EPC - Earnings call transcript Q4 2019 | Edgewell Personal Care Company

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Operator

Good morning and welcome to the Edgewell Personal Care Fourth Quarter and Full Fiscal Year 2019 Earnings Call. [Operator Instructions] Please also note this event is being recorded.

I would now like to turn the conference over to Chris Gough, Vice President of Investor Relations. Please go ahead sir.

Chris Gough

Thanks, Dan. thank Edgewell’s joining fiscal fourth earnings. and as this year everyone discuss we quarter morning, you us for morning XXXX Good and full me Officer. President Little, and With Sullivan, is Executive Dan Financial Chief Officer; our Chief our morning this and Rod off and then will kick transition Q&A. we to will to hand and results call full and then quarterly year the our will over Dan Rod discuss XXXX outlook, to being is our and will for available via recorded be website replay www.edgewell.com. This call

more. reflect may events. we plans might costs, with value, future promotional call, During fluctuations, changes about future our sales, and working statements future and to for currency the our respect expectations capital for savings are to future category restructurings, make metrics, and forward-looking statements, such current our Any advertising related launches, statements performance. include shareholders views to which return commodity spending, costs This product and plans of capital earnings,

assumptions events revise risks XX-K or are those any These as materially to our obligation amended year Risk of These do quarterly circumstances, be We our forward-looking by as statements or to under our statements. except Report law. those update different results and Form our caption these expressed September to be cause may actual on from XX, forward-looking subject implied required any XX-Q. ended and reports new the reflect or not are in to by statements assume Form various on uncertainties, Factors Annual the in may described including for on XXXX, based risks

today, prepared principles. financial directly to reconciliation These refer financial our will the believes of valuable available the website. trends are of provide which our generally measures accepted the most non-GAAP Relations section we earlier accounting non-GAAP our business. these call, A measures. underlying with this information with issued non-GAAP shown the GAAP at not on measures are Management accordance certain of Investor is measures press in release in comparable non-GAAP investors measures During to

the to turn to like would call I Rod. that, over With

Rod Little

America One evolving team and our for difficult particularly business play leadership Thanks, in Fuel. knew and of Shave. would We marketplace, we to in achievable competitive our further in business, were the an and of North good on morning, execution XXXX these everyone. climate set Chris, increasingly delivering require year of believe and financial Wet reflective objectives meeting XXXX, stabilization foundational would that that of a ago, the role strong that important objectives Project committed

Company, growth would it we key the refining toward our and A our and our and our initiative entire would require of to enhancing in Company. eye most portfolio, require commercial capabilities transformation a the structure with opportunities our reduce an simplify cost our way retail brands offerings channels. across in strengthen transformational work. and compelling our It brands, investment And across

delivering healthy am that pleased to earnings generation on expectations, line our balance while have all deleverage sheet. cash were these made I structurally adjusted flow Financially, in with meaningful again Today, objectives. delivered per and we we of net sales share say our that to progress

the discuss our the Importantly line significant last top and top the of this of second we and geography to am segment second line made as half. more with nearly trends seen of year first over year I I shortly. demonstrating the necessary that expected, headway the over trends we believe quarters, XXXX. and two Dan the business stabilization the foundation will pleased compared as every half in improved for have with the underlying detail improving in the provides half

and our the million improved performance and $XXX build necessary we on And of of serving operate to brands the the commercial redefining how change, delivered target gross providing business. capabilities. fundamentally reinvest operational have With as above Project we business. savings, Fuel, at our Fuel importantly, the Project in financial and catalyst flexibility

step impact portion still input The to improving QX. highest beginning large volumes, improved of the increased a we half trade of to bring lower show top to shelf trade impact the price second while trends a investment remains, at Fuel with the led care of volume Although our of year, able much investment Project trends, offset invest despite fem savings in were line were to the stabilization in in help back and work potential and slight is in cost in used initiatives. the our inflation, and

help these brands Black, specifically, and as broader the since Jack for portfolio. the our served acquisition growth, a and in XX% tripled Bulldog reminder by investment have has e-commerce, of experienced acquisition. A&P sales offer months deliver accelerated XXXX growth performance which and enhanced nearly driven since double-digit that presence retail in Bulldog opportunities Jack increased Black in XX the and More fantastic in sales the has

in area success is Black only e-commerce. our not Jack of

strong to and continue both we infrastructure over sales in approximately building invest outpacing businesses in Shave China. the Amazon In the U.S. year, e-commerce and XX% consumption and our overall from Amazon Tmall XX% and by and on at We channel U.S., performance with category growth the in for increased in Skin. Sun grew this to capabilities in

sales Hydro, e-commerce category average. both increased by significantly, and China, outpacing Intuition driven In the

partner $XXX.X for our the Care of Angelcare whereas and business the to Pet announced for transformation, businesses. Care shareholders, Feminine portfolio the review of interest Feminine we was Infant business a best business, determined the and retaining recently part Infant we our the Ultimately, million. we to process intent the strategic in and the ran Care that for our thorough Care As Company long-term sell

both We value presents the creation businesses opportunity and Edgewell best believe for best the forward is this path for for shareholders.

