Edgewell Personal Care Company · NYSE:EPC
Edgewell Personal Care — Barclays Global Consumer Staples Conference 2018
42 slides from Edgewell Personal Care's conference presentation, Sep 5, 2018
Slide 1: Barclays Global Consumer Staples Conference
Barclays Global Consumer Staples Conference Edgewell Personal Care Company September 5, 2018 Page 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 f
Slide 3: 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 discussion also includes Non-GAAP measures. These Non-GAAP measures are referred to as "adjusted“, "organic" or “underlying” and exclude item
Slide 4: Agenda
Agenda Strategic Overview David Hatfield, CEO and Chairman Project Fuel and Financials Rod Little, CFO Reinvestment Priorities Colin Hutchison, COO Page 4
Slide 5: Today's Key Messages
Today’s Key Messages • Portfolio of competitive and profitable brands o Since the launch of Edgewell in July 2015, have gained market share in challenging categories o Innovating and launching compelling new products o Executing strategic growth initiatives • Evolving categories create challenges an
Slide 6: Overview of Edgewell
Overview of Edgewell Strong Brands Wet Shave Feminine Care Sun & Skin Infant Care Care Strong consumer brands Wet Shave has strong representation across multiple segments* across sub-segments* Infant & Other Geographic Mix Shave Prep Branded Men’s 6% 48% International Femcare 52% USA 11% Systems 15%
Slide 7: Strategy for Growth
Strategy for Growth Fuel Growth - Colleague Engagement - Enhanced Organizational Capabilities - Systematic Cost Reduction - ZBS, Productivity Focus on the Fundamentals Re-configure into Growth Opportunities - Build Brand Equity/ Consumer Engagement - Grow Share in E-Retail, Growth Channels - Compell
Slide 8: Led by a Full Portfolio of Innovation
Focus on the Fundamentals Led by a Full Portfolio of Innovation Page 8
Slide 9: Investments in Strategic Growth Initiatives are Working
Re-configure into Growth Opportunities Investments in Strategic Growth Initiatives are Working Approx. 20% of EPC Sales (2018E) - International Expansion (1) - International Sun Care - eCommerce (all segments) Shave - Bulldog/Jack Black Innovation eCommerce International Expansion International Sun
Slide 10: Increased Market Share in Core Segments, Despite Challenging Categories
Increased Market Share in Core Segments, Despite Challenging Categories U.S. Razors & Blades Share Global Razors & Blades Share(1) +10 +140 bps bps 27.0 22.8 22.9 25.6 Category Category growth growth -570bps -300bps Q3’15 Q3’18 Q3’15 Q3’18 U.S. Sun Care Share +110 26.0 bps 24.9 Category growth +80bp
Slide 11: Driving Change
Driving Change • 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 on Edgewell’s future performance, and potential opportunities created for Edgewell • This review was conducted wi
Slide 12: Driving Improvement and Growth Through Project Fuel
Driving Improvement and Growth Through Project Fuel Executing on our strategic pillars Faster Better Deeper Fuel Growth Focus on the Fundamentals Re-configure into Growth Opportunities Page 12
Slide 13: A Refreshed Senior Leadership Team Focused on Execution and Creating Value
A Refreshed Senior Leadership Team Focused on Execution and Creating Value New to EPC Key Leadership Changes Over the Past 16 Months Rod Little Colin Hutchison Paul Hibbert Anne-Sophie Gaget Stephanie Lynn John Hill Marisa Iasenza Chief Financial Chief Operating VP, Global Supply VP, Global Strategy
Slide 14: Diverse, Experienced Board of Global Thought and Business Leaders
Diverse, Experienced Board of Global Thought and Business Leaders New Members since 2015 David P. Hatfield Daniel J. Heinrich Carla Hendra R. David Hoover John C. Hunter CEO and Chairman of the Board EVP, CFO (Retired) Chief Executive Chairman and CEO (Retired) Chairman, President and CEO (Retired)
Slide 15: Driving Improvement and Growth Through Project Fuel
