ST. LOUIS, April 29, 2016 /PRNewswire/ -- Edgewell
Personal Care Company (NYSE: EPC) today announced
results for its second fiscal quarter, which ended March 31, 2016.
Executive Summary
- Organic net sales decreased 0.7% in the quarter and 0.1%
year-to-date. Excluding the impact of international go-to-market
changes, sales would have increased by 1% and 1.9%,
respectively.
- Adjusted EBITDA was $137.7
million for the quarter and $232.1
million year-to-date.
- GAAP Diluted Earnings Per Share ("EPS") was $1.10 for the quarter and $1.49 year-to-date. Adjusted EPS was $1.17 for the quarter and $1.85 year-to-date.
- The Company has updated its fiscal 2016 outlook, projecting
relatively flat organic net sales, Adjusted EPS of $3.30-$3.50 and $440-$460
million in Adjusted EBITDA.
The Company reports results on a GAAP and "Non-GAAP" basis,
and has reconciled Non-GAAP results to the most directly comparable
GAAP measures later in this release. See "Non-GAAP Financial
Measures" below, for a more detailed explanation, including
definitions of various terms used in this release such as "Adjusted
EBITDA", "Normalized EBITDA", "Organic net sales", "Organic segment
profit" and "go-to-market impacts."
All comparisons used in this release are with the same period
in the prior fiscal year unless otherwise stated.
"Our second quarter results were in line with our expectations,
and we are pleased with the progress we're making in this important
first year operating as a standalone company. Our underlying
top-line growth was up nearly 2% through the first half of our
fiscal year, excluding the impact of international go-to-market
changes," said David Hatfield,
Edgewell's President and Chief Executive Officer. "Delivering
solid underlying net sales growth driven by Wet Shave and Sun and
Skin Care, while executing on key initiatives, like our complex
international go-to-market strategy, reinforces our view that
Edgewell's innovation and products are resonating in the
marketplace and that we're taking the necessary steps to further
enhance our position for future growth and value creation."
Fiscal 2Q 2016 Operating Results (Unaudited)
Net sales were $611.2
million in the quarter, a decrease of 6.1%. Organic
net sales decreased 0.7%, including a $10.9
million, or 170 basis point, negative impact from
international go-to-market changes. Organic net sales growth
in Wet Shave and Sun and Skin Care was offset in part by lower
sales in Feminine Care. North
America net sales were down 0.8%, though Wet Shave and Sun
and Skin care both grew. International net sales were down
0.3%, though up 4.5% excluding the negative impact of international
go-to-market changes. Underlying international net sales grew
across the Wet Shave portfolio, with particular strength in Men's
systems, driven by strong Hydro® performance in Asia and Europe.
Gross margin was $311.1
million or 50.9% of net sales, representing a 40
basis point decrease over the prior year. Excluding the
negative impact of currency, gross margin was flat versus the prior
year quarter, with higher volumes and productivity savings offset
by unfavorable price mix in North
America.
Advertising and sales promotion expense ("A&P") was
$85.0 million, or 13.9% of net sales,
up from prior year A&P of $78.4
million, or 12.0% of net sales. This quarter, higher
A&P investments were focused on new product innovation,
primarily supporting men's Hydro® in North America.
Selling, general and administrative expense ("SG&A")
was $99.7 million, or 16.3% of net
sales, compared to $149.2 million, or
22.9% of net sales, in the prior year. Included within the
current quarter results were pre-tax costs of $1.7 million related to the spin-off of the
Company's Household Products business in July 2015 (the "Separation"). Excluding
these spin-off costs, SG&A as a percent of net sales was 16.0%,
including amortization of intangible assets not allocated to the
segments. Historical SG&A results on a continuing
operations basis include certain costs associated with supporting
the Household Products business that were not eligible to be
reported in discontinued operations. Adjusting the prior year
for these expenses, SG&A increased an estimated 40 basis points
as a percent of net sales.
Other income, net was $4.6
million during the second quarter compared to $1.3 million in the prior year. The
increase is partially related to $2.6
million of interest income recorded in relation to
settlements with tax authorities. The increase also reflects
the net impact of foreign currency hedging contract gains and
losses.
Second quarter Adjusted EBITDA was $137.7 million versus second quarter 2015
Normalized EBITDA of $162.0
million, down $24.3
million. The primary drivers of the decrease were
$13.9 million of lower operating
profit due to international go-to-market changes, higher A&P
spend, a $4.9 million unfavorable
impact from currency and $6.4 million
due to the inclusion of Venezuela
operations and the Industrial blade business in the prior year.
The effective tax rate for the first half of 2016 was
26.4% as compared to (35.0)% in the prior year. The negative
tax rate for 2015 was a result of having incurred tax expense on a
net loss, driven primarily by the $79.3
million Venezuela
deconsolidation charge, which had no accompanying tax
benefit. Excluding the impact of the Separation,
restructuring and the Venezuela
deconsolidation charge, the adjusted 2016 year-to-date effective
tax rate was 28.1%, a 40 basis point increase over the prior year
rate of 27.7%.
Second quarter Adjusted EPS was $1.17, compared to $1.12 in the prior year quarter. GAAP
EPS was $1.10 in the second
quarter as compared to $(0.88) in the
prior year quarter.
Other Items
The second quarter included $1.7
million of pre-tax spin charges compared to
$32.2 million in the same period of
the prior year. In addition, the Company recorded pre-tax
expense of $5.1 million in the second
quarter related to its 2013 restructuring, as compared to
$6.6 million in the prior year.
Average (trailing 4 quarter) working capital as a percent of
sales was 16.5% at March 31,
2016, versus 17.5% as of September
30, 2015. The 100 basis point improvement was driven
by Days Payable Outstanding. 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
transition of manufacturing from its Montreal plant to its Dover plant.
Net cash used by operating activities was $72.6 million for the six months ended
March 31, 2016. During the
second quarter, the Company made a discretionary contribution of
$100.5 million to one of its
international pension plans, which negatively impacted operating
cash flow for the current period. The Company expects to have
positive operating cash flow for the full 2016 fiscal year.
In the first six months of fiscal 2016, the Company completed
share repurchases of nearly 1 million shares for
$79 million.
Fiscal 2Q 2016 Operating Segment Results (Unaudited)
Wet Shave (Men's Systems, Women's Systems, Disposables,
Shave Preps)
Wet Shave organic net sales increased $1.5 million, or 0.4%. Excluding an
estimated $9 million negative impact
from international go-to-market changes, underlying net sales would
have grown 2.7%. Underlying growth was primarily driven by
the Hydro® launch globally as well as Hydro® distribution gains in
North America. Organic net sales for the remaining brands
declined, in part due to international go-to-market changes and
unfavorable price mix from promotional investments.
