ST. LOUIS, Nov. 10, 2016 /PRNewswire/ -- Edgewell
Personal Care Company (NYSE: EPC) today announced
results for its full year and fourth fiscal quarter, which ended
September 30, 2016.
Executive Summary
- Net sales increased 9.0% in the quarter and decreased 2.4% for
the full year. Organic net sales increased 9.2% in the quarter and
1.4% for the full year. Excluding the estimated impact of
international go-to-market changes, full year underlying net sales
would have increased by 2.8%.
- Net earnings were $52.2 million
for the quarter and $178.7 million
for the full year. Adjusted EBITDA was $119.4 million for the quarter and $440.1 million for the full year.
- GAAP Diluted Earnings Per Share ("EPS") was $0.88 for the quarter and $2.99 for the full year. Adjusted EPS was
$1.06 for the quarter and
$3.57 for the full year.
- The Company provided its financial outlook for fiscal 2017 that
is in line with its long term financial objectives.
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.
"We ended fiscal year 2016 with solid fourth quarter results,
growing organic net sales in the quarter and the year, driven by
growth in Wet Shave and Sun and Skin Care. We are pleased to
have exceeded the sales, adjusted EPS, and operational objectives
that we set for ourselves at the beginning of the year," said
David Hatfield, Edgewell's
President, Chief Executive Officer, and Chairman of the
Board. "I want to thank all of our Edgewell colleagues around
the world for that accomplishment and for their dedication and hard
work during a very complex transition year." Mr. Hatfield
continued, "We now move into the next phase for Edgewell, one where
the strategy and the building blocks are in place to drive
sustained performance on both the top and bottom line. We're
excited about the organization we have in place, the products we
have in the marketplace and the innovation in our pipeline.
Although we recognize the tough competitive environment, we are
confident that we can deliver results that are in line with the
objectives of our long term financial algorithm in 2017."
Fiscal 4Q 2016 Operating Results (Unaudited)
Net sales were $610.6
million in the quarter, an increase of 9.0%. Organic
net sales increased 9.2%, driven by growth in all four
segments. North America net
sales were up 8.4%, with growth across all segments.
International (everything outside North
America) net sales were up 14.2%, or 11.0% on an organic
basis, driven by Wet Shave, with good performance in Asia, and Sun and Skin Care in Asia and Latin America.
Gross margin was $310.1
million, or 50.8% of net sales, representing a 270
basis point improvement over the prior year quarter. The
gross margin increase was primarily due to high levels of
promotional spending in the prior year quarter and lower material
costs in the current year quarter, which was partly offset by
higher start-up costs related to the Feminine Care production
consolidation into the U.S. plant.
Advertising and sales promotion expense ("A&P") was
$82.6 million, or 13.5% of net sales,
down from prior year A&P of $95.7
million, or 17.1% of net sales. The majority of the
decline was in the Wet Shave segment, as the prior year reflected
higher expense related to Hydro Silk® in North America.
A&P for the Sun and Skin Care segment was also down versus the
year ago quarter.
Selling, general and administrative expense ("SG&A")
was $107.8 million, or 17.7% of net
sales, including $3.6 million of
intangibles amortization, compared to $123.5
million, or 22.0% of net sales, in the prior year
quarter. Excluding $30.1
million in prior year charges related to the spin-off of the
Company's Household Products business in July 2015, SG&A as a percent of net sales
increased 100 basis points over the prior year quarter. This
increase was driven by higher spending in strategic growth
projects, IT projects and other corporate costs, as well as
increased compensation expense, including incentive
compensation.
We incurred a $6.5 million
non-cash asset intangibles impairment charge during the
quarter in connection with our annual impairment testing.
The Company recorded pre-tax restructuring expense of
$9.4 million ($1.7 million in Cost of goods sold and
$7.7 million in Restructuring
charges) compared to $6.3 million in
the prior year quarter.
Other expense (income), net was an expense of
$2.0 million during the quarter
compared to income of $3.5 million in
the prior year quarter. The change reflects the impact of
foreign currency hedging contract losses, particularly related to
the Japanese Yen, and revaluation losses on nonfunctional currency
balance sheet exposures.
The effective tax rate for the year ended September 30, 2016 was 18.7% as compared to 35.4%
in the prior year. The adjusted 2016 full year effective tax
rate was 23.1% as compared to the prior year rate of 23.2%.
The 2015 full year adjusted tax rate was favorably impacted by a
large allocation of U.S. interest expense and corporate overheads
associated with supporting the Company's former Household Products
business that are not reported in discontinued operations.
The 2016 full year adjusted tax rate includes a favorable mix of
earnings in lower tax rate jurisdictions and positive adjustments
to prior year tax accruals.
Net earnings in the quarter were $52.2 million, compared to a net loss of
$219.5 million in the fourth quarter
of fiscal 2015. The increase in net earnings was primarily
related to the impact of an intangibles impairment charge and
higher costs related to the spin-off in the prior year quarter, and
to higher segment profit in the current year quarter. Fourth
quarter Adjusted EBITDA was $119.4
million, an increase of $36.4
million versus fourth quarter 2015 Adjusted EBITDA of
$83.0 million.
GAAP Diluted EPS was $0.88
in the quarter as compared to a loss of $3.57 in the prior year quarter. Adjusted
EPS for the quarter was $1.06,
compared to $0.64 in the prior year
quarter.
Fiscal 4Q 2016 Operating Segment Results (Unaudited)
Wet Shave (Men's Systems, Women's Systems, Disposables,
Shave Preps)
Wet Shave net sales increased $33.1
million, or 9.2%. Excluding the impact of currency
movements, organic net sales increased $26.4 million, or 7.4%. North America drove the majority of the
increase, due in large part to the high level of promotional spend
in the prior year quarter related to coupons and trade
spending. International growth was driven by Hydro® sales in
Asia and Women's systems
performance in EMEA. Wet Shave segment profit increased
$38.2 million. On an organic
basis, Wet Shave segment profit increased $30.9 million. The increase in profit was
driven primarily by lower promotional spending, favorable costs,
and lower A&P spend.
Sun and Skin Care (Sun
Care, Wipes, Gloves)
Sun and Skin Care net sales increased $11.8
million, or 17.9%. Excluding the impact of currency
movements, organic net sales increased $12.0
million, or 18.2%, driven by growth of Banana Boat® and
Hawaiian Tropic® in both North
America and International. Growth was driven by higher
volumes due to category growth versus a year ago. Sun and
Skin Care segment profit increased $9.6
million. Excluding the impact of currency movements,
organic segment profit improved $9.7
million, driven by higher volumes, favorable price mix,
lower product costs and reduced A&P spend.
Feminine Care (Tampons, Pads, Liners)
Feminine Care net sales increased $11.0
million, or 11.4%. Growth was largely driven by lower
promotional spending, which more than offset lower volumes this
quarter. Feminine Care segment profit decreased $1.1 million. The decrease was primarily
due to start-up costs related to the production consolidation into
the U.S. plant and slightly lower volumes, which offset the benefit
from the lower promotional spend.
All Other (Infant Care,
all other brands)
All Other net sales decreased $5.4
million, or 13.8%. Excluding the impact of currency
movements and the sale of the Industrial blade business a year ago,
organic net sales increased $2.1
million, or 5.3%, with growth in Diaper Genie®, slightly
offset by lower volumes in infant cups and bottles. All
Other segment profit increased $1.6
million.