Driving Improvement and Growth Through Project Fuel Executing on our strategic pillars Objectives Faster Better Deeper • Drive sustained revenue and profit growth Fuel Growth • Grow market share by winning $225M in Annual with compelling innovation, Gross Savings increased agility, and digital trans
Slide 16: Agenda
Agenda Strategic Overview David Hatfield, CEO and Chairman Project Fuel and Financials Rod Little, CFO Reinvestment Priorities Colin Hutchison, COO Page 16
Slide 17: 2018 Performance: A Mandate for Project Fuel
2018 Performance: A Mandate for Project Fuel 2015 – 2017 (CAGR) 2018 Estimate(1) Reported: -2.5% Reported: -2.0% Sales Underlying: Flat(2)(3) Organic: -3.5%(2) Adjusted Operating Margin Increased -120 basis points Expansion -12% Adjusted EPS Growth Increased At mid-point of outlook Earnings-to-Free-
Slide 18: 2018 Sales Mix
2018 Sales Mix* Net Sales Challenged Businesses Growth Initiatives (Optimize ROI) (Invest for Growth) 20% 20% N.A. Branded Men’s Shave International Expansion N.A. Shave Preps International Sun Care Feminine Care eCommerce Bulldog / Jack Black 60% Stable Businesses (Maintain/Grow) N.A. Sun Care Priv
Slide 19: Strong Free Cash Flow
Strong Free Cash Flow Total Free Cash Flow(1) Target: 100%+ of Net Earnings $246M $250M $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 I
Slide 20: Capital Allocation Priorities
Capital Allocation Priorities 1 Invest in the Business 2 Acquisitions 3 Share Repurchase CapEx Spend $200 million $124 million $660 million(1) $70M $70M 8.8 million shares $60M Deleverage(2) Fiscal 1Q2017: 3.53 x Fiscal Fiscal Fiscal 2016 2017 2018E Fiscal 3Q2018: 2.90 x (1) Fiscal 4Q2015 through Fi
Slide 21: Project Fuel was Undertaken to Transform our Business and to Accelerate Growth and Value Creation
Project Fuel was Undertaken to Transform our Business and to Accelerate Growth and Value Creation Fuel Transformation Objectives 1 Lower cost base in a competitive environment 2 Transform ways of working to promote agility 3 Reinvest in capabilities and growth areas Page 21
Slide 22: Project Fuel Will Impact All Areas of the Business
Project Fuel Will Impact All Areas of the Business 1 Lower cost base in a competitive environment Total Company Spend Project Fuel Spending Goals $1.9B • Cost of Goods Sold • SG&A / R&D COGS Mix • Brand Investment 52% Materials (A&P, Trade, Price) 26% Overhead 10% W&D 8% Labor 4% Other COGS A&P R&D
Slide 23: Project Fuel: Rapid Return on One-Time Costs
Project Fuel: Rapid Return on One-Time Costs Project Fuel: Estimated Total Estimated Costs and CapEx Gross Savings $225M Annual • One-Time Costs: $120M - $130M Gross Savings Approximately 75% of • CapEx: approx. $70M project savings • Timing: 80%+ incurred by end of within the first fiscal 2019 two
Slide 24: Project Fuel: Building a More Agile and Modern CPG Company
Project Fuel: Building a More Agile and Modern CPG Company 2 Transform ways of working to promote agility • Retain, sharpen external focus: consumer and customer • Streamline targeted enterprise wide processes • Simplify organization, drive accountability / entrepreneurialism • Leverage digital to s
Slide 25: Project Fuel Will Provide Resources for Growth
Project Fuel Will Provide Resources for Growth 3 Reinvest in capabilities and growth areas Page 25
Slide 26: Agenda
Agenda Strategic Strategic Overview Overview David David Hatfield, Hatfield CEO and Chairman Project Project Fuel Fuel and Financials Rod Little Rod Little, CFO Reinvestment Reinvestment Priorities Colin Hutchison, Priorities Colin COO Hutchison Page 26
Slide 27: Reinvestment Priorities
Reinvestment Priorities Focus on the Re-configure into Growth Opportunities Fundamentals Reposition and Accelerate Sun and Grow Wet Shave Skin Care Growth Drive eCommerce International and Digital Across the Expansion Portfolio Page 27
Slide 28: EPC U.S. R&B Share Performance Resilient: Investment Required for Growth Going Forward
