Edgewell Personal Care Co

NYSE:EPC

Earnings Call Transcript 2020-Q3

[Operator]

Good morning and welcome to the Edgewell conference call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to the speakers. Please go ahead.

[Chris Gough]

Good morning, everyone. This is Chris Gough, VP of Investor Relations. Thank you for joining us this morning as we discuss Edgewell's Third Quarter 2020 Earnings and the CREMO acquisition.

With me this morning are Rod Little, our President and Chief Executive Officer; and Dan Sullivan, our Chief Financial Officer. Rod will kick off the call and he will hand it over to Dan to discuss our results, and we will then transition to Q&A. This call is being recorded and will be available for replay via our website, www.edgewell.com.

In addition to the comments we're making on this call, we have posted several supplementary slides to our website that provide additional information on our quarterly results and the acquisition of CREMO.

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 restructurings, 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 caption Risk Factors in our annual report on Form 10-K for the year-ended September 30, 2019, as may be amended in our quarterly reports on Form 10-Q.

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, except as required by law.

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 at the Investor Relations section of our website. Management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business.

With that, I'd like to turn the call over to Rod.

[Rod Little, President and Chief Executive Officer]

Thanks, Chris, and hello, everyone. I hope everyone is doing well and staying safe and healthy as we work our way through this pandemic. Today, I'll begin my remarks by providing an update on the current environment and its impact on our results. I'll then discuss our third quarter performance and the progress we continue to make on our strategic initiatives before finishing with the announcement we made earlier this morning about our intent to acquire CREMO.

Dan will then review our financial results in more detail, provide further details on the planned CREMO acquisition and share some thoughts on how we are approaching the final quarter of our fiscal year.

Since we last spoke, the pandemic has spread across the globe with far-reaching impact in the categories in which we compete, and therefore on our business, as you saw in our results posted earlier this morning. COVID-19 had a considerable impact on our sales in our core categories in the quarter. The difficult conditions we saw in April worsened in the month of May with some moderation in June.

Within this challenging environment, characterized by significant declines across all of our categories, I'm encouraged by many elements of our relative performance. In the U.S., we saw a strong market share gains in our Sun Care and preps businesses and stabilization in branded wet shave.

And as the market leader in the category, Wet Ones saw another quarter of accelerated growth and market share gains. Internationally, we drove gains in our Wet Shave business in Japan, which is our second largest market as well as improving share performance in Europe.

As we described a quarter ago, we remain focused during this challenging period on 3 key priorities: first, the health and safety of our colleagues; second, ensuring the continuity of our business operations and providing the best possible service to our customers; and third, managing the business in a disciplined and balanced manner, while ensuring we continue to invest in the long-term success of the company.

We've made progress on all of these priorities. With the health and safety of our associates being our number 1 priority, the protocols we put in place as far back as December of last year have helped ensure the ongoing safety and wellbeing of our colleagues. The steps taken to ensure safe operations at our manufacturing plants maintain the continuity of production and availability of essential products to consumers. And as such, all of our global manufacturing plants and distribution centers remain open and fully operational.

We are also slowly beginning the process of bringing our teams back to offices around the world on a voluntary basis. We'll get into more detail on the specific actions we've taken to strengthen the company for both the short- and long-term in a moment. But first, let me provide some color on the current environment across our markets and our top-line business results in the quarter.

The significant impact of COVID-19 was evident in our organic net sales decline of 14.7% in the quarter. However, we estimate that excluding COVID-19 impacts, the business continued on a flat to slightly down top-line trend. Organic sales in the quarter were most negatively impacted in Sun Care, as store traffic, holiday travel, resort business and outdoor activities were significantly curtailed by COVID-19.

Sun Care, which represents approximately 20% of total company sales, accounted for nearly half of the year-over-year decline. Leading into the Sun Care season, I was pleased with our preparation and execution, highlighted by strong innovation, robust shelf-positioning across the channels, solid off-aisle placements and strong initial in-stock positions, all while successfully implementing a 5% increase in price across the U.S. mass and drug channels.

So while COVID-19 has now meaningfully impacted the overall category, the 370 basis points of share gains we realized in the U.S. in the third quarter offer some validation of our strong execution and position us well as the category returns to more normal conditions over time.

Wet Shave was also impacted by COVID-19 and the resulting stay-at-home trends that are headwinds to shaving regimens, with organic net sales declining 14% in the quarter. Rounding out the Sun and Skin Care segment, we had strong organic sales growth in Wet Ones, increasing 52% over the prior year and 6% over the prior quarter, while remaining on track to add additional capacity in the coming weeks.

Feminine Care saw reversal of last quarter's pantry load as well as the impact of expected distribution losses. From a market share perspective, we are in a more stable position than we were a year ago. During the most recent 12-week period, we've seen market share growth in razors and blades in Asia; fairly stable and improving trends in Europe; and although the U.S. branded business is still declining, share losses have stabilized and are in line with the 52-week trend despite loss distribution in Sam's Club and further competitive rollouts.

And as mentioned, we've seen significant market share gains in the U.S. within both Sun Care and the personal hygiene wipes categories. As we reflect on the quarter, we are cautiously optimistic that April and May will prove to be the most severely impacted months of the fiscal year, given slowing rates of top-line decline in June as well as quarter-to-date in our fiscal fourth quarter.

However, there remains a great deal of uncertainty and volatility that we are carefully monitoring and will need to continue to navigate. To effectively operate in this challenging environment, we continue to manage the business in a highly disciplined and balanced way, making choices and focusing on key priorities that are most relevant in the near-term, while continuing to advance the strategic priorities that will drive our long-term success.

We tightly managed discretionary spend as the quarter evolved, reassess trade investment and brand support, including advertising and promotional activity and prioritize investments where we believed impact and return would be the strongest. We delivered on our Project Fuel objectives, generating $23 million in gross savings in the quarter as expected, reflecting our continued focus on creating efficiencies that in turn fund our growth investments.

With respect to our growth investments, we continue to invest in e-commerce and R&D, adding critical capabilities across both organizations. In the quarter, e-commerce net sales were once again strong, led by our growing Amazon business and Dan will speak more about this shortly.

We are operating from a position of strength in terms of liquidity with a healthy balance sheet and over $100 million in operating cash flow generation in this COVID-impacted fiscal third quarter. During quarter 3, we also successfully refinanced our 2021 notes with a high-yield upsized offering, reflecting continued confidence in our business.

We previously mentioned the importance of having the right talent profile and work environment for our employees, and our commitment to creating a culture that attracts and retains diverse, world-class, highly-engaged talent. This is an integral component of our overall focus on responsible, environmental, social and governance practices. And in 2020, our commitment and performance in this area was recognized as Newsweek ranked Edgewell as one of America's most responsible companies.

