Edgewell Personal Care Company · NYSE:EPC
Edgewell Personal Care — Debt Investor Presentation (September 2019)
48 slides from Edgewell Personal Care's debt investor presentation, Sep 9, 2019
Slide 1: Lender Presentation September 9, 2019
+ LENDER PRESENTATION SEPTEMBER 9, 2019
Slide 2: Forward-looking statements
This presentation and some of our comments contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking stat
Slide 3: Agenda
Agenda 1 INDUSTRY OVERVIEW 2 EDGEWELL OVERVIEW 3 HARRY’S OVERVIEW 4 COMBINATION OF EDGEWELL AND HARRY’S 5 KEY CREDIT STRENGTHS 6 FINANCIAL PERFORMANCE AND STRATEGY 7 2
Slide 4: Industry Overview
INDUSTRY OVERVIEW HIGHLY CONFIDENTIAL
Slide 5: CPG Industry is Facing a Number of Challenges
CPG Industry is Facing a Number of Challenges BRANDS NOT RESONATING UNABLE TO CONNECT THROUGH RESULTING IN SLOW GROWTH WITH MODERN CONSUMERS DIRECT SALES CHANNELS 1 Legacy brands built for a different generation E-Commerce Penetration CY ’18-’20E CAGR 2 Confusion at the shelf % of Retail Sales 10% 3
Slide 6: Male Grooming Segment Continues to Grow
Male Grooming Segment Continues to Grow Male Grooming is Projected to Reach $19.1B by 2022 Trends Related to Potential Of Male Grooming MEN'S GROOMING SEGMENT SIZE (USD MILLION) EURO MONITOR EST. FOR TOP 8 MARKETS (1) 1 $19,138 Asian Male Beauty (Japan / S. Korea) $16,560 3,112 $15,144 • New masculi
Slide 7: Wet Shave Remains an Attractive Category
Wet Shave Remains an Attractive Category Structurally Protected Through IP ■ Meaningful investments in manufacturing technology and infrastructure ■ 2,900+ granted global patents ■ 450+ pending patent applications ■ Manufacture of 10+bn blades annually Attractive Wet Shave Gross Margins(1) ~60% 1 6
Slide 8: The Combination of Harry's and EPC Has Been Taking Share of U.S. Wet Shave
The Combination of Harry’s and EPC Has Been Taking Share of U.S. Wet Shave Over Time Outperforming the category Meaningful share growth $ Volume 2016-2018 CAGR % Share 2016-2018 U.S. Men’s Wet Shave U.S. Men’s Wet Shave Razors and Blades Have Few Established Brands, but Accelerating Brand Entry Glob
Slide 9: Global Sun Care Market Continues To Grow And Edgewell Has Leading Share
Global Sun Care Market Continues To Grow And Edgewell Has Leading Share Edgewell SunCare Dollar Share & Market Position 40% #1 35% #1 30% HT new #1 18% in F19 25% #1 #1 6% 20% #2 15% 9% #3 10% 22% 19% 19% 8% #4 #5 #4 BB new 5% 10% in F20 3% 5% 3% 4% eCom 0% 1% US CA Mexico Australia Chile Spain UK C
Slide 10: Edgewell Overview
EDGEWELL OVERVIEW HIGHLY CONFIDENTIAL
Slide 11: Edgewell at a Glance
Edgewell at a Glance EDGEWELL’S PORTFOLIO OF BRANDS WET SHAVE FEMININE CARE SUN & SKIN INFANT CARE CARE FY 2018 REVENUE MIX BY SEGMENT FY 2018 REVENUE MIX BY PRODUCT Infant Skin Care & Other Infant Products & Other 6% 5% Femcare Shaving Gels 6% & Creams 15% 6% Tampons, Pads & Liners 15% 53% Razors &
Slide 12: Edgewell's Strategic Overview and Initiatives
Edgewell’s Strategic Overview and Initiatives In An Evolving …We Took Proactive Project Fuel Industry Backdrop… Steps to Drive Change ■ Evolving categories ■ Conducted creating new comprehensive review Fuel Growth challenges and of all business 1 Reinvest in business opportunities segments with assi
Slide 13: Enhancing Shareholder Value Through Project Fuel
Enhancing Shareholder Value Through Project Fuel FUEL OBJECTIVES & EMPHASIS 1 Lower Cost Base in a Competitive Environment In Fiscal Year 2018, Total Company Spend was $1.9Bn , going forward our goal is to achieve $225mm in annual gross savings by the end of Fiscal Year 2021 to: ■ Reduce Cost of Goo
Slide 14: Delivering Rapid Return on One-Time Costs