Fiscal 2016 Operating Results (Unaudited)
Net sales were $2,362.0
million in fiscal 2016, a decrease of 2.4%. Organic
net sales increased 1.4%, including an approximate $34.0 million, or 140 basis point, negative
impact from international go-to-market changes. From a
geographic perspective, North
America organic net sales increased 1.7%, and International
organic net sales increased 1.1%, or 5.0% on an underlying
basis. From a segment perspective, organic net sales
increased 1.8% for Wet Shave, and 4.6% for Sun and Skin Care.
Organic net sales decreased 1.8% for Feminine Care and 1.2% for All
Other.
Gross margin was $1,159.9
million, or 49.1% of net sales, representing a 20
basis point increase over the prior year, including a 10 basis
point benefit from currency.
Net earnings in fiscal 2016 were $178.7 million, compared to a net loss of
$275.3 million in fiscal 2015.
The increase in earnings was primarily related to the prior year
impact of an intangibles impairment charge, the Venezuela deconsolidation, and spin-related
charges. Fiscal 2016 Adjusted EBITDA was $440.1 million versus fiscal 2015 Normalized
EBITDA of $462.2 million.
Year-over-year segment profit growth was more than offset by
$7.0 million of unfavorable foreign
currency, $11.6 million from the
impact of Venezuela and
Industrial, and $15 million in Other
expense (income), net. The change in Other expense (income),
net was driven by foreign currency hedging activity, which was in
an income position in fiscal 2015 but changed to a loss position in
fiscal 2016, in large part due to the strengthening of the Japanese
Yen.
GAAP Diluted EPS was $2.99
in fiscal 2016 as compared to a loss of $4.44 in fiscal 2015. Adjusted EPS
for the year was $3.57, compared to
$2.80 in the prior year.
Net cash from operating activities was $176.4 million for fiscal 2016. During
fiscal 2016, the Company made a discretionary contribution of
$100.5 million to one of its
international pension plans, and repurchased 2.5 million shares for
$196.6 million.
Adjusted working capital as a percent of net sales was 16.1% at
September 30, 2016, versus 17.5% as
of September 30, 2015. The 140
basis point improvement was driven by improved days payable
outstanding and days in inventory. Adjusted working capital
continues to reflect a higher level of inventory in Feminine Care,
which is expected to return to normal levels as the Company
completes the consolidation of Feminine Care manufacturing in the
U.S.
On October 20, 2016, the Company
terminated its commitments under its Netherlands revolving credit facility and
repaid all outstanding loans and other obligations in full, in the
amount of approximately $277
million.
On November 1, 2016, the Company
announced that it had acquired the outstanding shares of Bulldog
Skincare Holdings Limited, a U.K. based men's grooming and skincare
products company. The acquisition was financed through
available foreign cash.
Full Fiscal Year 2017 Financial Outlook
For fiscal 2017, the Company estimates that net sales will
increase by low single digits, with no impact from currency, based
on current exchange rates (as of November 2,
2016), and an approximately 40 basis point benefit from the
Bulldog acquisition.
The GAAP EPS outlook is estimated to be in the range of
$3.60 - $3.80. Adjusted EPS is
estimated to be in the range of $3.80 -
$4.00. Adjusted operating income margin is anticipated
to expand by at least 50 basis points. The impact from the
acquisition of Bulldog is expected to be neutral to EPS in
2017. The effective tax rate for the fiscal year is estimated
to be in the range of 27% to 28%.
The full-year estimate for restructuring related costs is
$15 to $20 million for fiscal
2017. Incremental restructuring savings are expected to be
approximately $20 to $25 million in
fiscal 2017 and an additional $25
million in fiscal 2018.
The Company anticipates that fiscal 2017 Free Cash Flow will
exceed 100% of net earnings.
As part of the Company's strategy to drive systematic cost
reduction, the Zero Based Spend (ZBS) initiative was announced last
quarter. Based on initial projections, ZBS 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, and an additional $25 to $30 million in savings in fiscal 2018.
In fiscal 2017, we anticipate that sales and earnings growth
will not be uniform by quarter, largely due to the timing of
product launches and A&P phasing. In particular, fiscal
first quarter net sales are anticipated to be flat and segment
profit is anticipated to be lower than in the prior year
quarter.
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
2016 fourth 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® and Hawaiian Tropic® sun 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 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 expenses
associated with the Venezuela
deconsolidation charge, the sale of the Industrial business, spin
costs, restructuring charges, amortization and impairment of
intangible assets and cost of early debt retirements.
Reconciliations of the Company's 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. Given the significant one-time events that took
place during fiscal 2016 and 2015, most prominently the spin-off of
the Household Products business and the resulting go-to-market
impacts, the deconsolidation of the Company's Venezuela operations and the sale of the
Industrial business, the Company views the use of Non-GAAP measures
that take into account the impact of these unique events as
particularly valuable in understanding the Company's underlying
operational results and providing insights into future
performance.
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 and segment profit on an
organic basis to better measure the comparability of results
between periods. Organic net sales and organic segment profit
exclude the impact of changes in foreign currency, the impact of
acquisitions and dispositions (including the results of the
Industrial business) and the period-over-period change resulting
from the deconsolidation of the Company's Venezuela operations. Underlying net sales
represents organic net sales adjusted for international
go-to-market impacts, as defined below. This information is
provided because these fluctuations can distort the underlying
change in net sales and segment profit either positively or
negatively.
- To compete more effectively as an independent company, the
Company has increased its use of third-party distributors and
wholesalers, impacting sales and gross margin, and has decreased or
eliminated its business operations in certain countries, impacting
SG&A, consistent with its international go-to-market strategy.
Within this press release the Company discusses go-to-market
impacts, which reflect its best estimate on the impact of these
international go-to-market changes and exits, and represent the
year-over-year change in those markets. The Company believes it has
realized the majority of the impact from these changes in the first
three quarters of fiscal 2016.
- Adjusted EBITDA is defined as earnings before income taxes, net
interest expense, depreciation and amortization and excludes items
such as impairment charges, the Venezuela deconsolidation charge, spin costs,
restructuring charges and the sale of the Industrial business.
- Historical results on a continuing operations basis include
certain costs associated with supporting the Company's former
Household Products business that are not reported in discontinued
operations. These costs affect SG&A, interest expense, spin
costs, restructuring and tax. As a result, EPS and EBITDA on both a
GAAP and Non-GAAP basis for this quarter and fiscal year are not
comparable to the prior year, and are not comparable for each of
the first three quarters of fiscal 2016. To address this, the
Company has provided Normalized EBITDA, which adjusts corporate
SG&A expenses to reflect the Company's estimated full-year run
rate. Normalized EBITDA is presented to provide a basis for
comparing to future performance. A reconciliation of Fiscal 2015
Consolidated Statement of Earnings and Normalized EBITDA by quarter
was announced in a Form 8-K furnished on December 1, 2015, and can be found on the
Company's website www.edgewell.com, under "Investors," and
"Financial Reports," "Key Statistics" tabs or by using the
following link:
http://ir.edgewell.com/financial-reports/key-statistics
- Adjusted operating income is defined as earnings from
continuing operations before income taxes, interest expense
associated with debt, other expense (income), net, and excludes
items such as impairment charges, spin costs, restructuring charges
and the sale of the Industrial business.
- Adjusted EPS is defined as diluted earnings per share excluding
items such as impairment charges, the Venezuela deconsolidation charge, spin costs,
restructuring charges, the sale of the Industrial business, cost of
early debt retirements and the related tax effects of these
items.
