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Edgewell Personal Care’s Response to Procter & Gamble’s Lawsuit

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Price movement

Edgewell Personal Care Company (EPC) has a market cap of $4.6 billion. It fell by 1.1% and closed at $77.17 per share on August 23, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -2.9%, -7.2%, and -1.5%, respectively, on the same day. Edgewell Personal Care is trading 4.7% below its 20-day moving average, 6.6% below its 50-day moving average, and 3.0% below its 200-day moving average.

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Related ETF and peers

The SPDR S&P 400 Mid-Cap Value ETF (MDYV) invests 0.40% of its holdings in Edgewell Personal Care. MDYV tracks a market-cap-weighted index of US stocks. The index uses three factors to select value stocks from the 400 stocks chosen by the S&P Committee. MDYV’s YTD price movement was 14.8% on August 23.

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

  • Estee Lauder (EL) – $35.1 billion
  • Clorox (CLX) – $16.9 billion
  • Church & Dwight Company (CHD) – $12.9 billion

Latest news 

Edgewell Personal Care gave the following response to Procter & Gamble’s lawsuit:

“We believe P&G’s allegations have no basis. Gillette’s MACH3® patents have expired and we are confident in the quality and performance of our private label products. We will vigorously defend ourselves against these meritless claims and will continue to support our valued customers around the world.”

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Performance in fiscal 3Q16

Edgewell Personal Care reported fiscal 3Q16 net sales of $645.1 million—a fall of 4.1% compared to net sales of $672.9 million in fiscal 3Q15. Sales of the Wet Shave, Sun and Skin Care, and Feminine Care segments fell by 1.3%, 1.3%, and 6.7%, respectively, in fiscal 3Q16—compared to sales in fiscal 3Q15. The company’s gross profit margin rose by 0.37% in fiscal 3Q16—compared to fiscal 3Q15.

Its net income and EPS (earnings per share) rose to $36.7 million and $0.61, respectively, in fiscal 3Q16—compared to -$72.5 million and -$1.17, respectively, in fiscal 3Q15. It reported adjusted EPS of $0.66 in fiscal 3Q16—a rise of 53.5% compared to fiscal 3Q15.

Edgewell Personal Care’s cash and cash equivalents fell by 2.9% and its inventories rose by 0.24% in fiscal 3Q16—compared to fiscal 4Q15. Its current ratio and debt-to-equity ratio fell to 1.7x and 1.6x, respectively, in fiscal 3Q16—compared to 2.5x and 1.7x, respectively, in fiscal 4Q15.

Projections

Edgewell Personal Care made the following projections for fiscal 2016:

  • net sales to fall by 4%
  • adjusted EBITDA of $440 million–$450 million—this includes $10 million–$15 million of negative currency impact
  • net income in the range of $176 million–$185 million
  • adjusted EPS of $3.45–$3.60
  • adjusted effective tax rate in the range of 24%–26%
  • restructuring-related costs of $35 million–$40 million and $10 million–$15 million for fiscal 2016 and fiscal 2017, respectively
  • incremental restructuring savings of ~$15 million for fiscal 2016 and an additional $40 million–$50 million in combined savings in fiscal 2017 and fiscal 2018

In the next part, we’ll discuss Sealed Air (SEE).

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