EdgewellPersonalCare November 14, 2017 11:20 AM EST Speaker ID: Page #1 EdgewellPersonalCare November 14, 2017 11:20 AM EST Dara Mohsenian: Hi. Good morning, everyone. I'm Dara Mohsenian, Morgan Stanley's household products and beverage analyst, and I'm very pleased to welcome Edgewell to our conference with their CEO, David Hatfield, as well as CFO, Sandy Sheldon. For people new to the story, Edgewell spun off their battery business a little more than two years ago, and they're now a pure play personal care company. So we'll start out with brief remarks and an overview from David, and then we'll move into a fireside chat from there. David Hatfield: All right, very good. Thank you. Before going into Q&A, I'd like to briefly provide some background and some context to our strategies and our outlook for fiscal 2018. Before I do that, I want to note that we will be making forward-looking statements, and that we will be presenting non-GAAP financials. By way of background, for those who aren't familiar with us, Edgewell personal care is a pretty unique company in this industry. At $2.3 billion in sales, we're a relatively small pure play personal care company. And for our size, we have a relatively broad footprint, competing in over 50 countries and generating over 50% of our sales outside of the U.S. We have great brands and a diversified portfolio, and we're the only wet shave manufacturer that can provide solutions across the full category. In describing our results, strategies and outlook, I'd like to use our strategy on a page. This lays out our medium term financial algorithm, and our portfolio objectives along the top and our three strategic pillars below, namely focusing on the fundamentals of reconfiguring into growth opportunities, and freeing up resources and productivity to fuel investments into growth initiatives. We'll be revisiting these throughout my comments. In the terms of results, in fiscal 2017, we gained share in our two global segments: wet shave and sun and skin care. However, challenging competitive conditions and the weak category performance dampened topline growth. Nonetheless, we delivered targeted growth in operating margins where we grew margins 50 basis points; EPS, where we grew adjusted EPS double digit; and cash conversion, which was over 100%. And we also over delivered targeted savings and reinvested in innovation, ecommerce initiatives, and other strategic growth initiatives. Looking forward to fiscal 2018, our first pillar is focusing on the fundamentals, reflecting our strategies of building brands, delivering compelling innovation, and providing
EdgewellPersonalCare November 14, 2017 11:20 AM EST Speaker ID: Page #2 category solutions. In fiscal 2018, we'll be delivering compelling new products across all of our product segments. Over the last several years, we've emphasized becoming even more consumer centric and impactful in our innovation roadmap. We start by generating consumer insights, informed by emerging trends like personalization, customization, convenience, et cetera. And we marry those insights and those need states with new-to-the-world technologies that are obvious and -- with obvious and perceptible benefits. And finally, we link product innovation with our underlying brand promise to strengthen brand equity and reputation. I think you'll recognize these three characteristics in our fiscal 2018 innovation, which as I've mentioned, spans all of our product segments. Today, I'll just touch on three of them. First, we're reimaging women's shave, making it simpler, easier, and less of a chore with the introduction of Intuition Fab; the first bidirectional razor that safely shaves forward and back, hence the sub-brand Fab. This concept tested extraordinarily well in BASES, generating concept scores in the top 10% in all the markets that we tested. This product innovation fits well with the Intuition brand, which had been successfully built around all-in-one, convenient, simple shave proposition. Secondly, we're bringing significant innovation to our Hydro 5 franchise under the Hydro Sense sub-brand. This is based on the insight that guys have different skin types, facial contours and shaving routines. Hydro Sense is the only razor with a shock absorbing handle that adjusts based on how you shave. We're introducing it with a range of three new cartridges with different skin conditioning gels designed for different skin types. So the new Hydro 5 is the only shaving system customized for your skin and your routine for a more comfortable, irritation-free shave. This concept also tested very well internationally and in the U.S., and it serves to reinforce Hydro's reputation for skin care efficacy. Third, we're the first major sun care manufacturer to deliver on the trending less is more belief and desire among personal care consumers. We're introducing Banana Boat's Simply Protect; a line of products that provide strong, worry-free protection with no oxybenzone, no added oils or fragrances. This line will span our sport, kids and the baby's lines in the lotions, aerosols and sticks. So in summary, we believe our lineup of NPD is quite compelling to consumers, and is delivering value and the growth to our Customers categories. Moving to our second strategic pillar, reconfiguring our business against growth opportunities. We recognized a while ago that our world, and the world of consumer products in general, was changing rapidly, and that growth in the future would require more than just mastery of the fundamentals. We needed to restructure and reconfigure, moving dollars and people resources to new growth opportunities including ecommerce, digital and international. We've made a lot of progress this past year not only in the terms of the sales and in the share, but also in the terms of organization as we've established a center of excellence for digital marketing and commerce. We will continue to invest against these growth initiatives through fiscal 2018, including further solidifying our ecommerce and digital marketing capabilities; continuing to gain share in omnichannel and the pure play channels; continuing to expand our international sun care footprint and the share we're handled; building and expanding upon our Hydro Connect launches in China, Italy and Central Europe; and continuing our rapid growth of
Recommend
More recommend
