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Shave: Invest in Brands (“New Hydro”)

Focus on the Fundamentals

Leverage Strong Technology Enhanced Value Proposition Build Brand Equity and Resonance

• Stronger brand purpose
• New advertising that

leads with emotion

• A digital-heavy 360

campaign

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Shave: Invest in Brands (“New Hydro”)

Focus on the Fundamentals

• Stronger brand purpose
• New advertising that

leads with emotion

• A digital-heavy 360

campaign

Video

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Fun in the Sun

“Better for you” Segment Fewer Ingredients & Hypoallergenic

Aloha Therapy

Nature Inspired Anti Aging + Mattifying Agents - Facial

Key New Product Initiatives, Customized to Local Needs Key Global Sun Markets: EPC Outpaces Sun Category Dollar Sales 2x

Re-configure into Growth Opportunities

Sun: Innovate Beyond Core

Body Care

Leverage Brand DNA and Fragrance Identity

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2018 Highlights

• U.K.: Fastest growing male skincare brand: +18%, over 17% market share
• Increased global footprint from 9 countries to 25 countries
• Launched sugarcane packaging & shower gel refills kits, reducing our environmental impact
• Revamped “Direct to Consumer” site in the U.K., upcoming in the U.S. in October 2018
• Extending brand from skincare to male grooming, with disruptive approach on high

penetration categories: Launched the first Bamboo razor line at Boots and Walgreens

Lead Male Skincare Growth

Re-configure into Growth Opportunities

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Increased Sales Brand Investment Driving Growth:

• #1 Position in Prestige:

Organic sales +10-17% (B&M)

• Distribution Gains:

New Doors in the US at ULTA, DILLARDS and Sephora inside JCPenney

• eCommerce Sales Boost (US):

e-channel: +49% , DTC: +34%

• International Expansion

Through e-Commerce: China sales +57%

Lead Male Skincare Growth

Re-configure into Growth Opportunities

2018 Highlights

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Amazon Fiscal 2016 – 2018E(1) CAGR +35% China e-commerce sales increased 400% in fiscal 2018e(1) Schick.com launched in June’18 with Bulldog coming in the U.S. in October

Expand eCommerce Channels

Re-configure into Growth Opportunities

(1) Expected fiscal year 2018 sales growth as of August 7, 2018 earnings call.

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New Schick.Com

New, Best in Class Functionality

• Chat
• Omnipresent e-mail collection
• Refer-a-friend
• Personalized subscription offerings:

men and women

• Exclusive offerings: ex. Bare by Schick

Consolidated Brand and Commercial Sites Global Platform and Template

• Easy roll-out of new brands and

countries

Upcoming Bulldog.com

eCommerce Growth Plan: DTC

Re-configure into Growth Opportunities

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Grow China

Enter New Markets With Customized Approach

• DTC player partnership in South

Korea, Upcoming India

• Re-entered Argentina, with Sun

then Shave in March 2018

• Re-entered Russia with Private

Label

Bring Skin & Sun Brands to More Markets

Support International Expansion

Re-configure into Growth Opportunities

• Japan: New Hydro Shave Prep
• Asia: Bulldog & Jack Black in +3 countries
• Australia: Hawaiian Tropic
• Germany: Hawaiian Tropic
• Latin America: Expand permanent

presence in Sun and Sport segment

• Hydro Launch in B&M
• eCommerce increased 4x with

boosted Schick presence at Tmall and

• pening of JD.Com flagship
• Banana Boat and Jack Black launches

through Cross Border

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Faster Better Deeper

Closing Thoughts

Re-configure into Growth Opportunities Focus on the Fundamentals

Executing on our strategic pillars

• Drive sustained revenue and profit

growth

• Grow market share by winning

with compelling innovation, increased agility, and digital transformation

• Generate increased shareholder

value

Objectives

Fuel Growth $225M in Annual Gross Savings

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Q&A

Barclays Global Consumer Staples Conference