Edgewell Personal Care Co (EPC) 2006 Q3 法說會逐字稿

Welcome to Q3 2006 Playtex Products, Inc. earnings conference call. [OPERATOR INSTRUCTIONS] I would now like to turn the presentation over to Ms. Laura Kiernan, Vice President of Investor Relations. Please proceed ma'am.

Good morning everyone, and welcome to our third quarter 2006 conference call. With me this morning are Neil DeFeo, Chairman, President and CEO; and Kris Kelley, Executive Vice President and CFO of Playtex. I would like to remind everyone of the cautionary language about forward-looking statements contained in our press release, which applies to all comments by management during today's call. We encourage you to read the Company's SEC filings and last evening's press release, which discuss in full factors that could cause actual results to differ from those made in any forward-looking statements.

Our remarks this morning will refer primarily to our results, excluding certain charges and gains, as in last night's press release and accompanying financial statements. For your convenience, a reconciliation of the results as reported, which is in accordance with GAAP to results excluding charges and gains, which is a non-GAAP measure is included in the consolidated statement of income data attached to our press release and on our Website at playtexproductsinc.com.

A replay of this call will be available beginning this afternoon and will run through the end of the day on November 2. The replay dial in is 888-286-8010 and the passcode is 67676492. To access the Web replay of this call, please go to the Investor Relations portion of our Website at playtexproductsinc.com NOw, I will hand it over to Neil.

Good morning and thank you for joining us on this call, everybody. For today's call, we will discuss a summary of third quarter results and the progress we have made against our goals. Kris will then take you through the numbers in more detail. We will answer some questions -- questions and answers and then we'll up end up about 11:45. In summary, we are pleased that we have had another quarter of solid results to add to our track record. We are executing our strategy, launching new products and carefully managing our fundamentals. And so, both sales of our continuing brands and net income are up versus a year ago. Net balances are down and as a result, interest expense is down considerably.

Our new product launches are on target, we remain on track to deliver our guidance for this year and we continue to make progress against our long-term goals. Now to highlight some of the details for the quarter, excluding charges and gains. For the 11th consecutive quarter, we grew net sales of retained brands, up 7% this quarter to $142 million. Sales growth was driven by progress in all three of our segments, feminine care, skin care and infant care. Gross margins in the quarter were about even with a year ago and we are trending as expected with year to date gross margins at around 54%.

Operating income was down $900,000 to $21.4 million from $22.3 million last year, primarily due to the lost operating income from divested brands of $2.3 million and also higher equity compensation charges this year of $600,000. Excluding these items, operating income would have been higher by about 10% due to the gains in retained brands operating income. Interest expense declined by $2.4 million in the quarter versus a year ago.

As we reached $100 million debt buyback target for the full year during the quarter, ahead of our original schedule. We are on target with our planned stock buyback during the quarter, bringing total shares repurchased to date to about 1 million shares at a cost of $11.6 million. Finally, net income for the third quarter of 2006, excluding charges and gains, was $5.2 million, or $0.08 per diluted share versus $4.5 million or $0.07 per diluted share last year. We're very pleased with these results.

Now, I'd like to take a look at our sales results by category. First, feminine care. Feminine care sales were up about 3% to $65.4 million in the quarter. This is a good result, especially when you compare it to last year's quarter, which was up 8%, due to strong promotions in the quarter. Growth was driven by plastic applicator tampon sales as a result of shipments of the new Sport tampon. This was partially offset by lower shipments of Gentle Glide due to promotion differences versus the prior year and the impact of the Playtex Sport launch.

Also, plastic applicator tampons SKU's, Slimfits and Portables, were down. To help make room for Sport at retail, some retailers switched out of some SKU's, which resulted in some of the decline of these SKU's. In total however, the introduction has resulted in a slight average increase in shelf space for total Playtex tampons. Continuing previous trends, Beyond cardboard applicated tampons were down in the quarter. We are also seeing some impact from the discontinuation earlier this year of Heat Therapy products.