upon closing. will the additional We about detail provide infant transaction its

dialog and transformation remain the respective with Of and combination in companies and with information authorities course the remains Both of German with desired this frequent year U.S. timely the providing portfolio is our Harry's. cornerstone proactive authorities pending the and constructive.

successful degree a the to high in -- first no expect transaction to quarter XXXX. maintain outcome than calendar continue We close of later and the remain of confidence a

into cannot specifics two Harry's as and clearance go don't on close, we independent still the to call, the Because are competing this we companies. yet I of have business

can progress However, significant integration we're and share on transformation. making the planning cultural I

have and two a and several the of working with both significant months, amount do confident of Jeff extremely Over through companies with spent together. I and teams, along time past what integration in our planning leadership Andy can these I'm

linchpin Harry's assets to transformation. be consumer with transaction The consumers. disruptive, Bringing go-to-market channel, a market-leading strategic a us well portfolio together combination with position accelerator together of emerges combination of IP, global is we direct rationale consumer capabilities now of the May. The the and brings portfolio win best-in-class capabilities the announced brands, that infrastructure. in to as compelling is focused omni when approach continues to This and our technology strong scale transaction complementary with and highly the and established commercial for

to plan transformation to value. our two creates made for ultimately, create working hours And business. the a in We've great thoughtful it have integration significant leadership the planning progress highly drive thousands of capable and Collectively, create exciting companies. a experienced spent the the and teams and combined team dynamic for

thinking day close, geographies. preparation focused business one commercial addressing key governance, and on the efforts we activation our across integrated readiness, post brand-led channels In plans addition ensuring and of portfolio to seamless and and

will as ground new on focus we one ready the transaction Personal and Care the agile execution. a with on be day focused closes, to a strong running Once Company hit

developing this As for the I've said A from the transaction. previously, greatest success of integration combined best a the culture focus establishing best that is organizations thinking a very enabler new way. unlocks with the that of each has organization, perhaps a forward been third culture of Harry's both leverages major

to purpose vision, an this values environment where companies and is building a a modern develop best high our of CPG fulfill company talent ambition new everyone and both brings built effort statement, of to create behaviors Leaders to every X.X from creativity the win. that engagement, are spearheading to day

as I'm decision-making deliver the more excited acquisition teams and robust agility an the look together will as come forward both future. and work about work provides and that details to environment, in speed way ensuring supported talent efforts These desirable highly this well market. to and a retention daily model have empowered sharing

over XXXX outlook on for to the let the business. Edgewell comment Before base handing me Dan,

a to unrelenting Our to an continues competitive dedication demonstrate in industry environment. in challenging transformation team

to We have the in worked innovation hard resources growth. to invest and providing simplify and the streamline business,

We Harry's. exciting the we growth near as with have an our opportunity close combination of

infant XXXX core personal phase, into recent and focus to all for value capability the we sustainable care our in evolution. where of with business brands, with reinvestment A&P be as the us is decisive trade in reflected Company's the on and increases which brand moderate care ensure we And next and our move well will building reinvestment balance reshape in outlook investments. our taken positions the phase focused creation. This between we meaningful Company have of as A our actions we better and on pet and divestiture, growth to

reflects also of stable position are part savings given the and we and closed. is the a margin are provide performance, gross course, to Project we for cash free combined business as top guidance This, flow generation. line, healthy today, from outlook further Fuel not yet only Our of not story in

the in valuation combination important for developed XXXX, in However, model is the in to discuss outlook Dan Edgewell that note moment a with Harry's. it's In assumptions the support the with spring. that will back of base fiscal line and

We value significant the year for have in creation. made and progress past setting up our over growth business

to one quarter is results and we plan a to way. as a like and plan. This that deliver fourth And fiscal leadership for business XXXX. for in an take the to our on the for outlook well new future clear financial also full-year to is have and exciting time Company the I'd you the Dan fiscal and culture, place us and right through new now, positioned build We ask the

Dan Sullivan

commercial Overall, quarter our focus as Thanks, Rod. against executing and we expected, largely the everyone. morning, continued core played fundamentals. reflecting Good on our out, operational fourth

gross which As Project were reinvested behind stabilization a and and savings further in our Fuel result, performance in line from accelerated markets. brands top key growth saw we

of quarter up generated last of the delever. year, to to cash flow, same free continue also We almost versus which XX% us $XX allowed million

by favorable price inventories by Skin ahead timing organic aided Shave more impact of were part in unfavorable driven Skin October. by in and than International Shave. X.X% Care So in then grew quarter Japan, outlook X.X% Wet and the and decreased on for Wet the Grooming trade increase in Care basis the planned in expectations higher Sun or let me full highlights the of and move as the an quarter our and start sales performance minus Net points discussion and with In our to organic a in higher XX XXXX. line quarter in operational for fiscal year with sales volumes basis. offset the in mix our and of Sun net VAT

Importantly, all areas our organic of geographic sales saw net international three growth.

