Good day, and welcome to the Third Quarter Fiscal 2017 Earnings Call for Edgewell. All participants will be in listen-only mode. Please note, this event is being recorded. I'd now like to turn the conference over to Chris Gough. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for Edgewell's third quarter fiscal 2017 earnings conference call. With me this morning is David Hatfield, our President and Chief Executive Officer and Chairman of the Board; and Sandy Sheldon, our Chief Financial Officer. David will kick-off the call then hand the call over to Sandy for the 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, including those described under the caption Risk Factors in our Annual Report on Form 10-K for the year ended September 30th, 2016, as amended and supplemented in our quarterly reports on Form 10-Q for the quarters ended December 31st, 2016; March 31st, 2017; and June 30th, 2017. 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'll 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'd like to turn the call over to David.

Thank you, Chris, and good morning, everyone. Before Sandy takes you through the financial results, I'll briefly comment on the quarter, noting several of our key product launches in the quarter in support of our growth initiatives, and I'll discuss our outlook for the remainder of the fiscal year. Overall, we continued to operate in a very challenging environment, particularly in the U.S., where all of our categories declined in the quarter, and the heightened level of competitive intensity continued, particularly in the Wet Shave and the Feminine Care. However, even with that as a backdrop, I was relatively pleased with our overall performance in the quarter, as we delivered strong adjusted operating profit growth of nearly 40%; adjusted EPS growth of 68%; good cash flow generation, and the share gains in Wet Shave and Sun Care. Additionally, we continue to get traction from innovation in both Wet Shave and Sun and Skin Care. And in the third quarter, we launched several key offerings in e-Commerce, and emerging markets in support of our key growth initiatives. Looking across our segments in the quarter, in the Wet Shave, we again shared globally, and in the U.S. across Men's, Women's and the Disposables in the terms of sales, overall organic net sales were flat, we accelerated growth in the International as expected, and we grew sales in North America Men's Systems. In Sun and Skin Care, our organic net sales were up in the both North America and International, and across both the Banana Boat and the Hawaiian Tropic brands. North America growth benefited from lower returns and decreased promotional spend compared to the prior year, while International continued to benefit from innovation and incremental distribution. Our Feminine Care business continues to be challenged on the top line, impacted by declines in…

Thank you, David, and good morning, everyone. I'll cover our third quarter business performance, beginning with a few headlines. Net sales in the quarter were $638 million, down about 1% on a reported basis, and down 0.6% on an organic basis, with growth in our Sun and Skin Care segment offset by Feminine Care net sales declines; Wet Shave was essentially flat. From a geographic perspective, North America organic net sales were down 2.5%, while international organic net sales increased 3.2%. Adjusted EBITDA grew 35%, and adjusted EPS grew 68% versus a year ago; strong profit performance in a challenging market and competitive environment. Cash from operating activities was $119 million year-to-date, and we repurchased 1.3 million shares through the first three quarters of 2017. Turning to sales; reported net sales were down 1.2% in the quarter at $638 million, and down 60 basis points on an organic basis, which includes a $4 million benefit from the Bulldog acquisition and a $7.9 million negative impact from currency. Overall, volume was down slightly, 0.5%, as higher volumes in Wet Shave were offset by declines in Feminine Care. Overall, price mix was relatively flat at minus 0.1%, as improved international pricing, lower promotional spend, and improved Sun Care returns were offset by unfavorable mix in North America. I'll review more details of the drivers from a segment perspective in a few minutes. Gross margin with 50.5%, an increase of 230 basis points, the increase was driven by lower product costs resulting from both operational efficiencies and favorable commodity costs, as well as favorable product mix. A&P expense as a percent of net sales was 17.9%, down 110 basis points, primarily due to higher spending last year in support of Feminine Care innovation and promotional campaigns in Wet Shave. Through the first three…

We'll now begin the question-and-answer session. The first question comes from Ali Dibadj with Bernstein. Please go ahead. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Hey, guys. I've two questions. One was, just in terms of the balance between top line and bottom line, I mean, is it – sorry about the background noise – is it wise to cut A&P, I understand you're lapping some from last year – but is it wise to deliver so much to the bottom line, cut A&P, when your top line is growing the way it's growing, and how do you ensure that the balance is right between those (23:07) competitive environment? That's one question. And the second one is, you mentioned a little bit of private label expansion in Europe as well, bolstering some of your growth rates there. Can you talk about the competitive nature in Europe, and whether you anticipate it getting in any way as aggressive as it is in the U.S.? Thanks.