Now, let's focus on Playtex Sport launch. While it's still very, it seems the launch is off to a good start. We are cautiously optimistic about the launch but since we've only just launched the product, it's too early to tell how we will fare overall. So far, we have successfully shipped Playtex Sport and it has reached about 90% of the retail stores. In general, they have all put the product on the shelf in the planagrams the way we were expecting.

As anticipated, competition has been very intense with heavy promotions in advance of the launch. Our Playtex Sport advertising began airing in late September on air, in television and in print in the October books. We also are beginning to run promotions with retailers. Technologically the product is an exceptional, with our research indicating that consumers, once they try it, a high portion of them will buy it. Our plastic tampon dollar market shares for the quarter were up slightly. While our total tampon share was down slightly in the quarter due to losses from Beyond.

Moving on to skin care. Skin care net sales grew 19% to $31.1 million for the third quarter of 2006 versus the prior year quarter, continuing the growth trends of the first half. Recall that our skin care category consists of three businesses, Banana Boat, Wet Ones and Playtex Gloves. The significant growth for this segment was due primarily to growth in Banana Boat, although Wet Ones also grew in the quarter and Glove sales were about even with a year ago. For Banana Boat, we are very pleased with the success we are seeing in the Company's continuous sprays and the tear free products. And overall higher consumption in response to increased investments in marketing.

International sales of a Banana Boat, primarily in Australia, were also strong in the quarter due to new products. So far, we have recognized lower estimated returns rates as a percentage of shipments for the 2006 season. And we are waiting for the actual returns to be received in order to judge the results of our total year returns reduction efforts. As you will recall, returns generally come in between the months if September and December for the previous season. Wet Ones hand and face wipes net sales grew in the quarter primarily due to increased marketing efforts. Gloves net sales were about even with a year ago, as the brand maintains good distribution across all classes of trade.

As you may know, we have been promoting breast cancer awareness and the National Breast Cancer Foundation with our Gloves over the past several months. This month, we are sponsoring a Playtex Living Gloves Charity Auction to help raise money for the National Breast Cancer Foundation. To find out more, or to make a bid, for the October Charity Auction items, please visit our Website.

Now, let's move to infant care. Infant care net sales grew 6% to $45.9 million in the third quarter of 2006 versus a year ago, with growth in Diaper Genie, cups and reusable bottles. Our reusable bottle business benefited from increased distribution at retailers earlier this year. This increased distribution, along with new packaging, has driven growth of resuable bottles. New cups featuring Disney's popular animated film characters, Nemo and Cars, began shipping in the second quarter and carried through to the third quarter, contributing to our growth in cups.

Consumption trends in cups remain strong with Playtex outpacing category growth significantly during the quarter. Diaper Genie sales grew in the quarter as we shipped the new Diaper Genie 2 product to retailers. This has helped offset declines in sales of the original Diaper Genie product, due to price reductions at retail, competitive activity and some cannibalization from the new Diaper Genie 2. So far the Diaper Genia 2 launch is going well and initial reaction from users has been very encouraging.

Looking at new products, we have a broad line of infant care products begin shipping late this quarter for January 2007 shelf resets at our major accounts. These new products include a new cup we call Create a Cup, which is a unique idea where children can actually put their own designs on cups. We are also launching a complete new line of Baby Einstein licensed infant feeding products including bowls, cups, plates and utensils. We are also launching a broader line of infant pacifiers and a complete line of new breastfeeding products. All of these are launching late in the quarter for the 2007 shelf resets. We will see how these new products do in the marketplace during the first part of the year. And we feel good about our reinvigoration of this business.

We will launch more than double the number of new products in 2006 versus 2005 and expect these products to contribute to future growth. So far this year, new products account for about 20% of net sales, which was our goal for the year. So in summary, our results in this quarter continue to indicate that we're making good progress against our strategy. Recall, we have a five point strategy and we're operating against this strategy. Year to date, we have delivered a 6% increase in net sales in retained brands and we expect to achieve about the same level of growth for the full year.