International underlying sales increased in Men's and Women's
systems, Disposables, and Shave Preps. Organic segment profit
declined $13.2 million, or 13.2%,
driven primarily by increased investments in A&P, promotional
spend and Research and development expense, which more than offset
higher sales volumes and better cost mix.
Sun and Skin Care (Sun
Care, Wipes, Gloves)
Sun and Skin Care organic net sales increased $4.9 million, or 3.8%, driven primarily by growth
in North America, with growth
across both the Banana Boat® and Hawaiian Tropic® brands.
Organic segment profit improved $2.8
million or 7.5%, driven by higher sales volumes and modestly
better cost mix.
Feminine Care (Tampons, Pads, Liners)
Feminine Care organic net sales decreased $9.3 million, or 9.2%. North America net sales declined driven
primarily by unfavorable comparisons to the prior year pipeline
build for the new Sport® Pads and Liners offerings and lower net
sales in Stayfree®. International sales were down
primarily due to international go-to-market changes. Organic
segment profit was down $9.5 million,
or 45.5%, driven by lower net sales and unfavorable cost mix due to
transactional currency impacts.
All Other (Infant Care,
all other brands)
All Other organic net sales decreased $1.6 million, or 3.4%, as continued growth in
Diaper Genie® was more than offset by lower sales volumes in infant
cups and bottles resulting from continued competition in the
category. Organic segment profit grew $1.7 million driven by higher gross margin from
favorable product costs and lower A&P spending.
Full Fiscal Year 2016 Financial Outlook
Organic net sales are expected to be flat, including the
negative impact of international go-to-market changes through the
end of the third quarter of fiscal 2016. For the full year,
the go-to-market changes are estimated to impact top line growth by
approximately 1.5%. As a result, underlying net sales growth,
excluding these go-to-market changes, is expected to increase by
low single digits. Organic net sales excludes unfavorable
currency impact on net sales, which is now expected to be in the
range of $25-$35 million (previously,
$50-$60 million) for the full fiscal
year. Reported net sales are now expected to decrease by
2%-4% (previously, decreased by mid-single digits).
Adjusted EBITDA is projected to be in the range of
$440-$460 million, including
$10-$15 million (previously,
$20-$25 million) of negative currency
impact for the full fiscal year.
Adjusted EPS is now projected to be in the range of
$3.30-$3.50 (previously, $3.20-$3.40).
Adjusted Effective Tax Rate for the fiscal year is now
expected to be in the range of 29%-31% (previously, 30%-32%).
Other Items: The full-year estimate for spin costs
is unchanged at $10-$12 million, with
the majority of the costs already incurred. The full-year
estimate for restructuring related costs remains unchanged at
$40-$45 million. Incremental
restructuring savings are expected to be approximately $15 million in fiscal 2016 and an additional
$40-$50 million in fiscal 2017 and
2018 combined.
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 second quarter earnings and the outlook for fiscal 2016.
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" and exclude expenses associated
with the Venezuela deconsolidation
charge, the sale of the Industrial blade business, spin costs,
restructuring charges (including 2013 restructuring and spin
restructuring) and adjustments to prior year tax accruals.
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.
Adjusted EBITDA is defined as earnings before income
taxes, interest expense, net, depreciation and amortization and
excludes items such as the Venezuela deconsolidation charge, spin costs
and restructuring charges.
Historical results on a continuing operations basis include
certain costs associated with supporting the Company's former
Household Products business that are not eligible to be 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
will not be comparable as we move through 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 provided in an 8-K filed 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
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 segment profit
exclude the impact of changes in foreign currency, the impact of
acquisitions and dispositions (including the results of the former
Industrial blade business) and the period-over-period change
resulting from the deconsolidation of the Company's Venezuela operations. This information
is provided because these fluctuations can distort the underlying
change in net sales and segment profit either positively or
negatively. See Non-GAAP reconciliations later in this
release.
To compete more effectively as an independent company, the
Company has increased its use of third-party distributors and
wholesalers, and has decreased or eliminated its business
operations in certain countries, 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 expects to realize the majority of the
remaining impact from these changes in the first three quarters of
fiscal year 2016.
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 changing international go-to-market strategy,
that could adversely affect its results of operations;
- 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;
- 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 uncertainty with respect to its ability to achieve
its estimated cost savings;
- Loss of any of the Company's principal customers and emergence
of new sales channels 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 Wet Shave segment's men's shaving systems
category has faced relatively flat to declining sales;
- 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; and
- Potential liabilities in connection with the Separation may
arise under fraudulent conveyance and transfer laws and legal
capital requirements.
In addition, other risks and uncertainties not presently known
to the Company or that it 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
March 31,
|
|
Six Months Ended
March 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
611.2
|
|
|
$
|
651.1
|
|
|
$
|
1,106.3
|
|
|
$
|
1,188.2
|
|
Cost of products
sold
|
300.1
|
|
|
316.8
|
|
|
567.7
|
|
|
597.1
|
|
Gross
profit
|
311.1
|
|
|
334.3
|
|
|
538.6
|
|
|
591.1
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense
|
99.7
|
|
|
149.2
|
|
|
200.1
|
|
|
282.7
|
|
Advertising and sales
promotion expense
|
85.0
|
|
|
78.4
|
|
|
131.6
|
|
|
129.1
|
|
Research and
development expense
|
16.7
|
|
|
16.0
|
|
|
32.7
|
|
|
31.7
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
79.3
|
|
|
—
|
|
|
79.3
|
|
Spin restructuring
charges
|
—
|
|
|
22.8
|
|
|
—
|
|
|
24.0
|
|
2013 restructuring
charges
|
5.0
|
|
|
6.6
|
|
|
23.5
|
|
|
15.8
|
|
Industrial sale
charges
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Interest
expense
|
17.8
|
|
|
28.1
|
|
|
35.5
|
|
|
55.9
|
|
Other income,
net
|
(4.6)
|
|
|
(1.3)
|
|
|
(7.0)
|
|
|
(1.7)
|
|
Earnings (loss) from
continuing operations before income taxes
|
91.3
|
|
|
(44.8)
|
|
|
122.0
|
|
|
(25.7)
|
|
Income tax
provision
|
25.2
|
|
|
9.8
|
|
|
32.2
|
|
|
9.0
|
|
Earnings (loss) from
continuing operations
|
66.1
|
|
|
(54.6)
|
|
|
89.8
|
|
|
(34.7)
|
|
(Loss) earnings from
discontinued operations, net of tax
|
—
|
|
|
(33.8)
|
|
|
—
|
|
|
51.4
|
|
Net earnings
(loss)
|
$
|
66.1
|
|
|
$
|
(88.4)
|
|
|
$
|
89.8
|
|
|
$
|
16.7
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
1.11
|
|
|
(0.88)
|
|
|
$
|
1.51
|
|
|
(0.56)
|
|
Discontinued operations
|
—
|
|
|
(0.54)
|
|
|
—
|
|
|
0.83
|
|
Net earnings (loss)
|
1.11
|
|
|
(1.42)
|
|
|
1.51
|
|
|
0.27
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
1.10
|
|
|
$
|
(0.88)
|
|
|
$
|
1.49
|
|
|
$
|
(0.56)
|
|
Discontinued operations
|
—
|
|
|
(0.54)
|
|
|
—
|
|
|
0.82
|
|
Net earnings (loss)
|
1.10
|
|
|
(1.42)
|
|
|
1.49
|
|
|
0.27
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
59.4
|
|
|
62.2
|
|
|
59.6
|
|
|
62.1
|
|
Diluted
|
59.9
|
|
|
62.2
|
|
|
60.1
|
|
|
62.5
|
|
|
|
See Accompanying
Notes.
