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Page 1
September 7, 2016
Barclays Global Consumer Staples Conference
Edgewell Personal Care Company
Page 2
Strategic Overview and 2016 Performance David Hatfield
Commercial / Growth Strategy Colin Hutchison
Financial Perspective Sandy Sheldon
Agenda
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.
Forward-Looking Statements
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 operations, spin costs, restructuring charges, cost of early debt retirements and adjustments to prior years’ tax 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.
Non-GAAP Financial Measures
Page 5
Strategic Overview and 2016 Performance
David Hatfield Chief Executive Officer, President and Chairman of the Board
Page 6
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
• Continued global category growth expected for both Wet Shave and Sun and Skin Care
• Fiscal 2016 full year expectations* in-line with our 2016 Operational and Financial Plan
• Significant progress towards our long term financial algorithm 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
Edgewell Personal Care
Attractive Categories Strong Brands
Wet Shave
Sun & Skin Care
Feminine Care
Infant & Other
Category Brands Key Geographies
Page 8
Edgewell Company Plan Framework
A Strong Foundation On-going Value Drivers
Accelerate Top Line Growth • Strong brands in growing categories
• Unique “Challenger” position
• A culture dedicated to innovation, productivity, and value creation
• Diverse geographic footprint
• History of strong profit growth and 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 Will Position Us for Growth
2016 Priorities: A Transition Year… 2016 Financial Objective*
Segment Share Improvement
Solidify North America Business
Align Teams Around New Structure &
Priorities
Continue International
Expansion
• Flat Organic Sales Growth (including go-to-market impacts)
• Flat Organic Sales in North America
• Continued “underlying” growth in International
• Flat Organic EBITDA **
* 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
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 11
Return to Growth in North America
Strategic Priorities
• Re-investment in A&P and marketing spend
• Maintain strong innovation roadmap
• Leverage full portfolio
• Re-build share of shelf
• Meet competitive promo intensity
2016 Status
• NA Net Sales showing improving trends
• Expect net sales growth for fiscal 2016
• With growth in Wet Shave and Sun and Skin Care
• Wet Shave share gains for 5 consecutive quarters
• Expanded distribution and sales in Growth Channels
• Introduced new innovation across all segments
Page 12
Continue International Expansion
• Execute organizational changes, build distributor management capabilities
• Grow Wet Shave mid-single digit
• Continue Hydro Development
• Invest against Disposables
• Double-digit growth in value brands
• Grow Sun double-digit
• Continue distribution/visibility expansion
• Roll out innovation
2016 Status
• Go-to-markets changes complete
• On time and on financial plan
• Underlying net sales growth through 3Q YTD Fiscal 2016
• Expanded distribution and sales in Growth Markets and Channels
Strategic Priorities
Page 13
Growth Strategy
Colin Hutchison 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
$B
illio
ns
U.S. Wet Shave* Retail Sales 2015: $4.2 Billion
US
$B
illio
ns
*Wet Shave: Razors & Blades + Shave Prep
Source: 2015 Euromonitor Source: Measured: Nielsen Scantrack, Non-Measured: Slice and Nielsen Panel.. 2016-2019 Edgewell Projected
Continued Category Growth in Wet Shave
$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
$B
illio
ns
US
$B
illio
ns
*2016-2019 Edgewell projected sales
Source: 2015 Euromonitor
Edgewell’s Full Portfolio of Wet Shave Offerings are Aligned to Category Diversification
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 Category Growth Driven by Latin America & Asia
Global Sun Care Retail Sales
US
$B
illio
ns
v
Page 17
Leverage Full Portfolio
Edgewell Growth Strategies: Accelerate Top Line Growth
Meaningful Investment in
Growth Brands & Channels
Drive Innovation
Continue International
Expansion
Page 18
Xtreme 3: First Triple Blade
Disposable
Invented Lubricating Strip
Intuition: First Razor
with Built-in Shave Prep
Build Upon Proven Track Record of First-to-Market Innovation
Hydro: First Razor with Hydrating Gel
Challenge Category Convention First-To-Market Visually Differentiated
Page 19
0
50
100
150
200
250
300
350
400
450
500
12 Mths Ending June 2014 12 Mths Ending June 2015 12 Mths Ending June 2016
Disposables
Women's
Men's
Source: AC Nielsen Global Track, 25 markets
10%
Hydro Innovation Continues to Drive Growth
Hydro Franchise Retail Sales ($M)
Page 20
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 21
Full Portfolio of Brands and Private Label Meet Needs Across All Consumer Segments
Pri
ce
Private Label Premium
Page 22
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 our international markets.
