ST. LOUIS, Feb. 2, 2017 /PRNewswire/
-- Edgewell Personal Care Company (NYSE: EPC) today
announced results for its first fiscal quarter, which ended
December 31, 2016.
Executive Summary
- Net sales decreased 2.0% in the first quarter of fiscal
2017. Excluding sales growth from the Bulldog acquisition,
and the negative impact from currency, organic net sales
decreased 2.1%.
- GAAP Diluted Earnings Per Share ("EPS") and Adjusted EPS were
$0.58 and $0.66, respectively, for the first quarter,
compared to $0.39 and $0.68, a year ago.
- The Company maintained its fiscal 2017 financial outlook for
organic sales growth and Adjusted EPS.
The Company reports and forecasts results on a GAAP and
"Non-GAAP" basis, and has reconciled Non-GAAP results and outlook
to the most directly comparable GAAP measures later in this
release. See "Non-GAAP Financial Measures" for a more
detailed explanation, including definitions of various Non-GAAP
terms used in this release. All comparisons used in this
release are with the same period in the prior fiscal year unless
otherwise stated.
"The fiscal first quarter was a solid start to the year.
We are competing well in Wet Shave and Sun and Skin Care and we are
making progress on our Zero Based Spending initiative," said
David Hatfield, Edgewell's Chief
Executive Officer, President and Chairman of the Board. "We
are particularly encouraged by our Wet Shave performance, as we
grew manual shave share globally, and grew both sales and share in
North America, driven by our core
strategies of innovation and portfolio expansion. However,
the competitive environment remains intense and like many other
companies, we are facing increased macro-economic uncertainty,
including additional headwinds from the strengthening US
dollar. Despite these challenges, we remain on track to
achieve our full year targets and deliver enhanced shareholder
value by leveraging our strong innovation pipeline, and
focusing on improving operating margins."
Fiscal 1Q 2017 Operating Results (Unaudited)
Net sales were $485.0
million in the quarter, a decrease of 2.0%. Excluding
a $3.2 million benefit from the
Bulldog acquisition and a $2.7
million negative impact from currency, organic net sales
decreased 2.1%, with growth in global Sun and Skin Care and North
America Wet Shave more than offset by declines in International Wet
Shave and Feminine Care.
Gross margin increased 100 basis points to
47.0%. The increase reflects favorable cost mix due to
lower material costs, incremental restructuring savings
as well as favorable transactional foreign currency exchange,
partially offset by higher costs associated with the shift of
Feminine Care manufacturing from Montreal to Dover,
DE.
Advertising and sales promotion expense ("A&P") was
$50.6 million, or 10.4% of net sales,
up from prior year A&P of $46.6
million, or 9.4% of net sales, behind increased marketing
support in the Feminine Care and Sun and Skin Care segments.
Selling, general and administrative expense ("SG&A")
was $93.8 million, or 19.3% of net
sales, compared to $100.4 million, or
20.3% of net sales, in the prior year. Excluding
restructuring and spin costs, SG&A was relatively consistent
with the prior year.
The Company recorded pre-tax restructuring expense of
$7.2 million compared to $18.5 million in the prior year quarter.
Other income, net was $1.9
million during the quarter compared to $2.4 million in the prior year, and primarily
reflects a benefit from foreign currency hedging contract gains in
the quarter.
Earnings before income taxes were $44.9 million during the quarter compared to
$30.7 million in the first quarter of
fiscal 2016. Adjusted operating income was $67.6 million in the quarter compared to
$72.0 million in the prior
year. The moderate decline in adjusted operating income was
primarily driven by higher A&P spending.
The effective tax rate for the first three months of
fiscal 2017 was 25.4% as compared to 22.8% in the prior year.
The effective tax rate, excluding the tax associated with
restructuring, was 26.3%, a 140 basis point decrease from the prior
year adjusted rate of 27.7%, primarily due to a more favorable mix
of earnings in lower tax rate jurisdictions.
Net earnings in the quarter were $33.5 million, compared to $23.7 million in the first quarter of fiscal
2016. Adjusted net earnings in the quarter were $38.4 million, compared to $41.0 million in the first fiscal quarter of
2016.
GAAP Diluted EPS was $0.58
in the quarter as compared to $0.39
in the prior year quarter. Adjusted EPS for the quarter was
$0.66, compared to $0.68 in the prior year quarter.
Net cash used by operating activities was $59.0 million for the first quarter of fiscal
2017, in line with the prior year, and reflects the ongoing
seasonality of the Company's business, primarily in Sun Care, as well as the payment timing of
year-end accrued expenses and interest payments. The Company
expects to have positive operating cash flow for the full
year. In the first quarter of fiscal 2017, the Company
completed share repurchases of approximately 0.8 million
shares for $58.0 million.
