EDGEWELL PERSONAL CARE COMPANY ST. LOUIS, Nov. 13, 2015 /PRNewswire/ -- Edgewell Personal Care Company (NYSE: EPC) today announced results for the full year and fourth quarter, which ended September 30, 2015. This is Edgewell's first quarter following the spin-off of its Household Products business on July 1, 2015. The historical results for the Household Products business are presented as discontinued operations.
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Executive Summary
-- 4Q Adjusted EBITDA was $83.0 million; full-year adjusted normalized
EBITDA was $462.2 million.
-- Full year organic net sales declined 2.5%, while 4Q organic net sales
decreased 7.0%, including an approximate 200 basis point decline due to
international go-to-market changes.
-- 4Q Adjusted Diluted EPS from continuing operations was $0.64.
-- 4Q GAAP Earnings Per Share (EPS) was a loss from continuing operations
of $3.15, which includes a non-cash intangible asset impairment pre-tax
charge of $318.2 million.
-- Repurchased 2.2 million shares in the quarter for $187.6 million.
-- The Company's outlook for fiscal 2016 is for relatively flat organic
sales and $440-$460 million in adjusted EBITDA, including a $15-$20
million negative impact from currency.
"We made significant progress during Edgewell's first quarter as a standalone company. We navigated operational complexities related to the spin-off, while taking the actions needed for long-term success," said David Hatfield, Edgewell's President and Chief Executive Officer. "During the quarter we executed against our international go-to-market initiatives and invested in our brands, actions that will help position us well strategically for the future. Our top and bottom-line results reflect those actions, and while our results for the quarter came in below expectations, they do not change our view of 2016 or affect the long-term strategy that we laid out at our analyst day in June 2015. We are confident that we are taking the right steps to position our company for future growth and success." Mr. Hatfield continued, "We are committed to returning capital to our shareholders and during the quarter repurchased more than 2 million shares."
The Company reports results on a GAAP and adjusted "Non-GAAP" basis, as defined within this release. Adjusted measures are reconciled to the most directly comparable GAAP measures later in this release. All comparisons are with the same period in the prior fiscal year unless otherwise stated.
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 the period-over-period change in Venezuela and Industrial results. 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.
Historical results on a continuing operations basis include certain costs associated with supporting the Household Products business that are not eligible to be reported in discontinued operations. These costs affect selling, general and administrative expense ("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, we have provided normalized EBITDA reflecting pro forma adjustments to SG&A. See Non-GAAP reconciliations later in this release.
Fiscal 4Q 2015 Operating Results (Unaudited)
Net sales decreased 14.4%, with an organic net sales decline of 7.0%. The decline was driven by international go-to-market and other transition impacts and higher trade and sales promotion spending in North America and Europe. Excluding the international go-to-market impacts, organic net sales were down approximately 4.7%.
In North America, trade and price promotion investments increased in the current year to support the Playtex Sport branded pads and liners launch and promotional activities across all segments within Wet Shave. In addition, prior year net sales were favorably impacted by lower than anticipated coupon redemption and trade promotion activity. The decrease in net sales related to trade and sales promotion spending was partially offset in the U. S. by both category performance and improvements in our market shares in Wet Shave, Feminine Care and Sun Care.
To compete more effectively as an independent company, we have increased our use of third-party distributors and wholesalers, and have decreased or eliminated our business operations in certain countries, consistent with our international go-to-market strategy. Within this press release we discuss go-to-market impacts which reflect our best estimate on the impact of these international go-to-market changes and exits, and represent the year over year change in those markets. We expect to realize the majority of the impact from these changes in the fourth quarter of 2015 and the first three quarters of fiscal year 2016.
Gross margin decreased 420 basis points to 48.1%. Gross margin declined 310 basis points excluding the negative impact of currency and the change in Venezuela results. Gross margin declines were driven by increased price promotion, which more than offset volume and cost mix improvements.
Advertising and sales promotion expense (A&P) was $95.7 million, or 17.1% of net sales. This represents a decrease of $26.1 million, or 150 basis points as a percent of net sales, due to lower investments in the quarter, related primarily to timing of spend, as overall A&P in the fiscal year was up 100 basis points versus the prior year on a percent of net sales basis. In the fourth quarter of 2014, A&P was at higher than normal levels due to investments supporting our acquired Feminine Care brands.
Selling, general and administrative expense was $123.5 million, or 22.0% of net sales, compared to $147.5 million, or 22.5% of net sales, in the prior year quarter. Included within the current quarter results were pre-tax costs of $30.3 million related to the spin-off. Excluding these spin-off costs, SG&A as a percent of net sales was 16.7%, including corporate amortization. Historical SG&A results on a continuing operations basis include certain costs associated with supporting the Household Product business that are not eligible to be reported in discontinued operations.