North in sales growth Infant as than Organic Care in by Shave offset Sun other Wet America in and Care decreased declines and segments. Fem the was Skin X.X% more and and

sales line with with in Looking a Japan, to segment. from continue of stabilize at resulting our -- expectations higher the organic Wet ahead Shave our the favorable quarter sales VAT favorability decreasing results, X.X% includes the and in consistent ago by and increase.

and came were X% and continued growth Sun America, Bulldog key American, performance. X% e-commerce volume Sun Organic and sales strong markets by sales and Organic disposables of product new and growth by on overall increased from driven our price X.X% in volume business. offset Men's mix. which favorable international from grooming all initiatives several and to razors came by Care, down in Skintimate increased growth sales X.X% The unfavorable Bulldog organic Black Jack weigh regions. launch, driven in performance sales North Care. volume our mix, International sales in partly driven Skin by continue including increased organic North

as lower Fem America despite coupons Sport. however the consumption organic International, of stabilizing sales Gentle Sun Care consumption year decreased a sales Boat Pads as grocery, declined higher level trends, Tampon and and show promotions the to sales in Banana trends compared and prior sales both and we primarily in of increased experienced Care in grew Men's X% prior Sun Care. some sales in cycled over improving and grooming organic growth period, period. aggressive to Glide year declined compared XX.X% growth compared driven by to X.X% driven Liners continued as the Despite period. quarter year North result a destocking the prior-year to and ago. by

Nielsen, the O.B. by and year. [Ph] driven by Systems category tampons in other Wet with sales Innovation at X% increased declining driven the Men's dynamics XX-week declining X.X%. declining Paw U.S. Patrol In decreased Shave, launch. All continue latest to organic Women's measured mealtime Disposables X.X%, related in category X% quarter. by the about grow, looking razors to this products X.X% as and data and the cups Briefly, launch blades the

that points and measured e-commerce X% a latest by week blades in offline and a in blades ago XX perspective XX.X% a as basis down XX-week From we both On estimate. Including year XX consistent versus over unmeasured, basis improvement with share nearly and we increased the U.S. razors Nielsen sequential points. data, the and share we previous a are our at and estimate was U.S., XX our share estimate razors down a global basis, quarters. market

week Sun consumption category, Care Within X.X%. U.S. XX the increased

costs increased excluding points XX losses associated Sport. Our meaningful Sun in gross decreased points share Despite savings Banana Fuel, that Fuel Tropic Boat business. gross Care was to margin and flat. reformulation share with year-over-year XXX primarily declined margin points, year-over-year. by XX.X% about reinvested basis Gross basis Project in were Hawaiian approximately XXX the reflecting basis

The including net Hydro in sales million and and Men's sales year. grooming quarter. increased in XX% unfavorable of to the price the spending spend. primarily net a Skin this by amortization primarily quarter The as year was decrease reduction and sales or Wet of expense Shave decline was and prior Intuition period. net lower SG&A as A&P in Spending due f.a.b. in driven compared in mix. of by in XX.X% the XX.X% $XX.X XX.X% was in to prior compared expense Sun continued driven to cost was A&P Care

impact offset Excluding associated was despite strong The Project There XX operational restructuring-related integration quarter, sales was by as charges, a improved Harry's inflation. of in percent the XX.X% other year-over-year primarily of lower execution from SG&A improvement impact partly charges, and SG&A last year [indiscernible]. no of on points net driven XX.X% with costs Fuel SG&A material basis sales. this by to

compared prior fourth year GAAP share XXXX. per share $X.XX diluted the And to compared net the $X.XX earnings per per earnings share to adjusted fiscal were of in $X.XX $X.XX were in period. quarter

by and Shave a year, America Skin primarily decreased organic few international, on minus for sales Care. sales Now an Sun X.X% increased XX X.X% with Total highlights driven in the declines decreased and basis organic fiscal sales organic or full and in Care. basis. Shave net Fem on Wet North points X.X% growth Wet

year, trends the performance, in note our at of half Looking anticipated. we had year to full as it's important the second improving organic fiscal the sales

as First This each half declined declined regions. sales half organic second improvement net X.X% geographic sales each of underlying reflected while only as in XX segment, points. our in well basis

and aggregate, Overall, Sun shelf our International in the marketplace. we're at over past fiscal executing plans and/or both Wet and year Shave an X% as each consumers two in and and Care Skin. quarters seeing in as the the sales better trends Shave healthier with in competitive increasingly organic for category Sun growth of increased Wet posting commercial well full

and growth strong see of share that to with continued business reinforce and global finally, results XX% for These we investments in grooming and investing on Jack right Men's e-commerce are And results fundamental sales Amazon. belief accelerate business our growth led XXXX. global the increased in will Black. these we Our gains by the drivers Bulldog

growth savings the Fuel realized decline Fuel key markets. the meaningful and prior XXX the charges and Gross a in points in of basis margin year Project objectives as Sun reinvested both was were excluding Care compared brands largely to reformulation XX.X%, Project for