Fiscal 1Q 2017 Operating Segment Results (Unaudited)
Following is a summary of first quarter results by segment. All
comparisons are with the first quarter of fiscal year 2016.
Wet Shave (Men's Systems, Women's Systems, Disposables,
Shave Preps)
Wet Shave net sales decreased $10.1
million, or 3.2%. Excluding the impact of currency
movements, organic net sales decreased $7.7
million, or 2.4%. The decrease in organic net sales
was largely driven by $7.5 million in
lower Shave Prep sales due primarily to distribution losses in the
prior fiscal year, as well as increased competitive pressure.
From a geographic perspective, North
America organic net sales were up 3.8%, driven by higher
volumes and share gains in Men's and Women's Systems and
Disposables, offset by declines in Shave Preps. International
organic net sales declined 8.2%, primarily driven by lower volumes
in both Men's Systems and Shave Preps, in part due to timing of
shipments and competitive pressure. Wet Shave segment profit
increased $5.2 million, or 7.8%,
primarily due to lower material costs and favorable transactional
currency, which more than offset lower volumes.
Sun and Skin Care (Sun
Care, Wipes, Gloves, Bulldog)
Sun and Skin Care net sales increased $4.1 million, or 7.7%. Excluding the
Bulldog acquisition and the impact of currency movements, organic
net sales increased $1.0 million, or
1.9%, driven by volume growth in International, partially offset
by declines in North America
due to a shift in the timing of shipments between quarters, as well
as the Company's decision to exit the private label Sun Care business. Sun and Skin Care
segment profit decreased $0.9
million, driven primarily by higher planned A&P
spending.
Feminine Care (Tampons, Pads, Liners)
Feminine Care net sales decreased $3.4
million, or 3.7%. Sport® branded pad and liner volumes
were down approximately $2 million
due to distribution losses which are expected to continue through
the balance of the year. Tampon net sales were also down, due
to competitive pressure and soft consumption in the quarter.
These declines were partially offset by higher volume in Stayfree®
pads and Carefree® liners. Feminine Care segment profit
decreased $9.3 million, or 52.8%,
driven by increased product costs, higher A&P spending and
lower volumes. Product costs were unfavorable as higher plant
startup costs, related to the transition of manufacturing from
Montreal to Dover, DE, were only partially offset by
restructuring savings and lower material costs.
All Other (Infant Care,
all other brands)
All Other net sales decreased $0.7
million, or 2.1%, and organic net sales decreased
$0.5 million, or 1.5%, as lower
volumes in infant cups and bottles resulting from continued
competition in the category were partially offset by growth in
Diaper Genie®. All Other segment profit decreased
$0.3 million, or 4.2%, primarily
driven by lower net sales.
Full Fiscal Year 2017 Financial Outlook
For fiscal 2017, the Company is maintaining its outlook for low
single digit organic net sales growth. Reported net sales are
expected to be in the range of flat to up 2%, including an
approximate 50 basis point increase from the acquisition of
Bulldog, and negative foreign currency translation effects of
approximately 150 basis points (based on spot exchange rates as of
January 30, 2017).
The Company is also maintaining its outlook for GAAP EPS in the
range of $3.60 - $3.80, and Adjusted
EPS in the range of $3.80 -
$4.00. Adjusted operating income margin is anticipated
to expand by 50 basis points. The effective tax rate for the
fiscal year is estimated to be in the range of 27% to 28%.
The Company anticipates that fiscal 2017 Free Cash Flow will
exceed 100% of GAAP net earnings.
The full-year estimate for restructuring related costs is now
$20 to $25 million. Full year
incremental restructuring savings are expected to be approximately
$20 to $25 million in fiscal 2017,
with an additional $20 to $25 million
in fiscal 2018 and 2019 combined.
The Zero-Based Spend ("ZBS") initiative is anticipated to drive
$10 to $15 million in savings (net of
implementation expense) in fiscal 2017, primarily in the second
half of the year, with an additional $25 to
$30 million of savings in fiscal 2018.
Webcast Information
In conjunction with this announcement, the Company will hold an
investor conference call beginning at 10:00
a.m. Eastern Time today. The call will focus on fiscal
2017 first quarter earnings and the outlook for fiscal 2017.
All interested parties may access a live webcast of this conference
call at www.edgewell.com, under "Investors," and "News and Events"
tabs or by using the following link:
http://ir.edgewell.com/news-and-events/events
For those unable to participate during the live webcast, a
replay will be available on www.edgewell.com, under "Investors,"
"Financial Reports," and "Quarterly Earnings" tabs.