Delivering Rapid Return on One-Time Costs TOTAL ESTIMATED COSTS AND CAPEX ESTIMATED GROSS SAVINGS ■ One-Time Costs: $130M - $140M APPROXIMATELY 75% OF PROJECT $225-240M Annual ■ CapEx: approx. $60M - $70M SAVINGS WITHIN THE FIRST TWO Gross Savings FULL FISCAL YEARS(1) ■ Timing: − Began implementatio
Slide 15: Go Forward Strategy For Feminine And Infant Care Businesses
Go Forward Strategy For Feminine And Infant Care Businesses STRATEGIC BACKDROP GO FORWARD STRATEGY ■ In February 2019, Edgewell began a strategic review of its ■ After completing a lengthy review, including running a Feminine and Infant care businesses divestiture process, Edgewell has elected to re
Slide 16: Harry's Overview
HARRY’S OVERVIEW HIGHLY CONFIDENTIAL
Slide 17: Harry's at a Glance
Harry’s at a Glance HARRY’S PORTFOLIO OF BRANDS PRIVATE MEN WOMEN LABEL HARRY’S HAS DEMONSTRATED GROWING PENETRATION IN RETAIL CHANNELS 2% 5% 7% 1% FY 2016 FY 2017 FY 2018 LTM AUGUST, 2019 Harry’s Retail Market Share Other Providers Market Share FY 2018 Geographical Mix: 76% North America & 24% Inte
Slide 18: Harry's Is Truly a Next Generation CPG Company
Harry’s Is Truly a Next Generation CPG Company Harry’s Vision 1 Have built a formidable platform to disrupt the CPG industry 2 Build brands that are aspirational yet relatable and accessible 3 DTC-led and enabled by omni-channel distribution capabilities The Harry’s brand provides a playbook that is
Slide 19: Harry's Is A Successful Challenger Brand
Harry’s Is A Successful Challenger Brand PHENOMENAL TAKING SUCCESSFUL BRAND LAUNCHED GROWTH SIGNIFICANT SHARE EXTENSIONS 2013 ~$325mm 30%+ #1 SKUs CY’2019E Revenue Retail category share(1) Across new category launches 2019 2018 2018 2016 2015 2017 1 million DTC U.K. DTC launch customers 2014 Acquire
Slide 20: Driven by a Relentless Focus on what the Consumer Wants
Driven by a Relentless Focus on what the Consumer Wants and an Imagination to Deliver Beyond BUILD PRODUCTS AND DRIVING DEEP RELATIONSHIPS GET TO KNOW CUSTOMERS BRANDS THAT RESONATE AND STRONG ADVOCACY Brands that are relatable Connect directly with customers Percent highly likely to and everyday as
Slide 21: Harry's Has Developed a Fully Functional, Global Organization
Harry’s Has Developed a Fully Functional, Global Organization Manufacturing capabilities Best-in-class Industrial Design • Vertically integrated in 2014, • Ability to design high- acquiring feintechnik, our razor performance products blade facility in Germany and packaging with • Invested substantia
Slide 22: Strong DTC Platform Enables Harry's to Better Connect with Consumers
Strong DTC Platform Enables Harry’s to Better Connect with Consumers & Transition the Brand Across Channels BUILD RELATIONSHIPS THROUGH DTC ENABLES DISRUPTIVE PRESENCE AT RETAIL Broad reach Deep relationships Leverage customer insights from DTC ~4M cumulative DTC customers acquired 2M+ Direct CX con
Slide 23: Significant Opportunity in Brick and Mortar
Despite Being DTC led, Harry’s Realized that there was Significant Opportunity in Brick and Mortar …And we felt that incumbent shaving options were Most men buy their razors in-store… not delivering for customers at retail % Of U.S. men’s shave sales 120% 100% Overpriced 15%+ $7 per 80% cartridge 60
Slide 24: Harry's Playbook Has Been Proven Across New Markets and Categories
Harry’s Playbook Has Been Proven Across New Markets and Categories U.K. BODY & BAR WOMEN’S Indexed Post-Launch Cumulative Customers Acquired(1) U.K. U.S. Months Since Launch #1 body wash SKU at Target; Strong omni-channel start; >400k customers acquired; 500k+ customers in 6 months; Achieved >10% sh
Slide 25: Combination of Edgewell and Harry's
COMBINATION OF EDGEWELL AND HARRY’S HIGHLY CONFIDENTIAL
Slide 26: Power of an Edgewell and Harry's Combination
