Edgewell Personal Care Co (EPC) 2017 Q1 法說會逐字稿

Good day, and welcome to the first-quarter FY17 earnings conference call.

(Operator Instructions)

Please note, this event is being recorded.

I would now like to turn the conference over to Chris Gough, Vice President, Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us for Edgewell's first-quarter FY17 earnings conference call. With me this morning are David Hatfield, our President, Chief Executive Officer and Chairman of the Board; and Sandy Sheldon, our Chief Financial Officer. David will kick off the call, then hand over the call to Sandy for earnings and outlook discussion, followed by Q&A.

This call is being recorded and will be available for replay via our website, www.edgewell.com.

During the call, we may make statements about our expectations for future plans and performance. This might include future sales, earnings, advertising and promotional spending, product launches, savings, and costs related to restructuring, changes to our working capital metrics, currency fluctuations, commodity costs, category value, future plans for return of capital to shareholders, and more. Any such statements are forward-looking statements which reflect our current views with respect to future events. These statements are based on assumptions and are subject to various risks and uncertainties, included those described under the caption Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2016. These risks may cause our actual results to be materially different from those expressed or implied by our forward-looking statements. We do not assume any obligation to update or revise any of these forward-looking statements to reflect new events or circumstances.

During this call, we will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures are shown in our press release issued earlier today, which is available in the Investor Relations section of our website. Management believes these non-GAAP measures provide investors valuable information on the underlying trends of our business.

With that, I would like to turn the call over to David.

Thanks, Chris, and good morning, everyone.

Before Sandy takes you through the results, I'll briefly comment on a few highlights in the quarter on our priorities and on our outlook for FY17. From an operational perspective, we had a solid start to the year. We are competing well in the Wet Shave and Sun and Skin Care, despite an intense competitive environment and we are making solid progress on our Zero-Based Spending initiative. Like many other companies, we are facing increased macro-economic uncertainty, including additional headwinds from the strengthening US dollar. However, we are encouraged by the performance of our Manual Shave business, particularly in North America. In a category facing many forces of change along with intense competition, we maintained our focus on four key strategies: delivering ongoing innovation, leveraging and expanding our full portfolio, expanding internationally, and investing against growth brands and channels.

We saw positive results from the strategies in this past quarter. We gained share globally in the Manual Shave, with solid improvement in most of our largest international markets, as well as in the US. We grew sales and gained share in US Men's and Women's Systems benefiting from branded and private-label distribution gains. We gained share in Disposables, in our core brands, Xtreme3 and Hydro, as well as in private label. Our private label offerings continue to grow and gain share behind several US customer private brands and behind the Fits Mach3 proposition, generally. We are getting good results in non-measured channels, including online, where we continue to gain share in omnichannel and pure-play retailers.

We're excited about innovation coming to the market this quarter. For example, just take our actions in Women's Shaves. In Women Systems, we're launching the next-generation Hydro Silk with hydro blue serum. We are also launching QUATTRO U, a great-performing mid-tier women's disposable product, and we are rolling out new, improved, more impactful, packaging across our Women's product line.

As we look to the remainder of the year, I am confident we are using all of the levers at our disposal to drive top-line growth and improve operating margins in a line with our algorithm. These levers include ongoing performance in the North America Wet Shave and expected return to solid growth in International Wet Shave in the back half of the year; continued international growth and Sun and Skin Care; new innovation across our product lines; the integration of the Bulldog acquisition into our portfolio; and our ongoing cost reduction and productivity work across the enterprise. Taking all of those factors into account, we are maintaining our organic net sales outlook for the year at low single digits and we are maintaining our outlook for adjusted EPS in the range of $3.80 to $4.00 per share.

Thanks, and with that, I'll hand it over to Sandy.

Thank you, David, and good morning, everyone.

Net sales in the quarter were $485 million, a decrease of 2% on a reported basis and 2% on an organic basis, as the incremental net sales from the acquisition of Bulldog closed early in the first quarter, offset the negative impact of currency. In Wet Shave, volume growth in North America Razors and Blades was more than offset by declines in Shave profits and International Wet Shave. Sun and Skin Care net sales were up, driven by international volume growth, and Feminine Care volumes declined in the quarter. I will review more details of the drivers from a segment perspective in a few minutes. From a geographic perspective, North America organic net sales were flat with the prior year and international organic net sales declined 6%. Gross margin increased 100 basis points, primarily due to lower material costs, incremental restructuring savings, and favorable transactional foreign exchange, partially offset by higher startup costs related to the Feminine Care production consolidation into Dover, Delaware.