Fourth quarter segment profit of $76.9 million declined $27.3 million, or 23.3%, on an organic basis, due to lower sales and gross margin related primarily to higher promotion expense, partially offset by lower A&P spending.
The full-year effective tax rate for fiscal 2015 for continuing operations was 35.4% as compared to 19.3% in the prior year. The tax rate for 2015 reflects a tax benefit on a net loss primarily due to increased expenses in higher-rate tax jurisdictions, including spin-related expenses and the impairment charge, offset in part by the Venezuela deconsolidation charge, which had no accompanying tax benefit. The fiscal 2015 adjusted effective tax rate for continuing operations was 23.2% as compared to 28.4% in the prior year. The decrease was due to a higher mix of earnings in lower-rate tax jurisdictions compared to the prior year.
Fourth quarter adjusted net earnings per diluted share from continuing operations increased 34.8% to $0.64. On a GAAP basis, net loss per share from continuing operations was $3.15 as compared to net earnings per diluted share of $0.30 in the prior year quarter. Growth in adjusted EPS was largely driven by a lower tax rate and lower SG&A and reduced interest costs compared to the prior year, which included higher costs associated with supporting the Household Product business that are not eligible to be reported in discontinued operations.
Fourth quarter adjusted EBITDA was $83.0 million versus a normalized fourth quarter 2014 EBITDA of $110.3 million. Declines in gross margin and a $17 million negative impact from currency were partly offset by lower A&P and SG&A costs in the quarter.
Other Items
During the fourth quarter, the Company recorded a pre-tax, non-cash intangible asset impairment charge of $318.2 million to adjust the carrying values of indefinite-lived tradenames related to the Playtex, Wet-Ones and Skintimate brands. While we are still optimistic about the future potential and value of these brands, declining performance over the past twelve months impacted growth and cash flow projections. The impairment charge has no impact on cash balances, operating cash flows or business outlook, and is not expected to impact the ability of the Company to achieve its long-term objectives.
The sale of the Industrial Blade business was completed in September and resulted in a pre-tax loss on the sale of $10.8 million and $32.7 million for the quarter and year ended September 30, 2015, respectively.
In the fourth quarter of 2015, the Company incurred $30.3 million of pre-tax spin charges ($30.1 million included in SG&A and $0.2 million included in Cost of products sold); and $142.0 million of such charges for the year ended September 30, 2015 ($137.8 million reported in SG&A and $4.2 million included in Cost of products sold). The Company also incurred $28.3 million of pre-tax spin restructuring charges for the year ended September 30, 2015. Additionally, for the quarter and year ended September 30, 2015, the Company recorded pre-tax expense of $6.3 million and $26.7 million, respectively, related to its 2013 restructuring as compared to pre-tax expense of $12.7 million and $49.9 million, respectively, for the quarter and year ended September 30, 2014.
4Q Operating Segment Results (Unaudited)
Wet Shave (Men's Systems, Women's Systems, Disposables, Shave Preps)
Wet Shave organic net sales decreased $21.8 million, or 5.2%, in the fourth quarter, driven by the impact of international go-to-market changes, transition issues in international markets and higher sales and trade promotions in North America. Organic segment profit declined $26.4 million or 26.2% as higher sales promotions and increased investment in Research and Development (R&D) were only partially offset by higher volumes and lower A&P spend.
Sun and Skin Care (Sun Care, Wipes, Gloves)
Sun and Skin Care organic net sales decreased slightly, down 0.3%, driven by international sales declines related to go-to-market changes, transition issues and promotional spending, which was partially offset by growth in North America due to higher Sun Care volumes related to late season replenishment and promotions. Organic segment profit declined $1.0 million or 15.4% as higher promotional spending was only partially offset by higher volume and improved price mix.
Feminine Care (Tampons, Pads, Liners)
Feminine Care organic net sales decreased $19.7 million, or 16.7%, in the fourth quarter, driven primarily by higher investment in sales and trade promotions in support of Playtex Sport pads and liners in North America, and to a lesser extent go-to-market and other transition impacts internationally. Organic segment profit was down $1.1 million, or 14.6%, as the sales decline was somewhat offset by lower A&P and product costs.
All Other (Infant Care, all other brands)
All Other had an organic net sales decrease of $4.4 million, or 9.0%, due to lower volumes related to the ongoing impact of competitive pressure and share loss, particularly in cups and bottles. Organic segment profit increased $1.2 million, or 40.0%, driven by lower A&P spending and improved cost mix, which more than offset lower volumes.