|
EDGEWELL PERSONAL
CARE COMPANY
CONDENSED
CONSOLIDATED BALANCE SHEETS
(unaudited, in
millions)
|
|
Assets
|
March 31,
2016
|
|
September 30,
2015
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
660.5
|
|
|
$
|
712.1
|
|
Trade receivables,
net
|
291.5
|
|
|
279.8
|
|
Inventories
|
382.7
|
|
|
332.8
|
|
Other current assets
(1)
|
180.8
|
|
|
311.9
|
|
Total current
assets
|
1,515.5
|
|
|
1,636.6
|
|
Property, plant and
equipment, net
|
482.0
|
|
|
476.1
|
|
Goodwill
|
1,423.9
|
|
|
1,421.8
|
|
Other intangible
assets, net
|
1,401.6
|
|
|
1,408.5
|
|
Other assets
(1)
|
126.4
|
|
|
48.7
|
|
Total
assets
|
$
|
4,949.4
|
|
|
$
|
4,991.7
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Notes
payable
|
$
|
17.0
|
|
|
$
|
17.5
|
|
Accounts
payable
|
235.2
|
|
|
236.9
|
|
Other current
liabilities (1)
|
349.2
|
|
|
412.4
|
|
Total current
liabilities
|
601.4
|
|
|
666.8
|
|
Long-term
debt
|
1,843.4
|
|
|
1,704.0
|
|
Deferred income tax
liabilities (1)
|
344.6
|
|
|
335.8
|
|
Other
liabilities
|
287.2
|
|
|
421.0
|
|
Total
liabilities
|
3,076.6
|
|
|
3,127.6
|
|
Shareholders'
equity
|
|
|
|
Common
shares
|
0.7
|
|
|
0.7
|
|
Additional paid-in
capital
|
1,634.5
|
|
|
1,644.2
|
|
Retained
earnings
|
862.7
|
|
|
772.9
|
|
Treasury
shares
|
(448.7)
|
|
|
(382.2)
|
|
Accumulated other
comprehensive loss
|
(176.4)
|
|
|
(171.5)
|
|
Total shareholders'
equity
|
1,872.8
|
|
|
1,864.1
|
|
Total liabilities and
shareholders' equity
|
$
|
4,949.4
|
|
|
$
|
4,991.7
|
|
|
|
(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 a reclassification of
$85.1 deferred income tax assets and $0.7 deferred income tax
liabilities from current to non-current as of March 31, 2016.
The 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)
|
|
|
Six Months Ended
March 31,
|
|
2016
|
|
2015
|
Cash Flow from
Operating Activities
|
|
|
|
Net
earnings
|
$
|
89.8
|
|
|
$
|
16.7
|
|
Non-cash
restructuring costs
|
1.2
|
|
|
11.1
|
|
Depreciation and
amortization
|
44.6
|
|
|
64.6
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
144.5
|
|
Non-cash items
included in income, net
|
23.6
|
|
|
18.2
|
|
International pension
funding
|
(100.5)
|
|
|
—
|
|
Other, net
|
(27.7)
|
|
|
(14.4)
|
|
Changes in current
assets and liabilities used in operations
|
(103.6)
|
|
|
(160.9)
|
|
Net cash (used by)
from operating activities
|
(72.6)
|
|
|
79.8
|
|
|
|
|
|
Cash Flow from
Investing Activities
|
|
|
|
Capital
expenditures
|
(34.5)
|
|
|
(37.0)
|
|
Change related to
Venezuelan operations
|
—
|
|
|
(93.8)
|
|
Acquisitions, net of
cash acquired
|
—
|
|
|
(11.1)
|
|
Proceeds from sale of
assets
|
—
|
|
|
13.8
|
|
Change in restricted
cash
|
—
|
|
|
13.9
|
|
Net cash used by
investing activities
|
(34.5)
|
|
|
(114.2)
|
|
|
|
|
|
Cash Flow from
Financing Activities
|
|
|
|
Cash proceeds from
debt with original maturities greater than 90 days
|
395.3
|
|
|
—
|
|
Cash payments on debt
with original maturities greater than 90 days
|
(261.0)
|
|
|
(80.2)
|
|
Net (decrease)
increase in debt with original maturities of 90 days or
less
|
(5.6)
|
|
|
224.1
|
|
Common shares
purchased
|
(78.9)
|
|
|
—
|
|
Cash dividends
paid
|
—
|
|
|
(62.1)
|
|
Proceeds from
issuance of common shares, net
|
—
|
|
|
4.3
|
|
Excess tax benefits
from share-based payments
|
—
|
|
|
9.2
|
|
Net cash from
financing activities
|
49.8
|
|
|
95.3
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
5.7
|
|
|
(75.6)
|
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
(51.6)
|
|
|
(14.7)
|
|
Cash and cash
equivalents, beginning of period
|
712.1
|
|
|
1,129.0
|
|
Cash and cash
equivalents, end of period
|
$
|
660.5
|
|
|
$
|
1,114.3
|
|
|
|
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 most restructuring initiatives (including the Spin
restructuring and the 2013 Restructuring), the Venezuela
deconsolidation charge, the sale of the Industrial blade business
and 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 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
and, as such, have been excluded from both continuing operations
and segment results for all periods presented. The prior year
Condensed Consolidated Statements of Cash Flows has not been
adjusted to reflect the effect of the Separation, as the Company
had not adopted the Financial Accounting Standards Board's updated
guidance on the presentation of discontinued operations at the time
of Separation. Historical results on a continuing operations
basis include certain costs associated with supporting the
Household Products business that were not eligible to be reported
in discontinued operations.
|
|
|
|
The Company incurred
incremental costs to evaluate, plan and execute the
Separation. For the second quarter and first six months
of fiscal 2016, $1.7 and $9.0, respectively, of pre-tax charges
were recorded in Selling, general and administrative expense
("SG&A") and for the first six months of fiscal 2016 $0.2 of
pre-tax charges were recorded in Cost of products sold. For
the second quarter and first six months of fiscal 2015, $31.5 and
$55.3 of pre-tax charges, respectively, were recorded in SG&A
and $0.7 were recorded in Cost of Products sold.