A&P expense was $50.6 million in the quarter, an increase of $4 million or 100 basis points as a percent of net sales, led by higher planned spending in support of our Feminine Care and Sun and Skin Care segments. SG&A expense was $94 million, or 19% of net sales. Prior year SG&A was $100 million, or 20% of net sales, which included $7 million of spin-related costs. Excluding the impact of these spin-related costs, SG&A was relatively consistent with the prior year. Other income was $2 million, generally in line with the prior year results and primarily reflecting the impact of the net gain from hedging contracts.

Interest expense was relatively flat and the effective tax rate was 25.4%, versus 22.8% in the prior year. Excluding tax associated with restructuring expenses, the effective tax rate was 26.3%, a 140 basis-point decrease from the prior year, due to more favorable mix of earnings and lower tax rate jurisdictions. GAAP diluted EPS was $0.58 in the quarter, as compared to $0.39 in the prior year, due to lower restructuring and spin cost this year. Adjusted EPS for the quarter was $0.66, relatively in line with $0.68 in the prior year quarter. Net cash used by operating activities was $59 million, in line with the prior year and reflects ongoing seasonality of the business, primarily in Sun Care, as well as the timing of payments of year-end accrued expenses and interest. We continue to estimate positive operating cash flow for the full year and free cash flow to exceeded 100% of GAAP net earnings.

We completed share repurchases in the quarter of approximately 800,000 shares, for $58 million. As a reminder, we paid down international debt by $277 million early in the 1st quarter, which we discussed in our year-end earnings of financial disclosures. And finally, we acquired Bulldog Skin Care early in the first quarter, for $34 million, which is reflected in our cash flow statement.

Now turning to segment results. Wet Shave organic net sales decreased $8 million, or 2.4%, largely driven by a $7.5 million volume decline in Shave Preps. The largest driver of the decline in Shave Preps was in North America, where we are impacted by planogram losses in a major customer in Q2 of 2016. This is the last quarter impacted by these losses. Over the last three quarters, the impact was largely offset by new listings at a major club customer, gained in the first quarter of FY16, that we have now anniversaried.

Overall organic net sales for Wet Shave in North America were up 4%, driven by higher volumes and share gains in Men's and Women's Systems, partially offset by the decline in Shave Preps. International organic net sales declined 8%, primarily driven by lower volumes in both Men's Systems and Shave Preps, in part due to timing of shipments related to an upcoming price increase in Japan. Organic Wet Shave segment profit increased $4 million, with improved gross margin driven by lower material costs, favorable transactional foreign exchange, and restructuring savings.

As measured by Nielsen, the US Manual Shave category was down over 6% in the latest 12-week data, with declines in Men's Systems and Disposables. Men's Manual Shave was down nearly 9%, but when factoring in non-measured channels, we believe the US Men's category was down approximately 3%, and the overall category was down around 3% as well, due to Men's and Disposable softness, [acksay-ohsay]. From a share perspective, globally we are competing well, gaining share in key non-US markets, as well as gaining share in the US. Versus a year ago, our US share was up 160 basis points in Manual Shave, driven by market share gains in Men's, Women's and Disposables. Note that our US corporate-branded share results continue to be impacted by a transition of our opening price point value-branded product offering in a major retailer to a private-label product line.

Sun and Skin Care net sales increased nearly 8%, including the incremental impact of the Bulldog acquisition. Organic net sales increased about 2% in the quarter, driven by volume growth in Latin America. North America organic net sales declined $2 million, due to a shift in the timing of shipments between quarters compared to a year ago, as well as the company's decision to exit the private-label Sun Care business. The first quarter net sales impact from exiting the private-label business was about $1 million, with an estimated impact of $9 million for the full year.

Organic segment profit decreased $0.3 million, driven primarily by higher planned A&P spending, partially offset by restructuring savings. Keep in mind the fiscal first quarter is seasonably a lower point for Sun and Skin Care sales and profitability. Within the US Sun category, consumption was up nearly 6% in the quarter, with our share roughly flat. As a quick update on Bulldog, we are pleased with the financial and market share results in the quarter, as well as the commercial plans the team is putting in place over the balance of the year. Integration is progressing well, with back office activities underway and international expansion plans and development.