I am pleased that we are meeting the expectations that we set at the beginning of this year. Now, I would like to turn the call over to Kris Kelley who will provide you with some additional details on the rest of the P&L and go over our guidance for the year.

Thanks, Neil. Our gross margin for the quarter was 53.7% down only 20 basis points versus last year's 53.9%, despite about 100 basis point impact from continued higher overall raw material costs that are primarily affecting our infant care business. Increased freight costs have also negatively impacted our gross margins by about 25 basis points this year. Additionally, infant care gross margins were also negatively impacted by price reduction of the Original Diaper Genie in advance of the launch of the higher priced Diaper Genie 2.

Changes to our tampon manufacturing for the Gentle Glide down count packaging change, launching Sport tampons and volume decline in Beyond tampons have negatively impacted gross margins in fem care. On the positive side, margin improvement resulted from better mix and the divestiture of the non-core brands late last year. Margin improvements from this divestiture will begin to lap during the latter part of the fourth quarter. Gross margins also benefited from lower estimated '06 season Sun Care returns due to continued improvements in this area, as well as benefits from outsourcing Gloves production to Malaysia last year.

SG&A expenses were down $1.8 million in the quarter, due to the timing of advertising and promotion expenses particularly related to fem care. This will be more than offset by increased spending in the fourth quarter, resulting in double digit increases in advertising and promotion investments for the second year in a row. Equity compensation expenses were higher by $0.6 million versus a year ago. SG&A as a percentage of net sales declined only slightly due to the items I just mentioned, as well as for the impact of divested businesses sold in late in 2005, which had $13 million in net sales and minimal SG&A spending.

Total Company operating income decrease by $900,000, due primarily to the lost operating income on divested brands of about $2.3 million, partially offset by a margin gains on retained brands. As Neil mentioned, excluding divested brands and increased equity compensation expenses, operating income on retained brands would be up about 10%. By segment, fem care operating margins increased slightly in the quarter versus last year, even though gross margins declined. This is primarily due to the timing of advertising and promotional spending this quarter versus last year's third quarter.

Total skin-care operating margins were above a year ago due to the higher sales volume and the benefits I previously described in gross profit margins, including lower Sun Care returns and benefits from outsourcing of Gloves to Malaysia. Note, that the single digit operating margin in this seasonally low quarter for skin care are not as meaningful as the year to date trends, in which operating margins have improved from 22% last year to 25% of net sales so far in 2006. Infant care operating margins declined slightly year over year, due to the impact of higher raw material costs and price decreases on the Original Diaper Genie unit, partially offset by the higher sales volume.

Corporate operating expenses increased $1.3 million, in part due to higher compensation expenses than a year ago. Both equity compensation and planned bonuses for this year, given the rollout of bonuses to all employees in 2006, increased. As Neil previously mentioned, interest expense was down $2.4 million or 15% in the third quarter due to our bond repurchases. We repurchased $31.8 million of 9 3/8% notes during the third quarter. And to date in 2006, the Company has repurchased $100.3 million of notes, thereby meeting our goal for the year a little sooner than previously anticipated.

Also during the third quarter, the Company purchased an additional 500,000 shares of Playtex common stock at a cost of $5.8 million, as part of the previously announced stock repurchase program. Bringing the total shares repurchased this year under the plan to 1 million shares, at a cost of $11.6 million. Diluted shares outstanding of 63.2 million in the quarter, increased by 0.4 million versus last year's third quarter but were in line with our target of 63.5 million shares.