- The Adjusted effective tax rate is defined as the effective tax
rate excluding impairment charges, the Venezuela deconsolidation charge, spin costs,
restructuring charges, the sale of the Industrial business, cost of
early debt retirements and the related tax effects of these
items.
- 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. Adjusted working capital also excludes
amounts related to the Household Products business.
- Free cash flow is defined as net cash flow 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
Personal Care Company 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, currency
fluctuations and its international go-to-market strategy, that
could adversely affect its results of operations;
- The Company's manufacturing facilities, supply channels or
other business operations may be subject to disruption from events
beyond its control;
- The Company's access to capital markets and borrowing capacity
could be limited;
- 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 has a substantial level of indebtedness and is
subject to various covenants relating to such indebtedness, which
could limit its discretion to operate and grow its business;
- The Company faces risks arising from the restructuring of its
operations and its ongoing efforts to achieve cost savings;
- Loss of any of the Company's principal customers and emergence
of new sales channels such as e-commerce could significantly
decrease its sales and profitability;
- 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 business involves the potential for product
liability and other claims against it, which could affect its
results of operations and financial condition and result in product
recalls or withdrawals;
- A failure of a key information technology system or a breach of
the Company's information security could adversely impact its
ability to conduct business;
- The resolution of the Company's tax contingencies may result in
additional tax liabilities, which could adversely impact its cash
flows and results of operations;
- If the Company fails to adequately protect its intellectual
property rights, competitors may manufacture and market similar
products, which could adversely affect its market share and results
of operations;
- Potential liabilities in connection with the Separation may
arise under fraudulent conveyance and transfer laws and legal
capital requirements; and
- The Company may not achieve some or all of the expected
benefits of the spin-off of its Household Products business, and
this may materially adversely affect its business.
In addition, other risks and uncertainties not presently known
to the Company or that it presently considers immaterial could
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, 2015.
EDGEWELL PERSONAL
CARE COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
|
(unaudited, in
millions, except per share data)
|
|
|
|
|
|
Quarter Ended
September 30,
|
|
Year Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
610.6
|
|
|
$
|
560.1
|
|
|
$
|
2,362.0
|
|
|
$
|
2,421.2
|
|
Cost of products
sold
|
300.5
|
|
|
290.8
|
|
|
1,202.1
|
|
|
1,237.4
|
|
Gross
profit
|
310.1
|
|
|
269.3
|
|
|
1,159.9
|
|
|
1,183.8
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense
|
107.8
|
|
|
123.5
|
|
|
412.7
|
|
|
571.6
|
|
Advertising and sales
promotion expense
|
82.6
|
|
|
95.7
|
|
|
336.7
|
|
|
367.1
|
|
Research and
development expense
|
21.7
|
|
|
22.5
|
|
|
71.9
|
|
|
71.0
|
|
Impairment
charge
|
6.5
|
|
|
318.2
|
|
|
6.5
|
|
|
318.2
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
—
|
|
|
—
|
|
|
79.3
|
|
Spin restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
28.3
|
|
Restructuring
charges
|
7.7
|
|
|
6.3
|
|
|
37.0
|
|
|
26.7
|
|
Industrial sale
charges
|
—
|
|
|
10.8
|
|
|
0.2
|
|
|
32.7
|
|
Interest expense
associated with debt
|
18.0
|
|
|
16.4
|
|
|
71.8
|
|
|
99.8
|
|
Cost of early debt
retirements
|
—
|
|
|
—
|
|
|
—
|
|
|
59.6
|
|
Other expense
(income), net
|
2.0
|
|
|
(3.5)
|
|
|
3.2
|
|
|
(11.8)
|
|
Earnings (loss) from
continuing operations before income taxes
|
63.8
|
|
|
(320.6)
|
|
|
219.9
|
|
|
(458.7)
|
|
Income tax provision
(benefit)
|
11.6
|
|
|
(126.9)
|
|
|
41.2
|
|
|
(162.6)
|
|
Earnings (loss) from
continuing operations
|
52.2
|
|
|
(193.7)
|
|
|
178.7
|
|
|
(296.1)
|
|
(Loss) earnings from
discontinued operations, net of tax
|
—
|
|
|
(25.8)
|
|
|
—
|
|
|
20.8
|
|
Net earnings
(loss)
|
$
|
52.2
|
|
|
$
|
(219.5)
|
|
|
$
|
178.7
|
|
|
$
|
(275.3)
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.89
|
|
|
$
|
(3.15)
|
|
|
$
|
3.02
|
|
|
$
|
(4.78)
|
|
Discontinued operations
|
—
|
|
|
(0.42)
|
|
|
—
|
|
|
0.34
|
|
Net earnings (loss)
|
0.89
|
|
|
(3.57)
|
|
|
3.02
|
|
|
(4.44)
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.88
|
|
|
$
|
(3.15)
|
|
|
$
|
2.99
|
|
|
$
|
(4.78)
|
|
Discontinued operations
|
—
|
|
|
(0.42)
|
|
|
—
|
|
|
0.34
|
|
Net earnings (loss)
|
0.88
|
|
|
(3.57)
|
|
|
2.99
|
|
|
(4.44)
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
58.6
|
|
|
61.5
|
|
|
59.2
|
|
|
62.0
|
|
Diluted
|
59.2
|
|
|
61.5
|
|
|
59.7
|
|
|
62.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying
Notes.
|
EDGEWELL PERSONAL
CARE COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(unaudited, in
millions)
|
|
|
|
|
Assets
|
September
30,
2016
|
|
September
30,
2015
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
738.9
|
|
|
$
|
712.1
|
|
Trade receivables,
net
|
260.7
|
|
|
279.8
|
|
Inventories
|
309.2
|
|
|
332.8
|
|
Other current assets
(1)
|
143.2
|
|
|
311.9
|
|
Total current
assets
|
1,452.0
|
|
|
1,636.6
|
|
Property, plant and
equipment, net
|
486.1
|
|
|
498.9
|
|
Goodwill
|
1,420.3
|
|
|
1,421.8
|
|
Other intangible
assets, net
|
1,385.1
|
|
|
1,408.5
|
|
Other assets
(1)
|
28.0
|
|
|
20.5
|
|
Total
assets
|
$
|
4,771.5
|
|
|
$
|
4,986.3
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Current maturities of
long-term debt
|
$
|
281.8
|
|
|
$
|
—
|
|
Notes
payable
|
18.5
|
|
|
17.5
|
|
Accounts
payable
|
196.5
|
|
|
236.9
|
|
Other current
liabilities (1)
|
371.4
|
|
|
412.4
|
|
Total current
liabilities
|
868.2
|
|
|
666.8
|
|
Long-term
debt
|
1,544.2
|
|
|
1,698.6
|
|
Deferred income tax
liabilities (1)
|
255.3
|
|
|
335.8
|
|
Other
liabilities
|
274.8
|
|
|
421.0
|
|
Total
liabilities
|
2,942.5
|
|
|
3,122.2
|
|
Shareholders'
equity
|
|
|
|
Common
shares
|
0.7
|
|
|
0.7
|
|
Additional paid-in
capital
|
1,642.5
|
|
|
1,644.2
|
|
Retained
earnings
|
946.0
|
|
|
772.9
|
|
Treasury
shares
|
(563.0)
|
|
|
(382.2)
|
|
Accumulated other
comprehensive loss
|
(197.2)
|
|
|
(171.5)
|
|
Total shareholders'
equity
|
1,829.0
|
|
|
1,864.1
|
|
Total liabilities and
shareholders' equity
|
$
|
4,771.5
|
|
|
$
|
4,986.3
|
|
|
|
(1)
|
The Company early
adopted new accounting guidance during the first quarter of fiscal
2016 which required all deferred income tax assets and liabilities
to be classified as non-current, resulting in reductions to Other
current assets, Other current liabilities and Deferred income tax
liabilities of $86.3, $0.7 and $76.2, respectively, and an increase
in Other assets of $9.4 as of September 30, 2016. The
prospective adoption of the new guidance had no impact on the
balance sheet as of September 30, 2015.