Additionally, $22.8 and $24.0 of Spin restructuring costs were
recorded during the second quarter and first six months of fiscal
2015, respectively.
|
|
|
|
For the second
quarter and first six months of fiscal 2016, the Company recorded
pre-tax expense of $5.0 and $23.5, respectively, related to its
2013 restructuring, as compared to pre-tax expense of $6.6 and
$15.8 for the second quarter and first six months of fiscal 2015,
respectively. The 2013 restructuring charges were reported as
a separate line item on the income statement. Additionally,
for the second quarter and first six months of fiscal 2016, the
Company recorded pre-tax expense of $0.1 associated with
obsolescence charges related to the exit of certain non-core
product lines as part of the restructuring are included in Cost of
products sold. The non-core inventory obsolescence charges
are considered part of the total project costs incurred for the
restructuring project. There were no non-core inventory
obsolescence charges during the second quarter and first six months
of fiscal 2015.
|
|
|
|
Segment net sales and
profitability are presented below:
|
|
|
|
Quarter Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
Sales
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
353.4
|
|
|
$
|
372.2
|
|
|
$
|
669.7
|
|
|
$
|
713.6
|
|
Sun and Skin
Care
|
132.5
|
|
|
130.2
|
|
|
186.0
|
|
|
184.5
|
|
Feminine
Care
|
91.6
|
|
|
101.6
|
|
|
184.1
|
|
|
197.4
|
|
All Other
|
33.7
|
|
|
47.1
|
|
|
66.5
|
|
|
92.7
|
|
Total net
sales
|
$
|
611.2
|
|
|
$
|
651.1
|
|
|
$
|
1,106.3
|
|
|
$
|
1,188.2
|
|
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
77.7
|
|
|
$
|
99.8
|
|
|
$
|
144.5
|
|
|
$
|
190.3
|
|
Sun and Skin
Care
|
39.2
|
|
|
37.3
|
|
|
40.9
|
|
|
41.0
|
|
Feminine
Care
|
10.5
|
|
|
20.9
|
|
|
28.1
|
|
|
36.1
|
|
All Other
|
8.0
|
|
|
7.1
|
|
|
15.2
|
|
|
13.9
|
|
Total segment
profit
|
135.4
|
|
|
165.1
|
|
|
228.7
|
|
|
281.3
|
|
General corporate and
other expenses
|
(20.3)
|
|
|
(38.6)
|
|
|
(38.0)
|
|
|
(70.0)
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
(79.3)
|
|
|
—
|
|
|
(79.3)
|
|
Spin costs
(1)
|
(1.7)
|
|
|
(32.2)
|
|
|
(9.2)
|
|
|
(56.0)
|
|
Spin restructuring
charges
|
—
|
|
|
(22.8)
|
|
|
—
|
|
|
(24.0)
|
|
2013 restructuring
and related costs (2)
|
(5.1)
|
|
|
(6.6)
|
|
|
(23.6)
|
|
|
(15.8)
|
|
Industrial sale
charges
|
(0.2)
|
|
|
—
|
|
|
(0.2)
|
|
|
—
|
|
Amortization of
intangibles
|
(3.6)
|
|
|
(3.6)
|
|
|
(7.2)
|
|
|
(7.7)
|
|
Interest and other
expense, net
|
(13.2)
|
|
|
(26.8)
|
|
|
(28.5)
|
|
|
(54.2)
|
|
Total earnings
(loss) from continuing operations before income
taxes
|
$
|
91.3
|
|
|
$
|
(44.8)
|
|
|
$
|
122.0
|
|
|
$
|
(25.7)
|
|
|
|
(1)
|
Includes pre-tax
SG&A of $1.7 and $31.5 for the second quarters of fiscal 2016
and 2015, respectively, and $9.0 and $55.3 for the first six months
of fiscal 2016 and 2015, respectively, and pre-tax Cost of products
sold of $0.7 for the second quarter of fiscal 2015 and $0.2 and
$0.7 for the first six months of fiscal 2016 and 2015,
respectively.
|
|
|
(2)
|
Includes pre-tax Cost
of products sold of $0.1 for the second quarter and first six
months of fiscal 2016 associated with obsolescence charges related
to the exit of certain non-core product lines as part of the
restructuring. The non-core inventory obsolescence charges
are considered part of the total project costs incurred for the
restructuring project. There were no non-core inventory
obsolescence charges during the second quarter and first six months
of fiscal 2015.
|
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
March 31,
|
|
Net
Earnings
|
|
Diluted
EPS
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Earnings
(Loss) from Continuing Operations and Diluted EPS - GAAP
(Unaudited)
|
$
|
66.1
|
|
|
$
|
(54.6)
|
|
|
$
|
1.10
|
|
|
$
|
(0.88)
|
|
Impacts, net of
tax: Expense
|
|
|
|
|
|
|
|
Venezuela deconsolidation charge
|
—
|
|
|
79.3
|
|
|
—
|
|
|
1.27
|
|
Spin costs
(1)
|
0.9
|
|
|
23.1
|
|
|
0.01
|
|
|
0.37
|
|
Spin restructuring
charges
|
—
|
|
|
16.1
|
|
|
—
|
|
|
0.26
|
|
2013 restructuring and
related charges, net (2)
|
3.4
|
|
|
5.0
|
|
|
0.06
|
|
|
0.08
|
|
Industrial sale charges
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjustment to prior years'
tax accruals
|
—
|
|
|
0.9
|
|
|
—
|
|
|
0.01
|
|
Impact of
basic/dilutive shares (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Adjusted Net Earnings and Adjusted Diluted EPS -
Non-GAAP
|
$
|
70.5
|
|
|
$
|
69.8
|
|
|
$
|
1.17
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
|
|
Weighted average
shares - Diluted
|
|
|
|
|
59.9
|
|
|
62.2
|
|
|
|
(1)
|
Includes SG&A of
$0.9 and $22.6 (net of tax) for the second quarters of fiscal 2016
and 2015, respectively, and Cost of products sold of $0.5 (net of
tax) for the second quarter of fiscal 2015.
|
|
|
(2)
|
Includes Cost of
products sold of $0.1 for the second quarter of fiscal 2016
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. The
non-core inventory obsolescence charges are considered part of the
total project costs incurred for the restructuring project.