Thank you, Ali. On the A&P front, as you noted, the spend varies kind of quarter-to-quarter, depending on product launches, program phasing, whatnot. When you look at our total year, we actually think that our overall marketing pressure on our brands as a percent of sales will actually be up. Why I say that is, during the year, we have shifted some A&P up to trade spend, funding coupons, trade programs, et cetera. We've also – through ZBS, we've cut some non-working funds. Also, with the private label, I mean, growing modestly in the mix, that lowers A&P as a percent of sales. So you net all of that, and when you get underneath the hood, we think overall marketing pressure is actually up for the year against brands. How we judge whether enough is enough, or where we should spend, is really a bottom-up market-by-market exercise, and we feel share of voice is where we need it, versus share of market. On the Europe front, answering your question about where competitive pressure goes means that I kind of have to speculate about competition, and I'm not sure that I want to go there. I'll make the point that, that markets in Europe are very competitive now, both promotionally, and we see Nivea in Germany and whatnot. So it's a competitive situation, one that we're actually dealing with well, and are confident in our capabilities. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Can I just ask on that, more broadly, a follow-up question. When you guys spun out and took – say, your long-term guidance was 2% to 3%. Sun Care's doing okay, it looks like, but I guess, what do you need from Wet Shave and Fem Care to get to 2% to 3%? Do you anticipate getting there – kind of is that still your target, because it just seems tough to consistently get there, understanding this is a tough competitive environment. Right now, I don't really know if you have confidence it's going to get much better going forward, to get to 2% to 3%. Thanks.

Yeah. Sure. We've remained confident in our medium-term algorithm. We actually hit it on the high-end of the range last year on an underlying basis, and we think over the medium-term, we can do so. It's really predicated on our ability to modestly gain share in our global categories of Wet Shave and the Sun. And it's also predicated on a modest category growth in those segments. And as you indicated, this year, with the competitive situation, that's a challenging factor on Wet Shave, looking forward as we anniversary that, and as we work our way through the Feminine Care issues that we face, we're actually confident that we can presume the medium-term sales growth outlook.

Okay. Thank you, Ali. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Okay. Thanks.

Operator, next question – next question please, operator.

Our next question is from Faiza Alwy with Deutsche Bank. Please go ahead.

Yes. Hi, good morning. So, I just wanted to – I have two questions, one is just on the Women's Wet Shave category, it seems like the U.S. category has decelerated significantly, I think, you mentioned it was down 14%. So one, I just wanted to clarify is that based on Nielsen or is that across all channels; and what is driving this decline, and what is your sort of longer-term outlook on the Women's category?

Yes. Thank you. Yeah, the Women's Nielsen category this quarter significantly slowed, it was down 14% in dollars, and almost 11% in units. It was – like the units were a significant sequential slowdown. We think that in hindsight, part of it – a fair amount was actually driven by a pantry loading due to holiday gift sets plus then the planogram markdowns in January; those were a significant pantry load. Besides that, several customers shifted their promotional emphasis to Women's Disposables, and I think that we're seeing modest, but a sequential growth in online growth also. That all drove the quarter unit declines, and then there's been some category deflation, and a product mix that contributed to the dollar decline. Looking forward, we think a lot of those factors are relatively one-time. So I don't see a systematic issue with the Women's category that can't be rectified.

Okay. And then, just my second question was on the gross margin. I think, you came in well-above our estimate, and I think, you mentioned commodity several times. Can you remind us what the major commodities are, because it looks like most of the commodities were actually inflating in the first half of the year; so I'm just a little bit confused by that. Thank you.

So the commodity favorability we had in the quarter was really a continuation of what we've had all year, although slightly better just because of volumes, but our main drivers are resins, packaging, third-party manufacturing, we do produce some products outside, steel costs, and we also had lower freight costs.

Okay. Thank you.

Great. Thank you, Faiza. Operator, next question please?

Next question is from Nik Modi with RBC Capital Markets. Please go ahead.

Thanks. Good morning, everyone. Just a couple of quick ones from me, maybe if you can give an update on three areas, the direct-to-consumer launch that you had during the quarter; trade spending efficiency, I know, you guys have been working on a project there; and just wanted to get an update, if you're starting to see any benefits? And then just quickly kind of big picture thoughts on the M&A environment, if there's things that are out there that are interesting to you? Thanks.