|
|
|
See Accompanying
Notes.
|
EDGEWELL PERSONAL
CARE COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited, in
millions)
|
|
|
|
Year Ended
September 30,
|
|
2016
|
|
2015
|
Cash Flow from
Operating Activities
|
|
|
|
Net earnings
(loss)
|
$
|
178.7
|
|
|
$
|
(275.3)
|
|
Non-cash
restructuring costs
|
3.9
|
|
|
41.5
|
|
Depreciation and
amortization
|
92.6
|
|
|
115.3
|
|
Impairment
charge
|
6.5
|
|
|
318.2
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
144.5
|
|
Non-cash items
included in income, net
|
37.7
|
|
|
19.4
|
|
International pension
funding
|
(100.5)
|
|
|
—
|
|
Deferred income
taxes
|
7.8
|
|
|
(190.4)
|
|
Other, net
|
(31.8)
|
|
|
(37.9)
|
|
Changes in current
assets and liabilities used in operations
|
(18.5)
|
|
|
13.5
|
|
Net cash from
operating activities
|
176.4
|
|
|
148.8
|
|
|
|
|
|
Cash Flow from
Investing Activities
|
|
|
|
Capital
expenditures
|
(69.5)
|
|
|
(99.4)
|
|
Change related to
Venezuelan operations
|
—
|
|
|
(93.8)
|
|
Acquisitions, net of
cash acquired
|
—
|
|
|
(12.1)
|
|
Proceeds from sale of
assets
|
—
|
|
|
16.6
|
|
Change in restricted
cash
|
—
|
|
|
13.9
|
|
Net cash used by
investing activities
|
(69.5)
|
|
|
(174.8)
|
|
|
|
|
|
Cash Flow from
Financing Activities
|
|
|
|
Cash proceeds from
debt with original maturities greater than 90 days
|
756.3
|
|
|
2,604.2
|
|
Cash payments on debt
with original maturities greater than 90 days
|
(631.0)
|
|
|
(1,900.0)
|
|
Net decrease in debt
with original maturities of 90 days or less
|
(11.1)
|
|
|
(252.6)
|
|
Deferred finance
expense
|
(0.6)
|
|
|
(15.1)
|
|
Common shares
purchased
|
(196.6)
|
|
|
(175.2)
|
|
Cash dividends
paid
|
—
|
|
|
(93.2)
|
|
Transfer of cash and
cash equivalents to New Energizer
|
—
|
|
|
(499.7)
|
|
Proceeds from
issuance of common shares, net
|
—
|
|
|
4.4
|
|
Net cash used by
financing activities
|
(83.0)
|
|
|
(327.2)
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
2.9
|
|
|
(63.7)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
26.8
|
|
|
(416.9)
|
|
Cash and cash
equivalents, beginning of period
|
712.1
|
|
|
1,129.0
|
|
Cash and cash
equivalents, end of period
|
$
|
738.9
|
|
|
$
|
712.1
|
|
|
|
|
|
|
|
|
|
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, restructuring charges, spin
costs, the Venezuela
deconsolidation charge, the sale of the Industrial business, cost
of early debt retirements, and amortization and impairment 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 July 1, 2015, the
Company completed the separation of its Household Products business
into a separate publicly-traded company (the "Spin" or the
"Separation"). The historical
financial results of the Company's Household Products business are
presented as discontinued operations on the Condensed Consolidated Statements of Earnings.
The prior year Condensed Consolidated Statements of Cash Flows has
not been adjusted to reflect the
effect of the Separation. Historical results on a continuing
operations basis include certain costs associated with supporting
the Household Products business
that were not reported in discontinued operations.
|
|
|
|
Segment net sales and
profitability are presented below:
|
|
|
|
|
Quarter Ended
September 30,
|
|
Year Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
391.5
|
|
|
$
|
358.4
|
|
|
$
|
1,425.8
|
|
|
$
|
1,441.3
|
|
|
Sun and Skin
Care
|
77.6
|
|
|
65.8
|
|
|
414.9
|
|
|
403.6
|
|
|
Feminine
Care
|
107.7
|
|
|
96.7
|
|
|
388.9
|
|
|
398.2
|
|
|
All Other
|
33.8
|
|
|
39.2
|
|
|
132.4
|
|
|
178.1
|
|
|
Total net
sales
|
$
|
610.6
|
|
|
$
|
560.1
|
|
|
$
|
2,362.0
|
|
|
$
|
2,421.2
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
100.2
|
|
|
$
|
62.0
|
|
|
$
|
290.2
|
|
|
$
|
308.7
|
|
|
Sun and Skin
Care
|
14.3
|
|
|
4.7
|
|
|
89.5
|
|
|
71.5
|
|
|
Feminine
Care
|
3.6
|
|
|
4.7
|
|
|
39.1
|
|
|
48.7
|
|
|
All Other
|
7.1
|
|
|
5.5
|
|
|
28.4
|
|
|
24.6
|
|
|
Total
segment profit
|
125.2
|
|
|
76.9
|
|
|
447.2
|
|
|
453.5
|
|
|
General corporate and
other expenses
|
(21.9)
|
|
|
(15.4)
|
|
|
(80.4)
|
|
|
(122.0)
|
|
|
Impairment
charge
|
(6.5)
|
|
|
(318.2)
|
|
|
(6.5)
|
|
|
(318.2)
|
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
—
|
|
|
—
|
|
|
(79.3)
|
|
|
Spin costs
(1)
|
—
|
|
|
(30.3)
|
|
|
(12.0)
|
|
|
(142.0)
|
|
|
Spin restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
(28.3)
|
|
|
Restructuring and
related costs (2)
|
(9.4)
|
|
|
(6.3)
|
|
|
(38.8)
|
|
|
(27.0)
|
|
|
Industrial sale
charges
|
—
|
|
|
(10.8)
|
|
|
(0.2)
|
|
|
(32.7)
|
|
|
Amortization of
intangibles
|
(3.6)
|
|
|
(3.6)
|
|
|
(14.4)
|
|
|
(15.1)
|
|
|
Cost of early debt
retirements
|
—
|
|
|
—
|
|
|
—
|
|
|
(59.6)
|
|
|
Interest and other
expense, net
|
(20.0)
|
|
|
(12.9)
|
|
|
(75.0)
|
|
|
(88.0)
|
|
|
Total
earnings (loss) from continuing
operations before
income taxes
|
$
|
63.8
|
|
|
$
|
(320.6)
|
|
|
$
|
219.9
|
|
|
$
|
(458.7)
|
|
|
|
(1)
|
The Company incurred
incremental costs to evaluate, plan and execute the
Separation. This includes pre-tax SG&A of $30.1 for
the fourth quarter of fiscal 2015
and $11.8 and $137.8 for the years ending September 30, 2016 and
2015, respectively, and pre-tax Cost of products sold of
$0.2 for the fourth quarter of
fiscal 2015 and $0.2 and $4.2 for the years ending September 30,
2016 and 2015, respectively.