Distributor model in 30+ markets
• Moved to a Distributor model in 15 new markets
• Model began operating July 1, 2015
• Delivering Ahead of Expectations
Page 23
60%
40%
North America International
2015 Sales Mix
Achieving Our Long Term Objective: International
Continuation of Profitable Growth in International
• Strong Innovation Roadmap
• Pricing/Trade Up
• Accelerate Sun Care
• Leverage New Focused Go-To-Market Structure
• Expand Distribution: Geographic and Channel
Good progress to date Fiscal 2016
• Underlying sales growth achieved in each key geography (EMEA, Asia, Latin America)
• Wet Shave and Sun and Skin Care underlying growth
• Distributor markets delivering ahead of expectations
* Growth rate reflects estimated organic growth
+3.7%* CAGR ‘08 – ‘15
+3.2%** YTD 3Q16
** Growth rate reflects estimated underlying growth. See page 4 Non-GAAP financial measures
Page 24
1 Source: Slice, 2016 2Source: Nielsen, 12 months ending April 2016 3 Edgewell Estimate
eCommerce is a Key Growth Channel for Razors & Blades Category
Meaningful Opportunity
• US: $420MM1
• China: $80MM2
Fastest Growth Channel
• US: +15%3
• China: +20%3
• Rest of World: 15-20%3
Attractive Opportunity
• Full Portfolio Opportunity in Pure Play
• Scalable Model Across Geography
Page 25
eCommerce Strategies
Prioritize and Invest in Razors & Blades
Accelerate Growth with eRetailers, Pure Play & Omni Channel
Drive Top 6 Markets
Page 26
Leverage Full Portfolio
Edgewell Growth Strategies: Accelerate Top Line Growth
Meaningful Investment in
Growth Brands & Channels
Drive Innovation
Continue International
Expansion
Page 27
Financial Perspective
Sandy Sheldon Chief Financial Officer
Page 28
Edgewell – Long Term Algorithm Beyond 2016
*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%+
Investor Day June 2015
Page 29
Edgewell – Value Drivers
Accelerate Top Line Growth 1
2 Systematic Cost Reduction
3 Substantial Free Cash Flow Generation
4 Disciplined Approach to Acquisitions
5 Leverage the Power of EPC’s Colleagues
Page 30
• Growth in Wet Shave
• Innovation and continued growth in Hydro
• Emerging market growth
• Full portfolio strategy
• Trade up
• Accelerate International Growth in Sun
• Leverage Innovation and Full Portfolio of Offerings in Feminine Care
• Stabilize Infant Care
60%
16%
17%
7%
Wet Shave Feminine Care
Sun and Skin Care Infant/Other
Achieving Our Long Term Growth Objective By Segment Sales
2015 Sales Mix
Page 31
• Target total 14-15% on-going spend
• Target Higher Investment in Key Brands – 18%+
• Improve ROI and Effectiveness
• Optimize and right size based on market conditions, launch activity
• Closely monitor effectiveness of advertising and promotion program results
13.7%
12.8%
14.2%
15.2%
14.5%
FY12 FY13 FY14 FY15 LT Model
Achieving Our Long Term Growth Objective Through Investment
A&P Historical Trends Going Forward
Sales
midpoint
Page 32
• Improve Gross Margin as a % of Sales • Global Footprint Initiatives and Asset
Optimization
• Procurement Initiatives
• 3% Gross, 1% Net COGS Savings
• Trade Promotion Management
• Trade Up, Mix Management
• Reduce SG&A as a % of Sales • Ample Opportunity for Savings
• ZBS, ongoing productivity initiatives
60%
20%
3%
17%
COGS A&P R&D SG&A
Achieving Our Long Term Growth Objective Through Margin Expansion
% 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
Generating Funds for Growth Through Disciplined Cost Management
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
Margin Improvement Levers
• Reduction in Workforce