net the higher mix XX.X%. This XX.X% sales, expense spending with prior-year down the declines. drove combined was costs and headwinds, inflationary commodity versus year-over-year A&P negative of of

a level leading driven volumes concentrated last Project out through as ago to f.a.b. by lower promotions this were spend of of spend to display year, discussed year effort and non-productive launch and Sense the favorable I well shift term the cost spend comparisons drive as Intuition intentional fiscal factors lower short in to with a trade to Fuel, quarter, of combination there a longer including Hydro As

e-commerce We term investments that $XX.X Black, intangibles net against retail Jack million was ensure We best both amortization. like reallocating near requirements. objectives strong and million growth. efforts believe reducing Bulldog responsible expense all investments in in XX.X% deployed are strategic of brand we've consumer or competitive increased which trade to of select building $XXX and of SG&A our including spend been business, saw sales and

basis, savings, On inflation. by net partially of was XX.X% tax XX.X% income versus year. prior year XXXX SG&A to the was basis period. sales $XXX.X compared decrease lower prior to of prior effective XX.X%, were by point a XX million improvement was to operating in Adjusted compared of points year compared normalized X.X% prior for improvement the Fuel was This earnings despite basis The the XXX Project sales driven sales, an XX.X% of of XX basis Adjusted fiscal offset increase period. net an a the year. rate points adjusted net

GAAP share a XXXX, including diluted associated earnings in related of the earnings Adjusted headwinds unfavorable as other impact share lower earnings currency $X.XX of translation of per the XXXX, favorable interest $X.XX items. per higher a taken were This in fiscal year. tax to to as and expense of share well $X.XX $XXX quarter. third non-cash and $X.XX share compares tailwinds impairment were $X.XX a charge million in including per loss the per prior for with rate, of

reformulation Care prior inventory fiscal capital activities cash $X.XX per share driven to in the million period. the support to effort. to and service improve compared primarily as was This was Net year. year flow notably $XXX.X levels increased cash in $XXX.X working needed compared decline changes the most The days operating prior million for from XXXX operating Sun during by to

leverage at The times. Company's current is net X.X ratio debt

Project to Fuel. I'd to turn Now, like

a well in core our incremental program, fiscal offset volumes. lower of the for this drivers operations headwinds extremely full year. the $XXX across impact These delivering gross the to year-over-year business, teams million Our savings help savings the across to meaningful inflationary continue execute of and

catalyst also benefits grooming in to More the reinvestment growth XXXX. by totality, and million the these our total brands initiatives. provided to savings for $XXX of And generate of accelerated investments in the expect continue Fuel fiscal and of $XXX they business. Men's will overall importantly, of the our in million in Project we end saw key some In we growth e-commerce

end through year. of one-time to estimate be we million $XXX And charges approximately pre-tax fiscal to the XXXX $XXX million

to turn we to like Edgewell I'd for online. today XXXX. Now, outlook you an outlook the is business sharing What with fiscal are our for

This business, elements of outlook does includes not be this to outlook provided Harry's the Infant it post include transactions. will Adjustments Care close these of any combination. and future at date a the

Edgewell stand-alone earlier, combination is outlook in valuation the outlook, with ultimately Rod of model to case business assumptions, the Turning business and as the the mentioned diligence earlier as line efforts. year, for the business part for developed this our the largely plans

be can outlook our level, defined high pillars. by three a At

First, topline trend improvement.

improved improving organic Following second markets. XXXX, the results and half all with down to flat trends most we slightly anticipate sales of across continued segments

stabilization, choiceful Fuel finally, trade element second part and reinvestment. brand selective spends. is And in supported further moderated gross actions margin savings, price The by

As this outlook contemplates meaningful in and increase A&P reinvestment in key growth overall initiatives, spend.

also though at Fuel savings gross levels to fiscal XXXX. -- We absolute lower at lower see in Project continue a

and EBITDA e the compared anticipate the a to increased investment As of business, result adjusted adjusted fiscal XXXX. lower in EPS

by down range currency $X.XX estimate Now in total outlook is IT $X.XX Fuel charges. negatively the organic the reported to net for specific The enablement GAAP includes one-time guidance to restructuring, We and growth basis XXX charges points. flat other be X%. for the sales of to and to range We Project to sales of in EPS XXXX. estimate impact

range $X.XX EPS Our in adjusted of to $X.XX. outlook the is

range back $XX million. to is of savings. many be Fuel million in expected the categories, anticipated XX% EBITDA inflation, in business. $XXX and approximately largely of is headwinds to input gross the Despite estimated $XXX Project invested about million easing to gross generate remainder the that incremental commodity Adjusted used expect savings be in the we costs, will in tariff offset continued wage other Fuel still with rising to meaningful

effective is adjusted of to outlook XX.X% free to fiscal earnings up And of estimated $XX and be be call turn Project the approximately I'll in and to to between And million. CapEx over to rate charges excess of range that, is The estimated restructuring of related GAAP for it be for X.X% Fuel with the sales. XXX% to tax for in with our are back the XXXX expected questions. the net open be fiscal year cash expected XX.X%. flow X% operator

Operator

to At assembler [Operator this roster. Instructions]. time, we pause momentarily will

go Our first is Ali Please Dibadj Bernstein. from question with ahead.