Fiscal 2015 Operating Results (Unaudited)
-- Net sales of $2,421.2 million decreased 7.3% or 2.5% on an organic
basis. These results include a 60 basis point impact of international
go-to-market changes and other transition issues related to the
spin-off. After three solid quarters of growth, international sales were
down 0.4% for the year, reflecting the impact of go-to-market changes in
the fourth quarter. Underlying sales, excluding the go-to-market impact
were up, driven by growth in Asia Pacific in both Wet Shave and Sun and
Skin Care. North America organic net sales were down 3.7%, driven by
increased trade and promotional investment in the fourth quarter, as
well as declines in Infant Care.
-- Gross margin increased 50 basis points excluding the negative impact of
currency, due to lower product costs and favorable mix, mostly offset by
go-to-market impacts.
-- Advertising and sales promotion expense increased to 15.2% of net sales,
up 100 basis points, due to increased investments in Wet Shave and Sun
and Skin Care.
-- Selling, general and administrative expense as a percent of net sales
(exclusive of acquisition, integration, spin-off transaction and
restructuring related charges) was 17.9%. Historical SG&A results on a
continuing operations basis include certain costs associated with
supporting the Household Product business that are not eligible to be
reported in discontinued operations.
-- Adjusted net earnings per diluted share were $2.80 compared to $2.76 in
the prior year.
-- GAAP net loss per share from continuing operations was $4.78 compared to
net earnings per share of $1.88 in the prior year.
-- Normalized EBITDA, adjusted for SG&A in the first three quarters of
2015, was $462.2 million compared to $524.4 million in the prior year.
The decrease was due to a negative impact of $56 million from currency,
lower organic sales and higher A&P spending.
Fiscal Year 2016 Financial Outlook
"Looking ahead, we are on track with the long-term strategy and business plan that we presented to investors in June. We will continue to build on our progress to date by executing go-to-market changes, overcoming dis-synergies related to the spin and stabilizing our North America business," continued Mr. Hatfield. "For 2016, we see generally flat organic performance for both net sales and adjusted EBITDA. Although currency will continue to have a negative impact on both the top and bottom line, operationally, we are encouraged by positive trends in the categories, improved share performance, and we are excited about up-coming new innovation in our Hydro line in early 2016."
Organic net sales are expected to be flat for the year.
-- Organic net sales growth will be negatively impacted by go-to-market
changes in the first three quarters of fiscal 2016.
-- Underlying sales growth, excluding the go-to-market changes, is expected
to increase in the low single digits.
-- Unfavorable foreign currency impact on net sales of $40-$50 million.
-- Reported net sales are expected to decrease in the mid-single digits.
FY 2016 Adjusted EBITDA is projected to be in the range of $440-$460 million, including $15-$20 million negative impact from currency.
-- Projected adjusted EBITDA includes: $15-$20 million negative currency
impact, international go-to-market impacts, dis-synergies, the year over
year impact of Venezuela and Industrial, and restructuring savings.
FY 2016 Adjusted EPS is projected to be in the range of $3.20-$3.40, which excludes items such as restructuring and spin costs.
-- Unfavorable foreign currency impact of approximately $15-$20 million
based upon recent rates.
-- Our projections assume a 32% adjusted tax rate.
Other Items: We expect to incur spin costs of $10-$12 million in fiscal 2016, primarily in the first half of the year. Restructuring related costs are anticipated to be $40-$45 million for the fiscal year. We expect incremental savings of approximately $15 million in fiscal 2016, and an additional $40-$50 million in fiscal 2017 and 2018.
Webcast Information
In conjunction with this announcement, the Company will hold an investor conference call beginning at 10:00 a.m. eastern time today. The call will focus on fiscal 2015 full year and fourth fiscal 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 "Webcasts and Presentations" tabs or by using the following link:
http://ir.edgewell.com/phoenix.zhtml?c=254077&p=irol-calendar
For those unable to participate during the live webcast, a replay will be available on www.edgewell.com, under "Investors", "Investor Information", "Webcasts and Presentations", and "Audio Archives" 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 (1) spin costs, (2) restructuring charges (including 2013 restructuring and spin restructuring), (3) acquisition and integration expenses (including acquisition inventory valuation charges), (4) Venezuela deconsolidation charges (5) cost of early debt retirements, (6) industrial blade sale, (7) impairment charge and (8) adjustments to prior year tax accruals.
This Non-GAAP information is provided as a supplement, 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. Finally, the Company believes this information provides a higher degree of transparency.
Adjusted EBITDA is defined as earnings before income taxes, interest income and expense, depreciation and amortization and excludes items such as spin costs, restructuring charges, impairment charges, acquisition and integration expenses, Venezuela deconsolidation charges, cost of early debt retirements and adjustments to prior year tax accruals.
Normalized EBITDA 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.
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 excludes the impact of changes in foreign currency, the impact of acquisitions, and the period-over-period change in Venezuela and Industrial results. This information is provided because these types of fluctuations can distort the underlying change in net sales either positively or negatively.