EPC U.S. R&B Share Performance Resilient: Investment Required for Growth Going Forward EPC $ Share of Razors and Blades Nielsen Nielsen Industry Growth Schick Wilkinson Sword Private Label U.S. R&B xAOC 27.7 26.4 26.7 26.1 26.4 26.6 26.1 26.7 27.0 25.6 25.7 25.8 24.6 18.3 17.6 17.4 17.2 17.6 18.2 17
Slide 29: New Shave Strategy
Focus on the Fundamentals New Shave Strategy Exclusive Partnership Ultimate Technologies – Performance Seekers B&M & DTC Extend Frame of Reference: Hair with New New Brands Leverage Unique Portfolio & Brands Across All Price Tiers Value “Good enough” with Pragmatists Purposed Brand & Design Millenni
Slide 30: Shave: Consumer-centric Innovation
Focus on the Fundamentals Shave: Consumer-centric Innovation Leveraging cartridge Handle innovation Using hair & blades technologies for more that improves expertise to unlock new consumer needs consumer experience consumer usage Men’s: Hydro Body Disposables: Xtreme Pivot Ball Women’s: Bare by Schi
Slide 31: Shave: Lead Women Innovation
Focus on the Fundamentals Shave: Lead Women Innovation 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
Slide 32: Shave: More Customer Solutions
Focus on the Fundamentals Shave: More Customer Solutions Largest blades tech New More Exclusive Approach to portfolio Customers: B&M, online Increased DTC partnerships Unlimited customized handle options Mach 3 fits reinvigoration Entering new countries: plan: Russia, India, South Korea, 84% of tria
Slide 33: Shave: Invest in Brands ("New Hydro")
Focus on the Fundamentals Shave: Invest in Brands (“New Hydro”) Leverage Strong Enhanced Value Build Brand Equity Technology Proposition and Resonance • Stronger brand purpose • New advertising that leads with emotion • A digital-heavy 360 campaign Page 33
Slide 34: Shave: Invest in Brands ("New Hydro") Video
Focus on the Fundamentals Shave: Invest in Brands (“New Hydro”) • Stronger brand purpose • New advertising that leads with emotion • A digital-heavy 360 campaign Video Page 34
Slide 35: Sun: Innovate Beyond Core
Re-configure into Growth Opportunities Sun: Innovate Beyond Core Key Global Sun Markets: EPC Outpaces Sun Category Dollar Sales 2x Key New Product Initiatives, Customized to Local Needs Fun in the Sun Aloha Therapy Body Care “Better for you” Segment Nature Inspired Anti Aging + Leverage Brand DNA an
Slide 36: Lead Male Skincare Growth
Re-configure into Growth Opportunities Lead Male Skincare Growth 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
Slide 37: Lead Male Skincare Growth
Re-configure into Growth Opportunities Lead Male Skincare Growth 2018 Highlights 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
Slide 38: Expand eCommerce Channels
Re-configure into Growth Opportunities Expand eCommerce Channels 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 (1) Expected fiscal year 2018 sales growth as of August 7, 2018
Slide 39: eCommerce Growth Plan: DTC
Re-configure into Growth Opportunities eCommerce Growth Plan: DTC 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 S
Slide 40: Support International Expansion
Re-configure into Growth Opportunities Support International Expansion Bring Skin & Sun Brands to Enter New Markets With More Markets Grow China Customized Approach • Japan: New Hydro Shave Prep • Hydro Launch in B&M • DTC player partnership in South • Asia: Bulldog & Jack Black in +3 countries • eC
Slide 41: Closing Thoughts
Closing Thoughts Executing on our strategic pillars Objectives Faster Better Deeper • Drive sustained revenue and profit growth Fuel Growth • Grow market share by winning $225M in Annual with compelling innovation, Gross Savings increased agility, and digital transformation Re-configure into • Gener
Slide 42: Barclays Global Consumer Staples Conference Q&A
Barclays Global Consumer Staples Conference Q&A Page 42
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