Now, on to cash flow and liquidity items. Total liquidity at the end of the quarter was $94 million, comprised of cash of $41.9 million and availability under the AVL revolver of $52.1 million. Free cash flow, defined as operating cash flow less CapEx, was defined as $72.2 million in the first nine months of 2006, versus $78.6 million for the same period in '05. The decrease was driven by higher capital expenditure in the '06 period of $5.8 million versus a year ago. in support of new product initiatives, as higher cash taxes, due to the tax benefits realized in 2005 associated to the American Jobs Creation Act, were offset by lower interest paid as a result of our deleveraging program. Cash flows from working capital sources was even in the nine month period versus a year ago.

Now, I would like to update our 2006 guidance for you for current operating trends, which again is based on results excluding charges and gains. Excluding net sales of the brands divested in 2005, net sales growth for 2006 is expected to continue in line with the 6% growth achieved in the first nine months of this year.

On a reported basis, net sales for '06 are expected to be down about 2% versus the prior year, due to the $48.6 million of divested brand sales in 2005's numbers. We still expect gross margins to be about 54% for the full year, as recent reductions in oil related prices are too late to impact the current year's results. As we previously mentioned, to support new product launch activity and maintain solid levels of spending on existing products, we expect to increase advertising and promotion investments in 2006 by at least $10 million versus 2005. We expect noncash equity compensation expenses of approximately $9 million for 2006. And we expect operating income to be within the middle of our original range of between $103 and $108 million.

Due to the acceleration of debt paydown under the Company's deleveraging program, interest expense is now expected to decline by approximately $9 million in 2006 versus 2005. Free cash flow for 2006 is still expected to be at about the same as last year, in the low $50 million range, including about $15 million to $16 million of CapEx and about $3 million of restructuring related spending. Taxes are still expected to run at about 38% of pretax income for the full year. Operator, will you please begin the Q&A?

[OPERATOR INSTRUCTIONS] And your first question comes from the line of Reza Vahabzadeh with Lehman Brothers. Please proceed.

Good morning. A question for you. You seem to have pretty good free cash flow here in '06, in '07. How do you think the use of free cash flow in '07 will work?

Well, as we've said previously, we look at the best way to use our cash, whether it's investing in CapEx and our new products, whether it's looking at acquisitions or whether it's buying back debt or stock. And we will just take that one step at a time. Obviously, some of those items are within my control and some aren't. So, we will just have to see how it goes.

Where is your RP basket on the bonds?

As you know, the restricted basket is covered by our 9 3/8 purchases and our stock buybacks. And it's -- based on what we just purchased, it's less than $20 million at this point in time but will increase as earnings increase over the future quarters.

And then as far as the base business is concerned, this is a quarter were you have mentioned increases in raw material costs and competition impacting your gross margin seemingly more than the other quarters. Is that a trend that you would expect for the fourth quarter? Or is this a one-off quarter? Any comment on gross margin trends dynamics, I would appreciate.

I think as far as raw materials are concerned, we've consistently said raw materials have impacted us by about 100 basis points all year long. It's about 100 basis for the quarter and it's 100 basis points year to date. And as I mentioned, I don't see that trend changing in the fourth quarter. Where we will be in 2007 based on prices and our prices, raw material prices will trend is anybody's guess. They are down now, but who knows how long they will stay down or what will happen? So, we'll have to see on that side.

Thank you.

And your next question comes from the Alexis Gold with UBS. Please proceed.

Good morning. Just to follow up on the question on the RP basket, does the $20 million that you mentioned include carve-outs for the $10 million at 9 3/8% that you can buy back annually? And has that accumulated over the last couple years since your were not able to buy them back prior?

That is all inclusive.

And you talked a little bit about uses of free cash flow, mentioned acquisitions. If you where to make acquisitions, where would you focus and what kind of multiples would you look to pay?

The answer to the second question is the lowest multiples we could possibly pay and only the specifics will tell us. But we have a focus in acquisitions, looking for acquisitions, which would be enabling for us. With a particular focus on categories we're now in or close-in categories and in international where we have little infrastructure and would like to acquire infrastructure. Obviously, we have said that we don't want an acquisition that is diluted. Acquisitions have to accretive for us. And we'd obviously have to be able to manage these, so they'd be in businesses that we know or are closely familiar with.