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 the 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:
-- Whether the operational, marketing and strategic benefits of the
recently completed separation can be achieved;
-- Whether the remaining costs and expenses resulting from the separation
can be controlled within expectations;
-- General market and economic conditions;
-- Market trends in the categories in which the Company operates;
-- The success of new products and the ability to continually develop and
market new products;
-- The Company's ability to attract, retain and improve distribution with
key customers;
-- The Company's ability to continue planned advertising and other
promotional spending and the effectiveness of such spending;
-- The Company's ability to timely execute strategic initiatives, including
restructurings, in a manner that will positively impact its financial
condition and results of operations and does not disrupt its business
operations;
-- The impact of strategic initiatives, as well as restructurings, on the
Company's relationships with employees, customers and vendors;
-- The Company's ability to maintain and improve market share in the
categories in which it operates despite heightened competitive pressure;
-- The Company's ability to improve operations and realize cost savings;
-- The impact of foreign currency exchange rates and currency controls, as
well as offsetting hedges;
-- The impact of raw material and other commodity costs;
-- Goodwill impairment charges resulting from declines in profitability or
estimated cash flows related to intangible assets or market valuations
for similar assets;
-- Costs and reputational damage associated with cyber-attacks or
information security breaches;
-- The Company's ability to acquire and integrate businesses, and to
realize the projected results of acquisitions;
-- The impact of advertising and product liability claims and other
litigation;
-- Compliance with debt covenants and maintenance of credit ratings as well
as the impact of interest and principal repayment of our existing and
any future debt; or
-- The impact of legislative or regulatory determinations or changes by
federal, state and local, and foreign authorities, including taxing
authorities.
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 by no means 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 the Company's annual report on Form 10-K for the year ended September 30, 2014 and its quarterly reports on Form 10-Q for the quarters ended December 31, 2014, March 30, 2015 and June 30, 2015.
EDGEWELL PERSONAL CARE COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(Condensed)
(In millions, except per share data - Unaudited)
Quarter Ended Year Ended
September 30, September 30,
2015 2014 2015 2014
---- ---- ---- ----
Net sales $560.1 $654.7 $2,421.2 $2,612.2
Cost of products sold 290.8 312.5 1,237.4 1,322.3
----- ----- ------- -------
Gross profit 269.3 342.2 1,183.8 1,289.9
Selling, general and
administrative expense 123.5 147.5 571.6 534.7
Advertising and sales promotion
expense 95.7 121.8 367.1 371.3
Research and development expense 22.5 19.6 71.0 69.5
Impairment charge 318.2 - 318.2 -
Venezuela deconsolidation charge - - 79.3 -
Spin restructuring charges - - 28.3 -
2013 restructuring and related
costs 6.3 12.7 26.7 49.9
Industrial sale charges 10.8 - 32.7 -
Net pension and post-retirement
benefit gains - (1.1) - (1.1)
Interest expense 16.4 28.2 99.8 119.0
Cost of early debt retirements - - 59.6 -
Other (income) expense, net (3.5) 5.0 (11.8) 0.8
---- --- ----- ---
(Loss) earnings from continuing
operations before income taxes (320.6) 8.5 (458.7) 145.8
Income tax (benefit) provision
for continuing operations (126.9) (10.0) (162.6) 28.1
------ ----- ------ ----
Net (loss) earnings from
continuing operations $(193.7) $18.5 $(296.1) $117.7
Net (loss) earnings from
discontinued operations, net of
tax $(25.8) $66.7 $20.8 $238.4
------ ----- ----- ------
Net (loss) earnings $(219.5) $85.2 $(275.3) $356.1
======= ===== ======= ======
Basic net (loss) earnings per
share:
Continuing operations $(3.15) $0.30 $(4.78) $1.90
Discontinued operations $(0.42) $1.08 $0.34 $3.85
Net (loss) earnings $(3.57) $1.38 $(4.44) $5.74
====== ===== ====== =====
Diluted net (loss) earnings per
share:
Continuing operations $(3.15) $0.30 $(4.78) $1.88
Discontinued operations $(0.42) $1.07 $0.34 $3.81
------ -----
Net (loss) earnings $(3.57) $1.36 $(4.44) $5.69
====== ===== ====== =====
Weighted-average shares
outstanding:
Basic 61.5 61.8 62.0 62.0
Diluted 61.5 62.5 62.0 62.6
See Accompanying Notes
EDGEWELL PERSONAL CARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2015
(In millions, except per share data - Unaudited)
1. Operations for the Company are managed
via four segments: Wet Shave, Sun and
Skin Care, Feminine Care and All
Other products. Segment performance
is evaluated based on segment
operating profit, exclusive of (1)
general corporate expenses, (2)
share-based compensation costs, (3)
restructuring charges (including 2013
restructuring and spin
restructuring), (4) Venezuela
deconsolidation charge, (5)
acquisition and integration expense,
(6) amortization of intangible
assets, (7) cost of early debt
retirements, (8) Industrial Blade
sale and (9) impairment charge.
