Edgewell Personal Care Company · NYSE:EPC
Edgewell Personal Care — Barclays Global Consumer Staples Conference 2016
42 slides from Edgewell Personal Care's conference presentation, Sep 7, 2016
Slide 1: Barclays Global Consumer Staples Conference
Barclays Global Consumer Staples Conference Edgewell Personal Care Company September 7, 2016 Page 1
Slide 2: Agenda
Agenda Strategic Overview and 2016 Performance David Hatfield Commercial / Growth Strategy Colin Hutchison Financial Perspective Sandy Sheldon Page 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements 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 base
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 variou
Slide 5: Strategic Overview and 2016 Performance
Strategic Overview and 2016 Performance David Hatfield Chief Executive Officer, President and Chairman of the Board Page 5
Slide 6: Key Takeaways
Key Takeaways • Fiscal 3Q 2016 year-to-date top and bottom line results have tracked to our expectations • Including underlying net sales growth and share gains in Wet Shave and Sun and Skin Care • 2016 Organization changes are largely complete, including international go-to-market changes • Continu
Slide 7: Edgewell Personal Care
Edgewell Personal Care Attractive Categories Strong Brands 2015 Sales by Segment Category Brands Key Geographies Wet Shave US, Canada, Japan, Germany 7% 17% Sun & Skin Care US, Mexico, Australia 60% 16% Feminine Care US and Canada Infant & Other US and Canada Wet Shave Feminine Care Sun & Skin Care
Slide 8: Edgewell Company Plan Framework
Edgewell Company Plan Framework A Strong Foundation On-going Value Drivers • Strong brands in growing categories 1 Accelerate Top Line Growth • Unique “Challenger” position 2 Systematic Cost Reduction • A culture dedicated to innovation, productivity, and value creation 3 Substantial Free Cash Flow
Slide 9: 2016 Will Position Us for Growth
2016 Will Position Us for Growth 2016 Priorities: A Transition Year… 2016 Financial Objective* • Flat Organic Sales Growth (including go-to-market impacts) Segment Share Solidify North • Flat Organic Sales in North America Improvement America Business • Continued “underlying” growth in International
Slide 10: Segment Share Improvement
Segment Share Improvement Strategic Priorities • Grow share in Wet Shave • Accelerate growth in Sun Care • Maintain Feminine Care sales and grow profitability • Stabilize Infant Page 10
Slide 11: Return to Growth in North America
Return to Growth in North America Strategic Priorities 2016 Status • Re-investment in A&P and • NA Net Sales showing improving marketing spend trends • Maintain strong innovation • Expect net sales growth roadmap for fiscal 2016 • Leverage full portfolio • With growth in Wet Shave and Sun and Skin C
Slide 12: Continue International Expansion
Continue International Expansion Strategic Priorities 2016 Status • Execute organizational changes, • Go-to-markets changes complete build distributor management • On time and on financial plan capabilities • Underlying net sales growth • Grow Wet Shave mid-single digit through 3Q YTD Fiscal 2016 •
Slide 13: Growth Strategy
Growth Strategy Colin Hutchison Vice President Commercial International Page 13
Slide 14: Continued Category Growth in Wet Shave
Continued Category Growth in Wet Shave Global Wet Shave* Retail Sales U.S. Wet Shave* Retail Sales 2015: $15.5 Billion 2015: $4.2 Billion $18 $5.0 $16 $4.5 $14 $4.0 $3.5 $12 $3.0 $10 US$Billions US$Billions $2.5 $8 $2.0 $6 $1.5 $4 $1.0 $2 $0.5 $0 $0.0 2013 2014 2015 2016 2017 2018 2019 2013 2014 201
Slide 15: Edgewell's Full Portfolio of Wet Shave Offerings
Edgewell’s Full Portfolio of Wet Shave Offerings are Aligned to Category Diversification Global Wet Shave* Retail Sales U.S. Wet Shave* Retail Sales 2015: $15.5 Billion 2015: $4.2 Billion $18 $5.0 $16 $4.5 $14 $4.0 $3.5 $12 $3.0 $10 US$Billions US$Billions $2.5 $8 $2.0 $6 $1.5 $4 $1.0 $2 $0.5 US Men
Slide 16: Global Sun Care Category Growth Driven by Latin America & Asia
