Barclays Global Consumer Staples Conference
Edgewell Personal Care Company September 5, 2018
Page 1 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 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, 2017 and its quarterly reports on Form 10-Q for the quarters ended December 31, 2017, March 31, 2018, and June 30, 2018.
Page 2 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 items such as impairment charges, the disposition of the Playtex gloves business, the impact of the Tax Cuts and Jobs Act (the "Tax Act"), costs associated with the acquisition and integration of Jack Black, L.L.C. ("Jack Black"), restructuring charges and amortization of intangibles. Reconciliations of Non-GAAP measures, including reconciliations of measures related to the Company's fiscal 2018 financial outlook, can be found in the Company’s earnings releases for the third quarter of fiscal 2018 and full year fiscal 2017. 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 results. 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. This Non-GAAP information is a component in determining management's incentive compensation. Finally, the Company believes this information provides a higher degree of transparency.
For definitions of these terms and reconciliations to GAAP measures, refer to the Company’s earnings release for the third quarter of the 2018 fiscal year and other materials that can be found on its Investor Relations website at http://ir.edgewell.com.
Page 3 Agenda
Strategic Overview David Hatfield, CEO and Chairman
Project Fuel and Financials Rod Little, CFO
Reinvestment Priorities Colin Hutchison, COO
Page 4 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 and opportunities o New entrants increase competition and pricing pressure o Accelerating shift to new channels, digital and customization
• Taking proactive steps to drive change o Strengthened Board and management team o Conducted a comprehensive review of the business o Implementing Project Fuel and Transformation o Expect $225M in annual gross savings by the end of fiscal 2021 to fund growth, transformation and margin expansion
Page 5 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 48% International 6% 11% Systems Femcare 52% USA 15% 24%
Private Label 20%
19% 60% Sun & Skin Wet Shave 20% Branded 25% Women’s Systems
Branded Disposables * Fiscal 2017 mix Page 6 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 - Compelling Innovation - Expand International Footprint / Scale - Leverage the Full Portfolio - Build E-Comm & Digital Capabilities - Category Solutions - Enter New Growth Categories via M&A
Page 7 Focus on the Fundamentals Led by a Full Portfolio of Innovation
Page 8 Investments in Strategic Growth Re-configure into Growth Opportunities Initiatives are Working
Approx. 20% of EPC Sales (2018E) - International Expansion (1) - International Sun Care - eCommerce (all segments) Shave Innovation - Bulldog/Jack Black eCommerce
International Expansion
International Sun Care
Bulldog / Jack Black
(1) Includes Latin America, Asia Pacific (excluding Japan and Australia), Eastern & Central Europe and Middle East & Africa. Page 9 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 +80bps
Q3’15 Q3’18
Sources: Nielsen xAOC; Global defined as select EPC markets; Category growth 2015 thru 2018 Q3 YTD (1) Understated due to exclusion of international private label. Page 10 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 with the assistance of external advisors and included: – A comprehensive review of all business segments, addressing performance in challenging category environments – Assessment of all value creation levers
• Following this review, the Edgewell Board and management team determined that Project Fuel is the best path to drive value creation for all stakeholders
• Project Fuel is an enterprise-wide initiative to transform the Company's business and cost structure, enabling investment for growth and margin expansion
• Management and the Board have been and will remain open minded and committed to taking actions in the best interests of the Company and its shareholders
Page 11 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 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 VP, eCommerce Chief Human Chief Legal Officer Officer Officer Chain and Operations And Innovation Resources Officer
20+ years of 30+ years of 25+ years of 25+ experience in 20+ years of 30+ years business, 20+ years of global experience operational and manufacturing, consumer goods eCommerce, digital management, cross- experience in cross- in consumer goods leadership experience distribution, industry, with marketing and functional and border M&A, SEC organizations in consumer goods transportation, marketing, general database marketing leadership experience reporting, corporate customer service, management and experience governance, corporate Public company 13 years with procurement and sales business Previously led finance and track record of Edgewell, previously and operations transformation Previously served as Edgewell’s North compliance driving results serving as VP of planning experience experience. VP of eCommerce for American commercial through business Commercial Vineyard Vines organization Previously served as transformation International Previously served as Previously served as SVP, General Counsel EVP of Supply Chain regional VP for South and Secretary at for Safety-Kleen Europe, Middle-East Harman International Systems, Inc. and Africa. Industries
Page 13 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) Edgewell Personal Care The Clorox Company Ogilvy Consulting Ball Corporation Solutia, Inc.
