Feminine Care Brands
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Accelerating the Pace of Change EDGEWELL PERSONAL CARE 2018 ANNUAL REPORT EDGEWELL AT A GLANCE WET SHAVE SUN AND SKIN CARE KEY BRANDS: KEY GEOGRAPHIES: KEY BRANDS: KEY GEOGRAPHIES: Schick, Edge, Wilkinson Sword, U.S., Japan, Germany, Banana Boat, Hawaiian Tropic, U.S., Canada, Mexico, Skintimate U.K., Canada Wet Ones, Bulldog, Jack Black Australia, U.K. FEMININE CARE INFANT/OTHER KEY BRANDS: KEY GEOGRAPHIES: KEY BRANDS: KEY GEOGRAPHIES: Playtex, Carefree, U.S., Canada Playtex, Diaper Genie, U.S., Canada Stayfree, o.b. Litter Genie SEGMENT SALES 15% 5% Other 60% 20% Feminine Care Sun and Skin Care Wet Shave 56% 44% U.S. International GEOGRAPHIC SALES FINANCIAL HIGHLIGHTS ($ in millions) 2018 2017 Net Sales 2,234 2,298 Organic Net Sales versus prior year(1) (4.5%) (2.8%) Gross Profit Margin 46.4% 49.2% Net Earnings from continuing operations 103.3 5.7 Adjusted Net Earnings(2) 192 228 Diluted EPS from continuing operations (GAAP) $ 1.90 $ 0.10 Adjusted EPS - (Non GAAP)(2) $ 3.52 $ 3.97 In addition to Net Sales and Earnings presented in accordance with generally accepted accounting principles (GAAP), Edgewell has presented certain non-GAAP measures in the table above. These measures should be considered an alternative to, but not superior to or as substitute for, the comparable GAAP measures. (1) Reconciliation of reported Net Sales to Organic Net Sales is included on page 31 of the Company's 10-K for the 2018 fiscal year. (2) Reconciliation of Net Earnings to Adjusted Net Earnings and GAAP EPS to Non-GAAP EPS is included on page 30 of the Company's 10-K for the 2018 fiscal year. TO OUR SHAREHOLDERS, INVESTORS, CUSTOMERS AND COLLEAGUES: For Edgewell Personal Care, fiscal 2018 was a year of significant progress despite a challenging market and competitive conditions. We advanced all three prongs of our strategy: providing fuel for growth, focusing on the fundamentals and investing to capture growth opportunities. In fiscal 2019, we are continuing to take action to make Edgewell a stronger competitor. Edgewell’s fiscal 2018 results to implement the changes needed fuel our strategic growth initiatives. reflect the reality of an evolving to win. We have revitalized and Edgewell’s Board and leadership and challenging marketplace. We strengthened our senior leadership team are confident in our strategy delivered $2.2 billion in net sales team to help us address the rapidly and believe we are taking the right and $3.52 in adjusted earnings changing consumer and competitive steps to enhance shareholder value. per share, a decrease of 2.8% and environment. We have bolstered our 11% year-over-year, respectively. Board of Directors with additional Fuel for the Future: We generated strong cash from expertise and experience in the ACCELERATING PROJECT FUEL TO operations of $265 million, which areas most critical to our business, CAPTURE COST SAVINGS we used to invest in innovation, with four new directors appointed acquire Jack Black, reduce our in the past few months. We are also In fiscal 2018, we accelerated the debt and repurchase more than aggressively improving our cost pace of the changes we are making 2 million shares during the year. structure through Project Fuel, under Project Fuel, our enterprise- Importantly, the entire Company which will enable us to reinvest in wide initiative to transform the is working with a sense of urgency our most profitable brands and Company's business and cost Edgewell Personal Care 2018 Annual Report 3 ESTIMATED ANNUALIZED GROSS SAVINGS 2018 SALES MIX FROM PROJECT FUEL A&P $225-240M Growth Initiatives SG&A/R&D (Invest for Growth) Ops & Supply Chain International Expansion 19% International Sun Care eCommerce Bulldog/Jack Black $130M Challenged Businesses (Optimize ROI) 22% North America (N.A.) Branded Men’s Shave N.A. Shave Preps Feminine Care FY 2019 FY 2020 FY 2021 Stable Businesses (Maintain/Grow) N.A. Sun Care 59% Private Label Shave STRATEGIC PILLARS N.A. Women’s and Disposables International Shave (Developed Markets) Infant/Other Faster Better Deeper Fuel Growth $225-240M in Annual Gross Savings Focus on the Re-configure into Fundamentals Growth Opportunities structure. This initiative is designed achieve between $225 million and leveraging our strengths to capture to streamline the organization, $240 million in annual gross savings market opportunities. simplify ways of working and clarify by the end of fiscal 2021—providing One of Edgewell’s strongest and sharpen accountability. Through the financial flexibility we need to competitive advantages is our this initiative, we are reducing compete and win. portfolio of well-recognized and our cost base, transforming our profitable brands. We are making ways of working to create a more Focusing on Fundamentals: those brands even stronger by agile and modern consumer INNOVATING TO STRENGTHEN