Financial items, such as interest
income and expense, are managed on a
global basis at the corporate level.
The exclusion of charges such as
other acquisition transaction and
integration costs, and substantially
all restructuring costs, from segment
results reflects management's view on
how it evaluates segment performance.
On July 1, 2015, the Company completed
the spin-off of its Household
Products business. Discontinued
operations on the income statement
include the results of the Household
Products business, except for certain
corporate overhead costs and other
allocations which remain in
continuing operations.
For the quarter and year ended
September 30, 2015, the Company
recorded an intangible asset
impairment charge of $318.2. The
impairment charge was reported as a
separate line item on the income
statement.
For the year ended September 30, 2015,
the Company recorded a charge of
$79.3 as a result of deconsolidating
its Venezuelan subsidiaries, which
had no accompanying tax benefit. The
Venezuela deconsolidation charge was
reported as a separate line item on
the income statement.
On July 1, 2015, the Company completed
the previously announced separation
of its Household Products business
into a separate publicly-traded
company (the "Spin" or the
"Separation"). The Company incurred
incremental costs to evaluate, plan
and execute the Separation. For the
quarter and year ended September 30,
2015, $30.1 and $137.8, respectively,
of pre-tax charges were recorded in
Selling, general and administrative
expense ("SG&A") and $0.2 and $4.2,
respectively, of pre-tax charges for
the quarter and year ended September
30, 2015 were recorded in Cost of
products sold.
For the quarter and year ended
September 30, 2015, the Company
recorded pre-tax expense of $6.3 and
$26.7, respectively, related to its
2013 restructuring, as compared to
pre-tax expense of $12.7 and $49.9
for the quarter and year ended
September 30, 2014, respectively.
The 2013 restructuring charges were
reported as a separate line item on
the income statement. In addition,
pre-tax costs of $0.3 the year ended
September 30, 2015 and $0.4 and $4.3,
respectively, for the quarter and
year ended September 30, 2014
associated with certain information
technology enablement activities
related to the Company's
restructuring initiatives were
included in SG&A. Additionally, pre-
tax positive adjustments of $0.7 for
the quarter and year ended September
30, 2014, associated with the
Company's restructuring, were
included in cost of products sold.
For the quarter and year ended
September 30, 2015, the Company
recorded pre-tax expense of $10.8
and $32.7, respectively, related to
its sale of the Industrial Blade
product line. The Industrial Blade
sale charges were reported as a
separate line item in the income
statement.
In connection with the Company's
October 2013 acquisition of certain
feminine care brands from Johnson &
Johnson (the "feminine care
acquisition"), the Company recorded
pre-tax acquisition and integration
costs of $2.0 and $9.5, respectively,
for the quarter and year ended
September 30, 2014. These amounts
were not reflected in the Feminine
Care segment, but rather were
presented as a separate line item
below segment profit. Such
presentation reflects management's
view on how segment results are
evaluated.
For the year ended September 30, 2014,
the Company recorded $8.0 within Cost
of products sold based upon the
write-up and subsequent sale of
inventory acquired in the feminine
care acquisition. These amounts were
not reflected in the Feminine Care
segment, but rather presented as a
separate line item below segment
profit. Such presentation reflects
management's view on how segment
results are evaluated.
For the year ended September 30, 2015,
the Company recorded early debt
retirement costs of $59.6 associated
with the prepayment of its private
placement notes on May 29, 2015.
Segment net sales and profitability
for the quarter and year ended
September 30, 2015 and 2014,
respectively, are presented below.