About Edgewell
Edgewell is a leading pure-play consumer products company with
an attractive, diversified portfolio of established brand names
such as Schick® and Wilkinson Sword® men's and women's shaving
systems and disposable razors; Edge® and Skintimate® shave
preparations; Playtex®, Stayfree®, Carefree® and o.b.® feminine
care products; Banana Boat®, Hawaiian Tropic® and Bulldog® sun and
skin care products; Playtex® infant feeding, Diaper Genie® and
gloves; and Wet Ones® moist wipes. The Company has a broad
global footprint and operates in more than 50 markets, including
the U.S., Canada, Mexico, Germany, Japan, the U.K. and Australia, with approximately 6,000 employees
worldwide.
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" or "organic" and exclude items such as
spin costs, restructuring charges and amortization of
intangibles. Reconciliations of Non-GAAP measures, including
reconciliations of measures related to the Company's fiscal 2017
financial outlook, are included within the Notes to Condensed
Consolidated Financial Statements included with this release.
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. The following provides additional detail on the
Company's Non-GAAP measures.
- The Company analyzes its net revenue on an organic basis to
better measure the comparability of results between periods.
Organic net sales exclude the impact of changes in foreign currency
and acquisitions. This information is provided because these
fluctuations can distort the underlying change in net sales either
positively or negatively.
- Adjusted EBITDA is defined as earnings before income taxes,
interest expense, net, depreciation and amortization and excludes
items such as spin costs and restructuring charges.
- Adjusted operating income is defined as earnings before income
taxes, interest expense associated with debt, other income, net,
and excludes items such as spin costs and restructuring
charges.
- Adjusted net earnings and adjusted earnings per share are
defined as net earnings and diluted earnings per share excluding
items such as spin costs, restructuring charges and the related tax
effects of these items.
- Adjusted effective tax rate is defined as the effective tax
rate excluding items such as spin costs, restructuring charges and
the related tax effects of these items from the income tax
provision and earnings before income taxes.
- Adjusted working capital is defined as receivables, less trade
allowances in accrued liabilities, plus inventories, less accounts
payable, and is calculated using an average of the trailing
four-quarter end balances.
- Free cash flow is defined as net cash from operating activities
less capital expenditures. Free cash flow conversion is
defined as free cash flow as a percentage of net earnings.
Forward-Looking Statements. This document contains
both historical and forward-looking statements.
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 Edgewell or any
of its businesses. These statements generally can be
identified by the use of forward-looking 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 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. Numerous factors could cause the Company's
actual results and events to differ materially from those expressed
or implied by forward-looking statements, including, without
limitation:
- The Company is subject to risks related to its international
operations, such as global economic conditions and currency
fluctuations;
- Competition in the Company's industries may hinder its ability
to execute its business strategy, achieve profitability, or
maintain relationships with existing customers;
- Loss of reputation of the Company's leading brands or failure
of its marketing plans;
- Loss of any of the Company's principal customers and emergence
of new sales channels such as e-commerce;
- A failure of a key information technology system or a breach of
the Company's information security;
- The Company faces risks arising from the restructuring of its
operations and its ongoing efforts to achieve cost savings;
- Impairment of the Company's goodwill and other intangible
assets;
- If the Company cannot continue to develop new products in a
timely manner, and at favorable margins, it may not be able to
compete effectively;
- The Company's business is subject to increasing regulation that
may expose it to significant liabilities;
- The resolution of the Company's tax contingencies may result in
additional tax liabilities;
- Changes in production costs, including raw material
prices;
- The Company's manufacturing facilities, supply channels or
other business operations may be subject to disruption from events
beyond its control;
- The Company's business is subject to seasonal volatility;
- The Company has a substantial level of indebtedness and is
subject to various covenants relating to such indebtedness;
- The Company's access to capital markets and borrowing capacity
could be limited;
- If the Company fails to adequately protect its intellectual
property rights, competitors may manufacture and market similar
products;
- The Company's business involves the potential for product
liability and other claims against it, which could result in
product recalls or withdrawals;
- The Company may not be able to attract, retain and develop key
personnel;
- The Company may experience losses or be subject to increased
funding and expenses related to its pension plans;
- The Company may not be able to continue to identify and
complete strategic acquisitions and effectively integrate acquired
companies to achieve desired financial benefits;
- The Company's financial results could be adversely impacted by
the United Kingdom's departure
from the European Union; and
- The Company faces risks related to the separation of its
Household Products business in July
2015.
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. The list of factors above is illustrative, but
not exhaustive. 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 in Item 1A. Risk Factors of Part I of the
Company's Annual Report on Form 10-K for the year ended
September 30, 2016.