• Leadership, strategy, • Strategy, business • Brand strategy, digital • Operations, finance • Risk management, M&A, marketing, development, operations, marketing, data/analytics • CPG industry veteran with corporate governance and advertising financial management, and long-term planning insight into complex regulatory, sustainability, • Began career in Eveready accounting principles, financial • 25+ years of experience in business, operational and executive compensation Battery division in 1988 reporting global B2B and B2C financial issues • Extensive experience as a • 34+ years of experience in CPG marketing director in CPG companies industry Effective October 1, 2018
James C. Johnson Elizabeth Valk Long Rakesh Sachdev Joe O’Leary Gary K. Waring General Counsel (Retired) Executive Vice President (Retired) Chief Executive Officer President and COO (Retired) Accounting Professional (Retired) Loop Capital Markets LLC Time Inc. Platform Specialty Products Corporation Petsmart, Inc. Ernst & Young
• Legal, compliance, risk • Marketing, communications, • Finance, strategy, • Executive leadership, • Accounting, audit, management, corporate human resources, legal management, accounting, operations, marketing, financial reporting, governance, executive • First female to be named financial reporting logistics corporate governance and compensation publisher at Time, Inc., • Nearly 30 years of • 20+ years of CPG regulatory, M&A, • Extensive executive extensive consumer experience in leadership, experience and expertise in restructuring management and leadership marketing, customer service, finance, strategy and operations and logistics, • 35+ years of consulting experience distribution, production, general management M&A and restructuring experience with increasing human resources, legal leadership and operating affairs and communications responsibilities experience
Page 14 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 transformation
Re-configure into • Generate increased shareholder Focus on the Growth value Fundamentals Opportunities
Page 15 Agenda
Strategic Overview David Hatfield, CEO and Chairman
Project Fuel and Financials Rod Little, CFO
Reinvestment Priorities Colin Hutchison, COO
Page 16 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
Adjusted EPS Growth Increased -12% At mid-point of outlook
Earnings-to-Free-Cash- 100%+ 100%+ Flow Conversion Rate(4)
(1) As of August 7, 2018 Earnings Presentation. (2) Organic growth, excluding M&A, currency translation and Venezuela deconsolidation. (3) 2-year CAGR of underlying net sales. Underlying net sales reflect organic net sales, excluding the $34m impact in fiscal 2016 from the Company’s “go-to-market” initiative. (4) 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.
Page 17 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 Private Label Shave N.A. Women’s and Disposables International Shave (Developed Markets) Infant/Other
* Approximate sales mix based on 2018 Outlook as of August 7, 2018 earnings call Page 18 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 International Pension Plans. (3) As of August 7, 2018 Earnings Presentation. Page 19 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 Fiscal 3Q2018. (2) Debt Leverage defined as Net Debt-to-EBITDA (as defined per the terms of the Credit Agreement). Page 20 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 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
• Brand Investment COGS Mix 52% Materials (A&P, Trade, Price) 26% Overhead 10% W&D 8% Labor 4% Other
COGS A&P R&D SG&A
As of 2017 Fiscal Year
Page 22 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 fiscal years(1)
$170M
$80M Balanced Approach to Investment and Margin Expansion • Overcome rising inflation and other Commodity costs
• Increase Brand Investment Fiscal 2019 Fiscal 2020 Fiscal 2021 • Margin Expansion A&P SG&A/R&D Ops & Supply Chain
(1) Timing of project fuel savings between the 2019 and 2020 fiscal years may be refined as project plans are completed. Page 23 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 speed innovation, consumer insight, brand salience
Page 24 Project Fuel Will Provide Resources for Growth
3 Reinvest in capabilities and growth areas
Page 25 Agenda
StrategicStrategic Overview Overview David Hatfield,David CEO Hatfield and Chairman
ProjectProject Fuel Fueland Financials Rod Little, CFORod Little
ReinvestmentReinvestment Priorities Priorities Colin Hutchison,Colin COOHutchison
Page 26 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 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 27.0 26.4 26.7 26.4 26.6 26.7 25.6 25.7 25.8 26.1 26.1 24.6
18.3 17.2 17.6 17.4 17.2 17.6 18.2 19.0 17.8 17.4 17.6 18.5 17.9 -2.9%
-4.0% -4.0%
-5.2% -6.1% -6.4% 1.2 1.1 0.9 -7.7% 9.1 9.0 9.4 9.4 9.1 7.9 8.4 8.4 8.9 8.8 -8.2% 5.9 6.2 5.8 -9.1% -10.1% Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 2017 Q1’18 Q2’18 Q3’18
Sources: Nielsen XAOC Note: Quarters are EPC fiscal year end September 30. Page 28 Focus on the Fundamentals New Shave Strategy
Exclusive Partnership Ultimate Technologies – Performance Seekers Extend Frame of B&M & DTC Reference: Hair with New New Brands Leverage Unique Portfolio & Brands Across All Price Tiers
Value “Good enough” with Pragmatists Purposed Brand & Design Millennials New
Page 29 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 Schick Women’s: Intuition f.a.b.
Page 30 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 packaging & optimizing marketing mix based on year 1 learnings Expanding distribution to Central Europe and Rest of Asia Line extensions
Page 31 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 trialists are repeaters Brazil (US)
Page 32 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 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 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 and Fewer Ingredients & Mattifying Agents - Facial Fragrance Identity Hypoallergenic
Page 35 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 impact • Revamped “Direct to Consumer” site in the U.K., upcoming in the U.S. in October 2018 • Extending brand from skincare to male grooming, with disruptive approach on high penetration categories: Launched the first Bamboo razor line at Boots and Walgreens
Page 36 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): e-channel: +49% , DTC: +34%
• International Expansion Through e-Commerce: China sales +57%
Page 37 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 earnings call. Page 38 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 Sites Upcoming Global Platform and Template Bulldog.com • Easy roll-out of new brands and countries
Page 39 Re-configure into Growth Opportunities Support International Expansion
Bring Skin & Sun Brands to Enter New Markets With Grow China More Markets Customized Approach
• Japan: New Hydro Shave Prep • Hydro Launch in B&M • DTC player partnership in South • Asia: Bulldog & Jack Black in +3 countries • eCommerce increased 4x with Korea, Upcoming India • Australia: Hawaiian Tropic boosted Schick presence at Tmall and • Re-entered Argentina, with Sun opening of JD.Com flagship then Shave in March 2018 • Germany: Hawaiian Tropic • Banana Boat and Jack Black launches • Re-entered Russia with Private • Latin America: Expand permanent through Cross Border Label presence in Sun and Sport segment
Page 40 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 • Generate increased shareholder Focus on the Growth value Fundamentals Opportunities
Page 41 Barclays Global Consumer Staples Conference
Q&A
Page 42