And it sounds like you are gearing up for a pretty significant launch of new products in '07. It sounds like in '06, you did achieve the 20% growth target for new products. Is your '07 target for new product growth similar? Or are you looking even for more growth in new targets?

Our targets for '07, although, it is still early are to launch a similar number of new products as we did in '06.

I thought you has said at one point you were going to launch more than double the number of new products.

We're going to launch double -- we said we would launch double the products in '06 that we did in '05 and we have achieved that. And then, once we've achieved a higher level of products, we expect a higher level of launches to continue through the subsequent years.

That is helpful, thanks very much.

And your next question comes from the line of Lori Scherwin with Goldman Sachs. Please proceed.

Can you please talk about A&P? The ratio has been slowly creeping up, which arguably is a good thing. And it sounds like it will be up double digits again this year. Just looking forward longer-term and just thinking about your business and all these new categories and new launches, do you think this A&P ratio as a percent of sales, or at least where you will end '06 with is the new right level? And then from here, spend just grows with sales do you think there could still be a further step up in the future?

I can't answer the future particularly, Lori, although I can tell you that A&P is related to the level of new product launches that we have. Obviously, if you launch new products, you've got to spend money for the various things that you need to do to establish these in the marketplace. We believe in advertising a as a method of building our business. And we look at it as an investment and not an expense. So, I think you can expect us to continue to strongly promote and advertise our businesses. And again, what the future brings will depend upon the products we launch and the timing of those products.

Neil, when you first came in, you were looking at initiatives to evaluate more efficiently spending. Any update on what those learnings have taught you?

No, actually. We have learned quite a bit but I'm not going to share for them for competitive reasons, candidly. We are continuing to try to improve the effectiveness of al elements of our marketing plans. We've invested a considerable amount of money is in testing various plans and market research but I am not going to share that with you particularly.

In terms of the quarter, is it possible to quantify how much sales benefited from pipeline for new products?

No, we haven't calculated that. It is kind of hard to do.

Could you talk about maybe consumption trends and what they look like on an all-channel basis?

For which categories, Lori?

Fem care.

Consumption for the quarter was solid for us, I think it was flat in total. I don't have the numbers. Slightly down. Driven by a declines in Beyond, which offset the slight gains that we saw in Gentle Glide and the small initial results of Sport and also some gains in C&R personal cleansing cloths.

Do you have any more plans to do something to fix Beyond? Is it on a short leash at this point? I think last quarter you talked about launching new count sizes. That clearly didn't work of this quarter. At some point, do you make the decision that maybe it is not viable?

Well, I am not going to discuss our future plans with Beyond until we announce them. Obviously, we still have a lot of interest in Beyond and it's a superior product from our testing. And we are just trying to work through right now what we are going to do as our next steps. Our focus currently is on launching Sport. And that is taking a lot of our attention.

Thank you.

And your next question comes from the line of Kathleen Reed with Stanford Financial. Please proceed.

Good morning. Just to follow-up on that question there. Just in your prepared remarks, if Gentle Glide was down, Slimfits and Portables down, and Beyond down, we can assume then that the gain in fem care in the quarter was all from Sport. Unless I've missed some other piece there that was positive. Is that fair?

Well again -- in general, you are right. But that is to be expected because what the trade did against shipping in Sport, of course, was they took a look at the anticipated consumption of Sport and what they would anticipate for Gentle Glide and I think they made some minor adjustments. And there's obviously some cannibalization in Beyond, as we mentioned.

So, with those trends, it seems like maybe that's just as expected for this quarter. So going forward, your next quarter then, we should expect to see more normalized results from Gentle Glide and some of those other products?

We will have to see. I'm not going to predict by elements of the business. We will just see what happens. I am optimistic about our tampon business.