There were no non-core inventory obsolescence charges during the
second quarter of fiscal 2015.
|
|
|
(3)
|
All EPS impacts are
calculated using diluted weighted-average shares outstanding.
For the second quarter of fiscal 2015, this reflects the impact of
0.9 dilutive RSE awards which were excluded from the GAAP EPS
calculated due to the reported net loss.
|
|
|
|
|
|
Six Months Ended
March 31,
|
|
Net
Earnings
|
|
Diluted
EPS
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Earnings
(Loss) from Continuing Operations and Diluted EPS - GAAP
(Unaudited)
|
$
|
89.8
|
|
|
$
|
(34.7)
|
|
|
$
|
1.49
|
|
|
$
|
(0.56)
|
|
Impacts, net of
tax: Expense (Income)
|
|
|
|
|
|
|
|
Venezuela deconsolidation charge
|
—
|
|
|
79.3
|
|
|
—
|
|
|
1.27
|
|
Spin costs
(1)
|
5.7
|
|
|
38.6
|
|
|
0.10
|
|
|
0.62
|
|
Spin restructuring
charges
|
—
|
|
|
17.0
|
|
|
—
|
|
|
0.27
|
|
2013 restructuring and
related charges, net (2)
|
15.9
|
|
|
9.9
|
|
|
0.26
|
|
|
0.16
|
|
Industrial sale charges
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjustment to prior years'
tax accruals
|
—
|
|
|
(1.6)
|
|
|
—
|
|
|
(0.02)
|
|
Adjusted Net Earnings and Adjusted Diluted EPS -
Non-GAAP
|
$
|
111.5
|
|
|
$
|
108.5
|
|
|
$
|
1.85
|
|
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
Weighted average
shares - Diluted
|
|
|
|
|
60.1
|
|
|
62.5
|
|
|
|
(1)
|
Includes SG&A of
$5.5 and $38.1 (net of tax) for the first six months of fiscal 2016
and 2015, respectively, and Cost of products sold of $0.2 and $0.5
(net of tax) for the first six months of fiscal 2016 and 2015,
respectively.
|
|
|
(2)
|
Includes Cost of
products sold of $0.1 for the first six months of fiscal 2016
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. The
non-core inventory obsolescence charges are considered part of the
total project costs incurred for the restructuring project.
There were no non-core inventory obsolescence charges during the
first six months of fiscal 2015.
|
|
|
|
The following tables
provide a GAAP to Non-GAAP reconciliation of certain line items
from the Condensed Consolidated Statement of Earnings:
|
|
|
Quarter Ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Gross
Profit
|
|
SG&A
|
|
A&P
(1)
|
|
R&D
(1)
|
|
EBIT
(1)
|
|
Net
Earnings
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
611.2
|
|
|
$
|
311.1
|
|
|
$
|
99.7
|
|
|
$
|
85.0
|
|
|
$
|
16.7
|
|
|
$
|
91.3
|
|
|
$
|
66.1
|
|
|
$
|
1.10
|
|
% of net
sales
|
|
|
50.9%
|
|
|
16.3%
|
|
|
13.9%
|
|
|
2.7%
|
|
|
|
|
|
|
|
Spin costs
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
0.9
|
|
|
0.01
|
|
2013 restructuring
and related charges, net (2)
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.1
|
|
|
3.4
|
|
|
0.06
|
|
Industrial sale
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
Total Adjusted
Non-GAAP
|
$
|
611.2
|
|
|
$
|
311.2
|
|
|
$
|
98.0
|
|
|
$
|
85.0
|
|
|
$
|
16.7
|
|
|
$
|
98.3
|
|
|
$
|
70.5
|
|
|
$
|
1.17
|
|
% of net
sales
|
|
|
50.9%
|
|
|
16.0
|
|
|
13.9%
|
|
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Gross
Profit
|
|
SG&A
|
|
A&P
(1)
|
|
R&D
(1)
|
|
EBIT
(1)
|
|
Net
Earnings
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
1,106.3
|
|
|
$
|
538.6
|
|
|
$
|
200.1
|
|
|
$
|
131.6
|
|
|
$
|
32.7
|
|
|
$
|
122.0
|
|
|
$
|
89.8
|
|
|
$
|
1.49
|
|
% of net
sales
|
|
|
48.7%
|
%
|
|
18.1%
|
|
|
11.9%
|
|
|
3.0%
|
|
|
|
|
|
|
|
Spin costs
|
—
|
|
|
0.2
|
|
|
9.0
|
|
|
—
|
|
|
—
|
|
|
9.2
|
|
|
5.7
|
|
|
0.10
|
|
2013 restructuring
and related charges, net (2)
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23.6
|
|
|
15.9
|
|
|
0.26
|
|
Industrial sale
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
Total Adjusted
Non-GAAP
|
$
|
1,106.3
|
|
|
$
|
538.9
|
|
|
$
|
191.1
|
|
|
$
|
131.6
|
|
|
$
|
32.7
|
|
|
$
|
155.0
|
|
|
$
|
111.5
|
|
|
$
|
1.85
|
|
% of net
sales
|
|
|
48.7%
|
|
|
17.3%
|
|
|
11.9%
|
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Gross
Profit
|
|
SG&A
|
|
A&P
(1)
|
|
R&D
(1)
|
|
EBIT
(1)
|
|
Net Earnings
(3)
|
|
Diluted EPS
(4)
|
GAAP -
Reported
|
$
|
651.1
|
|
|
$
|
334.3
|
|
|
$
|
149.2
|
|
|
$
|
78.4
|
|
|
$
|
16.0
|
|
|
$
|
(44.8)
|
|
|
$
|
(54.6)
|
|
|
$
|
(0.88)
|
|
% of net
sales
|
|
|
51.3%
|
|
|
22.9%
|
|
|
12.0%
|
|
|
2.5%
|
|
|
|
|
|
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79.3
|
|
|
79.3
|
|
|
1.27
|
|
Spin costs
|
—
|