In the third quarter, we unveiled our Sustainable Care 2030 strategy, establishing 10 bold and comprehensive ambitions for the next decade and reinforcing our role in creating a sustainable future. In an increasingly uncertain world, what is certain is that we will continue to responsibly create brands and products people love to use and that our colleagues can be proud of.

Importantly, I have now finalized the reshaping of my management team, a process that began upon my appointment 15 months ago. We recently announced Eric O'Toole as our new President of North America. Eric has had an impressive career, spanning marketing and sales and holding other key executive roles across leading global consumer packaged goods and retail companies. His extensive experience and digital expertise will be instrumental as we continue to innovate and reshape our portfolio.

We also appointed Nick Powell as our new President of International. Nick provides tremendous global experience and a proven track record for delivering results. And finally, we have appointed Anne-Sophie Gaget as our Chief Growth and Innovation Officer; and Paul Hibbert as our Chief Supply Chain Officer.

We also announced that Colin Hutchison, our Chief Operating Officer, will be leaving Edgewell in November to start a new phase in his life in the UK. Colin has had a long and successful tenure with Edgewell and Energizer before that. Following the formation of Edgewell in 2015 as Vice President, International, Colin architected and implemented the international commercial organization before assuming the Chief Operating Officer role in 2017.

I have relied on Colin's experience and expertise in my time as the CEO. And I want to personally thank him for all that he has given to this organization and wish him well in the next stage of his life.

And finally, we are thrilled to announce our intent to acquire CREMO, a brand and company that represents a great strategic fit as we expand our business in the fast-growing U.S. men's grooming category. As you saw in our press release in the accompanying slide deck, CREMO is one of the strongest and fastest-growing masstige brands in personal grooming, offering a complete line of products across the personal grooming category.

CREMO is in many of the highest growth subcategories of the men's grooming segment with no razors and blades, a niche that is heavily segmented and one where we have already demonstrated our capabilities with the Jack Black and Bulldog brands.

CREMO is a profitable business with a well-diversified portfolio that is synonymous with quality and unpretentious luxury. This brand will reinforce our broader insurgent playbook, offering us unique portfolio options to meet a variety of consumer needs. Dan will talk more about the strategic fit and opportunity in a few moments.

In summary, though the environment remains uncertain, we continue to manage the business with strong discipline, and we are pleased to be driving trend improvement in our market share position across our key categories.

Over the last 12 months, we have seen an underlying stabilization of our top-line and gross margin profiles, the current COVID environment notwithstanding. This has always been an important first step in reshaping our business. And I'm pleased with our progress to date, recognizing that work remains.

Importantly, over recent months, we have been diligently working to develop and refine the go-forward stand-alone strategy for Edgewell. This work is progressing well. And while not finalized, you are already seeing certain fundamental elements of the work manifesting itself as seen by the CREMO announcement today, which is the execution of one pillar of our strategy that we have talked about previously, namely increasing our penetration in the attractive growing men's grooming category, beyond our existing portfolio of Jack Black and Bulldog.

In conjunction with our Board, we will be finalizing our strategy work in the weeks ahead, and we plan to discuss it in more detail in calendar Q4.

Before turning the call over to Dan, I want to thank our teams across the company for their focus and effort. I continue to be inspired by the resiliency and creativity of our people during these challenging times. Together, we are excited to push forward and execute on the next chapter of growth for Edgewell.

And now I'd like to ask Dan to take you through our fiscal third quarter results and discuss CREMO in more detail.

[Daniel Sullivan, Chief Financial Officer]

Thank you, Rod, and good morning, everyone. As Rod discussed, within this highly uncertain environment, we continue to manage the business with discipline, focused equally on near-term efficiency while taking the right steps to position Edgewell for sustainable growth.

As we navigate this challenging environment, we remain focused on our core priorities: first, execution, against our commercial and operational opportunities, both short and long term; second, strengthening the balance sheet, by ensuring a strong liquidity position with an emphasis on maximizing cash and reinforced by our successful high-yield refinancing and upsizing in the quarter; third, maximizing our brand-building investments, by optimizing our media mix and improving in-market execution to prioritize those investments with the potential to generate the highest returns; and fourth, executing on Project Fuel, where we delivered another quarter of meaningful growth savings.

While the results for the quarter reflect the unique circumstances of this COVID-19 environment, we continue to make solid progress against each of these core priorities. Our top-line performance in the quarter was largely the result of COVID-related systemic category declines across most of our segments. We are cautiously optimistic that April and May will prove to be the most significantly impacted months of the fiscal year. And the sequential improvement we saw in June and into the start of Q4 offer us some confidence that the worst of the impact in fiscal 2020 maybe behind us.

Organic net sales in April decreased 15%, followed by a 19% decline in May and an 11% decline in June. July trends have further improved with net sales running down in the mid-single-digits year-over-year. While we continue to see strong performance in both Wet Ones and Men's Grooming, the foreshadowed distribution losses in Wet Shave at Sam's Club and in Fem Care at Walmart, combined with the initial reversal of last quarter's pantry loading were clear headwinds to our Q3 sales results.

From a profitability standpoint, our gross margins were significantly impacted by COVID-19, both in the direct onetime costs incurred as well as in the negative mix effect caused by the significant shift in category performance.

Adjusted operating income, excluding the $3.4 million impact from the Infant and Pet Care divestiture, decreased $36.4 million. Project Fuel efforts continue to drive cost savings and increase operational efficiency across all areas of our business. And in the quarter, we realized $23 million in associated gross savings, representing an almost 30% increase from last quarter.

Our balance sheet and free cash flow continued to be strong with nearly $118 million in cash from operations year-to-date or $26 million higher than the same period a year ago, which was largely driven by improved working capital performance.

Now I'll turn to the detailed results. Organic net sales in the quarter decreased 14.7%, with similar declines in both North America and international. Globally, these declines were largely driven by the ongoing COVID-19 impact on consumer demand, particularly in our Wet Shave and Sun Care categories.

We estimate that the COVID-related top-line impact in the quarter was approximately $85 million, which includes both the headwinds associated with Sun Care, Wet Shave and Fem Care, and the estimated tailwinds within the skin category, driven by Wet Ones. Excluding these effects, we estimate that the underlying organic top-line run rate for the business in the quarter was flat to slightly down.

Looking at our performance by segment. Wet Shave organic net sales decreased 14% in the quarter, largely driven by significant COVID-19 related category declines globally, as well as the impact from the expected distribution losses in North America. By region, North America organic net sales decreased 16%, while international markets decreased 13%.