Good. On the Sun Care business, can you give us any magnitude about how much returns are down or how much you've accrued lower for this year or just some more information on that? And if you think then there is still good potential to decrease them even further in '07?

Yes, our returns this year are trending, right now, down. The rate of return is down about 5% versus last year. There is significant more benefits, reductions and returns going forward this year. Obviously, from a standpoint of watching the new products and how well they did in the volume, it was obviously difficult to know exactly how much we are going to sell through etc. So that did impact our ability to adjust returns because obviously we didn't want to miss any upside based on how these new products sold in very well. But, to your point, it is down again this year only about 5%. Not as much as we want but the year isn't over. And we will see how the actual returns come in over the next quarter. And give you an update in February.

And I think also, to sum the Sun Care business, you changed your terms with retailers. Did that already go through or is that something new for '07?

That went through for the '06 season for a lot of our retailers. There's a few retailers obviously pushed back and we are working on that. And those will come into line in '07 or '08. But to your point, I don't have 100% compliance but we will get there.

And then last question, I think you said that your SG&A benefited this quarter from some timing shift with A&P, so we should have a pickup in A&P in your fourth quarter?

Correct.

And I just -- in your fourth quarter of '05 there was another equity compensation amount of one-time of $5.8 million. So, the question is, would we still expect to see SG&A next quarter? Is it a little strange quarter because A&P is going up but you anniversary a weird compensation number from last year that we shouldn't have or is that going to repeat again?

No, the equity comp, I gave you the -- it is going to be $9 million for the year. And I think the year to date number is somewhere close to $7 or $6.5. So, it will be in that $2.2 range or so. But out year to date SG&A percentage is running at about 37%, 36%. The fourth quarter will be significantly higher than that because of the A&P spending. So, the year to date will trend higher than that. The full year will be higher than that 36%.

That is helpful, thanks very much.

And your next question comes from the line of Joe Altobello with CIBC World Markets. Please proceed.

First, quick question, just to clarify, the 90% distribution you quoted for Sport, is that a current number or is that what you saw in the September quarter?

That is the current number. It is not accurate enough for me to know on a give day Joe. That is where we are now. I think we were somewhat below that on the October 1. Remember, we didn't begin shipping Sport until very late August. And so it builds. There is no way to know for sure. But we've achieved the distribution now that we wanted to and achieved it at the pace that we expected to.

Second, on new product pipeline for '07, you've obviously mentioned that you expect to launch the same number of new products next year as you did this year but this year you've got Sport obviously, which is a pretty big product. Is there a way to measure, and this is probably a tough question, but is there a way to measure qualitatively the pipeline next year versus this year?

Sure. I think, in fact you mentioned -- this is a very good point. If we were to add up the absolute number of new SKU's launched year-to-year, I'm sure it would not be exactly the same. The intent of our remarks though, is to indicate that the intensity of new products across all of our categories will be similar. But they might vary, we might have more Sun Care and less infant care or more fem care and less --. But the intensity, we expect to maintain the same kind of intensity in new product activity. Although, next year's launch -- if this year's launch, for the example, was the biggest launch was Sport, maybe next year's will be in another category. Who knows?

And then finally, on raw materials, I think Kris had said that you guys are 100 basis points year to date and you're talking about 100 basis points of pressure in the fourth quarter. I would have thought that actually that number should come down a little bit, given the fact that the fourth quarter is probably the easiest comparison on the raw materials front?

We have no way to know for sure. Maybe we're being conservative. But we haven't seen any let up of the pricing. Oil has gone down quite a bit but the pass-through to those savings has not materialized. And maybe it will if the price stays down. But I think 100 basis points is probably a good assumption for the fourth quarter also.

And also, on margins will be affected by it. We are going to be lapping the assets of the divestiture. So, we won't be getting the benefit from the divestiture.

Thanks.

Next question is from [Lauren de Santo] with Morningstar. Please proceed.