Ali Dibadj

guys, few separately or perspective perspective volume category men's have I a you point? Men's Wet and is a a grooming any guess, America, from Hey Women's in North competitive questions. Men's at perspective, then Shave. thanks. from seen category or in stability Have I One this and

Rod Little

The Yes, were today this a good category, still point for across think year to Wal-Mart. It you morning, and I Harry's out if Ali, versus in we has At ago. look thanks question. at year a Men's were where the stabilized rolling there Women's. ago,

mortar, and yet Right. You this At the brick Joy February. in was knowing but point, coming had this year. and Earlier in Flamingo just coming into equation. it not

So still would level that negative, general, have we were have disruption was market year we in at but year having X% the out to Shave as incidents a pricing stabilized. I flat would ago, so and in we and where look up shape than out as we playing say, roughly The now think say, stabilized. them and is categories in better has stabilized has the slightly view I I U.S., a that of played ago.

Ali Dibadj

more So if through in you a that's would the bit detail. just helpful, quantification case, Maybe talk can be too. little

that does fact the know even competitors you're one ramp-up in with , that them. year. things investments the again as going delicate very of balance, terms buying, lot have Understand of of it's a be of destabilizing that's commentary earlier. that to next from In a the advertising your your risk big But you

Rod Little

and market extremely flexibility be WIC I of as success leader, retail the some Ali, with continues in of and a standpoint. Yes, accounts the that and mortar their competitive with with financial model. think Unilever, Shave, a a competitive. Hybrid out from Gillette and some to brick clear lots Right, not Dollar having from then there level but the competitive coming category landscape, [Ph]

the So right, a very point. is from starting landscape competitive,

I Harry's, our think going combination the own with be business and toward focused brand we're on look as and building we equity-building. to

in trade price to or value and over lead escalate lead last has new that the been what at and looking couple We're trying years. -- round a destruction of interested not of it

our so to work to And be priced going disadvantaged. we're margin not around and not trade -- barriers going have We're us. to wanting to the partner trade with

those in come equity and the address show brand benefit in we'll up, into as going XXXX, only that 'XX but to is will but reinvestment they activity, beyond. really start bulk of to So our be building not

Ali Dibadj

Okay you improvement. really you that last by on your We're quarter expect quarter you think the sticking question do it. should or I guns Are next and two? that Care, see Fem said not still in just improvement last seeing we

Dan Sullivan

up, you prior balance is stabilized sets trends. promotion prior just is way continue period. versus trends to distribution been has a unfortunate period. the share it back, like there the QX Ali. What's look the at if are outcome improve stocking behind however, what They some as versus look we Yes, makes inventory step and like-for-like and a consumption That

that confident So business. trends improve we in that the remain we will

Operator

Grundy with Kevin comes question next from Please ahead. go Jefferies. Our

Kevin Grundy

morning Hey good guys.

Rod Little

Kevin. Hi

Kevin Grundy

line to with Just of questioning. stick the

a if north in too been had like back but sales. of understanding of down, looks mix related, sort spending XX% it of you go played business that, it A&P the going far, So to coming was the part largely up which is be

over I good up do you continue this albeit on bit then, visibility follow is going How think is, you're this improved is question the good the up. like of feel here you're at So sort higher on of then was have something a quick to you of half Thanks. trends a visibility going as permanent that of Or to year a trends do to you the looking this And return sort is these to is maybe have step your move time. comp you it. of and some back some think improving in have get, driven. the

Rod Little

A&P look the about in building, On up that where the not more spend to to a in in brands increase past the the equity less period were business. we've talked going year-over-year, against we we in would

see we work assess in the why being didn't frankly, the return is A&P we you plans were return Fuel, As cuts. through Project there, and getting we as saw which XXXX our as XXXX, we the on

have just back we it, plans would them, XXXX that investment and categories growth have at better as in come first moving I better As you're better programs, tell talent, we look and that and you, to step in the channels forward. exposure seeing is

or 'XX percentage Any business meaningful factor move that our out is 'XX toward you beyond. would up when in I from where A&P be branded up remind private private and label, actually get return so you higher, but at don't that the against on point X business. the would spend dependent we look and as we are business, will see the others we the against looking brands we though, and Kevin,

Kevin Grundy

the pass $XXX long-term Pet targets, was not guys Infant Yes, million this last on. sales to. you The understood. That the EBITDA, all include and in, and that billion the was follow-up including did the was and supported, quick divestiture. quarter, A understanding basically $X.X I'll alluding Harry's, it point in I so in

it million, to I'll on Thanks. number by it still that call adjust pass ? circa that and then, are $XX like So number if that we EBITDA supporting you that

Rod Little

million and We we're close P&L got there needs $XX an to the or by Infant work. But, adjustment Pet that that will not, updating today. not but to so on it's outlook. Yes come outlook, that Kevin, yes. we're once that our whether changing we're be will we stand out, not, not do We've be made