• Consolidation of general and administrative functional support
• Reduced Overhead Spending
• Procurement savings
• Rationalization and streamlining of Personal Care Operating Facilities
Operating Margin Expansion
2013 Restructuring: Global Footprint and Supply Chain Initiatives
$m
Page 35
Margin Improvement Levers Operating
Margin Expansion
Program Objectives
• Deployed Commercial Hubs, rationalized Area structures
• Go-to-market Footprint restructuring
• Outsourced non-core transactional activities
• Centralized back office functions
Spin Related Programs
Complete
Go-to-Market Changes
Simplification in 20 Direct Markets
Distributor model in 30+ markets
Page 36
Margin Improvement Levers
Program Objectives:
• Eliminate non-productive spend
• Improve ROI
• Enhanced Organizational capabilities and Efficiencies
• Automation
• Replace multiple legacy systems
• Aligned Plans across Marketing, Sales and Operations
• Working capital improvements
Operating Margin Expansion
Scope/Progress:
• North America for initial phase
• Planning Module in place for 2017 Plan activities
• Settlement module goes live October 1
• Quick wins in 2016 based on quadrant analysis and delayering
Trade Promotion Effectiveness
Page 37
Margin Improvement Levers
Program Objectives
• Enhance and accelerate efforts to deliver lower costs, improved metrics
• Capture savings to provide on-going financial, operational flexibility
• Contribute to margin expansion goals
• Generate funds for more investment in our brands and capabilities
• Eliminate non-productive spend; improve ROI
• Develop governance and organizational capability to continue ZBS as a sustainable way of doing business
Operating Margin Expansion
Zero Based Spending (ZBS)
Scope
• Address non-headcount costs
• Analyze, benchmark and establish governance over 11 major cost areas in initial phase
• Identify quick wins for sustainable savings
Page 38
22.9%
16.6% 17.5%
16.0%
FY11 Baseline FY14 FY15 FY16 June LT Trend
Actions
• Large Working capital initiative drove significant improvement from FY11 baseline
• Increased in 2015 due to temporary inventory build for plant consolidation
• Going Forward:
• DII: Improve trends with Inventory Optimization and reductions after footprint changes are completed
Working Capital remains a key driver of Free Cash Flow
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
Priorities for Free Cash Flow
Page 40
Full Fiscal 2016 Outlook
• On Track to Achieve Goals for the Year
• Executed the First Full Year of Transition with Minimal Disruption and Positive Trends
• Market Share Momentum in Wet 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
Long Term Investment Case
Sales Growth
Margin Improvement Opportunities
Strong Cash Flow Generation
• Investing in Leading Brands
• Full Portfolio
• eCommerce Opportunity
• International, Emerging Markets
• Strong Cost Savings Track Record
• ZBS and 2013 Restructuring to Continue the Momentum
• FCF Driven by Profit Growth and Working Capital Improvements
Making significant progress towards our long term financial algorithm as presented at our June 2015 Investor Day
Page 42
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
• Continued global category growth expected for both Wet Shave and Sun and Skin Care
• Fiscal 2016 full year expectations* in-line with our 2016 Operational and Financial Plan
• Significant progress towards our long term financial algorithm as presented at our June 2015 Investor Day
* As of 8/02/16 Earnings Release