Okay, sure. Sure. Thanks, Nik. On the DTC front, we're actually pleased with the launch; we're making progress, I think, from a financial metric point of view, we've actually grown rapidly off of a Zero Base. So the results are not really material, but I think, we've learned a great deal, both even in the short time that we've been out there from a messaging point of view. I think that we're learning a lot, and I think that we've also learned a lot operationally. On the trade spend front, we actually continue to make good – make progress, sorting all of our events into four quadrants and moving the lowest efficiency quadrant events to higher productivity tactics. So I think that we're making progress there, and then on the M&A front, I guess, all I can really say is, as we continue to fill the funnel, and to track several targets as we always do.

Thank you, Nik.

Operator, the next question, please?

Next question comes from Olivia Tong with Bank of America Merrill Lynch. Please go ahead.

Great. Thanks. It's interesting to me that you wind the full-year organic sales range with just one quarter left to go. So it doesn't play a fairly large sort of 4 point to 5 point range for Q4. So you talked about the incremental softening in a couple of key areas. But what gets you from one end of the range to the other. I know the comp is pretty tough, but I always thought that, that was more a function of the year prior to that, in other words fiscal 2015 being such an easy comp for fiscal 2016; so that by this Q4, we'd be back to a more normalized base, and then I have a follow-up?

Yeah. Thank you. I think, the range just reflects, partially we're comping a very strong year-ago Sun Care season, and how this one plays out relative to that is a little bit up in the air. And I'll say that the incremental softening in the third quarter of both Men's and Women's Shave gives us a little pause, and so I think, that just reflects exogenous factors, and so I think that's the main driver. Sandy, any other comment...

The only other piece I guess, that would factor into the range is the – some of the supply chain issues we saw in Europe in third quarter. We may have a bit of an overhang in fourth quarter. So I think that also factored into the – to the wider range.

Got it. And then, just your view on promotion and advertising, has that changed at all since Gillette made its pricing moves because you've obviously got advertising down triple digits this quarter after – on a down triple digit comp, and we saw that ad spend is down in every division and promotions down in your two biggest. So how much of this is timing or short to medium-term shift or just a broader change in terms of how you think about levels of spending required to support your businesses?

Yeah. Thank you. No, the third quarter was just a timing. We're committed to supporting our brands, and any quarter-to-quarter change, yeah, that would have been planned several months to a year ago, and that's not in response to – you had a competition per se. Like I mentioned, one of the reasons that is down is that, we did move some A&P up to a trade spend, and that's generally in a reaction to overall competitive pressures over the last year.

Thank you, Olivia. Operator, next question please?

Next question comes from Jason English with Goldman Sachs. Please go ahead. Jason English - Goldman Sachs & Co.: Hey, good morning, folks. Thank you for letting me ask a question. Can you dive in a little bit deeper into the positive mix effects in Wet Shave this quarter; it was certainly surprising to see that realize this quarter from our perspective?

Well, the main driver was, we had higher Men's Systems volumes in the quarter, and that drove a very healthy mix for our overall business. Jason English - Goldman Sachs & Co.: And what drove higher Men's Systems in context to what you're saying about Men's Systems slowing competitive intensity most isolated there, and some of your volume growth being driven by private label, if anything, I would expect the mix to go the other way. And related to that, and I guess, so I'm really getting at is, did shipments track the consumption of Men's Shave or Men's Systems, is there any sort of residual issues that we need to be aware of as we contemplate fourth quarter for both the sales and margin mix perspective on that?

Yeah. So, I'll – let me just give you a couple of bullets, and then, I'll let David talk through the consumption discussion. So we had very strong growth on Men's Systems in both International and North America. Internationally, as you may recall, we had a price increase initiative in our Japan affiliate. So we had a very good experience this quarter, both from a promotional, higher promotional in the quarter as well as better price mix. So all of those things actually drove our volumes up in Japan, pretty significantly. And then within Men's in North America, we had higher volumes on, really again more promotional activities in the quarter, we had some – some of it was a little bit of timing, but overall pretty good branded Men's sales.

Yeah. I think that's... Jason English - Goldman Sachs & Co.: Okay. Thank you.

...that pretty much summarize it in the U.S. There was a timing benefit in the unmeasured channels; I think, some of that will actually reverse in the Q4. Jason English - Goldman Sachs & Co.: Okay. Appreciate it. I'll pass it on. Thank you.

Thank you, Jason. Operator, next question, please? Jason English - Goldman Sachs & Co.: Thank you.