Dan Sullivan

with Edgewell call stable Yes. profiles lines remind to that topline which, say provided outlook the the the up is that everyone flow were generation. well us there's said One And developed XXXX. foundational performance, stand-alone you've diligence. very building solid that maybe heard business, for with behind blocks outlook we've today EBITDA models just This and we cash because And out. pillars as the during of three as to obviously

Second Harry's element, is the course, business. of

today, continued we're of it's top course, the profitable. on growth. third do is said then, not although anticipate is meaningful never to is And going strong And the through while, while business that costs and cost have on for line defined leverage We synergies. historically comment the was over and not what significant therefore, -- synergies here been catalyst part providing deal we lens of the performance EBITDA

the first strong expect synergy full post to continue beginning in capture We XXXX. year close

out, adjustment we opportunity coming for million will about the the three really So, really Infant XXXX. an pillars behind yes, remain excited but $XXX support there be in that those

Operator

Our next go Chappell comes from with ahead. question SunTrust. Bill Please

Bill Chappell

morning. Good Thanks.

Rod Little

Hey Bill good morning.

Bill Chappell

Rod.

going assuming trying think, the we're through for just understand deal out Harry's spring part advertising all since I'm so, to the -- now that when that say it doesn't XXXX close near of trying how assume resets. of calendar term, I months, going with into it marketing close pending an not to figure the it's the and seems businesses mean next I maybe have few and the to tough works Just to kind budget A&P

in in the four these kind months help us switch this say spring if the separately facing early both you resets, advertising you five next summer, customer still And how as affect any side a with and is we or budget deal and of place? do transition does closes or have brands sooner, from marketing the resets this with run do some months, kind how just of they understand go, can of really look

Rod Little

independent Bill, companies than Yes, starts It thanks. good our we're today competitors. question, Right. separate by

and coming the as company. plan a only So seeing will what we that part up here, Edgewell this you will happen part together as laid that, today see be quickly because out relatively what we've set And is and of today, legacy business you're story. stand-alone of

has We be give this and important eye going reflective but look we thought if feel business it's business, up will and visibility together about it that no that Wet been stand-alone the And was the good look like plan putting specifically to at toward what when in the we're plan against plan. to A&P across with our what this doing Shave. we support a planned, the the transparency so plan is, that combination. we that's said, at incremental Right, and closed, return year, plan understand people to built combined you that Harry's what certainly all would not get the if not and that where but combined the have were we legacy maximizes is Harry's of we with look will

interesting really have double America return in Jack China, U.S. want where Bulldog, We growth going. profiles into Black, we investment actually some The that have e-com we to to growers. incremental and keep digit Japan and good North put some our more business want generally. profiles all Asia

season. Sun putting Our and the year a sun wet late we been about we in innovation are the Care and back a we're with tough to reformulation has next have as come We for the behind business, what like investment through Sun. planned excited allocation year start we and

nice International return against We doing That's Project Sun. international our to do see year. we well highest continue we increased a historically, next have as and then ROI put will well with investment actually, return

where A&P at where our think Harry's that quite across small. combined about real that look with all business. but The and putting We those going. is -- we'll of investment right if overlap, will, But the once in. that necessary do is think, where So and the it's you can you business but in investment we're a back we're when closed, we if we're for happy way the elements,

Bill Chappell

X%, number, growth And growth that single XXXX up to in ? digit follow-up, how are Shave kind I Shave a then of mid can And that that kind from Wet the pull-forward Got as of low was it. of Japan. for you you expecting tell international a just quick international us Wet much is the guess,

Dan Sullivan

Yes.

Japan of XX going you're So quarter the impact if it's penetration, basis to the on talking that. about international higher totaled about than be Obviously, points.

growth we've we across think, growth our We're areas. look, and of international the straight out always quarters all seen, we've business. I excited saw of that projected two

beyond business that to as said, reinvest just XXXX that to for Rod behind and look grow growth. in to continue to to we're [Ph] continue going and ensure we'll So

Bill Chappell

Got Thanks. it.

Operator

comes Please question Tong with of ahead. go next Olivia Our Bank from America.

Olivia Tong

wanted little And on bit Good quarter. give you to if and thanks. margin, decline I the could gross of Great, this more what , what you on Rod Chris. a to Dan morning, sort detail and gets drove start EBITDA lot as margin, little obviously, about to the turn around? your a that. a 'XX would we've about What's fiscal hear your gross talked love from Thanks. But expectation think expectations. for contribution you on and more I bit

Dan Sullivan

Sure.