In U.S., the razors and blades category was down just over 10%, driven primarily by transitory declines in shaving incidents for men as a result of the mandated and voluntary stay-at-home periods as well as the stock ups that occurred last quarter. For the 12-week period, our market share in razors and blades declined 190 basis points, reflecting recent loss distribution at Sam's Club, heightened competitive pressures and the negative effect of channel switching away from mass and drug and into grocery. This share decline is generally in line with our 52-week performance.

Excluding the impact of the lost distribution at Sam's Club, Hydro Men's grew share 40 basis points in the quarter. In our Women's Systems business, we were pleased with the launch of our new Hydro Silk and Intuition campaigns. And we gained 260 basis points of market share on Amazon, which is now the third largest customer in the category.

Across our international business, category declines in key markets were similar to those in North America. And as Rod mentioned earlier, we saw improved market share performance, growing share in Japan, which is our second largest market as well as across other markets in Asia and maintaining share in Europe amidst continued competitive pressure.

Shave preps followed similar patterns as the razors and blades category and we realized 240 basis points of share gains. Similarly, the disposables market remained sluggish, with consumption down 11%, reflecting lower store traffic and the negative effect of Q2's pantry loading.

Sun and Skin Care organic sales decreased nearly 19%, inclusive of a 30% organic net sales decline in Sun as global demand was significantly impacted by COVID-19 in the quarter. Sun Care category sales were down as much as 60% in April. And although consumption trends improved as the quarter progressed, with select weeks returning to slight growth in June, customer orders were severely impacted, resulting in much lower net sales growth as compared to consumption.

In the U.S., the overall Sun category declined about 18% in the quarter, although Edgewell consumption was down only 5%, driving share gains of 370 basis points. And importantly, we saw accelerated share gains with both our brands with Banana Boat and Hawaiian Tropic gaining 220 and 150 basis points, respectively.

Sun Care sales in international markets were impacted the most in our Latin America and Asia Pacific regions, which are highly dependent on tourism and where significant COVID-19 lockdowns persists.

Men's Grooming increased 5%, driven by Bulldog, which benefited from strong e-commerce sales and new distribution. Rounding out the segment, Wet One's organic net sales increased 52% on the heels of continued strong demand for products that meet consumers' heightened hygiene and sanitation needs. The total category increased 15%, and we increased our market share 11 points to over 70% of the category. We anticipate that this brand will approach $100 million in sales for fiscal 2020 or approximately 65% year-over-year growth despite being on allocation. As such, we're moving swiftly to meet the increased demand in the short-term. And our initial Wet Ones capacity expansion plans are on track for August completion. At full production, this August expansion will increase our capacity by almost one-third.

More broadly, for the longer term, we've secured additional third-party manufacturing, which will come online later in the quarter, with plans for further internal capacity expansion in fiscal 2021. We are, therefore, well positioned to capitalize on this consumer-led focus on personal hygiene by securing ample near-term and longer-term capacity in support of our category-leading brand.

Feminine Care organic sales decreased 14.7% as compared to the prior year period. The decline in net sales was largely driven by reduced volumes related to last quarter's pantry loading, overall category declines, heightened competitive pressures and the expected distribution losses at Walmart.

In terms of consumption, Fem Care sales declined nearly 11%, and our market share declined 130 basis points. Our e-commerce business grew organically by 76% in the quarter, fueled by 79% growth on Amazon, where we have seen 300 basis points of share gains year-to-date.

Gross margin rate decreased 200 basis points year-over-year to 46% as favorable commodity costs and the benefit of higher pricing in Sun Care were more than offset by onetime COVID costs; unfavorable category mix, most notably from lower penetration of Sun Care sales; and the deleveraging effect from lower volumes.

A&P expense this quarter was 13.9% of net sales as compared to 15.1% of net sales in the prior year period, including a $2.3 million impact from the Infant and Pet Care divestiture. Advertising-related costs, however, were flat as a percentage of net sales versus the same period last year with a higher penetration of digital media spend as we moved away from traditional TV. Strategically, we were focused on supporting Hydro in Japan, our Schick 5 launch in China, our seasonal programs in Sun Care and our new campaign in Women's Shave in North America.

SG&A, including amortization expense, was $91.3 million or 18.9% of net sales as compared to $94.8 million and 15.6% of net sales in the prior year period. Excluding SG&A costs associated with Project Fuel and other onetime costs, SG&A was approximately $2 million below the same period last year, driven primarily by lower travel and other discretionary spends, which more than offset incremental equity compensation and investments in key talent in North America and e-commerce.

Other expense net was $3.5 million of income during the quarter compared to $2.7 million of expense in the prior year period. The increase in income in the third quarter was largely related to favorable revaluation of balance sheet exposures, driven by the recovery of local currencies in the aftermath of significant declines in the second quarter caused by the COVID-19 pandemic.

GAAP-related net earnings per share were $0.09 compared to a loss of $8.51 in the third quarter of fiscal 2019, and adjusted earnings per share were $0.66 compared to $1.11 in the prior year period.

Net cash from operating activities was $101 million for the quarter as compared to $130 million during the prior year. On a year-to-date basis, net cash from operating activities was $119 million as compared to $98 million in the prior year period, reflecting improved working capital performance, particularly in inventory management and accounts receivable collections.

Our net debt leverage ratio is about 2 times, reflecting the businesses' strong free cash flow profile, which brings me to the topic of liquidity. As we discussed last quarter, our business model is defined by strong operating cash flow generation and efficient free cash flow conversion, which we demonstrated again this quarter despite significant top and bottom line headwinds. We've continued to take the necessary steps to ensure that we maintain our strong financial position.

Third quarter Project Fuel gross savings sequentially increased to $23 million as compared to $18 million last quarter. We've reassessed capital expenses in a disciplined way, balancing near-term business priorities with the stated desire to maximize liquidity. And as you saw across the P&L, we're addressing all aspects of our business model and investments in the near-term to find the optimal balance of eliminating discretionary spend, while thoughtfully reinvesting in our brands.

Our balance sheet remains strong with a $425 million untapped revolver in place, over $500 million of cash on hand and our recently executed $750 million high-yield notes offering. We are very well positioned to continue to weather near-term challenges while also investing in the growth profile of this business. This invest-for-growth priority is reflected in the CREMO acquisition that we're excited to announce today. The Men's Grooming category and in particular soft goods is a strategic focus for us given its attractive growth profile and our clear right to win in this space. And CREMO will help us accelerate our growth and strengthen our position in the fast-growing soft categories of the Men's Grooming segment.