EDGEWELL PERSONAL
CARE COMPANY CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited, in millions, except per share
data)
|
|
|
Quarter Ended
December 31,
|
|
2016
|
|
2015
|
|
|
|
|
Net sales
|
$
|
485.0
|
|
|
$
|
495.1
|
|
Cost of products
sold
|
257.0
|
|
|
267.6
|
|
Gross
profit
|
228.0
|
|
|
227.5
|
|
|
|
|
|
Selling, general and
administrative expense
|
93.8
|
|
|
100.4
|
|
Advertising and sales
promotion expense
|
50.6
|
|
|
46.6
|
|
Research and
development expense
|
16.3
|
|
|
16.0
|
|
Restructuring
charges
|
6.9
|
|
|
18.5
|
|
Interest expense
associated with debt
|
17.4
|
|
|
17.7
|
|
Other income,
net
|
(1.9)
|
|
|
(2.4)
|
|
Earnings before
income taxes
|
44.9
|
|
|
30.7
|
|
Income tax
provision
|
11.4
|
|
|
7.0
|
|
Net
earnings
|
$
|
33.5
|
|
|
$
|
23.7
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
Basic net earnings per share
|
$
|
0.58
|
|
|
$
|
0.40
|
|
Diluted net earnings per diluted share
|
0.58
|
|
|
0.39
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
Basic
|
57.7
|
|
|
59.7
|
|
Diluted
|
58.1
|
|
|
59.9
|
|
See Accompanying Notes.
EDGEWELL PERSONAL
CARE COMPANY CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited, in millions)
|
|
Assets
|
December 31,
2016
|
|
September 30,
2016
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
418.5
|
|
|
$
|
738.9
|
|
Trade receivables,
net
|
228.4
|
|
|
260.7
|
|
Inventories
|
339.0
|
|
|
309.2
|
|
Other current
assets
|
151.7
|
|
|
143.2
|
|
Total current
assets
|
1,137.6
|
|
|
1,452.0
|
|
Property, plant and
equipment, net
|
472.6
|
|
|
486.1
|
|
Goodwill
|
1,429.1
|
|
|
1,420.3
|
|
Other intangible
assets, net
|
1,388.5
|
|
|
1,385.1
|
|
Other
assets
|
27.4
|
|
|
28.0
|
|
Total
assets
|
$
|
4,455.2
|
|
|
$
|
4,771.5
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Current maturities of
long-term debt
|
$
|
—
|
|
|
$
|
281.8
|
|
Notes
payable
|
18.3
|
|
|
18.5
|
|
Accounts
payable
|
181.6
|
|
|
196.5
|
|
Other current
liabilities
|
273.4
|
|
|
371.4
|
|
Total current
liabilities
|
473.3
|
|
|
868.2
|
|
Long-term
debt
|
1,680.5
|
|
|
1,544.2
|
|
Deferred income tax
liabilities
|
255.8
|
|
|
255.3
|
|
Other
liabilities
|
267.6
|
|
|
274.8
|
|
Total
liabilities
|
2,677.2
|
|
|
2,942.5
|
|
Shareholders'
equity
|
|
|
|
Common
shares
|
0.7
|
|
|
0.7
|
|
Additional paid-in
capital
|
1,630.1
|
|
|
1,642.5
|
|
Retained
earnings
|
981.1
|
|
|
946.0
|
|
Treasury
shares
|
(609.8)
|
|
|
(563.0)
|
|
Accumulated other
comprehensive loss
|
(224.1)
|
|
|
(197.2)
|
|
Total shareholders'
equity
|
1,778.0
|
|
|
1,829.0
|
|
Total liabilities and
shareholders' equity
|
$
|
4,455.2
|
|
|
$
|
4,771.5
|
|
See Accompanying Notes.