|
|
|
(2)
|
Includes pre-tax Cost
of products sold of $1.7 and $1.8 for the quarter and year
ended September 30, 2016 associated with obsolescence
charges related to the exit of certain
non-core product lines as part of the restructuring. Also
includes $0.3 pre-tax SG&A costs associated with
certain information technology and
related activities during fiscal 2015. These non-core
inventory obsolescence charges and information technology costs are considered part of the total project
costs incurred for the restructuring project.
|
Note 2 - GAAP to
Non-GAAP Reconciliations
|
|
|
|
|
|
Basic earnings (loss)
per share is based on the average number of common shares
outstanding during the period. Diluted earnings (loss) 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 (loss) from continuing
operations and Net earnings (loss) per diluted share ("EPS") to
Adjusted net earnings and Adjusted EPS, which are Non-GAAP
measures.
|
|
|
|
|
|
Quarter Ended
September 30,
|
|
|
Net
Earnings
|
|
Diluted
EPS
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net Earnings
(Loss) from Continuing Operations and Diluted EPS - GAAP
(Unaudited)
|
$
|
52.2
|
|
|
$
|
(193.7)
|
|
|
$
|
0.88
|
|
|
$
|
(3.15)
|
|
|
Impairment
charges
|
6.5
|
|
|
318.2
|
|
|
0.11
|
|
|
5.17
|
|
|
Spin
costs (1)
|
—
|
|
|
30.3
|
|
|
—
|
|
|
0.49
|
|
|
Restructuring and related charges, net
(2)
|
9.4
|
|
|
6.3
|
|
|
0.16
|
|
|
0.10
|
|
|
Industrial sale
charges
|
—
|
|
|
10.8
|
|
|
—
|
|
|
0.17
|
|
|
Income
taxes
|
(5.6)
|
|
|
(132.4)
|
|
|
(0.09)
|
|
|
(2.16)
|
|
|
Impact of
basic/dilutive shares (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
Adjusted Net Earnings and Adjusted Diluted EPS -
Non-GAAP
|
$
|
62.5
|
|
|
$
|
39.5
|
|
|
$
|
1.06
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares - Diluted
|
|
|
|
|
59.2
|
|
61.5
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes SG&A of $30.1 and Cost of products sold
of $0.2 for the fourth quarter of fiscal 2015.
|
|
|
|
|
|
|
|
|
|
(2)
|
Includes Cost of products sold of $1.7 for the
quarter ended September 30, 2016 associated with obsolescence
charges related to the exit of certain non-core product lines as
part of the restructuring.
|
|
|
|
|
|
|
|
|
|
(3)
|
All EPS impacts are
calculated using diluted weighted-average shares outstanding.
For the fourth quarter of fiscal 2015, this reflects the impact of
0.4 dilutive RSE awards, which were excluded from the GAAP EPS
calculation due to the reported net loss.
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
September 30,
|
|
|
Net
Earnings
|
|
Diluted
EPS
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net Earnings
(Loss) from Continuing Operations and Diluted EPS - GAAP
(Unaudited)
|
$
|
178.7
|
|
|
$
|
(296.1)
|
|
|
$
|
2.99
|
|
|
$
|
(4.78)
|
|
|
Impairment
charges
|
6.5
|
|
|
318.2
|
|
|
0.11
|
|
|
5.13
|
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
79.3
|
|
|
—
|
|
|
1.27
|
|
|
Spin costs
(1)
|
12.0
|
|
|
142.0
|
|
|
0.20
|
|
|
2.29
|
|
|
Spin restructuring
charges
|
—
|
|
|
28.3
|
|
|
—
|
|
|
0.44
|
|
|
Restructuring and
related charges, net (2)
|
38.8
|
|
|
27.0
|
|
|
0.65
|
|
|
0.43
|
|
|
Industrial sale
charges
|
0.2
|
|
|
32.7
|
|
|
—
|
|
|
0.52
|
|
|
Cost of early debt
retirements
|
—
|
|
|
59.6
|
|
|
—
|
|
|
0.96
|
|
|
Income
taxes
|
(22.9)
|
|
|
(215.8)
|
|
|
(0.38)
|
|
|
(3.49)
|
|
|
Impact of
basic/dilutive shares (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
Adjusted Net Earnings and Adjusted Diluted EPS -
Non-GAAP
|
$
|
213.3
|
|
|
$
|
175.2
|
|
|
$
|
3.57
|
|
|
$
|
2.80
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares - Diluted
|
|
|
|
|
59.7
|
|
|
62.0
|
|
|
|
(1)
|
Includes SG&A of
$11.8 and $137.8 for fiscal 2016 and 2015, respectively, and Cost
of products sold of $0.2 and $4.2 for fiscal 2016 and 2015,
respectively.
|
|
|
(2)
|
Includes Cost of
products sold of $1.8 for the year ended September 30, 2016
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. Also
includes costs of $0.3 for the year ended September 30,
2015 associated with certain information technology and
related activities, which are included in SG&A. These
non-core inventory obsolescence charges and information technology
costs are considered part of the total project costs incurred for
the restructuring project.
|
|
|
(3)
|
All EPS impacts are
calculated using diluted weighted-average shares outstanding.
For fiscal 2015, this reflects the impact of 0.5 dilutive RSE
awards, which were excluded from the GAAP EPS calculation due to
the reported net loss.