Growth in this category largely comes from insurgent brands which had outperformed established brands in the U.S. And this acquisition complements our existing Bulldog and Jack Black brands, providing us with a strong insurgent portfolio of brands that operate across price tiers, while meeting various consumer needs. The business will contribute to our grooming portfolio, given CREMO's trailing 12-month net sales of $58 million as of June 30, which continues to strengthen on the heels of new distribution and offers a gross margin profile that is accretive to the Edgewell portfolio.

CREMO has great brand heritage, a strong social media presence and attractive opportunities for category, channel and geographic expansion, which we look forward to capitalizing on post close. This all-cash transaction is expected to close by the end of our fiscal Q1 2021 and is subject to customary closing conditions.

As we look ahead to the final quarter of our fiscal year, the environment remains highly uncertain and, therefore, we're not providing a financial outlook at this time. However, as I said earlier, we saw sequential top-line improvement in this business across Q3, which has continued [Technical Difficulty]

[Rod Little, President and Chief Executive Officer]

So, Chris, can you hear me? Yeah, everybody, it sounds like we've lost Dan. I'm going to pick up where he left off and then close out before we go to Q&A. So where Dan was going as well, the heightened level of uncertainty in today's environment likely suggests a wider range of potential outcomes than normal. This trend is a reasonable proxy for the organic top-line run rate for the quarter.

And additionally, while we expect to continue to see headwinds in gross margin associated with COVID-related costs and negative category mix, we also anticipate tailwinds from further fuel savings, favorable commodity costs and lower promotional intensity. Importantly, in the quarter, we will also continue to invest behind our key strategic priorities to ensure that we are creating and solidifying our platform to support sustainable growth.

In summary, we are operating in this business with great discipline, tightly managing expenses and capital, strengthening liquidity as we continue to generate savings from our Project Fuel work in making strategic and thoughtful reinvestments in growth, both organically and inorganically.

So with that, I'll go ahead and close this out. So I think you can tell from everything that we're talking about here, we have been working tirelessly to reposition the Edgewell business. We've stabilized the underlying top-line and gross margin profiles. And we've been improving our execution on-shelf.

And while the headwinds associated with COVID-19 significantly impacted our reported results in the quarter, our underlying progress has continued, and it starts with the commitment to discipline and execution across the organization, something that we've increasingly focused on over the last year, and is seen not only in our continued fuel results, but also in our seamless operational performance during this COVID environment and our efforts to strengthen our balance sheet.

Our global Wet Shave business is on the most solid footing that we've seen in quite some time, with solid performance internationally, including market share gains in our second biggest market in Japan and signs of structural improvement in the U.S. in both men's and women's branded shave.

Clearly, COVID-19 has completely disrupted the Sun Care season, including our largest market, the U.S. However, our execution was very strong, with the combination of strong product placement, good off-aisle presence and effective consumer messaging, all contributing to a sizable 370 basis point share gain in the quarter, which positions us very well heading into next year's sun season.

The consumers focus on personal hygiene and desire to utilize known brands that they can trust continues to benefit our Wet Ones brand. And we are quickly approaching $100 million brand with plans in place, both near-term and longer-term to increase capacity at a level required to meet ongoing increased consumer demand. It's clear that this fundamental shift in consumer behavior is not transitory, and we are well positioned to capture further growth in 2021 and beyond.

And that then brings me to the announcement to acquire CREMO. This profitable brand is the clear market leader in soft goods across the grooming space, has an exciting growth profile and is gross margin accretive to the Edgewell portfolio. And its strength in beard care, and to a lesser degree, body wash, provide a strong diversification for the Edgewell portfolio.

It's often difficult to look past these highly volatile days of COVID-19. But as we look forward to 2021, we see a business that is operating more effectively, driven by a more stable top-line and gross margin profile and underpinned by a full portfolio of brands that can be seen as a catalyst for growth from global Sun Care to Men's Grooming, to Wet Ones, and finally, international Shave.

We're committed to the continued transformation of the business and are convinced that we are on the right path and making good progress. And with that, I'll turn the call back over to the operator for questions.

[Operator]

Thank you. [Operator Instructions] Thank you for holding. We will now proceed with the Q&A session. Our first question comes from Bill Chappell, SunTrust Securities. You may proceed.

[William Chappell, SunTrust Robinson Humphrey, Inc.]

Thanks, good morning. Can you hear me?

[Rod Little, President and Chief Executive Officer]

Yeah, hey, Bill. Good morning.

[William Chappell, SunTrust Robinson Humphrey, Inc.]

Sorry, it seems like a couple of the technical difficulties, just checking in. Hey, Rod, I guess, on Wet Shave, and I understand that you're going to unveil broader plans for the strategy in a few months. But I mean, can you just help us understand how CREMO kind of fits in? Is this the last piece of multiple acquisitions to kind of fortify the business? Do you need to do more? Are there other more organic plans expected? Or - I'm just trying to understand maybe a little bit of a preview of what you're expecting for Wet Shave kind of long-term strategy?

[Rod Little, President and Chief Executive Officer]

Yeah, thanks, Bill. And apologies to you and others on the line with the technical difficulties. I was concerned for a moment that Dan wasn't going to be able to rejoin and I was going to have to like go back to my CFO chair days, which is maybe a more difficult position on calls like this, but I think we're all back on and good now.

But we're confident that Wet Shave in particular, and then broader grooming, so the Skin Care regimen and that whole category is still a great place to play and a good place to be in business. We are seeing, and I think Procter alluded to this as well, we had not only some stock up in quarter 2 that negatively impacted this quarter in Wet Shave, but you can see it when you around or see in the Zoom calls, there's less shaving happening right now.

I think we're confident based on everything we see, studies we've done that this is a temporary situation in terms of shave incidents declining during the work-from-home in more restricted environment. We think that the category will return to normal, which normal would be a flattish to maybe slightly positive.

Sales line for blades and razors in that Wet Shave definition with continued very fast growth across the balance of the grooming segments that are more around men's skin care, beard care, preps, moisturizers, any perspirant deodorant. There's a lot of growth in those grooming categories as more and more men use more products in their daily regimens.

So you balance that out. We think the growth across broader grooming, inclusive in blades and razors, returns to normal, has growth in it and structurally from a structural profitability and economic standpoint is highly valuable. And we think we've got the right capabilities to win. And so, this is an acquisition into that area around grooming. And we like our portfolio that we have and think it's differentiated to hit all the key consumer segments.

The leaky bucket we've had in blades and razors, primarily in the men's category, which I'm not happy with our performance and where that business has been, we're addressing. And we're addressing it with urgency around building brands that better resonate with the consumers, having new innovation coming that's going to be a lot more interesting, and ultimately, building better retailer relationships and having better outcome at the shelf in terms of our placement and positioning.