EDGEWELL PERSONAL
CARE COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited, in millions)
|
|
|
Three Months
Ended
December 31,
|
|
2016
|
|
2015
|
Cash Flow from
Operating Activities
|
|
|
|
Net
earnings
|
$
|
33.5
|
|
|
$
|
23.7
|
|
Non-cash
restructuring costs
|
1.7
|
|
|
0.7
|
|
Depreciation and
amortization
|
23.4
|
|
|
20.2
|
|
Non-cash items
included in income, net
|
(0.5)
|
|
|
7.2
|
|
Share-based
compensation expense
|
5.7
|
|
|
6.4
|
|
Other, net
|
(4.1)
|
|
|
(11.5)
|
|
Changes in current
assets and liabilities used in operations
|
(118.7)
|
|
|
(105.4)
|
|
Net cash used by
operating activities
|
(59.0)
|
|
|
(58.7)
|
|
|
|
|
|
Cash Flow from
Investing Activities
|
|
|
|
Capital
expenditures
|
(13.7)
|
|
|
(14.5)
|
|
Acquisitions, net of
cash acquired
|
(34.0)
|
|
|
—
|
|
Net cash used by
investing activities
|
(47.7)
|
|
|
(14.5)
|
|
|
|
|
|
Cash Flow from
Financing Activities
|
|
|
|
Cash proceeds from
debt with original maturities greater than 90 days
|
146.0
|
|
|
347.8
|
|
Cash payments on debt
with original maturities greater than 90 days
|
(287.0)
|
|
|
(203.0)
|
|
Net decrease in debt
with original maturities of 90 days or less
|
(0.4)
|
|
|
(2.2)
|
|
Common shares
purchased
|
(58.0)
|
|
|
(78.9)
|
|
Net cash (used by)
from financing activities
|
(199.4)
|
|
|
63.7
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(14.3)
|
|
|
(8.4)
|
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
(320.4)
|
|
|
(17.9)
|
|
Cash and cash
equivalents, beginning of period
|
738.9
|
|
|
712.1
|
|
Cash and cash
equivalents, end of period
|
$
|
418.5
|
|
|
$
|
694.2
|
|
See Accompanying Notes.
EDGEWELL PERSONAL CARE
COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(unaudited, in millions, except per share
data)
Note 1 - Segments
The Company conducts its business in the following four
segments: Wet Shave, Sun and Skin Care, Feminine Care and All
Other. Segment performance is evaluated based on segment
profit, exclusive of general corporate expenses, share-based
compensation costs, costs associated with restructuring initiatives
and the amortization of intangible assets. Financial items,
such as interest income and expense, are managed on a global basis
at the corporate level. The exclusion of such charges from
segment results reflects management's view on how it evaluates
segment performance.
On October 31, 2016, the Company
completed the acquisition of Bulldog Skincare Holdings Limited
("Bulldog"), a men's grooming and skincare products company based
in the United Kingdom,
for £27.8, or approximately $34, net of cash
acquired. The acquisition creates opportunities to expand
Edgewell's personal care portfolio into a growing global category
where it can leverage its international geographic footprint.
The acquisition was financed through available foreign cash.
The results of Bulldog for the post-acquisition period are included
within the Company's results for the quarter ended December 31, 2016, and all assets are included in
the Company's Sun and Skin Care segment.
Segment net sales and profitability are presented below:
|
Quarter Ended
December 31,
|
|
2016
|
|
2015
|
Net
Sales
|
|
|
|
Wet Shave
|
$
|
306.2
|
|
|
$
|
316.3
|
|
Sun and Skin
Care
|
57.6
|
|
|
53.5
|
|
Feminine
Care
|
89.1
|
|
|
92.5
|
|
All Other
|
32.1
|
|
|
32.8
|
|
Total net
sales
|
$
|
485.0
|
|
|
$
|
495.1
|
|
|
|
|
|
Segment
Profit
|
|
|
|
Wet Shave
|
$
|
72.0
|
|
|
$
|
66.8
|
|
Sun and Skin
Care
|
0.8
|
|
|
1.7
|
|
Feminine
Care
|
8.3
|
|
|
17.6
|
|
All Other
|
6.9
|
|
|
7.2
|
|
Total segment
profit
|
88.0
|
|
|
93.3
|
|
General corporate and
other expenses
|
(16.4)
|
|
|
(17.7)
|
|
Spin costs
(1)
|
—
|
|
|
(7.5)
|
|
Restructuring and
related costs (2)
|
(7.2)
|
|
|
(18.5)
|
|
Amortization of
intangibles
|
(4.0)
|
|
|
(3.6)
|
|
Interest and other
expense, net
|
(15.5)
|
|
|
(15.3)
|
|
Total earnings
before income taxes
|
$
|
44.9
|
|
|
$
|
30.7
|
|
|
|
(1)
|
Includes Selling,
general and administrative expense ("SG&A") of $7.3 and Cost of
products sold of $0.2 for the first quarter of fiscal 2016 related
to the separation of the Household Products business in July
2015.
|
|
|
(2)
|
Includes Cost of
products sold of $0.3 for the first quarter of fiscal 2017
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. These
non-core inventory obsolescence charges are considered part of the
total project costs incurred for the restructuring
project.
|
Note 2 - GAAP to Non-GAAP Reconciliations
Basic earnings per share is based on the average number of
common shares outstanding during the period. Diluted earnings
per share is based on the weighted-average number of shares used
for the basic earnings per share calculation, adjusted for the
dilutive effect of share options and restricted stock equivalent
("RSE") awards.