Quarter Ended Year Ended
September 30, September 30,
Net Sales 2015 2014 2015 2014
---- ---- ---- ----
Wet Shave $358.4 $419.3 $1,441.3 $1,585.8
Sun and Skin Care 65.8 68.7 403.6 424.5
Feminine Care 96.7 117.9 398.2 404.5
All Other 39.2 48.8 178.1 197.4
---- ---- ----- -----
Total net sales $560.1 $654.7 $2,421.2 $2,612.2
Segment Profit
Wet Shave $62.0 $100.4 $308.7 $388.2
Sun and Skin Care 4.7 6.5 71.5 73.9
Feminine Care 4.7 7.5 48.7 51.1
All Other 5.5 3.0 24.6 17.4
--- --- ---- ----
Total segment profit 76.9 117.4 453.5 530.6
General corporate and
other expenses (15.4) (38.3) (122.0) (151.8)
Impairment charge (318.2) - (318.2) -
Venezuela
deconsolidation
charge - - (79.3) -
Spin costs (1) (30.3) (20.2) (142.0) (24.4)
Spin restructuring
charges - - (28.3) -
2013 restructuring and
related charges (2) (6.3) (12.4) (27.0) (53.5)
Industrial sale
charges (10.8) - (32.7) -
Feminine care
acquisition and
integration costs - (2.0) - (9.5)
Acquisition inventory
valuation - - - (8.0)
Net pension and post-
retirement gains - 1.1 - 1.1
ASR transaction costs
and integration - - - (1.0)
Amortization of
intangibles (3.6) (3.9) (15.1) (17.9)
Cost of early debt
retirements - - (59.6) -
Interest and other
expense, net (12.9) (33.2) (88.0) (119.8)
----- ----- ----- ------
Total (loss) earnings
from continuing
operations before
income taxes $(320.6) $8.5 $(458.7) $145.8
======= ==== ======= ======
(1) Includes pre-tax costs of $30.1
and $137.8, respectively, for
the quarter and year ended
September 30, 2015 and $20.2 and
$24.4 for the quarter and year
ended September 30, 2014 which
are included in SG&A.
Additionally, pre-tax costs of
$0.2 and $4.2, respectively, for
the quarter and year ended
September 30, 2015 were included
in Cost of products sold.
(2) Includes pre-tax costs of $0.3
for the year ended September 30,
2015 and $0.4 and $4.3,
respectively, for the quarter
and year ended September 30,
2014, associated with certain
information technology and
related activities, which were
included in SG&A. Additionally,
positive pre-tax adjustments of
$0.7 for the quarter and year
ended September 30, 2014,
related to the restructuring,
were included in Cost of
products sold.
2. Basic (loss) earnings per share
is based on the average number
of common shares outstanding
during the period. Diluted
(loss) earnings per share is
based on the weighted average
number of shares used for the
basic (loss) earnings per share
calculation, adjusted for the
dilutive effect of stock
options and restricted stock
equivalents ("RSEs"). For the
quarter and year ended
September 30, 2015, GAAP (loss)
earnings per share is
calculated using basic weighted
average shares outstanding due
to the reported net loss.
The following tables provide a
reconciliation of net (loss)
earnings and net (loss)
earnings per diluted share
("EPS") to adjusted net
earnings and adjusted net
earnings per diluted share,
which are Non-GAAP measures.
Quarter Ended September 30,
Net (Loss) Earnings Diluted EPS
------------------- -----------
2015 2014 2015 2014
---- ---- ---- ----
Net (Loss)
Earnings from
Continuing
Operations and
Diluted EPS -
GAAP (Unaudited)
(1) $(193.7) $18.5 $(3.15) $0.30
Impacts, net of
tax: Expense
(Income) (2)
Impairment charge 201.1 - 3.25 -
Spin costs (3) 15.2 12.7 0.25 0.20
2013
restructuring
and related
charges, net (4) 1.7 8.2 0.03 0.13
Industrial sale
charges 6.7 - 0.11 -
Feminine care
acquisition and
integration
costs - (1.2) - (0.02)
Net pension and
post-retirement
curtailment
gains - (0.8) - (0.01)
Other realignment
and integration - - - -
Tax on certain
spin costs 1.4 - 0.02 -
Adjustment to
prior years' tax
accruals 7.1 (8.5) 0.11 (0.14)
Impact of basic/
dilutive shares
(5) - - 0.02 -
--- --- ---- ---
Adjusted Net
Earnings and
Diluted EPS -
Non-GAAP $39.5 $28.9 $0.64 $0.46
===== ===== ===== =====
Weighted average
shares -Basic 61.5 61.8
Weighted average
shares -Diluted
(2) 61.5 62.5
(1) GAAP EPS for the quarter ended
September 30, 2015 was
calculated using the basic
weighted average shares
outstanding due to the reported
net loss.
(2) All EPS impacts are calculated
using diluted weighted average
shares outstanding. For the
quarter ended September 30,
2015, this reflects the impact
of 0.4 million dilutive RSEs
which are excluded from the
GAAP EPS calculation due to the
reported net loss.
(3) Includes costs of $15.1 and
$12.7 (net of tax) for the
quarter ended September 30,
2015 and 2014, respectively,
which are included in SG&A.
Additionally, income of $0.1
(net of tax) for the quarter
ended September 30, 2015 were
included in Cost of products
sold.
(4) Includes costs of $0.2 (net of
tax) for the quarter ended
September 30, 2014 associated
with certain information
technology and related
activities, which are included
in SG&A. Additionally,
positive adjustments of $0.6
(net of tax) for the quarter
ended September 30, 2014,
related to the restructuring
were included in cost of
products sold.