So the strategy is going to be focused on doing all of those things. And again, CREMO is a key piece to expose us to the fastest-growing part of the grooming segment.

[William Chappell, SunTrust Robinson Humphrey, Inc.]

Okay. And then, Dan, if you're on the call, just a follow-up on Sun Care and how it kind of works through the P&L, I'm just trying to understand, did the June quarter - I mean, do you have excess inventory that now sits through next year? Did you accrue for returns that will happen this quarter? And just kind of understand if there's any lingering impact for the weak Sun Care season and how that carries over into 2021?

[Daniel Sullivan, Chief Financial Officer]

Sure, absolutely, and good morning, everyone, and again, apologies for the technical difficulties. No, look, Sun Care is always a difficult category to model and trying to get sort of the peak consumption period right, which we know the sell-in we have lags that. So, there's always a difficulty in the model, obviously, made harder by COVID. But we feel really good about our inventory position. We feel really good about sort of the state of the product at trade.

We don't anticipate heightened returns, risk or accruals. We've been monitoring this obviously quite closely over the course of the last 6 to 8 weeks, in particular, and we'll continue to do so. So, no, we don't anticipate Q4 or looking into 2021 with heightened risk. We've taken the appropriate provisions.

[William Chappell, SunTrust Robinson Humphrey, Inc.]

Great. Thank you. Yes, go ahead.

[Rod Little, President and Chief Executive Officer]

Yes, Bill, if I could add to that. Not only do we feel good about where we are in the season here in terms of financial exposure and how we're operating with retailers and retail trade, very simplistically, what happened in Sun Care this year is we lost the first part of the season by and large. Spring break didn't happen like it normally does. That Easter period, which is a heavy beach vacation season, didn't happen. And then by and large, Memorial Day, didn't happen like it normally did.

And so, you saw the category very depressed through that early to mid-June period. As we got into later June, and then into July, and now the beginning of August, we've actually seen the category recover from being down in some weeks as much as 60% at the beginning of the season to even having growth in some more of the recent weeks that we've seen.

And so I think we're ending the season in a way where a lot of the inventory that was placed in is now moving and turning, in fact, ahead a year ago in some cases. And so, not only do we feel like we're ending the season in a clean way, we're quite optimistic as we look forward to next year as we figure out how to move around and be outside safely that will return to not only more of a normal sun season, but we Edgewell and our brands enter that in a real position of strength with our performance this year and the share growth as we work with retailers and partner on the sets for next year.

[William Chappell, SunTrust Robinson Humphrey, Inc.]

That's great. Thank you for the color.

[Chris Gough]

Operator, next question, please?

[Operator]

Our next question comes from Kevin Grundy, Jefferies. You may proceed.

[Kevin Grundy, Jefferies Group LLC]

Hey, good morning, everyone. Thanks for taking the question. So I wanted to start off with the decision not to formally reinstitute guidance this year and understanding, I don't want to get too hung up on one quarter. But appreciating the volatility with COVID, Rod, you talked about some recalibration in the Wet Shave strategy, which I think people appreciate. But at the same time, given a challenging quarter, and we've seen a number of HPC companies reinstitute the practice of providing guidance and instilling some confidence, I think, to the shareholder base.

I just was hoping for some of the key areas of variability. Dan, I think you talked about mid- single-digit declines in June, which seems representative of what you're seeing. Rod, you talked about Wet Shave being on more solid footing and feeling better about where you are with retailers. Maybe just to push here a little bit, maybe talk about the biggest areas of variability and the decision not to formalize guidance here for the remainder of the year? And then I have a follow-up.

[Rod Little, President and Chief Executive Officer]

Yeah. Dan, go ahead.

[Daniel Sullivan, Chief Financial Officer]

Yeah, I think it is simply a recognition that the uncertainties that surround COVID far outweigh the knowns and the certainties. And that's the reality, particularly as we head into the back end of the summer and the Sun Care season. But just to kind of reiterate, our line of sight to the quarter, we did provide some color to that in the call, and I'll just - I'll sort of tick through it because I think it's helpful. You hit the first point absolutely right, Kevin. We do see a sequentially improving top-line. We think that we cycle through the lowest of the low of COVID-related impacts in that May time period, saw the exit rate on the quarter strengthened, and that's continued in July. So we're pleased about that mid-single-digit declines is a good proxy.

We also are seeing a bit more stability in the margin profile of the business. There are still headwinds related to COVID, for sure, onetime and other. We anticipate slightly less impact from category shift in the margin profile. And as we start to cycle through the Q2 pantry loading, there's less of an effect in shifting of segments, less volatility in margin. We obviously have the price increase, we have the full savings, and we continue to anticipate positive tailwinds from commodities.

So again, I think while difficult to quantify, we're seeing a more stable margin profile than we exited Q3, which - and we're going to continue to invest in this business. We feel like we spent extremely efficiently in Q2 behind our priorities in Japan, in Women's, in Sun, and we're going to continue to do that in Q4. So that's how we're thinking about the quarter sort of in high level points, but again, shying away from trying to quantify it because the range of outcomes is still too wide.

[Kevin Grundy, Jefferies Group LLC]

Okay. I appreciate the color. I'll pick up with Chris off-line. Just while I have you guys on the CREMO deal, can you offer a little bit how that came about maybe some financial information, EBITDA in that business? You did mention it was profitable growth rate, what you think you can do with this in terms of revenue and cost synergies and where you see sort of the biggest opportunities from a distribution perspective, both from a channel and perhaps even geographic? And then I'll pass it on.

[Rod Little, President and Chief Executive Officer]

Yeah. Kevin, I'll start, and I'll throw it over to Dan for some of the specifics. How it came about? We had the FTC block our transaction with Harry's back in the winter. And coming out of that is we've done the strategy work, again, which we'll be prepared to talk more about here in a few months in detail. And it's really about getting the bottom-up 2021 planning work done to have a solid basis in place for that.

But we were always very interested in increasing our exposure around men's grooming, the non-Blades and Razor segment where there's significant double-digit growth happening across the category. And a big part of the rationale, the Harry's transaction was not only the portfolio that existed there, but the ability to grow and drive that part of the business. And we very much see this as a pure-play grooming execution where that category growth is the fastest with CREMO.

And so again, it's - you're seeing us just follow through ultimately on what was a failed transaction with what we're confident will be a successful transaction to really grab that growth in a bigger way. So that's how it came about. Dan, you want to take the rest?