Feminine Care organic net sales decreased $3.4 million, or 3.7%. Sport branded pad and liner volumes were down approximately $2 million due to distribution losses, which are expected to continue through the balance of the year. Tampon net sales were also down, due to competitive pressure and soft consumption in the year. These declines are partially offset by higher volume in Stayfree pads and Carefree liners. Feminine Care segment profit decreased $9.3 million, driven by increased product costs, higher A&P spending, and lower volumes. Product costs were unfavorable, as nearly $7 million in production startup costs related to the transition of manufacturing to Dover, Delaware, were only partially offset by restructuring savings and lower material costs. These startup costs are expected to impact segment profitability for the next two quarters.

Overall, the Feminine Care category was down slightly by 0.5% and our market share was lower by 0.7 points. While each segment declined due to weak consumption trends and distribution losses, we are holding share in Sport tampons and Carefree liners. While the Sport branded pad and liner net sales are anticipated to decrease over the remainder of the year, we have plans in place to continue to invest in core brands, Sport tampons and Carefree liners, as well as launch innovation in Sport tampons.

In our All Other segment, which is primarily infant care, organic net sales decreased $0.5 million or 1.5%. This is the fifth consecutive quarter of organic net sales growth in our Diaper Genie business. The turnaround in the Diaper Genie business has been critical in stabilizing the infant care top line and profit.

I would like to turn to our outlook for the full fiscal year. As David mentioned up front, we continue to see macro-economic uncertainty, competitive pressure and currency volatility. We aren't immune to the impacts of these, but based on the results through the first quarter, current spot exchange rates, and what we know today, we are maintaining our previously stated outlook for organic net sales and adjusted EPS.

Let me comment for a minute on the impact of currency. Based on current spot rates, negative foreign currency translation effects on net sales are now expected to be $35 million or 1.5%. With a significant amount of effort and focus across the Company, dedicated to driving productivity and cost savings, we expect to be able to mitigate the current estimated impact from currency on the bottom line. While we will continue to take a balanced approach to investment in the business for the long term and margin expansion in the year, further unfavorable changes in currency may impact our current outlook for adjusted EPS and adjusted operating profit margins.

For the full FY17, we estimate that organic net sales will increase low single digits and we now estimate that reported net sales will be in the range of flat to up 2%. This includes an estimated 150 basis-point headwind from currency and an estimated 50 basis-point benefit from the Bulldog acquisition. Our GAAP EPS outlook is in the range of $3.60 to $3.80 and our adjusted EPS is estimated to be in the range of $3.80 to $4.00. Adjusted operating income margin is anticipated to expand by 50 basis points. The effective tax rate for the fiscal year is estimated to be in the range of 27% to 28%.

The full-year estimate for restructuring-related costs is $20 million to $25 million in FY17. Incremental restructuring savings are expected to be approximately $20 million to $25 million in 2017, and an additional $20 million to $25 million in 2018 and 2019. The Feminine Care production move to our Dover plant is 2 to 3 months behind schedule, and as a result project costs have increased, and some anticipated savings will be pushed back into 2019. The rest of our restructuring projects related to Wet Shave and Sun Care footprint changes are tracking on schedule.

Let me wrap up by addressing our Zero-Based Spend initiative. The project is progressing well, and on a preliminary view, we have estimated that we can deliver $35 million to $45 million in net savings over the next two years. Savings will begin in the back half of FY17, and our current outlook incorporates preliminary net savings estimate for $10 million to $15 million in FY17.

As we mentioned in our previous outlook, we anticipate that net sales and earnings growth will not be uniform by quarter, due to the timing of ongoing strategic investments, product launches, shipments and pricing actions, restructuring savings, and A&P trade spend, we expect organic net sales to be down through the first half of the fiscal year, with growth in the second half of the year. Additionally, we expect adjusted EPS for the first half of FY17 to be down in the mid-single digits, compared to 2016, with growth in the second half of the fiscal year.

Coming into the year we said we would take a balanced approach with respect to investment in the business and delivering margin expansion. Based on the current outlook for our core segments, Wet Shave and Sun and Skin Care, as well as our ZBS initiatives and restructuring projects, we believe we have the levers in place to overcome the additional currency and the Feminine Care headwinds and meet our financial objectives for the year, while maintaining our investments and competitiveness.

