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Morgan Stanley 2017 Global Consumer and Retail Conference
David Hatfield President, Chief Executive Officer and Chairman of the BoardNovember 14, 2017
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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 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, 2016 and its quarterly reports on Form 10-Q for the quarters ended December 31, 2016, March 31, 2017, and June 30, 2017.
Forward-Looking Statements
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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 items such as spin costs, restructuring charges, the sale of the industrial business and impairment of intangibles.
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, adjusted operating margin, adjusted EPS, free cash flow and working capital. For definitions of these terms and reconciliations to GAAP measures, refer to the Company’s earnings release for the second quarter of the 2017 fiscal year and other materials that can be found on its Investor Relations website at http://ir.edgewell.com.
Non-GAAP Financial Measures
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FeminineCare
Infant Care
60%15%
19%
6%
Wet Shave Feminine Care
Sun & Skin Care Infant & Other
2017 Sales Mix: Segment
Edgewell Personal Care Portfolio
Diversified Portfolio
Strong Brands
25%
20%25%
19%
11%
Men's Systems Women's Systems
Disposables Private Label
Shave Prep
2017 Global Sales Mix: Wet Shave
Wet Shave
Sun & Skin Care
N.A. 48% Inter. 52%
Geo Mix*
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Edgewell’s Strategic Pillars: FY’18 – FY’20
Fuel Growth - Colleague Engagement
- Enhanced Organizational Capabilities
- Systematic Cost Reduction- ZBS, Productivity
Re-configure into Growth Opportunities- Grow share in E-Retail, Growth Channels
- Expand International footprint / scale- Build E-Comm & Digital Capabilities
- Enter new growth Categories via M&A
Focus on the fundamentals- Build Brand Equity/ Consumer Engagement
- Compelling Innovation- Leverage the Full Portfolio
- Category Solutions
Goals: Exceed our medium term Financial Commitments• + 2-3% Net Sales growth • + 50 BPS Operating Margin Improvement • High Single Digit EPS growth • 100%+ Cash
Conversion
Deliver Portfolio Objectives• Grow global share in Wet Shave, Sun and Skin Care • Increase profitability in Fem Care, Infant and Others
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2017 Results Reflected a Challenging Category and Competitive Environment
2017 Results Progress on Strategic Pillars
Organic Net Sales
-2.8%(1)
50 Basis Points of Adjusted Operating
Margin
11% Adjusted EPS Growth
Grow Market Share in Razors and
Blades and Sun Care
• Launched Innovation Across Portfolio
• Launched eCommerce Initiatives: Direct to Consumer, T-Mall Flagship Store, New Amazon Home Page
• Grew eCommerce Net Sales 45%, and Grew Share
• Grew China Net Sales 15%, and Grew Share
• Grew International Sun and Skin Care Organic Net Sales 14%
• Delivered ZBS Savings of $20 million
• Delivered Restructuring Savings of $22 million(1) Organic net sales exclude a -0.5% impact of currency
movement and a 0.6% benefit from the acquisition of Bulldog.
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FY18: Focus on the Fundamentals
Focus on the fundamentals- Build Brand Equity/ Consumer Engagement
- Compelling Innovation- Leverage the Full Portfolio
- Category Solutions
In 2018 We will Deliver Compelling Innovation Across all Segments and the Full Portfolio of Wet Shave
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More Consumer-Centric and Impactful Innovation in FY18
Consumer Insights
Informed by
Emerging Trends
New to the World Technology
Strengthens
Brand Equity
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FY2018: Innovation across EVERY Segment
Intuition Fab
Hydro Sense Razor
Banana Boat Simply Protect
Women’s System
Men’s System
Disposables
PrivateLabel
Sun Care
Fem/ Infant Care
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Introducing a Revolutionary New Razor that safely shaves forward and back
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Introducing Hydro Sense
Introducing Hydro SenseThe First and Only Razors that Auto-Adjusts Based on How He Shaves
Shock absorber technology
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Introducing Banana Boat Simply Protect
strong, worry-free protection with 25% fewer ingredients
no oxybenzone, no parabens, no added oils or fragrances
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FY18: Re-configure into Growth Opportunities
Re-configure into Growth Opportunities- Grow share in E-Retail, Growth Channels
- Expand International footprint / scale- Build E-Comm & Digital Capabilities
- Enter new growth Categories via M&A
Build on 2017 Success with Continued Focus and Investment in Growth Initiatives
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FY18: Re-configure into Growth Opportunities
Re-configure into Growth Opportunities- Grow share in E-Retail, Growth Channels
- Expand International footprint / scale- Build E-Comm & Digital Capabilities
- Enter new growth Categories via M&A
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Fuel Growth - Colleague Engagement
- Enhanced Organizational Capabilities
- Systematic Cost Reduction- ZBS, Productivity
Vision We will be the trailblazing personal care company leveraging our colleagues’ creativity and passion to challenge convention and drive growth
Mission We will win through focus, insightful innovation and agility; delivering better solutions to our consumers and customers
FY18: “Fuel” Growth and Margin Expansion
Re-investment: A&P, Trade, Growth Initiatives
FY18/19 Restructuring Savings: $20 million
FY18 ZBS Net Savings Projection: $25 to $30 million
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FY18 – Staying the Strategic Course in a Challenging Market
* as of November 9, 2017 Earnings Presentation**Organic, excluding M&A and Impact from Currency*** Free cash flow is defined as net cash flow from operating activities less capital expenditures. Free cash flow conversion is defined as free cash flow as a percentage of net earnings.
Net Sales**
Adjusted Operating Margin
Earnings Per Share
Earnings-to-Free-Cash-Flow Conversion Rate***
Flat with prior year
2018 Outlook*
20 to 25 basis point improvement
GAAP: $4.00 to $4.20Non GAAP: $3.80 to $4.00
100%+
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Edgewell’s Strategic Pillars: FY’18 – FY’20
Fuel Growth - Colleague Engagement
- Enhanced Organizational Capabilities
- Systematic Cost Reduction- ZBS, Productivity
Re-configure into Growth Opportunities- Grow share in E-Retail, Growth Channels
- Expand International footprint / scale- Build E-Comm & Digital Capabilities
- Enter new growth Categories via M&A
Focus on the fundamentals- Build Brand Equity/ Consumer Engagement
- Compelling Innovation- Leverage the Full Portfolio
- Category Solutions
Goals: Exceed our medium term Financial Commitments• + 2-3% Net Sales growth • + 50 BPS Operating Margin Improvement • High Single Digit EPS growth • 100%+ Cash
Conversion
Deliver Portfolio Objectives• Grow global share in Wet Shave, Sun and Skin Care • Increase profitability in Fem Care, Infant and Others
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