[Daniel Sullivan, Chief Financial Officer]

Sure. Yes. I mean, I'll probably shy away from giving specifics, but I'll add certainly some color. The top-line of this business is extremely attractive, you had a very healthy growth rate. You saw the numbers, $58 million TTM sales in June. It's growing by both velocity and distribution gains. It's the largest niche brand in its space, ex-razors and blade. So it's a healthy book of business that has a really attractive growth algorithm to it. It is profitable. It has a gross margin profile that's accretive to the Edgewell portfolio, which we're excited about.

And in terms of expansion, we see quite a bit of opportunity for this brand. At the channel level, reasonably well distributed in mass, but certainly opportunities there as well as drug grocery and online, where its business is quite small today. And also geographically, we're quite excited about the opportunity to bring this brand into our international portfolio. So there's a lot to like about this acquisition and about the business model.

[Kevin Grundy, Jefferies Group LLC]

Okay. I appreciate the color, guys. Good luck.

[Daniel Sullivan, Chief Financial Officer]

Thank you.

[Rod Little, President and Chief Executive Officer]

Thank you.

[Chris Gough]

Operator, next question, please?

[Operator]

Next question comes from Mr. Jason English, Goldman Sachs. You may proceed.

[Jason English, Goldman Sachs]

Thank you. Hey, good morning, folks. Hope all is well.

[Rod Little, President and Chief Executive Officer]

Good morning, Jason.

[Jason English, Goldman Sachs]

Good morning. So the underlying market share trends are encouraging. And you're clearly expressing narrative of a lot of confidence that the base business you have today is turning around, stabilizing and improving from here. Meanwhile, it doesn't appear reflective in your valuation. And with the amount of cash you spent on CREMO today, you could have purchased probably around 15% of your shares outstanding. So it's a pretty high bar in terms of the accretion math or the value that must come from CREMO to match that. Quick back of the envelope math suggests you need to scale that business to north of $200 million to match that same type of return of just buying back yourself at this current valuation.

So a couple of questions. And I guess the redundant a bit to what Grundy asked, but you didn't give a lot of specificity, so I'm going back at it. One, do you generally agree with that sort of conceptual math? And two, do you think that's possible that you could scale that size? And three, what's the pathway? Like, where is it distributed today? Where can you get it to? What are the revenue synergies? Help us get confidence that this is the best use of the cash and at least as good, and hopefully, if not better, than just buying back your own stock at this valuation? Thanks.

[Rod Little, President and Chief Executive Officer]

Yeah, good morning, Jason, fair question, right. And as we look at capital allocation, I think we've talked about our relative priority around organic needs of the business, smart, disciplined acquisitions. And then you look into share repurchase, potentially dividends, right, all of those things are things we're looking at are on the table as we look at our strategy going forward. I don't think we're ready to declare all of those today, but that's something more formally and more specifically we'll have a point of view on when we have more time with you all and the investors in Q4 as we think about Investor Day and telling the story in a more detailed way.

Relative to CREMO, I'm not going to get into more specifics on the assumptions other than to tell you, because I don't want to give away, specifically our plans. Other than to tell you, we see significant upside in the brand, in the business itself in terms of distribution expansion, where it's not today, but also there's an interplay here with our base Edgewell brands and business. And this is part of the story to regain credibility and to regain our footing with not only end consumers who interact with and use our brands, but also with retailers who, frankly, over the last couple of years, had lost confidence that we could be a legitimate partner in Wet Shave and Grooming.

And as we rebuild that and we build back our position, not only with better brand building capabilities, better omni-channel execution, better retailer relationships, this is one piece of the arsenal to go do that, and it's a big piece because it signals we're serious about winning and being successful in our primary category here. And so again, we've done the math, and I'll tell you, we're confident we can create a lot of value here. And we spent a lot of time looking at that and going through the assumptions and to the comparable choices. And we feel like this is the right choice today for our shareholders.

[Jason English, Goldman Sachs]

Okay. I appreciate that. That's helpful. And just going back to the market share performance, the figures you gave on at least the U.S. razor and blade market share, I think you said the last 12 weeks, down 120 basis points or so look worse than what we've seen in the Nielsen data. I'm guessing that the differential is your private label business as probably what does appear to be losing share in the U.S., is that right? Is it your brands are doing better, but private labels, the negative offset? And if so, what do you believe is driving the private label share weakness? And any thoughts or anything we should contemplate as we think about the forward trajectory for that business?

[Rod Little, President and Chief Executive Officer]

Jason, we have private label down 6% in the quarter. It was up 2% in the first half of the year. So it stepped back a little bit, but it's still beat the category, which we had at down 10%. And so Private Label did not perform worse than our branded business. There's a couple of things going on, I think there's specifically the biggest change in the business is we lost distribution at Sam's Club in the February, March planogram resets, actually a little before that, where we lost a big chunk of systems business. And again, I don't know how that's flowing through the share reports. And that's the single biggest drag. Absent that, we're actually growing share in other channels with other customers that then holds the share relatively flat overall in terms of the trajectory that it was on.

Dan, I don't know if there's anything else you would add to that.

[Daniel Sullivan, Chief Financial Officer]

Yeah. I think good comments. Maybe, Jason, for perspective, our total portfolio share in the quarter was flat, which I think is a significant statement. It was actually up 100 basis points in unit share. You saw the strong performance in Sun and Shave perhaps still challenged result in Fem, for example. But we knew the impact on the branded side of the business that was coming from the distribution losses in Sam's on both men's and women's. Not that I'm trying to isolate that.

But if you exclude the Sam's distribution loss, Hydro Men's and Hydro Silk both gained 40 to 50 basis points of share, strong performance at target, strong performance in food. So again, we have a lot of work to do here, but I think a more stable share results in our branded business is what we take away from the quarter as encouraging signs.

[Jason English, Goldman Sachs]

Thank you very much. I'll pass it on.

[Daniel Sullivan, Chief Financial Officer]

Thanks, Jason.

[Chris Gough]

Operator, next question, please?

[Operator]

Our next question comes from Faiza Alwy, Deutsche Bank. You may proceed.

[Faiza Alwy, Deutsche Bank AG]

Yeah. Hi, good morning, everyone. So I wanted to talk a little bit about investment spending and sort of where you are in that process. And I'm wondering if you can give us a little bit of a preview as you talk about your strategy. Because it seems that so far, a lot of your competitors within household, personal care have been spending significantly behind the category, just overall across categories. So it seems like the cost of growth is increasing. And I wonder how you were thinking about it? And whether you think there is more that you can do in terms of expanding project, if you will?