XQ in of a thought to sight good in call. had we line So we the margin quarter, look, our pretty back

played quarter, a certainly intensity XXX more identified the in by but that higher XXX of to had promotional negative we than due overall, slightly out surprised a to the pressure of for bps bit bps that. largely we called bit year-over-year performance weren't think, and mix, we I

trade A&P out the largely that to got were I including across we inflationary invest driver areas into all heavily the looking by ramp savings of in of business, choice absorbed pressures meaningful and promotion you've year price main the trade. and at overall, in made and unfortunately, the really -- reallocating think Fuel funds then additional

summarize that, stabilization had other of point I basis cost comfortable with about the as we're calls slightly mix some XXX XXXX obsolescence couple XXX had points So well, outlook that a worth Why in then and and an decline, . negative items was to higher for of is you if really things. year-over-year that basis

that level accretion level significant level to in be provide do some to of we margin We rates and still markets taking from tariff saw even price margin profile. our we we're then what selective said, certain think expect we moderate of some helpful one, and So across the categories, as though, cost on XXXX. we some also of trade spend versus which expect actions accretion. Fuel We're And going will pressures. expect Fuel rate inflationary will we've lastly,

when So stabilized a that's those calling why, margin XXXX. for more comfortable we're put all you in together, picture

Operator

Our from next Jason Sachs. English go Please question ahead. comes Goldman with

Jason English

folks. sliding morning, in. from me me. you questions [Ph] good I Hey, Two appreciate

is contrast U.S., you stands the give because First in substantially in sort in of it packaging us on come the certainly be seem direction, steel context look they've stark and and more from you in. where little coming they've a around this coming right Can cost kind to costs or at inflation. come what of in we're prices industrywide seeing

to for to it's us so foot this where substantial kind of pressure going for hard be little So you? is

Dan Sullivan

Yes, absolutely.

total important back of it's about book to business. just our and So up I think think,

which of cost On side are of many our equation, the things categories, you're commodity actually XX% the these And calling you're structure. absolutely out total about right. to of in

We are of inflation. easing only not seeing

textiles, trends around resin, deflationary seeing actually board. We're packaging, around around around

assessment meaningful continue agree said other continue costs Having cost the completely we headwinds with Sun anticipate , So increase. in a to few that, Chemical there. Care areas to

headwinds XXXX. are for in meaningful Tariff us

China. the on Prep and we on Chemicals you of Sun around If out think bid then headwinds business. our steel purchased mostly the about of business, costs anticipate a But Shave associated still we with that sort not wage the just Care core transportation. pressure And

So easing certainly I headwinds, guess, commodities, us Chemicals keep long highly but namely short, Care unfortunately in Sun some story a position. cost in tariffs and other in pressurized

Jason English

this we to Fem some I a before That's year counter setting you. of savings. it bit Mr. to want bridge think a and I implies forward EBITDA the of growth you lay Grundy's adjustments pull million, to despite Care And year off helpful. obviously, you adjustments back for guidance and [Ph] of million but base the is $XXX come lower for $XXX have here little Thank question the next

feasible like Can blocks? 'XX base, a building $XXX help we contextualize that's So a how bit becoming -- to ? we path do million it little we've number less to the got now and with forward you there? us So a stretched lower fiscal savings get that believe more in help a the feels harder to Why still us is achieve. should that to look

Rod Little

if details. to and into of that updating to We'll can prepared morning. and closed the would Edgewell out. the in and million. the thought not we put into the the XXXX business be. detail see our do it components actually spring, update $XXX We're commentary, Good Jason. into Hi, once work largely, in the do and we numbers we you said of that business plan Harry's the did get input at when that to the we this guidance is how But not total We're in we the where the going back look get we combined to we're get

Right.

we and Right. Edgewell the we for So 'XX piece business. our see assumed what a we on there. that I from input we don't know perspective, know think the That of change

on leads the to leads actually bring is piece performance certain that that So we roll those and as and Harry's their it grow a us business to out business. they that sales that then can leverage synergies and

when change us three the doesn't pieces confident together, at look million those that it's keep to $XXX so the same a may come look And appear in internally. necessarily that you, what like way we and

Jason English

Okay. I That's pass appreciate helpful. it. on. I'll it

Operator

Faiza Alwy Deutsche ahead. Bank. go question please next Our from comes with

Faiza Alwy

much outlook would you. what more Skin just I the is guess growth, Care. seem strong despite to profitability sustainable, the those because be wanted think when and sales to talk that, about we that of on first So doesn't Sun love thank for how results business -- question your there a are? is And contribution I there? do color you profit

Rod Little

Faiza. thanks, Yes,

to We of I see categories. lot think Skin. a growth come for Sun [Ph] and those in