Yes, my question is about the infant care division and the operating profit there. Specifically, the decline. And I was wondering if you could quantify a little bit how much that relates to the discounted sales of Diaper Genie versus the investment that you put in A&P, I assume, behind Diaper Genie 2.

The biggest impact to our infant care margins is the raw materials, year to year. So that would be the number one fact. And number two, as far as whether it's the DG price decline versus anything else, it's -- they're close.

Any kind of feel for when you might see those -- that decline reverse?

As -- we just launched the new improved premium priced Diaper Genie model in late July. And so therefore, as that starts -- as the volume on that starts to increase and increases versus the volume on our original lower-priced model, you'll start to see that margin swing.

Thank you.

And your next question come from the line of Connie Maneaty with Prudential. Please proceed.

I came in a little bit late. So, I apologize if this has been asked and answered. But have you given any preliminary outlook for 2007 and if not, could you do that?

No, we have not and we will not give an outlook for 2007 until we announce our full-year results for '06, probably in that conference call.

Are you still comfortable with your target of $180 million of EBITDA in 2008?

We're not making any changes in that. We're still comfortable with it. We have no data that would indicate any change. We are on our plan for this year. So, we've maintained that guidance.

So, how should we think about the rampup of EBITDA over the next couple of years? Is it a hockey stick, all in 2008 or is there an appreciable increase in 2007?

There is an old expression in the newscaster business, "I'll see it film at 11." What I mean by that is that really is going to depend upon what we put out in '07. And we will announce that when we announce our '07 guidance.

And then the final question is, there has been a big change in your shareholder base over the last nine months. If we look at Bloomberg, at the end of last year, your top five shareholders accounted for 25%. And now, the top five, and it is a different group, represents 45% to 50% of the shares. So first of all ,what do you make of that? And secondly, has there been any move by any of the newer shareholders for Board seats for greater influence?

Well, no to the second question. To the first question, I am not sure I agree with your numbers. At the end of last year, [Haasuite] Partnership was the biggest holder of our shares. And they collectively owned about 1/3 of our shares.

But once Haasuite broke?

Once Haasuite broke in January, then we don't -- we're not -- it went to a lot of players and our shareholder base has changed. Some people have accumulated substantial equities -- substantial position in our equity. And I look at that as a vote of confidence, candidly, in the management. I don't know, Kris, if you have any comments on this?

No, but the other thing I think to notice is the makeup of that top group other than one new major new player. It's really the same players increasing their holdings in general. So, they're believing the story and increasing their holding.

Thank you.

Your next question comes from the line of Linda Bolton Weiser with Oppenheimer. Please proceed.

Colgate-Palmolive, yesterday, on its conference call mentioned that they did see some additional inventory reductions by certain retailers. Did you see any of that again this quarter? And then my second question has to do with Playtex Sport. I'm just wondering if you have any market research data or anything that indicates the sustainability of a price increase when the innovation is based on the applicator, architecture rather than the string and absorptive material?

We are not seeing any real change in the trades' inventory reduction practice. We haven't seen anything like that. Maybe it's occuring, maybe it's not but we haven't seen it. In terms of consumer research which indicates the importance of different pieces of architecture of the tampon, I have nothing to share on that. We have certainly done a lot of consumer research on Sport and I will tell you that people who try it, like it. And we have a very high-level of, based on research, high-level of purchase intent after usage.

To you have any early data reads on where you think the sales might be coming from? Whether new people into the Playtex brand franchise, or do you think you might be cannibalizing some of the Gentle Glide? Is there any indication on that so far?

No, indication, it's really too soon. We would expect some of the Gentle Glide -- some of the Playtex franchise to be cannibalize but we have no data yet. It is just too early.

Thanks, Neil.

Your next question comes from the line of Jason Gere with A. G. Edwards. Please proceed.