|
The following tables
provide a GAAP to Non-GAAP reconciliation of certain line items
from the Condensed Consolidated Statement of Earnings:
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
September 30, 2016
|
|
Gross
Profit
|
|
SG&A
|
|
Pre-tax
Income
|
|
Net
Earnings
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
310.1
|
|
|
$
|
107.8
|
|
|
$
|
63.8
|
|
|
$
|
52.2
|
|
|
$
|
0.88
|
|
% of net
sales
|
50.8
|
%
|
|
17.7
|
%
|
|
|
|
|
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
6.5
|
|
|
4.1
|
|
|
0.07
|
|
Restructuring and
related charges, net (1)
|
1.7
|
|
|
—
|
|
|
9.4
|
|
|
6.2
|
|
|
0.11
|
|
Total Adjusted
Non-GAAP
|
$
|
311.8
|
|
|
$
|
107.8
|
|
|
$
|
79.7
|
|
|
$
|
62.5
|
|
|
$
|
1.06
|
|
% of net
sales
|
51.1
|
%
|
|
17.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
September 30, 2016
|
|
Gross
Profit
|
|
SG&A
|
|
Pre-tax
Income
|
|
Net
Earnings
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
1,159.9
|
|
|
$
|
412.7
|
|
|
$
|
219.9
|
|
|
$
|
178.7
|
|
|
$
|
2.99
|
|
% of net
sales
|
49.1
|
%
|
|
17.5
|
%
|
|
|
|
|
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
6.5
|
|
|
4.1
|
|
|
0.07
|
|
Spin costs
|
0.2
|
|
|
11.8
|
|
|
12.0
|
|
|
7.6
|
|
|
0.13
|
|
Restructuring and
related charges, net (1)
|
1.8
|
|
|
—
|
|
|
38.8
|
|
|
26.1
|
|
|
0.43
|
|
Industrial sale
charges
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
Separation-related
tax adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3)
|
|
|
(0.05)
|
|
Total Adjusted
Non-GAAP
|
$
|
1,161.9
|
|
|
$
|
400.9
|
|
|
$
|
277.4
|
|
|
$
|
213.3
|
|
|
$
|
3.57
|
|
% of net
sales
|
49.2
|
%
|
|
17.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
September 30, 2015
|
|
Gross
Profit
|
|
SG&A
|
|
Pre-tax
Income
|
|
Net Earnings
(2)
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
269.3
|
|
|
$
|
123.5
|
|
|
$
|
(320.6)
|
|
|
$
|
(193.7)
|
|
|
$
|
(3.15)
|
|
% of net
sales
|
48.1
|
%
|
|
22.0
|
%
|
|
|
|
|
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
318.2
|
|
|
201.1
|
|
|
3.25
|
|
Spin costs
|
0.2
|
|
|
30.1
|
|
|
30.3
|
|
|
15.2
|
|
|
0.25
|
|
Restructuring and
related charges, net (1)
|
—
|
|
|
—
|
|
|
6.3
|
|
|
1.7
|
|
|
0.03
|
|
Industrial sale
charges
|
—
|
|
|
—
|
|
|
10.8
|
|
|
6.7
|
|
|
0.11
|
|
Taxes on certain spin
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
0.02
|
|
Adjustments to prior
years' tax accruals
|
—
|
|
|
—
|
|
|
—
|
|
|
7.1
|
|
|
0.11
|
|
Impact of dilutive
shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
Total Adjusted
Non-GAAP
|
$
|
269.5
|
|
|
$
|
93.4
|
|
|
$
|
45.0
|
|
|
$
|
39.5
|
|
|
$
|
0.64
|
|
% of net
sales
|
48.1
|
%
|
|
16.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
September 30, 2015
|
|
Gross
Profit
|
|
SG&A
|
|
Pre-tax
Income
|
|
Net Earnings
(2)
|
|
Diluted EPS
(3)
|
GAAP -
Reported
|
$
|
1,183.8
|
|
|
$
|
571.6
|
|
|
$
|
(458.7)
|
|
|
$
|
(296.1)
|
|
|
$
|
(4.78)
|
|
% of net
sales
|
48.9
|
%
|
|
23.6
|
%
|
|
|
|
|
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
318.2
|
|
|
201.1
|
|
|
3.22
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
—
|
|
|
79.3
|
|
|
79.3
|
|
|
1.27
|
|
Spin costs
|
4.2
|
|
|
137.8
|
|
|
142.0
|
|
|
93.5
|
|
|
1.50
|
|
Spin restructuring
charges
|
—
|
|
|
—
|
|
|
28.3
|
|
|
20.1
|
|
|
0.32
|
|
Restructuring and
related charges, net (1)
|
—
|
|
|
0.3
|
|
|
27.0
|
|
|
16.2
|
|
|
0.26
|
|
Industrial sale
charges
|
—
|
|
|
—
|
|
|
32.7
|
|
|
20.5
|
|
|
0.33
|
|
Cost of early debt
retirements
|
—
|
|
|
—
|
|
|
59.6
|
|
|
37.4
|
|
|
0.60
|
|
Taxes on certain spin
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
0.02
|
|
Adjustments to prior
years' tax accruals
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
0.03
|
|
Impact of
basic/dilutive shares (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
Total Adjusted
Non-GAAP
|
$
|
1,188.0
|
|
|
$
|
433.5
|
|
|
$
|
228.4
|
|
|
$
|
175.2
|
|
|
$
|
2.80
|
|
% of net
sales
|
49.1
|
%
|
|
17.9
|
%
|
|
|
|
|
|
|
|
|
(1)
|
Includes Cost of
products sold of $1.7 and $1.8 for quarter and year ending
September 30, 2016 associated with obsolescence charges related to
the exit of certain non-core product lines as part of the
restructuring. Also includes costs of $0.3 for fiscal
2015 associated with certain information technology and
related activities, which are included in SG&A. These
non-core inventory obsolescence charges and information technology
costs are considered part of the total project costs incurred for
the restructuring project.
|
|
|
(2)
|
For the fourth
quarter and year ending September 30, 2015, Net Earnings is defined
as Earnings (loss) from continuing operations.
|
|
|
(3)
|
All EPS impacts are
calculated using diluted weighted-average shares outstanding.
For the fourth quarter and year ended September 30, 2015, this
reflects the impact of 0.4 and 0.5 dilutive RSE awards,
respectively, which were excluded from the GAAP EPS calculation due
to the reported net loss.
|
The following table
provides a reconciliation of Earnings from continuing operations
before income taxes to adjusted operating income, which is a
Non-GAAP measure, for each quarter of fiscal 2016:
|
|
|
|
|
|
|
|
|
|
|
|
Q1
2016
|
|
Q2
2016
|
|
Q3
2016
|
|
Q4
2016
|
|
Fiscal
Year
2016
|
Earnings from
continuing operations before income taxes
|
$
|
30.7
|
|
|
$
|
91.3
|
|
|
$
|
34.1
|
|
|
$
|
63.8
|
|
|
$
|
219.9
|
|
Impairment
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
6.5
|
|
|
6.5
|
|
Spin costs
(1)
|
7.5
|
|
|
1.7
|
|
|
2.8
|
|
|
—
|
|
|
12.0
|
|
Restructuring and
related charges, net (2)
|
18.5
|
|
|
5.1
|
|
|
5.8
|
|
|
9.4
|
|
|
38.8
|
|
Industrial sale
charges
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
Interest expense
associated with debt
|
17.7
|
|
|
17.8
|
|
|
18.3
|
|
|
18.0
|
|
|
71.8
|
|
Other expense
(income), net
|
(2.4)
|
|
|
(4.6)
|
|
|
8.2
|
|
|
2.0
|
|
|
3.2
|
|
Adjusted operating
income
|
$
|
72.0
|
|
|
$
|
111.5
|
|
|
$
|
69.2
|
|
|
$
|
99.7
|
|
|
$
|
352.4
|
|
% of net
sales
|
14.5
|
%
|
|
18.2
|
%
|
|
10.7
|
%
|
|
16.3
|
%
|
|
14.9
|
%
|
|
|
(1)
|
Includes SG&A of
$7.3, $1.7, $2.8 and $11.8 for the first, second and third quarters
of fiscal 2016 and fiscal year 2016, respectively, and Cost of
products sold of $0.2 for the first quarter of fiscal 2016 and
fiscal year 2016.
|
|
|
(2)
|
Includes Cost of
products sold of $0.1, $1.7 and $1.8 for the second and fourth
quarters of fiscal 2016 and fiscal year 2016, respectively,
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:
|
|
|
|
|
|
Year Ended
September 30, 2016
|
|
Year Ended
September 30, 2015
|
|
Reported
|
|
Adjustments
(1)
|
|
Adjusted
(Non-GAAP)
|
|
Reported
|
|
Adjustments
(1)
|
|
Adjusted
(Non-GAAP)
|
Earnings (loss) from
continuing operations before income taxes
|
$
|
219.9
|
|
|
$
|
57.5
|
|
|
$
|
277.4
|
|
|
$
|
(458.7)
|
|
|
$
|
687.1
|
|
|
$
|
228.4
|
|
Income tax provision
(benefit)
|
41.2
|
|
|
22.9
|
|
|
64.1
|
|
|
(162.6)
|
|
|
215.8
|
|
|
53.2
|
|
Earnings (loss) from
continuing operations
|
$
|
178.7
|
|
|
$
|
34.6
|
|
|
$
|
213.3
|
|
|
$
|
(296.1)
|
|
|
$
|
471.3
|
|
|
$
|
175.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
18.7
|
%
|
|
|
|
|
|
35.4
|
%
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
23.1
|
%
|
|
|
|
|
|
23.2
|
%
|
|
|
(1)
|
Includes adjustments
for the Venezuela deconsolidation charge, spin costs, restructuring
charges, the sale of the Industrial business, cost of early debt
retirements, impairment charges and the associated tax impact of
these charges, as well as adjustments to prior years' tax
accruals. See reconciliation of Net earnings to Adjusted net
earnings.