All right. Next question is from Kevin Grundy with Jefferies. Please go, ahead.

Thanks. Good morning. First, Sandy a housekeeping question. Can we get an update on the tax rate, longer-term you've had a couple of favorable revisions this year, I think, down a few points? So an update there I think would be helpful. And then the second question is on productivity in the Zero Based savings. So we have your guidance for this year and for next, but what inning are we in here, how much opportunity is there beyond fiscal 2018 would be question number one related to that, and two, is the incentive structure in place down to the business level for employees in this area? And I guess, I ask this in the context, and there are some questions on long-term guidance before it seems like, given top line pressures, the company is going to become increasingly reliant on this area. So the 2% to 3% organic sales growth is still on the table, but it looks like if the new normal is sort of modest declines, which is what we've had in two of the past three years, and then looks like it will be the case again this year, it seems like the company will have to lean again more heavily. And then, related to this is, is high-single-digit EPS growth still – which is the long-term target – is that reasonable sort of in the current environment, if things do not change, can you sort of get there? It would seem like perhaps too big of an ask in this area on productivity savings to offset the top line weakness. So there's a lot there, but your commentary would be helpful. Thank you.

Okay. So I'll try and start. So on tax rate, and what our longer-term rate is; just as a reminder, we are having very favorable mix this year, and that's one of the things that's driving our tax rate lower, and we also had a favorable return to provision in the quarter that's helped us. So we've had some discrete items, as well as mix, that have impacted our rate this quarter. I can't really give an outlook today for next year's tax rate, but certainly below a 30% rate ,given mix of our International earnings. In terms of ZBS and what to expect beyond 2018, the organization's very dedicated to continuing and sustaining savings against all of our P&L line items. I don't have a good number or a good set of savings initiatives that are in play beyond 2018 at this point, because we've been working so hard on trying to get the savings initiatives that we have identified through 2018 into our budgeting process, and trying to deliver on all of those initiatives, and there are many, many initiatives to deliver on. Certainly, those initiatives will continue to provide savings incrementally, even into 2019, just at a lower amount, because we need to really come back and refill the funnel in 2018 to continue growing to – increasing our savings in 2019. So I don't have an outlook for you today on it, but I will tell you that we are very committed to continuing to finding productivity in all the line items in our income statement.

And I'll chime in that, we remain confident and committed to our algorithm, and that includes the EPS targets. To do so, certainly, we need to attack top line, we need to grow margin, and we need to manage cash. Incentives for the whole organization are directly tied to sales, to profit, and to cash – to balance sheet management. Therefore, I think the whole organization sees that we need to remain committed, with a sense of urgency, to manage productivity and cost. And like Sandy said, we're really working to make ZBS part of the culture, and I'm confident we're going to keep attacking costs with urgency going forward.

Okay. Thank you, guys. Good luck.

Thanks, Kevin. Operator, next question please?

All right. Jason Gere with KeyBanc Capital Markets. Please go ahead.

Okay, thanks. And then, maybe just continuing with Kevin's question; so obviously, the margin improvement, especially on Wet Shaving, was quite impressive in the quarter. So I guess, as we think about the next 12 months, category trend's a little bit tougher, when you think about the acceleration in ZBS for next year, how do you kind of bucket the reinvestment rate that you might need of those cost savings, in terms of – some of both the trade spending, the A&P, and understanding that it's going to be up a little bit this year, kind of combined. But also, when you think about the e-Commerce platform, IT capabilities, China, et cetera, do you see any change in terms of the reinvestment rate that you might see over the next 12 months, versus where maybe you were six months ago?

We're in the middle of planning that now, and I don't mean to beg-off, but I think it's a little premature for me to comment. You highlight, I think, some of our key priorities in our planning process. They're going to be at the top of the list, and we do have several reinvestment priorities, and that just means that we need to work harder and harder for productivity to fuel them. Beyond that, I can't really, really speculate yet.

Okay. And then, just if I could just add another quick thing. What was – excluding, I guess, the distribution losses – can you just talk about Fem Care, just a little bit more broadly, in terms of the growth you're seeing and the efforts there to kind of stabilize that business? Thanks.

Sure. Thank you, Jason. Yes, Feminine Care for the quarter had a sequential slowdown, and the category was actually down about 1.5%. Beyond that, we had several planogram disappointments where we lost; items carried, we were down about 7%, driven by losses on our Sport pads and liners. So that was the major driver along with a loss of quality merchandising in a couple of customers on our liners business. So the focus over the upcoming quarters and years is to really re-double efforts against fundamentals, really managing share of shelf, bringing category solutions plus innovation and the team is focused on the fundamentals.