(5) Represents the difference
between calculating EPS - Non-
GAAP using dilutive weighted
average shares outstanding
while calculating EPS - GAAP
using basic weighted average
shares outstanding.
Year Ended September 30,
Net (Loss) Earnings Diluted EPS
------------------- -----------
2015 2014 2015 2014
---- ---- ---- ----
Net (Loss) Earnings
from Continuing
Operations and
Diluted EPS -GAAP
(Unaudited) (1) $(296.1) $117.8 $(4.78) $1.88
Impacts, net of tax:
Expense (Income) (2)
Impairment charge 201.1 - 3.22 -
Venezuela
deconsolidation
charge 79.3 - 1.27 -
Spin costs (3) 93.5 15.4 1.50 0.25
Spin restructuring
charges 20.1 - 0.32 -
2013 restructuring and
related charges, net
(4) 16.2 37.1 0.26 0.59
Industrial sale
charges 20.5 - 0.33 -
Feminine care
acquisition and
integration costs - 6.2 - 0.10
Acquisition inventory
valuation - 5.0 - 0.08
Net pension and post-
retirement
curtailment gains - (0.8) - (0.01)
Cost of early debt
retirements 37.4 - 0.60 -
Other realignment and
integration - 0.6 - 0.01
Tax on certain spin
costs 1.4 - 0.02 -
Adjustment to prior
years' tax accruals 1.8 (8.7) 0.03 (0.14)
Impact of basic/
dilutive shares - - 0.03 -
--- --- ---- ---
Adjusted Net Earnings
and Diluted EPS -
Non-GAAP $175.2 $172.6 $2.80 $2.76
====== ====== ===== =====
Weighted average
shares -Basic 62.0 62.0
Weighted average
shares -Diluted (2) 62.0 62.6
(1) GAAP EPS for the year ended
September 30, 2015 was
calculated using the basic
weighted average shares
outstanding due to the reported
net loss.
(2) All EPS impacts are calculated
using diluted weighted average
shares outstanding. For the
year ended September 30, 2015,
this reflects the impact of 0.4
million dilutive RSEs which are
excluded from the GAAP EPS
calculation due to the reported
net loss.
(3) Includes costs of $90.8 and
$15.4 (net of tax) for the year
ended September 30, 2015 and
2014, respectively, which are
included in SG&A.
Additionally, costs of $2.7
(net of tax) for the year ended
September 30, 2015 were
included in Cost of products
sold.
(4) Includes costs of $0.2 and $2.9
(net of tax) for the year ended
September 30, 2015 and 2014,
respectively, associated with
certain information technology
and related activities, which
are included in SG&A.
Additionally, positive
adjustments of $0.6 (net of
tax) for the year ended
September 30, 2014,
respectively, related to the
restructuring were included in
Cost of products sold.
3. 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
quarter and year ended
September 30, 2015.
Net Sales (In millions - Unaudited)
Quarter Ended September 30, 2015
Wet Shave Sun and Skin Care Feminine Care All Other Total
Q4 %Chg Q4 %Chg Q4 %Chg Q4 %Chg Q4 %Chg
--- ---- --- ---- --- ---- --- ---- --- ----
Net Sales -Q4
'14 $419.3 $68.7 $117.9 $48.8 $654.7
Organic (21.8) (5.2)% (0.2) (0.3)% (19.7) (16.7)% (4.4) (9.0)% (46.1) (7.0)%
Change in
Venezuela
results (5.9) (1.4)% - -% - -% - -% (5.9) (0.9)%
Impact of
currency (33.2) (7.9)% (2.7) (3.9)% (1.5) (1.3)% (1.4) (2.9)% (38.8) (5.9)%
Incremental
impact of
acquisition
and sale - -% - -% - -% (3.8) (7.8)% (3.8) (0.6)%
--- --- --- --- --- --- ---- ----- ---- -----
Net Sales -Q4
'15 $358.4 (14.5)% $65.8 (4.2)% $96.7 (18.0)% $39.2 (19.7)% $560.1 (14.4)%
====== ====== ===== ===== ===== ====== ===== ====== ====== ======
Net Sales (In millions - Unaudited)
Year Ended September 30, 2015
Wet Shave Sun and Skin Care Feminine Care All Other Total
Year Ended %Chg Year Ended %Chg Year Ended %Chg Year Ended %Chg Year Ended %Chg
Net Sales -
FY'14 $1,585.8 $424.5 $404.5 $197.4 $2,612.2
Organic (24.6) (1.5)% (6.7) (1.6)% (23.4) (5.8)% (11.9) (6.1)% (66.6) (2.5)%
Change in
Venezuela