|
|
0.7
|
|
|
31.5
|
|
|
—
|
|
|
—
|
|
|
32.2
|
|
|
23.1
|
|
|
0.37
|
|
Spin restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22.8
|
|
|
16.1
|
|
|
0.26
|
|
2013 restructuring
and related charges, net (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.6
|
|
|
5.0
|
|
|
0.08
|
|
Adjustments to prior
years' tax accruals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
0.01
|
|
Impact of
basic/dilutive shares (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Total Adjusted
Non-GAAP
|
$
|
651.1
|
|
|
$
|
335.0
|
|
|
$
|
117.7
|
|
|
$
|
78.4
|
|
|
$
|
16.0
|
|
|
$
|
96.1
|
|
|
$
|
69.8
|
|
|
$
|
1.12
|
|
% of net
sales
|
|
|
51.5%
|
|
|
18.1%
|
|
|
12.0%
|
|
|
2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
Gross
Profit
|
|
SG&A
|
|
A&P
(1)
|
|
R&D
(1)
|
|
EBIT
(1)
|
|
Net Earnings
(3)
|
|
Diluted
EPS
|
GAAP -
Reported
|
$
|
1,188.2
|
|
|
$
|
591.1
|
|
|
$
|
282.7
|
|
|
$
|
129.1
|
|
|
$
|
31.7
|
|
|
$
|
(25.7)
|
|
|
$
|
(34.7)
|
|
|
$
|
(0.56)
|
|
% of net
sales
|
|
|
49.7%
|
|
|
23.8%
|
|
|
10.9%
|
|
|
2.7%
|
|
|
|
|
|
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79.3
|
|
|
79.3
|
|
|
1.27
|
|
Spin costs
|
—
|
|
|
0.7
|
|
|
55.3
|
|
|
—
|
|
|
—
|
|
|
56.0
|
|
|
38.6
|
|
|
0.62
|
|
Spin restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
17.0
|
|
|
0.27
|
|
2013 restructuring
and related charges, net (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.8
|
|
|
9.9
|
|
|
0.16
|
|
Adjustments to prior
years' tax accruals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6)
|
|
|
(0.02)
|
|
Total Adjusted
Non-GAAP
|
$
|
1,188.2
|
|
|
$
|
591.8
|
|
|
$
|
227.4
|
|
|
$
|
129.1
|
|
|
$
|
31.7
|
|
|
$
|
149.4
|
|
|
$
|
108.5
|
|
|
$
|
1.74
|
|
% of net
sales
|
|
|
49.8%
|
|
|
19.1%
|
|
|
10.9%
|
|
|
2.7%
|
|
|
|
|
|
|
|
|
|
(1)
|
A&P is defined as
Advertising and sales promotion expense, R&D is defined as
Research and development expense and EBIT is defined as Earnings
(loss) from continuing operations before income taxes.
|
|
|
(2)
|
Includes Cost of
products sold of $0.1 for the first six months of fiscal 2016
associated with obsolescence charges related to the exit of certain
non-core product lines as part of the restructuring. The
non-core inventory obsolescence charges are considered part of the
total project costs incurred for the restructuring project.
There were no non-core inventory obsolescence charges during the
first six months of fiscal 2015.
|
|
|
(3)
|
For the quarter and
first six months of fiscal 2015, Net Earnings is defined as
Earnings (loss) from continuing operations.
|
|
|
(4)
|
All EPS impacts are
calculated using diluted weighted-average shares outstanding.
For the second quarter of fiscal 2015, this reflects the impact of
0.9 dilutive RSE awards which were excluded from the GAAP EPS
calculated due to the reported net loss.
|
Note 3 - Net Sales
and Profit by Segment
|
|
|
Starting July 1,
2015, as a result of the Separation, 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 second quarter and first six
months of fiscal 2016, as compared to the corresponding period in
fiscal 2015.
|
|
|
Net Sales (In
millions - Unaudited)
|
Quarter Ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
Net Sales - FY
'15
|
$
|
372.2
|
|
|
|
|
$
|
130.2
|
|
|
|
|
$
|
101.6
|
|
|
|
|
$
|
47.1
|
|
|
|
|
$
|
651.1
|
|
|
|
Organic
|
1.5
|
|
|
0.4%
|
|
|
4.9
|
|
|
3.8%
|
|
|
(9.3)
|
|
|
(9.2)%
|
|
|
(1.6)
|
|
|
(3.4)%
|
|
|
(4.5)
|
|
|
(0.7)%
|
|
Impact of
Venezuela
|
(14.4)
|
|
|
(3.9)%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(14.4)
|
|
|
(2.2)%
|
|
Impact of
currency
|
(5.9)
|
|
|
(1.6)%
|
|
|
(2.6)
|
|
|
(2.0)%
|
|
|
(0.7)
|
|
|
(0.7)%
|
|
|
(0.6)
|
|
|
(1.3)%
|
|
|
(9.8)
|
|
|
(1.5)%
|
|
Impact of
Industrial
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(11.2)
|
|
|
(23.8)%
|
|
|
(11.2)
|
|
|
(1.7)%
|
|
Net Sales - FY
'16
|
$
|
353.4
|
|
|
(5.1)%
|
|
|
$
|
132.5
|
|
|
1.8%
|
|
|
$
|
91.6
|
|
|
(9.9)%
|
|
|
$
|
33.7
|
|
|
(28.5)%
|
|
|
$
|
611.2
|
|
|
(6.1)%
|
|
|
|
Net Sales (In
millions - Unaudited)
|
Six Months Ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
Net Sales - FY
'15
|
$
|
713.6
|
|
|
|
|
$
|
184.5
|
|
|
|
|
$
|
197.4
|
|
|
|
|
$
|
92.7
|
|
|
|
|
$
|
1,188.2
|
|
|
|
Organic
|
5.2
|
|
|
0.7%
|
|
|
7.3
|
|
|
4.0%
|
|
|
(11.5)
|
|
|
(5.8)%
|
|
|
(2.7)
|
|
|
(2.9)%
|
|
|
(1.7)
|
|
