EPC Q3 2020 EARNINGS SUPPLEMENTARY SLIDES
Forward-Looking Statements. This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of Edgewell Personal Care Company (“the Company”). Forward-looking statements generally can be identified by the use of words or phrases such as "believe," "expect," "expectation," "anticipate," "may," "could," "intend," "belief," "estimate," "plan," "target," "predict," "likely," "will," "should," "forecast," "outlook," or other similar words or phrases. These 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 Edgewell or any of its businesses, growth trends, and product innovation and service to meet customer needs. Many factors outside our control (including the ongoing COVID-19 outbreak), could affect the realization of these estimates. 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 document are only made as of the date of this document and the Company disclaims any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. In addition, other risks and uncertainties not presently known to the Company or that it presently considers immaterial could significantly affect the accuracy of any such forward-looking statements. Risks and uncertainties include those detailed from time to time in the Company's publicly filed documents, including in Item 1A. Risk Factors of Part I of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on November 26, 2019 and in Item 1A. Risk Factors of Part II of the Company’s Quarterly Reports on Form 10-Q filed with the SEC. Certain product information, competitive position data and market trends contained in this presentation have been prepared internally and have not been verified by any third party. Use of different methods for preparing, calculating or presenting such information may lead to different results and such differences may be material. In addition, certain industry and market data described in this presentation was obtained from industry and general publications and research, surveys and studies conducted by third parties. While the Company believes this information is reliable and appropriate, such information has not been verified by any independent source. You are cautioned not to place undue reliance on this product, competitive and market information or on this industry and market data. Non-GAAP Financial Measures. While the Company reports financial results in accordance with generally accepted accounting principles ("GAAP") in the U.S., this discussion also includes non-GAAP measures. These non-GAAP measures are referred to as "adjusted" or "organic" and exclude items such as restructuring charges, combination and integration planning costs, and expenses associated with the sale of the Infant and Pet Care business. Reconciliations of non-GAAP measures, are included within the Notes to Condensed Consolidated Financial Statements included with this presentation. 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.
Agenda 1 COVID-19 RESPONSE: THREE KEY AREAS OF FOCUS 2 Q3 AND YTD FINANCIAL PERFORMANCE 3 Q3 OPERATIONAL HIGHLIGHTS 4 CREMO ACQUISITION HIGHLIGHTS 5 APPENDIX 3
COVID-19 UPDATE
COVID-19 Response: Three Key Areas of Focus 1. The health and safety of our colleagues i. Protocols put in place a quarter ago have helped ensure on-going safety and wellbeing of colleagues. ii. Beginning process of bringing teams back to offices around the world, on a voluntary basis. 2. Ensuring the continuity of business operations and providing the best possible service to our customers i. Safety protocols at manufacturing plants ensured the continuity of production and availability of essential products to consumers; all global manufacturing plants and DC’s remain open and operational. ii. Continue to prioritize our strategic partnerships with the most important retailers. Focus on winning at the shelf through high levels of service, collaboration and problem-solving to build and maintain enduring and mutually beneficial relationships. 3. Managing the business in a disciplined and balanced manner while ensuring we continue to invest in the long-term success of the Company i. Making choices and focusing on key priorities that are most relevant in the near term, while continuing to advance the strategic priorities that will drive our long-term success. 5
Q3 AND YTD FINANCIAL PERFORMANCE
Q3 and YTD Financial Highlights • Organic net sales (14.7%) y/y, ($ in millions) YTD YTD excluding the impact from the sale Q3 2020 Q3 2019 2020 2019 of the Infant and Pet Care business Wet Shave $278.0 $327.7 $835.5 $909.8 and the negative translational $136.9 impact from FX. Management Sun and Skin Care $169.3 $369.5 $382.7 estimates that excluding the Feminine Care $69.0 $80.9 $229.1 $230.2 COVID-19 related impacts, organic net sales were essentially flat with Infant Care & All Other -- $31.3 $26.8 $90.3 the prior year period. Net Sales $483.9 $609.2 $1,460.9 $1,613.0 % Growth (20.6%) (1.8%) (9.4%) (4.9%) • Organic % Growth (14.7%) (0.3%) (4.7%) (4.3%) Excluding the impact of incremental COVID-19 expenses, Gross Profit $222.7 $292.2 $658.8 $736.6 restructuring charges and Sun Care % Margin 46.0% 48.0% 45.1% 45.7% reformulation charges, adjusted gross margin decreased 130 bps Adj. Operating Income* $58.1 $97.9 $201.7 $237.5 y/y, largely due to negative % Margin 12.0% 16.1% 13.8% 14.7% category mix driven by COVID-19. Adj. EBITDA* $82.8 $117.4 $261.1 $304.2 % Margin 17.1% 19.3% 17.9% 18.9% • Ended fiscal Q3 with $512 million in Capital Expenditures $10.1 $15.8 $26.9 $38.7 cash on hand, access to an undrawn % of Sales 2.1% 2.6% 1.8% 2.4% $425 million credit facility and a net leverage ratio of 2.1x. Cash $511.9 $279.0 Net Debt Leverage 2.1x 2.8x Ratio • *RECONCILIATION TABLES FOR ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA CAN BE FOUND IN APPENDIX 7 ON SLIDES 19-20
Q3 OPERATIONAL HIGHLIGHTS
Q3 Operational Highlights • Maintained seamless global operations and further strengthened the balance sheet with issuance of 2028 Notes • Further developing long-term strategy; certain key pillars already established with continued focus on execution in the near-term – Project Fuel delivering gross savings as expected • Right leadership team and structure now in place • Investments in strategic priorities and internal capabilities • Comprehensive sustainability strategy and objectives for 2030 9
CREMO ACQUISITION HIGHLIGHTS
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CREMO Acquisition: Transaction Overview • Edgewell enters into definitive agreement to acquire CREMO in an all cash transaction with a purchase price of approximately $235 million – Transaction expected to close by the end of first fiscal quarter 2021 • CREMO generated net revenue of approximately $58 million over the 12 months ended June 30 – Profitable financial profile with strong cash flow generation • Acquisition aligned with Edgewell growth strategy – Selective bolt-on of fast growing attractive brands with the ability to accelerate growth and profitability as part of the Edgewell platform 12
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