Global Sun Care Category Growth Driven by Latin America & Asia Global Sun Care Retail Sales 12.0 3% 10.0 8.0 US$Billions 6.0 v 4.0 2.0 0.0 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. Foreca
Slide 17: Edgewell Growth Strategies: Accelerate Top Line Growth
Edgewell Growth Strategies: Accelerate Top Line Growth Meaningful Continue Drive Leverage Full Investment in International Innovation Portfolio Growth Brands & Expansion Channels Page 17
Slide 18: Build Upon Proven Track Record of First-to-Market Innovation
Build Upon Proven Track Record of First-to-Market Innovation Challenge Category Convention First-To-Market Visually Differentiated Intuition: Invented First Razor Lubricating Strip with Built-in Shave Prep Xtreme 3: Hydro: First Triple Blade First Razor with Disposable Hydrating Gel Page 18
Slide 19: Hydro Innovation Continues to Drive Growth
Hydro Innovation Continues to Drive Growth Hydro Franchise Retail Sales ($M) 500 10% 450 400 350 300 Disposables 250 Women's 200 Men's 150 100 50 0 12 Mths Ending June 2014 12 Mths Ending June 2015 12 Mths Ending June 2016 Source: AC Nielsen Global Track, 25 markets Page 19
Slide 20: Challenging the Razors & Blade Paradigm by Unlocking the Category
Challenging the Razors & Blade Paradigm by Unlocking the Category 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 20
Slide 21: Full Portfolio of Brands and Private Label Meet Needs
Full Portfolio of Brands and Private Label Meet Needs Across All Consumer Segments Price Private Label Premium Page 21
Slide 22: Go-to-Market Changes
Go-to-Market Changes Post spin-off, Edgewell International Moved to a Leaner and More Efficient Commercial Organization Simplification in 20 Direct Markets • Commercial strategy led by Regional Hubs • Lean teams in markets focused on sales execution • Organization changes were implemented in 2/3 of
Slide 23: Achieving Our Long Term Objective: International
Achieving Our Long Term Objective: International 2015 Sales Mix Continuation of Profitable Growth in International • Strong Innovation Roadmap +3.7%* • Pricing/Trade Up CAGR ‘08 – ‘15 • Accelerate Sun Care +3.2%** • Leverage New Focused 40% YTD 3Q16 Go-To-Market Structure 60% • Expand Distribution:
Slide 24: eCommerce is a Key Growth Channel for Razors & Blades Category
eCommerce is a Key Growth Channel for Razors & Blades Category Meaningful Fastest Growth Attractive Opportunity Channel Opportunity • US: $420MM1 • US: +15%3 • Full Portfolio Opportunity in • China: $80MM2 • China: +20%3 Pure Play • Rest of World: 15- • Scalable Model 20%3 Across Geography 1 Source:
Slide 25: eCommerce Strategies
eCommerce Strategies Accelerate Growth with eRetailers, Pure Play & Omni Channel Prioritize and Invest in Razors & Blades Drive Top 6 Markets Page 25
Slide 26: Edgewell Growth Strategies: Accelerate Top Line Growth
Edgewell Growth Strategies: Accelerate Top Line Growth Meaningful Continue Drive Leverage Full Investment in International Innovation Portfolio Growth Brands & Expansion Channels Page 26
Slide 27: Financial Perspective
Financial Perspective Sandy Sheldon Chief Financial Officer Page 27
Slide 28: Edgewell – Long Term Algorithm Beyond 2016
Edgewell – Long Term Algorithm Beyond 2016 Long-Term Goal Sales* 2-3% Operating Margin 50+ Basis Point Improvement/Year Adjusted EPS High Single Digit Earnings-to-Free-Cash- 100%+ Flow Conversion Rate *Organic, excluding M&A and Impact from Currency Investor Day June 2015 Page 28
Slide 29: Edgewell – Value Drivers
Edgewell – Value Drivers 1 Accelerate Top Line Growth 2 Systematic Cost Reduction 3 Substantial Free Cash Flow Generation 4 Disciplined Approach to Acquisitions 5 Leverage the Power of EPC’s Colleagues Page 29
Slide 30: Achieving Our Long Term Growth Objective By Segment
Achieving Our Long Term Sales Growth Objective By Segment 2015 Sales Mix • Growth in Wet Shave • Innovation and continued 7% growth in Hydro • Emerging market growth 17% • Full portfolio strategy • Trade up 60% 16% • Accelerate International Growth in Sun • Leverage Innovation and Full Portfolio of