The following table provides a reconciliation of Net earnings
and Net earnings per diluted share ("EPS") to Adjusted net earnings
and Adjusted EPS, which are Non-GAAP measures.
|
Quarter Ended
December 31,
|
|
Net
Earnings
|
|
Diluted
EPS
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Earnings and
Diluted EPS - GAAP (Unaudited)
|
$
|
33.5
|
|
|
$
|
23.7
|
|
|
$
|
0.58
|
|
|
$
|
0.39
|
|
Spin costs
(1)
|
—
|
|
|
7.5
|
|
|
—
|
|
|
0.13
|
|
Restructuring and
related charges (2)
|
7.2
|
|
|
18.5
|
|
|
0.12
|
|
|
0.31
|
|
Income
taxes
|
(2.3)
|
|
|
(8.7)
|
|
|
(0.04)
|
|
|
(0.15)
|
|
Adjusted Net Earnings and Adjusted Diluted EPS -
Non-GAAP
|
$
|
38.4
|
|
|
$
|
41.0
|
|
|
$
|
0.66
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares - Diluted
|
|
|
|
|
58.1
|
|
59.9
|
|
|
(1)
|
Includes SG&A of
$7.3 and Costs of products sold of $0.2 for the first quarter of
fiscal 2016 related to the separation of the Household Products
business in July 2015.
|
|
|
(2)
|
Includes Cost of
products sold of $0.3 for the first quarter of fiscal 2017
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. These
non-core inventory obsolescence charges are considered part of the
total project costs incurred for the restructuring
project.
|
The following tables provide a GAAP to Non-GAAP reconciliation
of certain line items from the Condensed Consolidated Statement of
Earnings:
Quarter Ended
December 31, 2016
|
|
|
Gross
Profit
|
|
SG&A
|
|
EBIT
(1)
|
|
Net
Earnings
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
228.0
|
|
|
$
|
93.8
|
|
|
$
|
44.9
|
|
|
$
|
33.5
|
|
|
$
|
0.58
|
|
% of net
sales
|
47.0
|
%
|
|
19.3
|
%
|
|
|
|
|
|
|
Restructuring and
related charges (2)
|
0.3
|
|
|
—
|
|
|
7.2
|
|
|
4.9
|
|
|
0.08
|
|
Total Adjusted
Non-GAAP
|
$
|
228.3
|
|
|
$
|
93.8
|
|
|
$
|
52.1
|
|
|
$
|
38.4
|
|
|
$
|
0.66
|
|
% of net
sales
|
47.1
|
%
|
|
19.3
|
%
|
|
|
|
|
|
|
Quarter Ended
December 31, 2015
|
|
Gross
Profit
|
|
SG&A
|
|
EBIT
(1)
|
|
Net
Earnings
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
227.5
|
|
|
$
|
100.4
|
|
|
$
|
30.7
|
|
|
$
|
23.7
|
|
|
$
|
0.39
|
|
% of net
sales
|
46.0
|
%
|
|
20.3
|
%
|
|
|
|
|
|
|
Spin costs
|
0.2
|
|
|
7.3
|
|
|
7.5
|
|
|
4.8
|
|
|
0.08
|
|
Restructuring and
related charges
|
—
|
|
|
—
|
|
|
18.5
|
|
|
12.5
|
|
|
0.21
|
|
Total Adjusted
Non-GAAP
|
$
|
227.7
|
|
|
$
|
93.1
|
|
|
$
|
56.7
|
|
|
$
|
41.0
|
|
|
$
|
0.68
|
|
% of net
sales
|
46.0
|
%
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
(1)
|
EBIT is defined as
Earnings before income taxes.
|
|
|
(2)
|
Includes Cost of
products sold of $0.3 for the first quarter of fiscal 2017
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. These
non-core inventory obsolescence charges are considered part of the
total project costs incurred for the restructuring
project.
|
The following table provides a reconciliation of Earnings before
income taxes to adjusted operating income, which is a Non-GAAP
measure, for the first quarters of fiscal 2017 and 2016:
|
Quarter Ended
December 31,
|
|
2016
|
|
2015
|
Earnings before
income taxes
|
$
|
44.9
|
|
|
$
|
30.7
|
|
Spin costs
(1)
|
—
|
|
|
7.5
|
|
Restructuring and
related charges (2)
|
7.2
|
|
|
18.5
|
|
Interest expense
associated with debt
|
17.4
|
|
|
17.7
|
|
Other income,
net
|
(1.9)
|
|
|
(2.4)
|
|
Adjusted operating
income
|
$
|
67.6
|
|
|
$
|
72.0
|
|
% of net
sales
|
13.9
|
%
|
|
14.5
|
%
|
|
|
(1)
|
Includes SG&A of
$7.3 and Costs of products sold of $0.2 for the first quarter of
fiscal 2016 related to the separation of the Household Products
business in July 2015.