Power of an Edgewell and Harry’s Combination Compelling Combination… …With Leading Market Positioning 1 Unique Consumer Centric Platform to Launch New Brands and Products Across Personal Care 2 Combines Edgewell’s Leading Technology and Shave Manufacturing Capabilities with Harry’s Best-in- #1 Japan
Slide 27: Consumers Are Demanding a Differentiated Approach
Consumers Are Demanding a Differentiated Approach EXCEPTIONAL PRODUCTS BRANDS THAT CONNECT OMNI-CHANNEL MODEL CONSTANTLY INNOVATING TO RELATABLE BRANDS THAT AVAILABLE HOW AND WHERE MEET CONSUMER NEEDS SHARE CONSUMER BELIEFS CONSUMERS WANT 26
Slide 28: Edgewell and Harry's Bring Together the Capabilities to Better Meet Consumer Needs
Edgewell and Harry’s Bring Together the Capabilities to Better Meet Consumer Needs WORLD-CLASS PRODUCT MODERN BRAND BUILDING TECHNOLOGY AND PRODUCT DESIGN GLOBAL SCALE AND STRONG DTC CAPABILITIES AND INFRASTRUCTURE TECHNOLOGY COMPANY COST DISCIPLINE AND CASH FLOW PERFORMANCE MARKETING TO DRIVE INVES
Slide 29: Our Leadership Positions Allow us to Reshape and Grow in Attractive Core Categories
Our Leadership Positions Allow us to Reshape and Grow in Attractive Core Categories SHAVE SKIN SUN ■ Highly attractive margin structure ■ High average spend across ■ Increasing focus on wellness and ■ Recurring spend driven by high category making sun care part of daily Category degree of customer l
Slide 30: Opportunity to Continue Disruption by Leveraging Our Combined Platform
We Have an Opportunity to Continue Disruption by Leveraging Our Combined Platform New Brands Technology and Web Platform Data and Analytics Modern CPG HARRY’S Capabilities STRENGTHS Digital and Performance Marketing Shopper Experience and Engagement Retail Relationships EPC’S Traditional CPG R&d, Su
Slide 31: Leveraging a Proven Playbook That is Better Together
Leveraging a Proven Playbook That is Better Together BUILD A BRAND THAT CONNECTS WITH CONSUMERS DEEPEN AND BROADEN RELATIONSHIPS WITH CONSUMERS THROUGH DTC EXPAND INTO RETAIL LEVERAGING SUCCESS IN DTC REPLICATE SUCCESS INTERNATIONALLY TAKE BRAND EQUITY INTO NEW PRODUCT ADJACENCIES Global, omni-chann
Slide 32: Well-Positioned to Win in Core Categories and Launch New Products
Well-Positioned to Win in Core Categories and Launch New Products or Brands in Adjacencies 2018 US Category Sales (in $B) +$75 $100 $25 Current Categories Adjacent Total Addressable Personal Care Categories –Men’s Razors and Blades –Men’s Anti-Perspirant and –Men’s Shave Preps and Deodorant Associat
Slide 33: Harry's Has Built a Formidable Platform to Disrupt the CPG Industry
Harry’s Has Built a Formidable Platform to Disrupt the CPG Industry and the Retail Channels MODERN AND RELATABLE BRANDS FULLY INTEGRATED OMNI-CHANNEL PRODUCT DEVELOPMENT BUILT FROM SCRATCH FOR TODAY’S EXPERIENCE TO MEET CONSUMER DRIVEN BY REAL CONSUMER PAIN POINTS CONSUMER NEEDS Create differentiate
Slide 34: Opportunity to Accelerate International Expansion Through Edgewell's Global Reach
Opportunity to Accelerate International Expansion Through Edgewell’s Global Reach 33
Slide 35: We Have Developed a Detailed Integration Roadmap
We Have Developed a Detailed Integration Roadmap Mobilization phase completed on June 27 Execution: Delivering on Mobilization: Major framing of Design: Workstreams designing Aspiration of the combination the combination NewCo and how to get there (some elements starting in design) June 2019 (~4 wee
Slide 36: Strong Team Identified to Support the Integration
Strong Team Identified to Support the Integration Integration Leads Steering Edgewell & Harry’s VP, Global Procurement Committee COO (Harry’s) Executive Leadership (Edgewell) Have Identified 14 Key Areas To Drive Design and Planning for the NewCo and Assigned A Lead Resource to Each Area Shave Brand