Thank you, and with that, we'll open it up for questions.

We will now begin the question-and-answer session.

(Operator Instructions)

At this time we will pause momentarily to assemble our roster. The first question comes from Bill Schmitz, Deutsche Bank. Please go ahead.

Operator, maybe we will go back to Bill.

Our next question comes from Ali Dibadj, Bernstein. Please go ahead.

Hi guys. A couple of questions actually.

One is, just from a top-line perspective, clearly disappointing, certainly relative to consensus on organic basis -- you talked a little bit about it, but can you help us quantify and really understand precisely what caused some of the issues between macro, which you mentioned, competitive situation or company specific factors.

And then, as you think forward, which of those do you really expect to get better? Is it just some of these one-time company-specific stuff or what do you expect to get better and are you seeing any signs of that yet? That's my first question.

Okay. Good morning. It was a little bit of a soft quarter. We actually saw some of it coming. We were going up against some relatively strong year-ago comps. We saw timing of several international programs that were off-cycle.

Fem Care, we saw some distribution losses and the Shave Prep by one quarter of misalignment were all factored in to our forecast for a flat quarter. We actually came in softer than that and that was really due to three things.

One is the timing of our US Sun shipments to a major customer -- it was a push out, so that will come back in Q2. The second factor was that Fem Care suffered more than we thought, due to facing losses into listing losses. We don't see that coming back short-term. So I think Fem Care is going to be somewhat softer for the year than we thought.

And the third shortfall versus the flat outlook, was associated with a price increase that we are taking in Japan. Shifts in the timing of the shipments, associated with managing retail inventories and returns, meant that we came in somewhat softer than even we planed for Q1. That is to come back in the back half of the year. So there were some puts and takes. The first and the third factors will come back. I think Fem Care will be somewhat soft for the year.

On the positive side, I think we're seeing better-than-planned trends in Wet Shave, behind emerging markets and those distributor markets where we change go-to-market are up 12%. We see strength there and in Latin America generally.

So just to clarify, on Wet Shave, except for Japan, even with the competitive pressure you described before and the ship-to private-label, doesn't seem like anything else was a surprise except for Japan as a follow-up. And you say, excluding spin-related restructuring costs, SG&A as a percent of sales was flat year-on-year, and so I'm just trying to understand a little bit more about where ZBS is actually was working. So thanks.

On your top-line question, I think that is generally true, from a Shave point of view. It was mainly Japan that was softer than our outlook.

Yes and on SG&A, we are relatively flat in the quarter. Our ZBS savings we anticipate will be much more back-end loaded in the year. However, we did have some come through this quarter, but they really were offsetting some of our higher investment spending in the quarter. So, we've continued similar to what we had last year, to invest behind IT systems, some of our marketing and e-commerce initiatives, as well as, obviously the investment we are putting into implement ZBS. So, for the most part, the investments were mostly offset by some of the smaller, incremental ZBS savings we are starting to see this quarter.

Okay.

Thank you Ali. Operator next question please.

Our next question comes from Olivia Tong, Bank of America. Please go ahead.

Olivia Tong, please go ahead.

We will move on to our next questioner. Our next question comes from Jason Gere, KeyBanc Capital.

Okay, thanks. Hey guys, two questions -- one, I guess you're talking about the innovation, it seems like it's more second half-weighted. I guess I want to know a little bit more on the Women's Shave. The innovation that is coming, are you getting incremental shelf space, is it replacing any old legacy brands? So that is the first question. If you could just talk about the cadence of the innovation and whether there is incremental shelf space in the second half on that.

Yes, I think it is fair to say that the Hydro Silk, which is the next generation of our current Hydro Silk product, I think that will be more of a replacement of our current facings. We think it is a great product.

The market testing results indicate that the consumers raised purchase interest scores and the use-testing has been very solid. But that should be just an upgrade on our current facings. I think the Quattro U product -- we are hoping it gain facings within several major customers.

Okay, great, and then I guess the follow-up question -- in favor during this earnings season, is talking about the Trump administration, the Border Tax -- just knowing a lot of year assembly and product comes from overseas, can you just talk about what percentage of your product or what is sold in the US is manufactured from abroad and how you guys have this conversation thus far? I know there is still a lot of moving parts to it. But how do you guys think about it initially? Thanks.