|
|
|
(2)
|
Includes Cost of
products sold of $0.3 for the first quarter of fiscal 2017
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. These
non-core inventory obsolescence charges are considered part of the
total project costs incurred for the restructuring
project.
|
The following table provides a reconciliation of the effective
tax rate to the adjusted effective tax rate, which is a Non-GAAP
measure:
|
Quarter Ended
December 31, 2016
|
|
Quarter Ended
December 31, 2015
|
|
Reported
|
|
Adjustments
(1)
|
|
Adjusted
(Non-GAAP)
|
|
Reported
|
|
Adjustments
(1)
|
|
Adjusted
(Non-GAAP)
|
Earnings before
income taxes
|
$
|
44.9
|
|
|
$
|
7.2
|
|
|
$
|
52.1
|
|
|
$
|
30.7
|
|
|
$
|
26.0
|
|
|
$
|
56.7
|
|
Income tax
provision
|
11.4
|
|
|
2.3
|
|
|
13.7
|
|
|
7.0
|
|
|
8.7
|
|
|
15.7
|
|
Net
earnings
|
$
|
33.5
|
|
|
$
|
4.9
|
|
|
$
|
38.4
|
|
|
$
|
23.7
|
|
|
$
|
17.3
|
|
|
$
|
41.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
25.4
|
%
|
|
|
|
|
|
22.8
|
%
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
26.3
|
%
|
|
|
|
|
|
27.7
|
%
|
|
|
(1)
|
Includes adjustments
for spin costs, restructuring charges and the associated tax impact
of these charges. See reconciliation of Net earnings to
Adjusted net earnings.
|
Note 3 - Net Sales and Profit by Segment
Operations for the Company are reported via four segments - Wet
Shave, Sun and Skin Care, Feminine Care and All Other. The
following tables present changes in net sales and segment profit
for the first quarter of fiscal 2017, as compared to the
corresponding period in fiscal 2016, and also provide a
reconciliation of organic net sales and organic segment profit to
reported amounts.
Net Sales (In
millions - Unaudited)
|
Quarter Ended
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and
Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
Net Sales - Q1
'16
|
$
|
316.3
|
|
|
|
|
$
|
53.5
|
|
|
|
|
$
|
92.5
|
|
|
|
|
$
|
32.8
|
|
|
|
|
$
|
495.1
|
|
|
|
Organic
|
(7.7)
|
|
|
(2.4)
|
%
|
|
1.0
|
|
|
1.9
|
%
|
|
(3.4)
|
|
|
(3.7)
|
%
|
|
(0.5)
|
|
|
(1.5)
|
%
|
|
(10.6)
|
|
|
(2.1)
|
%
|
Impact of
acquisition
|
—
|
|
|
—
|
%
|
|
3.2
|
|
|
6.0
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
3.2
|
|
|
0.6
|
%
|
Impact of
currency
|
(2.4)
|
|
|
(0.8)
|
%
|
|
(0.1)
|
|
|
(0.2)
|
%
|
|
—
|
|
|
—
|
%
|
|
(0.2)
|
|
|
(0.6)
|
%
|
|
(2.7)
|
|
|
(0.5)
|
%
|
Net Sales - Q1
'17
|
$
|
306.2
|
|
|
(3.2)
|
%
|
|
$
|
57.6
|
|
|
7.7
|
%
|
|
$
|
89.1
|
|
|
(3.7)
|
%
|
|
$
|
32.1
|
|
|
(2.1)
|
%
|
|
$
|
485.0
|
|
|
(2.0)
|
%
|
Segment Profit (In
millions - Unaudited)
|
Quarter Ended
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and
Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
Segment Profit - Q1
'16
|
$
|
66.8
|
|
|
|
|
$
|
1.7
|
|
|
|
|
$
|
17.6
|
|
|
|
|
$
|
7.2
|
|
|
|
|
$
|
93.3
|
|
|
|
Organic
|
4.3
|
|
|
6.4
|
%
|
|
(0.3)
|
|
|
(17.6)
|
%
|
|
(9.3)
|
|
|
(52.8)
|
%
|
|
(0.3)
|
|
|
(4.2)
|
%
|
|
(5.6)
|
|
|
(6.0)
|
%
|
Impact of
acquisition
|
—
|
|
|
—
|
%
|
|
(0.4)
|
|
|
(23.5)
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(0.4)
|
|
|
(0.4)
|
%
|
Impact of
currency
|
0.9
|
|
|
1.4
|
%
|
|
(0.2)
|
|
|
(11.8)
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
0.7
|
|
|
0.7
|
%
|
Segment Profit - Q1
'17
|
$
|
72.0
|
|
|
7.8
|
%
|
|
$
|
0.8
|
|
|
(52.9)
|
%
|
|
$
|
8.3
|
|
|
(52.8)
|
%
|
|
$
|
6.9
|
|
|
(4.2)
|
%
|
|
$
|
88.0
|
|
|
(5.7)
|
%
|
Note 4 - EBITDA
The Company reports financial results on a GAAP and adjusted
basis. The table below is used to reconcile Net earnings to
EBITDA and Adjusted EBITDA, which are Non-GAAP measures, to improve
comparability of results between periods.