|
Note 3 - Net Sales
and Profit by Segment
|
|
|
|
The following tables
present changes in net sales and segment profit for the fourth
quarter and fiscal 2016, as compared to the corresponding period in
fiscal 2015, and also provide a reconciliation of organic net sales
and organic segment profit to reported amounts.
|
|
|
|
Net Sales (In
millions - Unaudited)
|
|
Quarter Ended
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and
Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
|
Net Sales - FY
'15
|
$
|
358.4
|
|
|
|
|
$
|
65.8
|
|
|
|
|
$
|
96.7
|
|
|
|
|
$
|
39.2
|
|
|
|
|
$
|
560.1
|
|
|
|
|
Organic
|
26.4
|
|
|
7.4
|
%
|
|
12.0
|
|
|
18.2
|
%
|
|
11.0
|
|
|
11.4
|
%
|
|
2.1
|
|
|
5.3
|
%
|
|
51.5
|
|
|
9.2
|
%
|
|
Impact of Industrial
sale
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(7.6)
|
|
|
(19.4)
|
%
|
|
(7.6)
|
|
|
(1.4)
|
%
|
|
Impact of
currency
|
6.7
|
|
|
1.8
|
%
|
|
(0.2)
|
|
|
(0.3)
|
%
|
|
—
|
|
|
—
|
%
|
|
0.1
|
|
|
0.3
|
%
|
|
6.6
|
|
|
1.2
|
%
|
|
Net Sales - FY
'16
|
$
|
391.5
|
|
|
9.2
|
%
|
|
$
|
77.6
|
|
|
17.9
|
%
|
|
$
|
107.7
|
|
|
11.4
|
%
|
|
$
|
33.8
|
|
|
(13.8)
|
%
|
|
$
|
610.6
|
|
|
9.0
|
%
|
|
|
|
Net Sales (In
millions - Unaudited)
|
|
Year Ended
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and
Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
|
Net Sales - FY
'15
|
$
|
1,441.3
|
|
|
|
|
$
|
403.6
|
|
|
|
|
$
|
398.2
|
|
|
|
|
$
|
178.1
|
|
|
|
|
$
|
2,421.2
|
|
|
|
|
Organic
|
25.5
|
|
|
1.8
|
%
|
|
18.6
|
|
|
4.6
|
%
|
|
(7.1)
|
|
|
(1.8)%
|
|
|
(2.1)
|
|
|
(1.2)%
|
|
|
34.9
|
|
|
1.4
|
%
|
|
Impact of
Venezuela
|
(24.0)
|
|
|
(1.7)
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
|
|
—
|
%
|
|
(24.0)
|
|
|
(1.0)
|
%
|
|
Impact of Industrial
sale
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(41.9)
|
|
|
(23.5)
|
%
|
|
(41.9)
|
|
|
(1.7)
|
%
|
|
Impact of
currency
|
(17.0)
|
|
|
(1.2)
|
%
|
|
(7.3)
|
|
|
(1.8)
|
%
|
|
(2.2)
|
|
|
(0.5)
|
%
|
|
(1.7)
|
|
|
(1.0)
|
%
|
|
(28.2)
|
|
|
(1.1)
|
%
|
|
Net Sales - FY
'16
|
$
|
1,425.8
|
|
|
(1.1)
|
%
|
|
$
|
414.9
|
|
|
2.8
|
%
|
|
$
|
388.9
|
|
|
(2.3)
|
%
|
|
$
|
132.4
|
|
|
(25.7)
|
%
|
|
$
|
2,362.0
|
|
|
(2.4)
|
%
|
|
|
|
Segment Profit (In
millions - Unaudited)
|
|
Quarter Ended
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and
Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
|
Segment Profit - FY
'15
|
$
|
62.0
|
|
|
|
|
$
|
4.7
|
|
|
|
|
$
|
4.7
|
|
|
|
|
$
|
5.5
|
|
|
|
|
$
|
76.9
|
|
|
|
|
Organic
|
30.9
|
|
|
49.8
|
%
|
|
9.7
|
|
|
206.4
|
%
|
|
(1.1)
|
|
|
(23.4)
|
%
|
|
2.2
|
|
|
40.0
|
%
|
|
41.7
|
|
|
54.2
|
%
|
|
Impact of Industrial
sale
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(0.6)
|
|
|
(10.9)
|
%
|
|
(0.6)
|
|
|
(0.8)
|
%
|
|
Impact of
currency
|
7.3
|
|
|
11.8
|
%
|
|
(0.1)
|
|
|
(2.1)
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
7.2
|
|
|
9.4
|
%
|
|
Segment Profit -
FY'16
|
$
|
100.2
|
|
|
61.6
|
%
|
|
$
|
14.3
|
|
|
204.3
|
%
|
|
$
|
3.6
|
|
|
(23.4)
|
%
|
|
$
|
7.1
|
|
|
29.1
|
%
|
|
$
|
125.2
|
|
|
62.8
|
%
|
|
|
|
Segment Profit (In
millions - Unaudited)
|
|
Year Ended
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and
Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
|
Segment Profit - FY
'15
|
$
|
308.7
|
|
|
|
|
$
|
71.5
|
|
|
|
|
$
|
48.7
|
|
|
|
|
$
|
24.6
|
|
|
|
|
$
|
453.5
|
|
|
|
|
Organic
|
(7.9)
|
|
|
(2.6)
|
%
|
|
20.9
|
|
|
29.2
|
%
|
|
(7.9)
|
|
|
(16.2)
|
%
|
|
7.2
|
|
|
29.3
|
%
|
|
12.3
|
|
|
2.7
|
%
|
|
Impact of
Venezuela
|
(9.4)
|
|
|
(3.0)
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(9.4)
|
|
|
(2.1)
|
%
|
|
Impact of Industrial
sale
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(2.2)
|
|
|
(8.9)
|
%
|
|
(2.2)
|
|
|
(0.5)
|
%
|
|
Impact of
currency
|
(1.2)
|
|
|
(0.4)
|
%
|
|
(2.9)
|
|
|
(4.0)
|
%
|
|
(1.7)
|
|
|
(3.5)
|
%
|
|
(1.2)
|
|
|
(5.0)
|
%
|
|
(7.0)
|
|
|
(1.5)
|
%
|
|
Segment Profit -
FY'16
|
$
|
290.2
|
|
|
(6.0)
|
%
|
|
$
|
89.5
|
|
|
25.2
|
%
|
|
$
|
39.1
|
|
|
(19.7)
|
%
|
|
$
|
28.4
|
|
|
15.4
|
%
|
|
$
|
447.2
|
|
|
(1.4)
|
%
|
Note 4 -
EBITDA
|
|
|
|
|
|
|
The Company reports
financial results on a GAAP and adjusted basis. The table
below is used to reconcile Net earnings (loss) to EBITDA, Adjusted
EBITDA and Normalized EBITDA, which are Non-GAAP measures, to
improve comparability of results between periods.
