Barclays Global Consumer Staples Conference Edgewell Personal Care - - PowerPoint PPT Presentation
Barclays Global Consumer Staples Conference Edgewell Personal Care Company September 7, 2016 Page 1 Agenda Strategic Overview and 2016 Performance David Hatfield Commercial / Growth Strategy Colin Hutchison Financial Perspective Sandy
Page 1
September 7, 2016
Edgewell Personal Care Company
Page 2
Strategic Overview and 2016 Performance David Hatfield Commercial / Growth Strategy Colin Hutchison Financial Perspective Sandy Sheldon
Page 3
Unless the context otherwise requires, references in this presentation to “Edgewell,” “Personal Care,” “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, 2015 and its quarterly reports on Form 10-Q for the quarters ended December 31, 2015, March 31, 2016 and June 30, 2016.
Page 4
While the Company reports financial results in accordance with accounting principles generally accepted in the U.S. (“GAAP”), this presentation also includes non-GAAP measures. These non-GAAP measures are generally referred to as “adjusted” or “organic” and exclude various items, which can include the impact of changes in foreign currency, the impact of acquisitions and dispositions, the impact of deconsolidation of the Company’s Venezuelan
accruals. 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 and provides insights into future performance. 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. The Company also believes that providing this information provides a higher degree of transparency. This presentation includes references to organic net sales, underlying net sales, go-to-market impacts, adjusted EBITDA, normalized EBITDA, adjusted EPS, free cash flow and adjusted working capital. For definitions of these terms and reconciliations to GAAP measures, refer to the Company’s earnings release for the third quarter of the 2016 fiscal year and other materials that can be found on its Investor Relations website at http://ir.edgewell.com.
Page 5
Chief Executive Officer, President and Chairman of the Board
Page 6
tracked to our expectations
and Sun and Skin Care
international go-to-market changes
and Sun and Skin Care
Operational and Financial Plan
as presented at our June 2015 Investor Day
* As of 8/02/16 Earnings Release
Page 7
US, Canada, Japan, Germany US, Mexico, Australia US and Canada US and Canada 60% 16% 17% 7% Wet Shave Feminine Care Sun & Skin Care Infant & Other 2015 Sales by Segment
Attractive Categories Strong Brands
Wet Shave Sun & Skin Care Feminine Care Infant & Other Category Brands Key Geographies
Page 8
A Strong Foundation On-going Value Drivers
Accelerate Top Line Growth
productivity, and value creation
cash flow generation
1 2 3 4 5
Systematic Cost Reduction Substantial Free Cash Flow Generation Disciplined Approach to Acquisitions Leverage the Power of EPC’s Colleagues
Page 9
2016 Priorities: A Transition Year… 2016 Financial Objective*
Segment Share Improvement Solidify North America Business Align Teams Around New Structure & Priorities Continue International Expansion
go-to-market impacts)
International
* Initial Fiscal 2016 Company objective as presented during the November 13, 2015 Earnings Call ** compared to 2015, with “normalized” EBITDA of $462 m. See page 4 Non-GAAP Financial Measures
Page 10
Strategic Priorities
and grow profitability
Page 11
Strategic Priorities
marketing spend
roadmap
2016 Status
trends
for fiscal 2016
and Sun and Skin Care
consecutive quarters
Growth Channels
all segments
Page 12
build distributor management capabilities
expansion
2016 Status
through 3Q YTD Fiscal 2016
Growth Markets and Channels Strategic Priorities
Page 13
Vice President Commercial International
Page 14
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 2013 2014 2015 2016 2017 2018 2019
US Rest of World
Global Wet Shave* Retail Sales 2015: $15.5 Billion
US$Billions
U.S. Wet Shave* Retail Sales 2015: $4.2 Billion
US$Billions
*Wet Shave: Razors & Blades + Shave Prep
Source: 2015 Euromonitor Source: Measured: Nielsen Scantrack, Non-Measured: Slice and Nielsen Panel.. 2016-2019 Edgewell Projected
$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0
2013 2014 2015 2016 F 2017 F 2018 F 2019 F
Non-Measured Channels Measured Channels
Page 15
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 2013 2014 2015 2016 2017 2018 2019
US Rest of World
Global Wet Shave* Retail Sales 2015: $15.5 Billion
US$Billions US$Billions
*2016-2019 Edgewell projected sales
Source: 2015 Euromonitor
U.S. Wet Shave* Retail Sales 2015: $4.2 Billion
Source: Measured: Nielsen Scantrack, Non-Measured: Slice and Nielsen Panel.. 2016-2019 Edgewell Projected
$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0
2013 2014 2015 2016 F 2017 F 2018 F 2019 F
Non-Measured Channels Measured Channels
US Men’s Measured* is 9% of Global Category
Page 16
0.0 2.0 4.0 6.0 8.0 10.0 12.0 2013 2014 2015 2016 2017 2018 2019 2020
NA EU & MEA APAC LatAm Total Markets
Source: Euromonitor: Total Sun Care +Baby Sun Care. Fixed Currency@2015 Rate. Forecast values for 2016-2020.