Thank you, Jason. Operator, next question please.

Next question is from Jonathan Feeney with Consumer Edge Research. Please go ahead.

Hey, how're you doing? This is Armani Khoddami in for Jon. Thanks for the question. Maybe just a quick one about the European supply chain impact, is there any way you could quantify that? It sounds like the price increases in Japan went well, so just trying to understand internationally what, maybe a run rate growth look like versus the impact from the supply chain piece, that'd be great. Thank you.

I'm not sure, I have – it was around five of the quarter (48:46) shortfall, and it was a product of two or three different projects, the timing issues that all kind of – that kind of aggregated to a pretty severe supply chain issue. We think it's mainly a Q3 issue, but we might have a little hangover going into Q4.

Okay. Thank you very much.

Thanks, Armani. Operator, the next question please?

Next question is Bill Chappell with SunTrust. Please go ahead?

Good morning, thanks. Hey, David, just a question both on Skin Care and really Wet Shave, I mean, do you see signs of stabilization in the end markets in terms of the overall category seeing some stabilization or more rational pricing, or are we still middle innings, I mean, how do you gauge that as we look over the next 12 months?

Well, on the U.S. Wet Shave issue, I think that, we're in the early days to middle phases of it, certainly, the competitive list price action just happened as of April, so we have a while to go before we anniversary that, and the situation is influx. There's several channels that haven't even taken pricing down, yet. So that's going to continue, but we'll emphasize that, that's U.S. that I'm talking about, and I think around the world, I think, while the competitive levels remain high, I don't see them, they haven't accelerated at all. And then Feminine Care, from a competitive point of view remains high, and I think, it's actually gotten a little worse for us, I don't know – I can't speculate where that goes.

And just on that, I mean, is that being helped by the – or accelerated by a favorable commodity environment, I mean would you expect if commodity started to spike, there would be any pricing or that would be an incremental headwind?

Well, I think the competitive situation right now isn't really related to commodities, and I can't really speculate either where commodities go or what they'll do in a reaction to that, what you see right, yeah, I think that I'll leave it there.

Thank you, Bill. Operator, next question please?

Next question is from Stephen Powers with UBS. Please go, ahead.

Hey, great. Maybe, if you could just shed a bit more of a spotlight on e-Commerce, maybe you can provide some early learnings with respect to Tmall, just going back to that launch last quarter. And I guess related to that, as well as the direct-to-consumer experiment with Hydro online in the U.S., it's some of what you've announced or talked about today with respect to Europe, you clearly began to expand distribution of Hydro Connect, so maybe some color on what the uptake and consumer feedback has been so far, and maybe why not launch it more aggressively in the U.S. whether brick-and-mortar outlets or a placement at Amazon et cetera? Thanks.

Okay, great. Yeah. Thank you. First, on with the Tmall, yeah we've – we got our new site, and our new store this past quarter, and a we've had – everyday actually sales grow, we launched Hydro Connect on Father's Day to great reaction, and it's now kind of number two on our list from a sales point of view. So we're pleased with the progress there. It's really early days to comment about sales, the sales rates in the Europe. We're just getting retail placement now. So I don't have any real good color for you on that. And in terms of a broader distribution of it in the U.S., we'll certainly evaluate that. We sort of like having it on our site as a differentiator, and a reason to come to our site, and it's working well in that regard.

Okay, great. And then...

Thanks. Sorry, to interrupt.

I'm sorry. I'll pass it on. That's fine. Thanks.

Thanks, Steve. Operator, next question please?

Next question is from Kate Grafstein with Barclays. Please go ahead.

Hi, thanks. So, last quarter, I think, you mentioned that Men's Systems in the U.S. declined 23%. So I was just wondering, if you could give that figure for this quarter, and then on Women's Systems, have you seen any change in that category dynamics outside of the U.S.? Thanks.

Sure. On the second question, I don't see a major trend or anything really notable on that front. And the 23% was at Nielsen?

No that was us.

Yeah.

And so this quarter U.S., our North America Men's grew 15%.

Okay. Thanks, Katie. Operator, next question please?

This concludes our question-and-answer session. I'd like to turn the conference back over to David Hatfield for any closing remarks.

Yeah. Thank you. And I'd like to thank everyone for your time and your interest. Have a nice day.