Two quick questions, one on organic sales. Your 6% for the year would indicate something under 5% for the four quarter just on the retained brands, of course. And looking at last year, obviously it was, I think, a 3% comp. Can you just kind of flesh it out a little bit? Is it -- especially when you're talking about some of the new products that are going to be launched? Are those going to ship to retail in the fourth quarter or is that to be right after the new year?

Again, on our full-year guidance, we said about 6%. SO, I am not saying it's 6.0 and therefore you can do the math and it's going to be 5% versus 6% versus 7%. On our new product launches, particularly in infant care. As you know, the set is reset in January/February time period, so the shipments out of the new products are very late in the quarter versus the October time frames. So, they don't impact the quarter as much as you would normally think. So, that is where our guidance comes from.

And then going back to, I think, an earlier question on SG&A and kind tying into all of your guidance. To make a long question short, SG&A for the year should be roughly in line with what it is last year based on the parameters that you have laid out? When you factor in the fourth quarter will have higher A&P but also, I think there's maybe $2.5 million of equity compensation versus kind of that number from the prior year. If you look at it all together, you're looking at SG&A that's something maybe slightly north of 40% for the fourth quarter?

It should be right around the 40% but whether it is 40%, 41%, that is a good guesstimate.

That is it. Thanks.

Your next question comes from the line of Bill Chappell with SunTrust Robinson Humphrey. Please proceed.

A couple questions on skin care. You have impressive results for the quarter but it did look like if Coppertone's growth was a little bit faster for the quarter and some of the market share has fallen off a little bit, that combined with, as we look to next year, we have tough comps with the mist product. Do you think that brand can continue to grow at above 5%? And are you losing share to Coppertone or others?

First of all, we have not disclosed our Banana Boat sales growth for the quarter. We just did our total skin care numbers. And so you're comparing a little bit of apples and oranges when you compare us to Coppertone. Second, I would say that we continue to be very pleased with our Banana Boat business. We did build shares this season for the whole season. We think we gained about 1 share point over the entire season. And I would expect next year with our launch of new products for us to continue to have a good year -- season on Banana Boat. Of course, only the future will tell for sure. But as you may recall from our last conference call, we are launching, I believe, 13 new SKU's on Banana Boat this year. For next season. And we are quite excited about those.

And with the -- on the new returns policy, won't you see the benefit of that in the first quarter sales or would you see it in the December quarter?

It's -- obviously, I booked the adjustment to my returns provision as soon as I have the best information. So, as I close the books in January or early February I use whatever data I have through that. So, by that time period, we usually have a majority of it in. But again, they can still trickle in in February or March depending on how well the trade executes returns, as you know. It's one of the reasons why they want to get out of it because they don't execute returns very well and it takes a long time for it to get out of their process and into our return centers.

That is great. One Kris, final thing, it's certainly a positive that you've completed $100 million of debt repurchase. But mostly, I am surprised that you didn't continue to go well past the $100 million. Any reason not to repurchase debt in the fourth quarter or just you have better uses of cash going into next year?

The $100 million was not a stop gap. We can or we might continue to pass that. It all depends. We're also, as you know, going into our working capital build season. So, you have to take that into consideration as well as the interest payment we have coming up on December 1. So, all of that taken into consideration, that's -- we are where we are.

But in principle, Bill, we'd like to see lower debt for the Company.

Me too. Thanks so much.

There are no further questions. I would like to turn the call over to Neil DeFeo for closing remarks.

Well, I want to thank you all for coming to our conference call. We continue to be pleased with our results. We're making good progress across the board against our strategy, our sales are up in line with our forecast, our profits are up. And I am very proud of the Playtex team of associates for the results they have been able to achieve so far this year. I am optimistic about the future. We're on track to deliver our previously forecasted guidance. I want to thank you all of you for participating in this conference today and for all your interest in Playtex. Please feel free to follow-up with Laura Kiernan on any questions you may have after this call. Thank you so much. Bye, bye.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a great day.