|
Quarter Ended
December 31,
|
|
2016
|
|
2015
|
Net
earnings
|
$
|
33.5
|
|
|
$
|
23.7
|
|
Income tax
provision
|
11.4
|
|
|
7.0
|
|
Interest expense,
net
|
17.2
|
|
|
17.7
|
|
Depreciation and
amortization
|
24.5
|
|
|
20.7
|
|
EBITDA
|
$
|
86.6
|
|
|
$
|
69.1
|
|
|
|
|
|
Spin costs
|
—
|
|
|
7.5
|
|
Restructuring and
related costs (1)
|
6.1
|
|
|
17.8
|
|
Adjusted
EBITDA
|
$
|
92.7
|
|
|
$
|
94.4
|
|
|
|
(1)
|
Excludes $1.1 and
$0.7 of accelerated depreciation for the first fiscal quarters of
2017 and 2016, respectively, which are included within Depreciation
and amortization.
|
Note 5 - Outlook
The following tables provide reconciliations of Adjusted EPS,
which is a Non-GAAP measure, included within the Company's outlook
for projected fiscal 2017 results:
Adjusted EPS
Outlook
|
|
|
Fiscal 2017 GAAP
EPS
|
|
$3.60 -
$3.80
|
|
|
|
Restructuring and
related costs
|
approx.
|
$0.30
|
Income
taxes
|
approx.
|
$(0.10)
|
|
|
|
Fiscal 2017 Adjusted
EPS Outlook (Non-GAAP)
|
|
$3.80 -
$4.00
|
Note 6 - Adjusted Working Capital
Adjusted working capital metrics for the first quarter of fiscal
2017 and the fourth quarter of fiscal 2016 are presented below.
|
Q1
2017
|
|
Days
(1)
|
|
Q4
2016
|
|
Days
(1)
|
Receivables, as
reported
|
$
|
272.3
|
|
|
|
|
$
|
275.2
|
|
|
|
Less: Trade allowance
in accrued liabilities (2)
|
(27.6)
|
|
|
|
|
(28.1)
|
|
|
|
Receivables,
adjusted
|
244.7
|
|
|
38.0
|
|
|
247.1
|
|
|
38.2
|
|
|
|
|
|
|
|
|
|
Inventories, as
reported
|
341.1
|
|
|
104.6
|
|
|
345.3
|
|
|
104.9
|
|
|
|
|
|
|
|
|
|
Accounts payable, as
reported
|
204.1
|
|
|
62.6
|
|
|
211.4
|
|
|
64.2
|
|
|
|
|
|
|
|
|
|
Average adjusted
working capital (3)
|
$
|
381.7
|
|
|
|
|
$
|
381.0
|
|
|
|
% of net sales
(4)
|
16.2
|
%
|
|
|
|
16.1
|
%
|
|
|
|
|
(1)
|
Days sales
outstanding is calculated using net sales for the trailing
four-quarter period. Days in inventory and days payable
outstanding are calculated using cost of products sold for the
trailing four-quarter period.
|
|
|
(2)
|
Trade allowances are
recorded as a reduction of net sales per GAAP and reported in
accrued expenses on the Condensed Consolidated Balance
Sheets.
|
|
|
(3)
|
Adjusted working
capital is defined as receivables (less trade allowance in accrued
liabilities), plus inventories, less accounts payable.
Average adjusted working capital is calculated using an average of
the four-quarter end balances for each working capital component as
of December 31, 2016 and September 30, 2016,
respectively.
|
|
|
(4)
|
Average adjusted
working capital divided by trailing four-quarter net
sales.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/edgewell-personal-care-announces-first-quarter-fiscal-2017-results-and-maintains-fiscal-year-2017-financial-outlook-300400991.html
SOURCE Edgewell Personal Care Company