Confidential
3%
Global Sun Care Retail Sales
US$Billions
v
Page 17
Leverage Full Portfolio
Meaningful Investment in Growth Brands & Channels Drive Innovation Continue International Expansion
Page 18
Xtreme 3: First Triple Blade Disposable Invented Lubricating Strip Intuition: First Razor with Built-in Shave Prep
Hydro: First Razor with Hydrating Gel Challenge Category Convention First-To-Market Visually Differentiated
Page 19
50 100 150 200 250 300 350 400 450 500 12 Mths Ending June 2014 12 Mths Ending June 2015 12 Mths Ending June 2016
Disposables Women's Men's
Source: AC Nielsen Global Track, 25 markets
10%
Hydro Franchise Retail Sales ($M)
Page 20
Relevant Mach 3 patents expired in April 2016 in U.S. Unprecedented access to the largest user base in the world – Mach 3 Launched via Private Label in U.S. in June 2016
Page 21
Price Private Label Premium
Page 22
Post spin-off, Edgewell International Moved to a Leaner and More Efficient Commercial Organization
Simplification in 20 Direct Markets
Regional Hubs
implemented in 2/3 of our international markets. Distributor model in 30+ markets
in 15 new markets
2015
Expectations
Page 23
60% 40%
North America International 2015 Sales Mix
Continuation of Profitable Growth in International
Go-To-Market Structure
Channel
Good progress to date Fiscal 2016
in each key geography (EMEA, Asia, Latin America)
underlying growth
* Growth rate reflects estimated organic growth
+3.7%*
CAGR ‘08 – ‘15
+3.2%**
YTD 3Q16
** Growth rate reflects estimated underlying
Page 24
1 Source: Slice, 2016 2Source: Nielsen, 12 months ending April 2016 3 Edgewell EstimateMeaningful Opportunity
Fastest Growth Channel
20%3
Attractive Opportunity
Opportunity in Pure Play
Across Geography
Page 25
Prioritize and Invest in Razors & Blades Accelerate Growth with eRetailers, Pure Play & Omni Channel Drive Top 6 Markets
Page 26
Leverage Full Portfolio
Meaningful Investment in Growth Brands & Channels Drive Innovation Continue International Expansion
Page 27
Chief Financial Officer
Page 28
*Organic, excluding M&A and Impact from Currency
Sales* 2-3% Long-Term Goal Operating Margin 50+ Basis Point Improvement/Year Adjusted EPS High Single Digit Earnings-to-Free-Cash- Flow Conversion Rate 100%+
Page 29
Accelerate Top Line Growth
Systematic Cost Reduction
Substantial Free Cash Flow Generation
Disciplined Approach to Acquisitions
Leverage the Power of EPC’s Colleagues
Page 30
growth in Hydro
60% 16% 17% 7%
Wet Shave Feminine Care Sun and Skin Care Infant/Other
Sales
2015 Sales Mix
Page 31
Brands – 18%+
program results
13.7% 12.8% 14.2% 15.2% 14.5%
FY12 FY13 FY14 FY15 LT Model
A&P Historical Trends Going Forward
Sales
midpoint
Page 32
Sales
Optimization
60% 20% 3% 17% COGS A&P R&D SG&A
% of Total Spend Operating Margin Expansion
As of 2016 Fiscal 3Q YTD
52% Materials 26% overhead 10% W&D 8% Labor 4% Other
Page 33
Program Components
2013 Restructuring: Global Footprint and Supply Chain Initiatives Trade Promotion Effectiveness Go to Market Initiatives Commercial Hub Deployment Streamline and Consolidate Back Office Functions Zero Based Spending
Operating Margin Expansion
Spin Related Programs
Page 34
Pre-2016 2016 2017+ Total
Costs $101 $35-40 $10-15 $145-155 Savings $113 $15 $40-50 $170-$180
administrative functional support
Personal Care Operating Facilities Operating Margin Expansion
2013 Restructuring: Global Footprint and Supply Chain Initiatives
$m
Page 35
Operating Margin Expansion Program Objectives
Area structures
Spin Related Programs Complete
Go-to-Market Changes
Simplification in 20 Direct Markets Distributor model in 30+ markets
Page 36
Program Objectives:
and Efficiencies
and Operations
Operating Margin Expansion Scope/Progress:
activities
analysis and delayering
Trade Promotion Effectiveness
Page 37
Program Objectives
lower costs, improved metrics
financial, operational flexibility
brands and capabilities
improve ROI
capability to continue ZBS as a sustainable way of doing business Operating Margin Expansion
Zero Based Spending (ZBS)
Scope
governance over 11 major cost areas in initial phase
savings
Page 38
22.9% 16.6% 17.5% 16.0%
FY11 Baseline FY14 FY15 FY16 June LT Trend
Actions
significant improvement from FY11 baseline
inventory build for plant consolidation
Optimization and reductions after footprint changes are completed
Balance Sheet and Cash
Page 39
Invest In The Business To Drive Top-line Growth Disciplined M&A To Grow And Expand Portfolio Return of Capital to Shareholders Through Buyback
Page 40
Transition with Minimal Disruption and Positive Trends
Shave and Sun and Skin Care
Reported Sales -4% Currency Neutral “Organic” Sales Flat Adjusted EBITDA $440m - $450m GAAP EPS $2.95 - $3.10 Adjusted EPS $3.45 - $3.60
August 2, 2016 Earnings Outlook
For reconciliations, refer to the Company’s earnings release for the third quarter of the 2016 fiscal year and other materials that can be found on its Investor Relations website at http://ir.edgewell.com
Page 41
Sales Growth Margin Improvement Opportunities Strong Cash Flow Generation
Brands
Opportunity
Emerging Markets
Savings Track Record
Restructuring to Continue the Momentum
Growth and Working Capital Improvements
Making significant progress towards our long term financial algorithm as presented at our June 2015 Investor Day
Page 42
tracked to our expectations
and Sun and Skin Care
international go-to-market changes
and Sun and Skin Care
Operational and Financial Plan
as presented at our June 2015 Investor Day
* As of 8/02/16 Earnings Release