Yes, thank you. Of course we are really monitoring the situation and are actively scenario planning. But you are right, right now details matter in these topics. And the variance of policies that are out there are pretty fluid. And you really need to know the details below the headlines to assess impact and the reaction from the world.

So I can't really speculate on where this is going at the moment. We are really monitoring it. On the tax policy side, there are many scenarios that say the lower tax rate or the repatriation would be positive to us. But again, we don't really know the details.

And on the Border tax or the import tax or whatever, we will have to see where that shakes out, also. We do have a global supply chain and we do import finished goods into the US. But I will make the point that the great majority of our production footprint for the US is in the US. We have major razor plants in Milford and Knoxville, and we grind the vast majority of our blades in those two plants.

We have a Sun Care plant in Florida. We make Shave Preps and Wet Ones in the US and we are in the process, as you know, of moving all of our Canadian Fem Care production lines to Dover, Delaware. So I would say the great majority of our US products are made in the US.

Okay, great, thanks for the color.

Thank you Jason. Operator, next question please

Our next question comes from Kevin Grundy, Jefferies. Please go ahead.

Hey, good morning, guys. I'm going to apologize. I just hopped on. I was on another call. Going through the release this morning, and we put our initial thoughts out, is it fair to say you're targeting more of the lower-end of the range, just giving organic sales came in a bit lighter than, at least you'd guided to, and market expectations?

And now FX, back of the napkin math, sort of assuming reasonable transactional impact, which would suggest about a $0.10 to $0.15 headwind. So on both counts there, both with respect to organic sales growth and the EPS guidance range, are you more comfortable at the lower-end of the range or what has to go right for you to obtain the higher-end of the range? Thanks.

We are holding to the organic rate and the range that we gave you. Because most of the softness versus the outlook were timing issues. Like I mentioned, the US Sun shipment is a timing issue and should work it's way out in Q2.

The softness in the timing of the shipments around the Japanese price increase -- we think will also come back in the back half of the year. We think the Fem Care softness is a little more systematic. We see puts and takes in the international Wet Shave that can hold to the organic outlook.

And then, on EPS, you are right, we are facing those currency headwinds. We are able to offset some of those through our hedging programs, which cover some of the impact, obviously not all of it. Based on where the rates are now, we expect we can manage the remainder with our cost levers -- especially ZBS. But clearly if the dollar continues to strengthen, that may impact our outlook.

Okay, thank you.

Thank you, Kevin. Operator next question please.

Our next question comes from Bill Chappell, SunTrust. Please go ahead.

Thanks, good morning. Two questions -- and I will throw them both at the same time. First, can you help me clarify the Japan price increase? I would have thought that -- that normally would accelerate sales as retailers and distributors were buying in front of a price increase, so I didn't really understand why it would postpone sales.

All right, so you want me to take that right now? That's a good question and a natural one. Japan, as you may note, is a pretty complicated market. Business is done fairly differently there.

This price increase is a pretty major undertaking, in which we ship new UPC SKUs and we take back the existing ones and we refurbish them and resell them later. So, to implement the price increase in this quarter, we are actually trying to run down retail inventories. Because next quarter, we will take the product off the shelf and replace it with the higher product over that quarter and the next one.

The net is a big positive for us. But you have to go through that. So what happened this quarter is that we actively managed down retail inventories, to kind of minimize the returns that we have to do, coming up now.

Okay, that makes more sense. And then, on the private-label Sun Care, I know it is relatively small, but the decision to exit that, is that excluded from your organic growth going forward in your calculations? And then also, are there reasons for getting out of that? When razors and other categories, you're pushing further in the private-label, what was the thought process behind getting out of this one?

Yes. We looked at that for several years, looking at the margins and the costs and the absorption and the retailer relationships. The fact is, the margins were very low. The complexity was pretty high.

Any organizational effort to properly support customers was well over what the economic value was. We tried, over years, to find ways to make it a better business. It just wasn't so. So we work with our customers to exit in a quarterly way.

So while we suffer the loss of top line, there is no real margin impact and it really simplifies operations -- simplifies focus. At the end of the day, it was a pretty easy decision and it just took time to work with our customers to get out of it.

And it is built into our organic outlook.

So the growth is, including that, kind of going away.

That is correct.

Thank you.

Thank you, Bill Operator next question please.