|
|
|
|
|
|
|
|
Quarter Ended
September 30,
|
|
Year Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net earnings
(loss)
|
$
|
52.2
|
|
|
$
|
(219.5)
|
|
|
$
|
178.7
|
|
|
$
|
(275.3)
|
|
|
Loss (earnings) from
discontinued operations, net of tax
|
—
|
|
|
25.8
|
|
|
—
|
|
|
(20.8)
|
|
|
Income tax provision
(benefit)
|
11.6
|
|
|
(126.9)
|
|
|
41.2
|
|
|
(162.6)
|
|
|
Interest expense, net
(1)
|
16.3
|
|
|
16.4
|
|
|
70.1
|
|
|
159.4
|
|
|
Depreciation and
amortization
|
25.1
|
|
|
22.3
|
|
|
96.5
|
|
|
91.1
|
|
|
EBITDA
(2)
|
$
|
105.2
|
|
|
$
|
(281.9)
|
|
|
$
|
386.5
|
|
|
$
|
(208.2)
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
charges
|
6.5
|
|
|
318.2
|
|
|
6.5
|
|
|
318.2
|
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
—
|
|
|
—
|
|
|
79.3
|
|
|
Spin restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
28.3
|
|
|
Spin costs
|
—
|
|
|
30.3
|
|
|
12.0
|
|
|
142.0
|
|
|
Restructuring and
related costs (3)
|
7.7
|
|
|
5.6
|
|
|
34.9
|
|
|
22.4
|
|
|
Industrial sale
charges
|
—
|
|
|
10.8
|
|
|
0.2
|
|
|
32.7
|
|
|
Adjusted EBITDA
(2)
|
$
|
119.4
|
|
|
$
|
83.0
|
|
|
$
|
440.1
|
|
|
$
|
414.7
|
|
|
|
|
|
|
|
|
|
|
|
SG&A
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
47.5
|
|
|
|
|
|
|
|
|
|
|
|
Normalized
EBITDA
|
$
|
119.4
|
|
|
$
|
83.0
|
|
|
$
|
440.1
|
|
|
$
|
462.2
|
|
|
|
(1)
|
Interest expense, net
includes Interest expense associated with debt as well as
components of interest reported in Other expense (income), net on
the Condensed Consolidated Statement of Earnings. Interest
expense, net for the fourth quarter and twelve months ending
September 30, 2016 includes $1.4 and $0.8 respectively of net
interest income recorded in relation to settlements with tax
authorities. Interest expense, net for the twelve months
ending September 30, 2015 includes $59.6 of cost of early debt
retirements.
|
|
|
(2)
|
Historical Adjusted
EBITDA results on a continuing operations basis include costs
associated with supporting the Household Product business that are
not reported in discontinued operations which affect corporate
SG&A. As such, both EBITDA and Adjusted EBITDA this
quarter and this fiscal year are not comparable to the prior year,
and are not comparable year-over-year for the first three
quarters of fiscal 2016.
|
|
|
(3)
|
Excludes $1.7 and
$0.7 of accelerated depreciation for the fourth fiscal quarters of
2016 and 2015, respectively, and $3.9 and $4.6 of accelerated
depreciation for the fiscal years 2016 and 2015, respectively,
which are included within Depreciation and amortization.
|
|
|
(4)
|
Corporate SG&A
has been adjusted to reflect an estimated full year run-rate of $74
in fiscal 2015.
|
Note 5 -
Outlook
|
|
|
|
|
|
The following table
provides a reconciliation 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, net
|
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 fourth and third quarters of fiscal 2016
and the fourth quarter of fiscal 2015 are presented
below.
|
|
|
|
|
Q4
2016
|
|
Days
(1)
|
|
Q3
2016
|
|
Days
(1)
|
|
Q4
2015
|
|
Days
(1)
|
|
Receivables, as
reported
|
$
|
275.2
|
|
|
|
|
$
|
280.0
|
|
|
|
|
$
|
423.0
|
|
|
|
|
Less: Household
Products receivables (2)
|
—
|
|
|
|
|
(8.5)
|
|
|
|
|
(137.7)
|
|
|
|
|
Less: Trade allowance
in accrued liabilities (3)
|
(28.1)
|
|
|
|
|
(31.9)
|
|
|
|
|
(38.0)
|
|
|
|
|
Receivables,
adjusted
|
247.1
|
|
|
38.2
|
|
|
239.6
|
|
|
37.8
|
|
|
247.3
|
|
|
37.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories, as
reported
|
345.3
|
|
|
|
|
351.2
|
|
|
|
|
565.0
|
|
|
|
|
Less: Household
Products inventories (2)
|
—
|
|
|
|
|
—
|
|
|
|
|
(202.7)
|
|
|
|
|
Inventories,
adjusted
|
345.3
|
|
|
104.9
|
|
|
351.2
|
|
|
107.5
|
|
|
362.3
|
|
|
107.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, as
reported
|
211.4
|
|
|
|
|
221.6
|
|
|
|
|
325.4
|
|
|
|
|
Less: Household
Products accounts payable (2)
|
—
|
|
|
|
|
—
|
|
|
|
|
(139.4)
|
|
|
|
|
Accounts payable,
adjusted
|
211.4
|
|
|
64.2
|
|
|
221.6
|
|
|
67.8
|
|
|
186.0
|
|
|
54.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average adjusted
working capital (4)
|
$
|
381.0
|
|
|
|
|
$
|
369.2
|
|
|
|
|
$
|
423.6
|
|
|
|
|
% of net sales
(5)
|
16.1
|
%
|
|
|
|
16.0
|
%
|
|
|
|
17.5
|
%
|
|
|
|
|
(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. Both net sales and cost of
products sold for the trailing four-quarter period exclude amounts
related to the Household Products business.
|
|
|
(2)
|
Amounts are
calculated using an average of the four-quarter end balances for
each working capital component. As such, the average for each
period includes amounts related to the Household Products business,
which are being excluded from the calculation.
|
|
|
(3)
|
Trade allowances are
recorded as a reduction of net sales per GAAP and reported in
accrued expenses on the Condensed Consolidated Balance
Sheets.
|
|
|
(4)
|
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 September 30, 2016, June 30, 2016 and September 30, 2015,
respectively.
|
|
|
(5)
|
Average adjusted
working capital divided by trailing four-quarter net
sales.
|
Note 7 - Venezuela
Deconsolidation
|
|
|
|
|
|
|
|
|
|
On March 31, 2015,
the Company deconsolidated its Venezuelan subsidiaries.
Included in consolidated results of operations, and reflected
below, are the historical results of the Company's Venezuela
operations through the second quarter of fiscal 2015 (reflected at
the official exchange rate of 6.30 bolivars per U.S.
dollar).
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Wet Shave - Net
Sales
|
Fiscal
2015
|
$9.6
|
$14.4
|
—
|
—
|
$24.0
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Wet Shave - Segment
Profit
|
Fiscal
2015
|
$3.3
|
$6.0
|
—
|
—
|
$9.3
|
Note 8 - Sale of
Industrial Business
|
|
|
|
|
|
|
|
|
|
The sale of the
Industrial business was completed in September 2015. The
historical results of the Industrial business are included in
consolidated results of operations through September 30,
2015. Reflected below are the net sales for the Industrial
business. The impact on All Other segment profit is not
material.
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Industrial - Net
Sales
|
Fiscal
2015
|
$10.7
|
$11.2
|
$12.4
|
$7.6
|
$41.9
|
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SOURCE Edgewell Personal Care Company