OUR reinvesting cost savings generated products company, and investing CORE BRAND PORTFOLIO by Project Fuel in brand equity in innovation, digital capabilities and innovation. In fiscal 2018, we and growth areas. While Edgewell continues to introduced key innovation across We made significant progress on experience strong headwinds our core brands, such as Intuition, these goals in fiscal 2018, achieving because of unprecedented Schick Hydro, Schick Xtreme and savings ahead of schedule and competitive pressure in the razors Carefree. We also brought our increasing our outlook for gross and blades category, we took a shaving expertise to one of our newer savings in fiscal 2019 and beyond. number of steps this year to address brands, Bulldog, with the launch of Through Project Fuel, we expect to these and other challenges. We are the first Bulldog bamboo razor. 4 Edgewell Personal Care 2018 Annual Report RECONFIGURE INTO GROWTH FULL PORTFOLIO OF INNOVATION OPPORTUNITIES Shave Innovation eCommerce International Expansion International Sun Care Bulldog/Jack Black Driving Growth: branded products to value-driven in the Edgewell portfolio—with the INVESTING IN THE MOST PROMISING private-label customers—Edgewell launch of the Bulldog Razor and OPPORTUNITIES is uniquely positioned to capture Blades, exclusively in Walgreens new opportunities in this evolving stores in the U.S. and Boot’s stores Edgewell is also investing in key category. For example, our Women’s in the U.K. This launch shows initiatives that will drive our next Systems business returned to growth our agility in capitalizing on hair phase of growth. These initiatives this year with the launch of the maintenance, while leveraging accounted for approximately 20% Intuition f.a.b. line, a revolutionary Edgewell’s assets in Sun and of total company sales in fiscal 2018, new razor that streamlines hair Skin Care. driven by double-digit organic sales maintenance for on-the-go women, In Sun and Skin Care, we launched gains in the fiscal year. who use the forward or backward the Banana Boat Simply Protect line First, we are pursuing oppor- razor design to shave without lifting of sun care products that leverages tunities and innovation in men's the blade from their skin. the better-for-you consumer trend. and women's grooming and hair At the same time, we are seeing We are also supplementing our maintenance. With our excellent opportunities for our brands to organic growth with key bolt-on market coverage throughout a cross between Wet Shave and Sun acquisitions. We have expanded variety of tiers—from high-end and Skin Care—a strong bright spot our footprint in men’s skin care Edgewell Personal Care 2018 Annual Report 5 Edgewell is acting with a sense of urgency. We are executing a clearly defined three-pronged strategy to achieve cost savings, capitalize on our strong portfolio, and invest in compelling growth opportunities. with the acquisition of Jack Black Schick Hydro in the U.S. and China Our team of dedicated employees premium skin care products in are now 100% digital. is what enables us to innovate and March. At the same time, we compete. It is their creativity and have fully integrated Bulldog into Proactively Building on significant effort that allows us to the Edgewell portfolio, more Our Foundation deliver the brands that consumers than doubling net sales since the love. We are deeply grateful for their acquisition and increasing the If you are an investor, a customer, a dedication and contributions. brand’s coverage to 25 countries. consumer, or a supplier, I hope you I look forward to updating you E-commerce is also a key area take one key message away from on our progress throughout 2019. in which we are continuing to this letter: Edgewell is acting with a Thank you for your investment in invest and grow. In particular, we sense of urgency. We are executing Edgewell. are achieving growth through our a clearly defined three-pronged flagship store in China’s Tmall.com strategy to achieve cost savings, retail site, our state-of-the-art capitalize on our strong portfolio, Schick.com site, our Amazon and invest in compelling growth expansion and the launch of other opportunities. Across our company, branded direct-to-consumer sites we are committed to returning to such as Bulldog, which recently growth and increasing shareholder David P. Hatfield expanded to the U.K. and U.S. value through hard work, innovative Chief Executive Officer, In fact, our marketing efforts for thinking and financial discipline. President and Chairman of the Board 6 Edgewell Personal Care 2018 Annual Report UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2018 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 001-15401 EDGEWELL PERSONAL CARE COMPANY (Exact name of registrant as specified in its charter) Missouri 43-1863181 (State or other jurisdiction of incorporation or organization) (I.