[Daniel Sullivan, Chief Financial Officer]

Yeah. So I'll take it in 2 parts. On the investment side of the business, we obviously had to make significant steps to prioritize in the quarter given the COVID-related pressures we felt in the top-line. We prioritized against our strategic priorities. And I think I referred to those in my comments. So Japan and Hydro Schick 5 launch in China, the women's shave business in the U.S. and, of course, Sun Care. If you look at our spend overall, though, our advertising dollars as a percentage of net sales were actually flat year-over-year. Where you saw the lion's share of the declines was in the promotional end of the spend, if you will, which is not surprising, right. You see less display activity, less merchandising, less consumer promotions. So we did feel like we invested at the right level, but importantly, invested behind the right priorities, and we're going to continue to do that going forward.

As far as are there further legs for Fuel, certainly, the answer to that is yes. And not so much because of the Fuel program, which technically has another year left in it. But just by the way we are running this business and the push that we have on productivity and efficiency. That is in the DNA of the organization that is not about a named program. And so we are going to continue to run this business with the same level of focus and effort on Fuel-like savings, irrespective of that program. We're confident there's continued runway there in terms of productivity gains and efficiency gains for the business.

[Faiza Alwy, Deutsche Bank AG]

Okay. That's helpful. But do you think for longer term, do you think that you need to further increase your A&P spending or just general investment spending overall?

[Daniel Sullivan, Chief Financial Officer]

We do. And in fact, if you remember, that was embedded in our outlook for 2020 when we began the year, we were leaning in on A&P spends and R&D spend to the tune of plus $20 million or so year-over-year. That's what we had anticipated, and we were on that path pre-COVID. We've made the necessary adjustments, given the pressures in the quarter. But we still maintain a leaning instance when it comes to investments behind the right strategic priorities.

[Faiza Alwy, Deutsche Bank AG]

Okay. Thank you.

[Chris Gough]

Thank you. Operator, next question, please?

[Operator]

Our next question comes from Olivia Tong. You may proceed.

[Olivia Tong, Bank of America Merrill Lynch]

Great. Thanks. Good morning. First, I want to ask you about Wet Shave and just the competitive environment, whether you're seeing more from the main branded competitor? Or is it more coming from the newer disruptor brands? And then assuming that the COVID impact sort of turn into recession challenges over time, can you talk about your expectations of your business in terms of the branded versus the private label performance and then mix? Thanks.

[Rod Little, President and Chief Executive Officer]

Yeah. Thank you, Olivia. Good morning. On Wet Shave, the competitive environment is really high, right. It remains a highly competitive segment. There's no doubt. And Procter is very good at what they do. We have a lot of respect for them. And they're operating well in the category as the leader. We know the Harry's business pretty well by spending time with them. They're a talented group and have brought innovation and new thinking to the category, and you've got Dollar Shave there with Unilever, right, backing that when you put that all together, it's a highly competitive environment.

Despite the competition and where it sits, if you look at the consumer, and you look at the totality of the portfolio that each of us have, we have a very interesting portfolio that has a right to win and exists with consumers in segments where we play. We've got great technology and quality. We - for the U.S. market, we grind blades in the U.S., like there's a lot of things we can play with as we move forward to be successful in these categories. And I think we're increasingly confident we can be despite the competitive environment. Okay. So that's what I would say on Wet Shave in the competitive environment. Again, increasingly confident given what we have line of sight to.

On the recession, it's a great question because I think this is what we're all facing, and this is likely to come out of this. Again, I think our portfolio sets up well in a recessionary environment. We're not, in many cases, the price leader. We play more in mid-tier and value segments. And then we have the big Private Label piece of the business. And if you look back to past recession, you've seen trade down to Private Label. And so I would expect that to happen again. As you have more value offerings and better disposable options, I think those segments are also potentially net winners in this. So it's not just about Private Label.

But again, I think we feel good about our portfolio and our price points. Not just in Shave, by the way, but in Sun Care, Hawaiian Tropic and Banana Boats are both right in the mid-tier pricing zone. We think that's part of why they're winning today versus some of the higher-priced alternatives. And so again, from a recession-proof portfolio, I think we've got one that is recession proof, is any other out there in the categories where we play.

[Olivia Tong, Bank of America Merrill Lynch]

Got it. Thanks. And then just one follow-up. You mentioned your thoughts on the COVID impact of sales, but how much do you think COVID-related costs impacted SG&A in particular? Because the cost saves were pretty solid, the Fuel savings, but SG&A quarter was relatively in line on both a year-over-year and sequential basis despite the sales shortfall. So just wondering if you could talk a little bit about that? Thank you.

[Daniel Sullivan, Chief Financial Officer]

Sure. Yeah. I would say the COVID impact outside of sales, first of all, hit us most significantly in gross margin. We talked about that both the onetime costs and the channel shifting - segment shifting that occurred, which was negative to our margin profile. In terms of SG&A, we feel really good about our ability to pull back on non-discretionary spend and discretionary spend, prioritize where we want to spend behind the business. We essentially didn't hire headcount during the quarter other than key talent that we needed to bring into the organization. You heard Rod talk about that, for example, with Eric O'Toole.

So we made conscious choices to both pull back where we thought it was smart and thoughtful to do so, but also invest in talent and capabilities, both in our North America leadership structure and also in our e-commerce and R&D organizations. And those are partial offsets for the savings that you're seeing as a result of COVID.

[Olivia Tong, Bank of America Merrill Lynch]

Thank you.

[Chris Gough]

Thanks, Olivia. Operator, next question, please.

[Operator]

Next question from Nik Modi, RBC Capital Markets. You may proceed.

[Nik Modi, RBC Capital Markets]

Thanks, good morning, everyone. Hey, Rod, I was hoping you can just talk a little bit about the share progress that you've made, maybe helping us understand some of the underlying dynamics there. I mean is this velocity? Is it distribution? Is this based on perhaps some delayed new product launches? And then I guess kind of dovetailing with that is distribution losses have been pretty common over the last several quarters.

And I'm just curious, like when do you think the leaky bucket will kind of get stop leaking? Any perspective around that would be helpful?

[Rod Little, President and Chief Executive Officer]

Yeah, thanks, Nik. Good morning. The share position or the, let's call it, the share stabilization we're seeing, particularly in Wet Shave, has little to nothing to do with distribution gains. We've had none in Wet Shave. We've had some improved positioning here and there at a couple of retailers. We picked up a little incremental here and there behind some innovation. But largely, we've been donating shelf to the competitive set now for the last 3 or 4 years.

And so, what we're seeing is better execution and performance within the space we have. So it's around velocities. Outside of measured share, it's around better communication programs and better innovation, particularly on our women's portfolio in the Hydro line, where we're growing share rapidly on Amazon around some of the Hydro Silk and Intuition lines. And so, I think it's better execution, it's better messaging, and it's all around velocity.