Slide 31: Achieving Our Long Term Growth Objective Through Investment
Achieving Our Long Term Growth Sales Objective Through Investment A&P Historical Trends Going Forward 15.2% midpoint • Target total 14-15% on-going spend 14.5% • Target Higher Investment in Key 14.2% Brands – 18%+ 13.7% • Improve ROI and Effectiveness • Optimize and right size based 12.8% on market
Slide 32: Achieving Our Long Term Growth Objective Through Margin Expansion
Achieving Our Long Term Growth Operating Objective Through Margin Expansion Margin Expansion % of Total Spend • Improve Gross Margin as a % of Sales • Global Footprint Initiatives and Asset Optimization 17% • Procurement Initiatives 3% • 3% Gross, 1% Net COGS Savings 60% 52% Materials • Trade Promot
Slide 33: Generating Funds for Growth Through Disciplined Cost Management
Generating Funds for Growth Through Operating Margin Expansion Disciplined Cost Management Program Components 2013 Restructuring: Global Footprint and Supply Chain Initiatives Go to Market Initiatives Spin Related Commercial Hub Deployment Programs Streamline and Consolidate Back Office Functions Tr
Slide 34: Margin Improvement Levers
Operating Margin Improvement Levers Margin Expansion 2013 Restructuring: Global Footprint and Supply Chain Initiatives • Reduction in Workforce • Consolidation of general and Pre-2016 2016 2017+ Total administrative functional support $m • Reduced Overhead Spending Costs $101 $35-40 $10-15 $145-155
Slide 35: Margin Improvement Levers
Operating Margin Improvement Levers Margin Expansion Go-to-Market Changes Spin Related Programs Program Objectives • Deployed Commercial Hubs, rationalized Simplification in 20 Direct Markets Area structures • Go-to-market Footprint restructuring Distributor model in 30+ markets • Outsourced non-cor
Slide 36: Margin Improvement Levers
Operating Margin Improvement Levers Margin Expansion Trade Promotion Effectiveness Program Objectives: Scope/Progress: • Eliminate non-productive spend • North America for initial phase • Improve ROI • Planning Module in place for 2017 Plan activities • Enhanced Organizational capabilities and Effic
Slide 37: Margin Improvement Levers
Operating Margin Improvement Levers Margin Expansion Zero Based Spending (ZBS) Program Objectives Scope • Enhance and accelerate efforts to deliver • Address non-headcount costs lower costs, improved metrics • Analyze, benchmark and establish • Capture savings to provide on-going governance over 11
Slide 38: Working Capital remains a key driver of Free Cash Flow
Working Capital remains Balance Sheet a key driver of Free Cash Flow and Cash 22.9% Actions • Large Working capital initiative drove 17.5% 16.6% significant improvement from FY11 16.0% baseline • Increased in 2015 due to temporary inventory build for plant consolidation • Going Forward: • DII: Impro
Slide 39: Priorities for Free Cash Flow
Priorities for Free Cash Flow 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 39
Slide 40: Full Fiscal 2016 Outlook
Full Fiscal 2016 Outlook August 2, 2016 Earnings Outlook • On Track to Achieve Goals for the Year Reported Sales -4% • Executed the First Full Year of Currency Neutral “Organic” Sales Flat Transition with Minimal Disruption and Positive Trends Adjusted EBITDA $440m - $450m • Market Share Momentum in
Slide 41: Long Term Investment Case
Long Term Investment Case Sales Margin Improvement Strong Cash Growth Opportunities Flow Generation • Investing in Leading • Strong Cost • FCF Driven by Profit Brands Savings Track Record Growth and Working Capital Improvements • Full Portfolio • ZBS and 2013 Restructuring to • eCommerce Continue th
Slide 42: Key Takeaways
Key Takeaways • Fiscal 3Q 2016 year-to-date top and bottom line results have tracked to our expectations • Including underlying net sales growth and share gains in Wet Shave and Sun and Skin Care • 2016 Organization changes are largely complete, including international go-to-market changes • Continu
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