Slide 37: Sustainable Long-Term Growth Opportunities Enabled by Our Combined Capabilities
Sustainable Long-Term Growth Opportunities Enabled by Our Combined Set of Capabilities + 1 Apply modern branding and design capabilities across the portfolio 2 Improve Harry’s and Flamingo products with Edgewell’s technology 3 Build engaging DTC experiences for Edgewell brands on Harry’s platform 4
Slide 38: Key Credit Strengths
KEY CREDIT STRENGTHS HIGHLY CONFIDENTIAL
Slide 39: Key Credit Strengths
Key Credit Strengths 1 Compelling Combined Company Financial Profile 2 Industry-Leading Growth and Margin Profile 43 Meaningful Synergy Opportunities 4 Exceptional Leadership Team 4 5 Successful Global Footprint and Valuable IP 38
Slide 40: Compelling Combined Company Financial Profile
1 Compelling Combined Company Financial Profile PROFILE DRIVERS ■ Accelerated growth outperforms CPG in TOP-LINE ■ Mid-single digit growth algorithm both core business and synergy capture ■ Leveraging Edgewell scale and focus on ■ High 40s gross margin model productivity and efficiency (with synergi
Slide 41: Our Combined Growth And Margin Profile Will be Industry-Leading
2 Our Combined Growth And Margin Profile Will be Industry-Leading REVENUE GROWTH PROFILE GROSS MARGIN PROFILE “Mid- Single “ High 40s” Digits” 44% 2.5% (1) CPG Average (2) (1) CPG Average (2) (1) Reflects fiscal year-end estimates (2) Average based on S&P 500 Consumer Staples index, excluding Food &
Slide 42: Meaningful Growth and Synergy Opportunity
3 Meaningful Growth and Synergy Opportunity ESTABLISH THE FOUNDATION EXECUTE ON ADDITIONAL OPPORTUNITIES ■ Bring together key functions and teams ■ Leverage Edgewell’s footprint ■ Understand best practices across both ■ Accelerate Harry’s international expansion companies ■ Increase Edgewell’s value
Slide 43: Exceptional Commercial Leadership Team
4 Exceptional Commercial Leadership Team Rod R. Little President and CEO NEW EXECUTIVE LEADERSHIP WITH REFRESHED PERSPECTIVES POISED TO DRIVE GROWTH ACROSS THE ORGANIZATION Colin Hutchison Dan Sullivan Strong public company and entrepreneurial experience COO, Head of Int’l Forward-thinking culture a
Slide 44: Strong Global Infrastructure and Valuable IP
5 Strong Global Infrastructure and Valuable IP Leading Edge Innovations Global Reach Advanced Technology – 2,900+ granted global patents – Global research and technology centers – Vertically integrated R&B operations – 450+ pending patent applications – Over 5,000 dedicated colleagues – Advanced man
Slide 45: Financial Performance and Strategy
FINANCIAL PERFORMANCE AND STRATEGY HIGHLY CONFIDENTIAL
Slide 46: Edgewell Historical Financials
Edgewell Historical Financials ($ in millions) LTM 2016 2017 2018 6/30/19 Wet Shave $1,426 $1,375 $1,330 $1,260 Sun and Skin Care 415 440 450 456 Feminine Care 389 352 330 313 Infant Care & All Other 132 131 125 122 Net Sales $2,362 $2,298 $2,234 $2,150 % Growth (2%) (3%) (3%) -- Cost of Goods Sold
Slide 47: Harry's Historical Financials
Harry’s Historical Financials ($ in millions) 2016 2017 2018 1 Total Net Sales $147 $174 $247 % Growth 40% 18% 42% 2 Adj. EBITDA ($24) ($23) ($7) % Margin n.m n.m n.m 3 Capital Expenditures ($18) ($20) ($29) % of Revenue 12% 11% 12% COMMENTARY 1 Net Sales Growth: Launched Harry’s at Walmart in Q2
Slide 48: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation EDGEWELL PERSONAL CARE HARRY’S ($ in millions) ($ in millions) LTM 6/30/19 LTM 12/31/18 Net Income ($374) Net Income ($6) Income Tax Provision (13) D&A 18 Interest expense, net 63 Stock Based Compensation 1 Depreciation and Amortization 93 Taxes (0) EBITDA ($230) Inter
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