In terms of the leaky bucket, the real chance to impact that, as you know, is - and here in the U.S. is in the spring planogram reset timing, in the late winter, early spring. And as you might expect, we've been hard at work on building plans that are better and more interesting than in partnering with retailers to stop the leaky bucket, but not only stop the leaky bucket, get some additional space back that we've lost over the last couple of years.

And so, we're working hard on that. That's the next real opportunity in Wet Shave to stop the leaky bucket and move that forward. That applies to Fem-Care as well. The single biggest drag in our Fem-Care business over the last 3 or 4 years that perfectly correlates to the top-line decline is low shelf space and lost distribution. And we're cycling another one of those this year at Walmart in particular.

Again, as we move forward off of the base that we have, I think we're increasingly confident that we can hold distribution and build some back as we move forward. And that's part of the confidence I think we have that the key driver of decline in this business has been around 2 things: engagement with the consumer, we're working very hard on that to have better engagement with consumers; and then, have a more real estate at shelf. It's that simple.

And again, I think as we look to next year, we'll be proven on where we land, but I think we're feeling increasingly confident across the portfolio that we can land better outcomes.

[Nik Modi, RBC Capital Markets]

Thank you, very helpful.

[Rod Little, President and Chief Executive Officer]

Thank you.

[Chris Gough]

Operator, next question, please.

[Operator]

Next question comes from Jonathan Feeney, Consumer Edge. You may proceed.

[Jonathan Feeney, Consumer Edge Research, LLC]

Good morning. Thanks very much. I just wanted to clarify a comment earlier. When you said your portfolio share was flat, is that flat ex-distribution losses? Like across all of your brands and businesses in the U.S., you're saying your share was flat. Could you clarify that?

[Daniel Sullivan, Chief Financial Officer]

Yeah, that's exactly what it is. So if you take the U.S. portfolio in totality, the categories in which we compete, share was flat. And, that was obviously driven by robust gains in categories like Sun and shave preps, and then obviously, share losses in areas like Fem-Care which we talked about.

[Jonathan Feeney, Consumer Edge Research, LLC]

And that ties to, I believe, it was Rod's comment in the prepared remarks about 40 basis points of share gain for the Hydro franchise excluding distribution losses, is that right also?

[Daniel Sullivan, Chief Financial Officer]

Same math, same figures, slightly different, obviously, because we excluded from that calculation, the known losses at Sam's on Hydro, and said, absent of that we saw 40 basis points of gains, but same database and same math.

[Jonathan Feeney, Consumer Edge Research, LLC]

Got you. Okay. So it really seems like it's fair to say that when you lap these distribution losses, you're relatively happy or at least happy with the share progression within your businesses across the board. I mean, I guess, maybe I'm not going to just to ask you if you're happy. But how is that compared to your plan coming into this quarter? Like are you pleased with that relative to your plan?

[Daniel Sullivan, Chief Financial Officer]

Yeah. And maybe the way to think about it is if you look at the distribution losses that we saw in Sam's on both men's and women's branded, you look at a heightened competitive environment that Rod talked about. Obviously, we're cycling through COVID. You look at the channel shifting that took place, which was not favorable to our business. It moves into food, for example, and out of mass and drug.

You put all of that together and you look on the men's side of the business at a share picture that's largely in line with our 52-week trend. So while facing those headwinds and the known distribution losses from Sam's, our share position was largely in line with longer-term trend. That's an encouraging sign for us as we think about the quarter.

As Rod said, obviously, a lot of work remains, but I think an important point of context.

[Jonathan Feeney, Consumer Edge Research, LLC]

It makes a lot of sense.

[Rod Little, President and Chief Executive Officer]

Yes, John, if I could - yeah, John, if I could just build on that one point. I think are we happy about where we are versus plan ex-COVID around share? Yes, we are. Are we happy with much else relative to where we are overall? No, we're very dissatisfied, particularly in Wet Shave, and in the U.S. Men's business on where we are. And we're very hungry to change that and not only get to a place where we're growing market share across the portfolio, but we're creating a lot of value for shareholders. We're very cognizant that today we are not doing that, but that's what we're working to do.

[Jonathan Feeney, Consumer Edge Research, LLC]

And one unrelated question, if I might. When you think about Jack Black, Bullfrog (sic) [Bulldog] and now your latest acquisition, longer term, I mean, broadly speaking, how does the manufacturing and fulfillment overlap look? Is this a question of you can utilize existing capacity, which maybe utilization isn't where you want it to be? Or are these just - do you have to just keep these businesses completely separate forever and try to maintain the quality niche, whatever it is, just the nature of the business? Thanks.

[Rod Little, President and Chief Executive Officer]

Yeah, so, Jonathan, I'm going to correct one thing you said, because our brand team would not be happy. It's Jack Black, CREMO and Bulldog.

[Jonathan Feeney, Consumer Edge Research, LLC]

Oh, didn't I say Bulldog. I am sorry about that. Sorry about that.

[Rod Little, President and Chief Executive Officer]

It is not [indiscernible] Bullfrog, we have respect for Bullfrog too. But this is Bulldog.

[Jonathan Feeney, Consumer Edge Research, LLC]

It's pouring - it's pouring rain outside, so that's probably what made me say that, I'm sorry.

[Rod Little, President and Chief Executive Officer]

Yeah, that's okay. We've had our own technical issues this morning. No, today, these brands largely, as we've acquired them, manufactured via third-party outside manufacturing relationships. All formula cards owned, all the R&D product development, in-house owned, but executed via third-party manufacturing of typically a finished product.

And so, as we look at that across the 3 brands, there's obviously opportunity to leverage scale across that. In fact, in some cases, the third-party manufacturers are the same. And so as we look at that and becoming highly efficient, but not losing anything around the formulation or the efficacy of the product that, frankly, is the magic here beyond the brand positioning, where consumers love the brands and the experience they have.

We're not going to lose any of that. And that will be very unique, very distinct, different teams working on that, but there will be some backend efficiency we think we can drive.

[Jonathan Feeney, Consumer Edge Research, LLC]

Thank you very much.

[Rod Little, President and Chief Executive Officer]

Thank you.

[Chris Gough]

Thank you, operator. Next question, please.

[Operator]

No more questions. I would like to turn the conference back over to the speaker for any closing remarks.

[Rod Little, President and Chief Executive Officer]

All right. Thank you, everybody. I appreciate your time and running a little longer today. And thanks for the interest in Edgewell. Again, I think dynamic times here, and I hope everyone stays safe and healthy, as we move forward, hopefully, to better times in not-too-distant future. Thank you.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Have a nice day. Thank you.