Our next question comes from Kate [Brathstein], Barclays. Please go ahead

Thanks. My question is on price mix. Last year price mix was a benefit to gross margins and I believe it should be this year as well, but I'm wondering how this could be the case when you're starting to see promotional intensity pick up in Wet Shave, not just in the US, but perhaps in spots internationally? And then, if price mix is still a positive, why shouldn't operating margins be up more than 50 basis points? Thanks.

Sandy, why don't you take the price mix and I might comment a little bit about the proportional.

So, most of our organic sales growth this year is really volume-based. We're not seeing necessarily -- we're not eroding price over the year versus what we had last year. But we're really not improving it significantly either. We clearly, as David just talked about, have a price impact on Japan.

So, there is that flowing through our numbers. But the rest is -- we're seeing price mix relatively neutral for the year, other than that. So it really is predominantly a volume organic story.

And your comment about the promotional in intensity, I would make the point that in Wet Shave, it isn't uniform. It really varies both by market and by product line. While there is some hot spots around the world, generally promotional levels seem to be averting back down to more normal levels. I think the one area that I would call out is the one that everyone seems to look at, which is US Men's Systems, where despite their dominant share of P&G continues to do promotion levels that we've never seen, up to 40% of its volume done on promotion.

Given the category loyalty and their size, what that is really doing is trading down the overall category and their share. My guess is they are doing it more against the shave clubs. But it is primarily just a US phenomenon, and I think that generally around the world, promotional levels are going back to more normal levels. That is what is built into our product mix.

Thank you, Kate. Operator next question please.

Our next question comes from Jonathan Feeney, Consumer Edge Research. Please go ahead.

Hi, how are you doing? This is actually Armani calling in for John Feeney today. Just a quick question, looking at private-label business in Wet Shave -- I think the main concern or question when you guys were swapping branded to Disposables, was sort of the all-in contribution margin of that business. As we are now annualizing that, could you help us understand that similar question on contribution margin in private-label cartridges, now that that is the new non-tractor, non-branded growth lever going forward? Thank you.

There are two different ways to answer. First, private-label prices are lower than branded. Therefore, while they are different products, and are lower-cost products generally than branded, they do have a lower gross margin, but they require less or very little A&P.

When you allocate the proper overheads against them and whatnot, we feel comfortable that the contribution margin for private-label is very similar to our overall average contribution margin. And in that swap that we did between opening price point products within that major customer -- if you take that contribution margin versus private-label, they are very, very similar. So that swap really didn't impact our economics negatively at all.

And just one quick follow-up. You were saying, that they're generally the same on the overall company average, or are overall average for Shave -- the private-label cartridges?

Overall company average.

Okay, great, thank you very much. Thank you very much.

Great, thank you. Operator, next question please.

Our next question comes from Olivia Tong, with Bank of America. Please go ahead.

Great, thank you. Apologies, I got on late. I want to talk a little bit about advertising spend and just the efficiency of that. It was up pretty robustly, but it doesn't look like it really impacted your top line, so can you talk about where that spend was concentrated both in product areas and geographies?

And also, do you consider your spend to be more offensive behind innovation, trial building, or more defensive as you see actions of some your main competitors you just talked about, unprecedented levels of promotion?

And, also, what do you expect for the year in terms of advertising relative to sales? Thank you.

Okay, Great. We view advertising primarily as offense and it generally flows against innovation. That is one of the reasons that you see it vary by quarter somewhat. It does tend to skew along with new product launches, both US and also internationally. So that is how we view it. I think for the year, we are looking at a relatively flat aid of sales percentage versus a year ago.

What varies from year to year is how much we have to devote against digital versus TV. It is interesting because it has certainly gone up and has tended to go more digital over the years. We have seen that slow and even reverse as we are sorting out the ROI against digital.

I see in the industry, several major advertisers are calling for better regulation and better transparency on the digital front. I think we would support that. I think that is why we've been backing away slightly over the last year.

And then, Olivia to your question on the current quarter. We increased A&P behind Sun Care in North America and Sun Care predominantly in Latin America. In terms of how things reacted to that, we are certainly seeing ongoing growth and strength in our Sun Care business in Latin America and we are continuing to invest behind that momentum.

In terms of Fem Care, the increase was really behind new copy and advertising behind our Carefree liners business. We are seeing pretty healthy share in our Carefree business and some share increase. Obviously it's an equity program; it's longer-term in nature. It started last year and we'll continue to use it to improve our brand equity on Carefree.