results (4.7) (0.3)% - -% - -% - -% (4.7) (0.2)%
Impact of
currency (115.2) (7.3)% (14.2) (3.3)% (4.3) (1.1)% (3.6) (1.8)% (137.3) (5.3)%
Incremental
impact of
acquisition
and sale - -% - -% 21.4 5.3% (3.8) (1.9)% 17.6 0.7%
Net Sales -
FY'15 $1,441.3 (9.1)% $403.6 (4.9)% $398.2 (1.6)% $178.1 (9.8)% $2,421.2 (7.3)%
======== ===== ====== ===== ====== ===== ====== ===== ======== =====
Segment Profit (In millions - Unaudited)
Quarter Ended September 30, 2015
Wet Shave Sun and Skin Care Feminine Care All Other Total
Q4 %Chg Q4 %Chg Q4 %Chg Q4 %Chg Q4 %Chg
--- ---- --- ---- --- ---- --- ---- --- ----
Segment
Profit -Q4
'14 $100.4 $6.5 $7.5 $3.0 $117.4
Organic (26.4) (26.2)% (1.0) (15.4)% (1.1) (14.6)% 1.2 40.0% (27.3) (23.3)%
Change in
Venezuela
results (0.4) (0.4)% - -% - -% - -% (0.4) (0.3)%
Impact of
currency (11.6) (11.6)% (0.8) (12.3)% (1.7) (22.7)% 1.3 43.3% (12.8) (10.9)%
Segment
Profit -Q4
'15 $62.0 (38.2)% $4.7 (27.7)% $4.7 (37.3)% $5.5 83.3% $76.9 (34.5)%
Segment Profit (In millions - Unaudited)
Year Ended September 30, 2015
Wet Shave Sun and Skin Care Feminine Care All Other Total
Year Ended %Chg Year Ended %Chg Year Ended %Chg Year Ended %Chg Year Ended %Chg
Segment Profit
-FY'14 $388.2 $73.9 $51.1 $17.4 $530.6
Organic (35.7) (9.2)% 0.8 1.1% (0.6) (1.2)% 7.0 40.3% (28.5) (5.3)%
Change in
Venezuela
results 1.6 0.4% - -% - -% - -% 1.6 0.3%
Impact of
currency (45.4) (11.7)% (3.2) (4.3)% (6.3) (12.3)% 0.2 1.1% (54.7) (10.3)%
Incremental
impact of
acquisition - -% - -% 4.5 8.8% - -% 4.5 0.8%
Segment Profit
-FY'15 $308.7 (20.5)% $71.5 (3.2)% $48.7 (4.7)% $24.6 41.4% $453.5 (14.5)%
4. The Company reports financial
results on a GAAP and adjusted
basis. The table below is used
to reconcile (loss) 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 September 30 Year Ended September 30
2015 2014 2015 2014
---- ---- ---- ----
(Loss) earnings from
continuing operations
before income taxes -
GAAP $(320.6) $8.5 $(458.7) $145.8
Interest Expense 16.4 28.2 159.4 119.0
Depreciation and
Amortization 22.3 26.8 91.1 101.4
EBITDA $(281.9) $63.5 $(208.2) $366.2
Impairment charge 318.2 - 318.2 -
Venezuela deconsolidation - - 79.3 -
Spin restructuring
charges - - 28.3 -
Spin costs 30.3 20.2 142.0 24.4
2013 restructuring and
related costs 5.6 11.8 22.4 52.9
Industrial sale charges 10.8 - 32.7 -
Feminine care acquisition
and integrations costs - 2.0 - 9.5
Acquisition inventory
valuation - - - 8.0
Net pension/post-
retirement gains - (1.1) - (1.1)
ASR transaction costs/
integration - - - 1.0
Adjusted EBITDA (1) $83.0 $96.4 $414.7 $460.9
Selling, general and
administrative expenses
(2) - 13.9 47.5 63.5
Normalized EBITDA $83.0 $110.3 $462.2 $524.4
===== ====== ====== ======
(1) 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
expenses. 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.
(2) Corporate SG&A expenses have
been adjusted to reflect an
estimated full year run-rate
of $74 in fiscal 2015, $88 in
fiscal 2014, and $24.6 in the
fourth quarter of 2014.
5. On March 31, 2015, the Company
deconsolidated its Venezuelan
subsidiaries. Included in
consolidated results of operations,
and reflected below, are the
historical results of our Venezuela
operations through the quarter ended
March 31, 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
Fiscal 2014 $6.9 $8.3 $7.6 $5.9 $28.7
Q1 Q2 Q3 Q4 FY
--- --- --- --- ---
Wet Shave -
Segment
Profit Fiscal 2015 $3.3 $6.0 - - $9.3
Fiscal 2014 $2.4 $2.7 $2.3 $0.4 $7.8
6. 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
Fiscal 2014 $10.3 $11.7 $11.8 $11.6 $45.4
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SOURCE Edgewell Personal Care Company