|
(0.1)%
|
|
Impact of
Venezuela
|
(24.0)
|
|
|
(3.4)%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(24.0)
|
|
|
(2.0)%
|
|
Impact of
currency
|
(25.1)
|
|
|
(3.5)%
|
|
|
(5.8)
|
|
|
(3.1)%
|
|
|
(1.8)
|
|
|
(0.9)%
|
|
|
(1.6)
|
|
|
(1.7)%
|
|
|
(34.3)
|
|
|
(2.9)%
|
|
Impact of
Industrial
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(21.9)
|
|
|
(23.6)%
|
|
|
(21.9)
|
|
|
(1.8)%
|
|
Net Sales - FY
'16
|
$
|
669.7
|
|
|
(6.2)%
|
|
|
$
|
186.0
|
|
|
0.9%
|
|
|
$
|
184.1
|
|
|
(6.7)%
|
|
|
$
|
66.5
|
|
|
(28.2)%
|
|
|
$
|
1,106.3
|
|
|
(6.8)%
|
|
|
|
Segment Profit (In
millions - Unaudited)
|
Quarter Ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
Segment Profit - FY
'15
|
$
|
99.8
|
|
|
|
|
$
|
37.3
|
|
|
|
|
$
|
20.9
|
|
|
|
|
$
|
7.1
|
|
|
|
|
$
|
165.1
|
|
|
|
Organic
|
(13.2)
|
|
|
(13.2)%
|
|
|
2.8
|
|
|
7.5%
|
|
|
(9.5)
|
|
|
(45.5)%
|
|
|
1.7
|
|
|
23.9%
|
|
|
(18.2)
|
|
|
(11.0)%
|
|
Impact of
Venezuela
|
(6.1)
|
|
|
(6.1)%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(6.1)
|
|
|
(3.7)%
|
|
Impact of
currency
|
(2.8)
|
|
|
(2.8)%
|
|
|
(0.9)
|
|
|
(2.4)%
|
|
|
(0.9)
|
|
|
(4.3)%
|
|
|
(0.4)
|
|
|
(5.6)%
|
|
|
(5.0)
|
|
|
(3.0)%
|
|
Impact of
Industrial
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(0.4)
|
|
|
(5.6)%
|
|
|
(0.4)
|
|
|
(0.2)%
|
|
Segment Profit -
FY'16
|
$
|
77.7
|
|
|
(22.1)%
|
|
|
$
|
39.2
|
|
|
5.1%
|
|
|
$
|
10.5
|
|
|
(49.8)%
|
|
|
$
|
8.0
|
|
|
12.7%
|
|
|
$
|
135.4
|
|
|
(17.9)%
|
|
|
|
Segment Profit (In
millions - Unaudited)
|
Six Months Ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wet
Shave
|
|
Sun and Skin
Care
|
|
Feminine
Care
|
|
All
Other
|
|
Total
|
Segment Profit - FY
'15
|
$
|
190.3
|
|
|
|
|
$
|
41.0
|
|
|
|
|
$
|
36.1
|
|
|
|
|
$
|
13.9
|
|
|
|
|
$
|
281.3
|
|
|
|
Organic
|
(25.9)
|
|
|
(13.6)%
|
|
|
1.7
|
|
|
4.1%
|
|
|
(6.4)
|
|
|
(17.7)%
|
|
|
3.6
|
|
|
25.9%
|
|
|
(27.0)
|
|
|
(9.6)%
|
|
Impact of
Venezuela
|
(9.4)
|
|
|
(4.9)%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(9.4)
|
|
|
(3.3)%
|
|
Impact of
currency
|
(10.5)
|
|
|
(5.5)%
|
|
|
(1.8)
|
|
|
(4.4)%
|
|
|
(1.6)
|
|
|
(4.4)%
|
|
|
(1.1)
|
|
|
(7.9)%
|
|
|
(15.0)
|
|
|
(5.3)%
|
|
Impact of
Industrial
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
—
|
|
|
—%
|
|
|
(1.2)
|
|
|
(8.6)%
|
|
|
(1.2)
|
|
|
(0.4)%
|
|
Segment Profit -
FY'16
|
$
|
144.5
|
|
|
(24.0)%
|
|
|
$
|
40.9
|
|
|
(0.3)%
|
|
|
$
|
28.1
|
|
|
(22.1)%
|
|
|
$
|
15.2
|
|
|
9.4%
|
|
|
$
|
228.7
|
|
|
(18.6)%
|
|
Note 4 -
EBITDA
|
|
|
|
The Company reports
financial results on a GAAP and adjusted basis. The table
below is used to reconcile earnings from continuing operations
before income taxes to EBITDA, Adjusted EBITDA and Normalized
EBITDA, which are Non-GAAP measures, to improve comparability of
results between periods.
|
|
|
|
Quarter Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Earnings from
continuing operations before income taxes - GAAP
|
$
|
91.3
|
|
|
$
|
(44.8)
|
|
|
$
|
122.0
|
|
|
$
|
(25.7)
|
|
Interest expense, net
(1)
|
14.8
|
|
|
28.1
|
|
|
32.5
|
|
|
55.9
|
|
Depreciation and
amortization
|
25.1
|
|
|
23.0
|
|
|
45.8
|
|
|
48.2
|
|
EBITDA
(2)
|
$
|
131.2
|
|
|
$
|
6.3
|
|
|
$
|
200.3
|
|
|
$
|
78.4
|
|
|
|
|
|
|
|
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
79.3
|
|
|
—
|
|
|
79.3
|
|
Spin restructuring
charges
|
—
|
|
|
22.8
|
|
|
—
|
|
|
24.0
|
|
Spin costs
|
1.7
|
|
|
32.2
|
|
|
9.2
|
|
|
56.0
|
|
2013 restructuring
and related costs (3)
|
4.6
|
|
|
5.0
|
|
|
22.4
|
|
|
12.8
|
|
Industrial sale
charges
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Adjusted EBITDA
(2)
|
$
|
137.7
|
|
|
$
|
145.6
|
|
|
$
|
232.1
|
|
|
$
|
250.5
|
|
|
|
|
|
|
|
|
|
SG&A
(4)
|
—
|
|
|
16.4
|
|
|
—
|
|
|
28.9
|
|
|
|
|
|
|
|
|
|
Normalized
EBITDA
|
$
|
137.7
|
|
|
$
|
162.0
|
|
|
$
|
232.1
|
|
|
$
|
279.4
|
|
|
|
(1)
|
Interest expense, net
for the second quarter and first six months of fiscal 2016 includes
$2.6 of income recorded in relation to settlements with tax
authorities.
|
|
|
(2)
|
Historical adjusted
EBITDA results on a continuing operations basis include costs
associated with supporting the Household Product business that are
not eligible to be 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 will not be comparable year-over-year as we move through
each of the first three quarters of fiscal 2016.