Thank you, Olivia. Operator, next question please.

Our next question comes from Bill Schmitz, Deutsche Bank. Please go ahead.

Hi, good morning.

Good morning.

Can you guys talk to me, I missed this, I apologize, I also jumped on a little late, but can you just talk about the savings you have year-to-date for the full year? It looks like it's almost $0.50 of earnings from the two savings buckets -- so kind of where that savings is going? And then when you lapped that switch from branded to private-label at Walmart? And then lastly, and I'm sorry for the long-winded question, how do you view the strategic outlook for the Fem Care business?

Have you ever considered doing something more strategic, maybe looking at options? So, kind of like, how the brands fit in the portfolio and what would make you change your mind on the business, whether to invest in or maybe find a better owner for it? Thanks.

Thanks. Sandy, would you take the first and I'll take the--?

So, the restructure savings in the quarter were around -- I'll say, rounds up to about $5 million in the quarter. And that is really spread between Fem Care, Wet Shave and Sun Care. So, Sun Care is about half of that and then Shave and Sun Care about the rest of it.

We are really not at this point talking about our ZBS savings. Again, it's really back half loaded to the extent we did have some that came in the quarter that was really helping offset some other investment spending, predominantly behind the ZBS project.

And the switch from the opening price point brand to private-label, this is the last quarter that we will have to talk about that. It should run it's course now. So, that's good.

On your Fem Care question, we look at, and the Board looks at, our portfolio on a regular basis. I really don't want to speculate any further about that. What I will say, is we have been disappointed with the launch of the Sport pads and the liners effort. We are going to need to work over the remainder of this year, going into FY18 to stabilize the top line in this business. We are going to focus on the category management innovation and the marketing fundamentals.

For example, we were launching Playtex Sport Compact Tampons, the smallest compact tampon in the market and supporting it with 360 marketing programs against trial and awareness. As Sandy mentioned, we are continuing into the second year of the Carefree liners. We relaunch it with new positioning, packaging and a copy.

So, the goal is really to stabilize top line while we grow profitability through the plant consolidation project that we have been talking about, as well as other continuous improvement programs. So that's really how we are walking forward.

Thank you, Bill. Operator next question please.

Our next question comes from Stephen Powers, UBS. Please go ahead.

Great, thank you. Just going back, Sandy, to the ZBS savings cadence that you had talked about, just the backend-loaded nature of it, I guess the question really is, how much of that was always in the plan versus perhaps a delay? I just wanted to clarify that.

And secondly, as you do press a bit more on actually pulling through those savings, I was hoping you could talk about what precautions you are taking to make sure you don't inadvertently impact execution in the market. Thanks.

So, we did have some of the ZBS savings in our outlook and in our plan. I think as we work through the final value identification over the last couple months, we have seen some upside in those savings -- savings numbers that can help us both this year and next year.

We're not really talking about those right now in a lot of detail because we're still trying to work on what those implementation plans look like. We are pretty optimistic about being able to deliver savings and improve savings really, versus our original plan. What was the question again, I'm sorry?

And following up on that point, but the plan was always to have more of those ZBS savings flow through in the second half versus the first half. And now you are saying there may be upside to the original plan, as well.

Yes.

Okay, great. And then my second question is more strategically broadly -- how your governance model is internally to make sure that as you flow through those savings you don't negatively impact demand.

I jump in to offer two thoughts and then if Sandy wants to add anything, that's fine. One is the weight from a governance point of view -- this will actually be a matrix. We've added tension to get the cost because we have category cost owners that we'll be pushing for cost reduction.

But the other matrix remains business owners that have to do it and are really focused against top line growth and the profit growth. So, we are building a little tension into the process. But the goals, the outlook, and the attempt to grow the business remain. So that's one point.

And when we targeted savings rates, we made sure -- we put the bulk of the burden against non-customer-facing and non-consumer-facing costs buckets. I think that was very deliberate. And I think we have been pretty true to that.

Okay, great, thank you very much

Thank you, Steve. Operator, next question please.

We have no further questions. This concludes our question-and-answer session. I would now like to turn the conference back over to David Hatfield for any closing remarks.

Well, thank you everyone for your time and your interest in Edgewell. Have a nice day.

The conference has now been concluded. Thank you for attending today's presentation. You may now disconnect.