Jack we as growth at there. this and that we've Double-digit we've Skin, is the is on what forward lot profile. trajectories a specifically growth We with Black primarily upside up done So historically and see something point rates what to of done. Bulldog look continued

sight We into have and have of planned foreseeable out that future that. the line to

question the growing Men's of area. One the Care Skin us little makes segment, on more particularly that, in your the rapidly bullish it's points important part it is behind portfolio of a that a

part really brands around of combined. in of we we portfolios with business growth that. think, is as we right have nice define and and the our innovation the grooming, Wet advantage take so Shave, that pipelines business And Skin to There

that then as that. feel about And once we their about that think there So And story on Skin, continues, get leg you closed Harry's. we well. a of that to good exposure obviously is with

to the us opposed year. it results the as season, assurance, in season allocation the category to this on is side, it beginning reformulation cutover On Care in being the around growing, us, the really that feel it's think, this was good us overall, to One but mid we our the at did that we early is we continue supply Sun to what our had behind Sun past impacted that and season supply a of get which I year. of put did the issues control about with

our with incidents then the had being brands beach through the that on combined outside fewer us a July, orientation in June, record disproportionately shares. that period to XX-month slow And our wettest then you with start States, beach got obviously which with more off around and orientation, impacted United

formulation Neutrogena, investments growing brands versus I the Moving about who been normalize also formulation our that at we And where time. thinking if holistically around we're looks winning only quite what capability, but think, we're where the our important. like innovation and itself incremental made the path Sun. are not but category at portfolio everyday improved it's day weather, share beach nicely, and you will looking forward, look that's like such more every around two has positioning as access over good really front-end on. years significantly capability feel we about R&D capability, control can't that And in We've we were ago we that

going So feel look of that, really think, about we our of we category as good all ability to and I it. participate the the combination forward, in

Operator

ahead. go Our comes Please next UBS. question with from Strycula Steve

Steve Strycula

morning. good Hi

Rod Little

Good morning.

Steve Strycula

think the shake Thank should moderating more you. we So we business. within in out of quarter? going about kind pricing and you off how think and down higher when quarter, what I wanted then just shelf business sales ended X% understand, the through resets Shave what should last then and spend proved based opposite your XXXX, internal and question innovation, framework fourth the on go that importantly, the that domestic of true to trade Wet ultimately how how the organic environment for

Rod Little

segments. around Steve. we've Yes. that's make a very perspective. and below to you I will they second working our Skin. go Sun Wet within Faiza's their from there. to of are razor margins margin businesses, Shave profitable would is and profile on -- a margins We what if they are I margin Faiza's want nice the category been above profitability. part part mix question blade or Thanks, say, there And and back average so of But negative those of through, at

So the back Wet Shave around business. to Steve, domestic question your

well. I in around of periods, Wal-Mart quite around Joy different across the as volatile in a than coming base, happening display, with and like the just like coming line that been off Harry's Flamingo being period think, and current distribution, in before rollout at what's dynamic and happening what's we're you for the has particularly then look

Right. the had be end with We've impacts margin that, from wanting adjusted we've trade we've in competitive to trade price our consumer put partners and us. to and work to incremental the partnering remove with with us barriers of

that's So all in.

some investment compared year, largely incremental where we've And is and certainly very we're done. to been. There very making next but tactical it's minor

quarter the see going we're forward the from distribution point, like this We moves environment, as also business, were Intuition with we'll stable like in on f.a.b. women's a at the more some for quarter, so have I but launch we're more pricing. stable more look I lapping much side. with to And think, we

was 'XX equivalent lapping 'XX It were essentially. we launched with no in in that launch

in looking volume year forward have our the we how plans we're innovation in pipeline come forward, our obviously we better innovation that that and with predictability at that more throughout bring the general sequence as future, us So to stability, more gains. help

and in much the have for 'XX, better total, business. the holds too think the spend U.S. time true that year-over-year category be 'XX versus future. improving did to predict Shave I wouldn't also But domestic what And we so will to we Wet try I in backwards looking in

Operator

with from Kate go go Our Please next ahead. ahead. Please question Barclays. comes Grafstein

Kate Grafstein

three if or Thanks. of think year? could was markets give the Thank some share across Dan, details your year mentioned I can you pricing for maybe terms next performance also I next there share select wondering, and you. market expectation separately, just then you for geographies? overall segments if more taking in was wondering, I in you segments had And which

Dan Sullivan

the didn't ? sorry, question, Kate, we Yes, can first your I'm the of part catch -- line pricing [indiscernible]

Kate Grafstein

like about geographies, was asking pricing which Sorry, planning next segments just to you're or some take year? yes. I

Rod Little

Yes.

particularly the that into in Sun go more up goes the of planning the to have behind I input substantial last the and the in over So as -- Dan some products becoming bar as Care those chemical formulate been out, has laid And expensive cost it's in Sun. increases years the the monograph, now, that we're FDA think, in ingredients couple business actually on where we category compete pricing significant products.

standpoint. everywhere largely, in some And Sun so from we a quo else status that's planned behind and that and geographic we see category pricing have it's

so that's price increase. And the

'XX in equation continue The We've seen expect second share over we go to market the part into as essentially year market improving shares. second generally the in we of that the trends half around and 'XX. of

generally share a stable year-over-year of market change. it assumptions So I of would set call

Operator

closing question to That session. our back chief I'd executive officer conference turn and any concludes Rod like for over remarks. answer to the Little

Rod Little

Thank today. you everybody joining interest and Edgewell. We for appreciate your time in

Operator

Thank you today's for conference attending The is now concluded. presentation.

may now disconnect. You

Edgewell Personal Care (EPC) 12 Nov 192019 Q4 Earnings call transcript