|
|
|
(3)
|
Excludes $0.5 and
$1.6 of accelerated depreciation for the second fiscal quarters of
2016 and 2015, respectively, and $1.2 and $3.0 of accelerated
depreciation for the first six months of 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 - Segment
Working Capital
|
|
|
|
Segment Working
Capital metrics for Q2 2016, Q1 2016 and Q4 2015 are presented
below.
|
|
|
|
Q2
2016
|
|
Days
|
|
Q1
2016
|
|
Days
|
|
Q4
2015
|
|
Days
|
Average receivables,
adjusted (1) (2)
|
$
|
241.8
|
|
|
37.7
|
|
|
$
|
245.2
|
|
|
37.6
|
|
|
$
|
246.7
|
|
|
37.2
|
|
Average inventories
(1)
|
355.5
|
|
|
107.7
|
|
|
356.2
|
|
|
106.5
|
|
|
362.0
|
|
|
107.1
|
|
Average accounts
payable (1)
|
212.4
|
|
|
64.4
|
|
|
197.1
|
|
|
58.9
|
|
|
185.4
|
|
|
54.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average working
capital (3)
|
$
|
384.9
|
|
|
|
|
$
|
404.3
|
|
|
|
|
$
|
423.4
|
|
|
|
% of net sales
(4)
|
16.5%
|
|
|
|
|
17.0%
|
|
|
|
|
17.5%
|
|
|
|
|
|
(1)
|
Excludes amounts
identified as corporate.
|
|
|
(2)
|
Adjusted for trade
allowances recorded as a reduction of net sales per GAAP and
reported in accrued expenses on the Condensed Consolidated Balance
Sheets.
|
|
|
(3)
|
Working capital is
defined as receivables (less trade allowance in accrued
liabilities), plus inventories, less accounts payable. Average
working capital is calculated using an average of the four-quarter
end balances for each working capital component as of March 31,
2016, December 31, 2015 and September 30, 2015,
respectively.
|
|
|
(4)
|
Average working
capital divided by trailing four quarter net sales.
|
Note 6 - Fiscal
2015 Segment Net Sales and Profitability
|
|
|
Segment net sales and
profitability for each quarter of fiscal 2015, respectively, are
presented below.
|
|
|
|
Q1
2015
|
|
Q2
2015
|
|
Q3
2015
|
|
Q4
2015
|
|
Fiscal
Year
2015
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
341.4
|
|
|
$
|
372.2
|
|
|
$
|
369.3
|
|
|
$
|
358.4
|
|
|
$
|
1,441.3
|
|
Sun and Skin
Care
|
54.3
|
|
|
130.2
|
|
|
153.3
|
|
|
65.8
|
|
|
403.6
|
|
Feminine
Care
|
95.8
|
|
|
101.6
|
|
|
104.1
|
|
|
96.7
|
|
|
398.2
|
|
All Other
|
45.6
|
|
|
47.1
|
|
|
46.2
|
|
|
39.2
|
|
|
178.1
|
|
Total net
sales
|
$
|
537.1
|
|
|
$
|
651.1
|
|
|
$
|
672.9
|
|
|
$
|
560.1
|
|
|
$
|
2,421.2
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
|
|
|
Wet Shave
|
$
|
90.5
|
|
|
$
|
99.8
|
|
|
$
|
56.4
|
|
|
$
|
62.0
|
|
|
$
|
308.7
|
|
Sun and Skin
Care
|
3.7
|
|
|
37.3
|
|
|
25.8
|
|
|
4.7
|
|
|
71.5
|
|
Feminine
Care
|
15.2
|
|
|
20.9
|
|
|
7.9
|
|
|
4.7
|
|
|
48.7
|
|
All Other
|
6.8
|
|
|
7.1
|
|
|
5.2
|
|
|
5.5
|
|
|
24.6
|
|
Total segment
profit
|
116.2
|
|
|
165.1
|
|
|
95.3
|
|
|
76.9
|
|
|
453.5
|
|
General corporate and
other expenses
|
(31.4)
|
|
|
(38.6)
|
|
|
(36.6)
|
|
|
(15.4)
|
|
|
(122.0)
|
|
Impairment
charge
|
—
|
|
|
—
|
|
|
—
|
|
|
(318.2)
|
|
|
(318.2)
|
|
Venezuela
deconsolidation charge
|
—
|
|
|
(79.3)
|
|
|
—
|
|
|
—
|
|
|
(79.3)
|
|
Spin costs
(1)
|
(23.8)
|
|
|
(32.2)
|
|
|
(55.7)
|
|
|
(30.3)
|
|
|
(142.0)
|
|
Spin restructuring
charges
|
(1.2)
|
|
|
(22.8)
|
|
|
(4.3)
|
|
|
—
|
|
|
(28.3)
|
|
2013 restructuring
and related costs (2)
|
(9.2)
|
|
|
(6.6)
|
|
|
(4.9)
|
|
|
(6.3)
|
|
|
(27.0)
|
|
Industrial sale
charges
|
—
|
|
|
—
|
|
|
(21.9)
|
|
|
(10.8)
|
|
|
(32.7)
|
|
Amortization of
intangibles
|
(4.1)
|
|
|
(3.6)
|
|
|
(3.8)
|
|
|
(3.6)
|
|
|
(15.1)
|
|
Cost of early debt
retirements
|
—
|
|
|
—
|
|
|
(59.6)
|
|
|
—
|
|
|
(59.6)
|
|
Interest and other
expense, net
|
(27.4)
|
|
|
(26.8)
|
|
|
(20.9)
|
|
|
(12.9)
|
|
|
(88.0)
|
|
Total earnings
(loss) from continuing operations before income
taxes
|
$
|
19.1
|
|
|
$
|
(44.8)
|
|
|
$
|
(112.4)
|
|
|
$
|
(320.6)
|
|
|
$
|
(458.7)
|
|
|
|
(1)
|
Includes pre-tax
costs of $23.8, $31.5, $52.4, $30.1 and $137.8, respectively, for
the first, second, third and fourth quarter of fiscal 2015 and
fiscal year 2015, which were included in SG&A, and pre-tax
costs of $0.7, $3.3, $0.2 and $4.2, respectively, for the second,
third and fourth quarters of fiscal 2015 and fiscal year 2015,
included in Cost of products sold.
|
|
|
(2)
|
Includes pre-tax
costs of $0.3 for the third quarter of fiscal 2015 and fiscal year
2015 associated with certain information technology and related
activities, which were included in SG&A.
|
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 Blade Business
|
|
|
The sale of the
Industrial blade business was completed in September 2015.
The historical results of the Industrial blade business are
included in consolidated results of operations through September
30, 2015. Reflected below are the net sales for the
Industrial blade 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