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Moody’s Downgraded Edgewell Personal Care’s CFR and Debt Rating

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Price movement of Edgewell Personal Care

Edgewell Personal Care Company (EPC) has a market cap of $4.5 billion. EPC fell by 0.59% to close at $76.43 per share on February 23, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 0.09%, 6.6%, and -2.5%, respectively, on that day.

At times, the stock has broken the support of all moving day averages. Currently, EPC is trading 2.6% above its 20-day moving average, 1.4% above its 50-day moving average, and 12.1% below its 200-day moving average.

The PowerShares S&P MidCap Low Volatility Portfolio (XMLV) invests 1.2% of its holdings in Edgewell Personal Care. XMLV tracks a volatility-weighted index of the 80 least volatile S&P MidCap 400 companies. The YTD price movement of XMLV was -0.15% as of February 22, 2016.

The market caps of Edgewell Personal Care’s closest competitors are as follows:

  • Estee Lauder Companies (EL)—$33.8 billion
  • Clorox (CLX)—$16.7 billion
  • Church & Dwight Company (CHD)—$11.9 billion
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Moody’s downgraded Edgewell Personal Care

Moody’s Investors Service has downgraded Edgewell Personal Care’s CFR (corporate family rating) and its probability of default rating to Ba2 and Ba2-PD, respectively, from Ba1 and Ba1-PD. Moody’s also downgraded the company’s senior unsecured notes rating to Ba2 from Ba1 and lowered the Speculative Grade Liquidity (or SGL) rating to SGL-2 from SGL-1.

These actions reflect the company’s fall in earnings, debt finance share repurchases, and weaker liquidity profile. Moody’s believes that the company has a more aggressive financial policy. The outlook is stable.

Edgewell Personal Care’s performance in fiscal 1Q16

Edgewell Personal Care reported 1Q16 net sales of $495.1 million, a fall of 7.8% compared to net sales of $537.1 million in fiscal 1Q15. Sales from the wet shave, sun and skin care, and feminine care segments fell by 7.4%, 1.5%, and 3.4%, respectively, in fiscal 1Q16 compared to sales in fiscal 1Q15. It reported the 2013 restructuring charges of $18.5 million in fiscal 1Q16 compared to $9.2 million in fiscal 1Q15.

Its net income and EPS (earnings per share) fell to $23.7 million and $0.39, respectively, in fiscal 1Q16 compared to $105.1 million and $1.69, respectively, in fiscal 1Q15. It reported adjusted EBITDA of $94.4 million in fiscal 1Q16, a fall of 10.0% compared to fiscal 1Q15.

Meanwhile, its cash and cash equivalents fell by 2.5%, and its inventories rose by 6.9% in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio and debt-to-equity ratio rose to 2.9x and 1.72x, respectively, in fiscal 1Q16, compared to 2.5x and 1.67x, respectively, in fiscal 4Q15.

Projection

Edgewell has made the following projections for fiscal 2016:

  • flat organic net sales, including the negative impact of go-to-market changes through the end of the fiscal 3Q16
  • adjusted EBITDA in the range of $440–$460 million, including $20–$25 million of negative currency impact
  • adjusted EPS in the range of $3.20–$3.40
  • adjusted tax rate in the range of 30%–32%
  • spin costs in the range of $10–$12 million

Continue to the next part for a look at Canon.

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