We moved quickly on creating work from home, social distancing standards: Edgewell CEO

Edgewell is a personal-care business that owns brands including Schick, Banana Boat, and Wet Ones. Edgewell CEO Rod Little joins Yahoo Finance’s On The Move to discuss the outlook for the personal-care industry.

Video Transcript

JULIE HYMAN: And we were just talking about what's going on in the food industry. Let's switch on over to personal care and what is happening in that industry. Shares of Edgewell Personal Care company, they're up about 1% in today's session. They have kind of slipped and gone sideways thus far this year, as have many companies.

We're joined now by the head of that company, Rod Little. He is the CEO. And Rod, you guys have-- we were just talking about Focus having diverse, stable brands. Edgewell does as well. When it comes to personal care, you've got Wet Ones, you've got Schick, the razor brand, Skintimate. But then you also have things like Banana Boat and Hawaiian Tropic. So what has the demand arc been like across those different brands over the past couple of months?

ROD LITTLE: Yeah. Hi, Julie. It's great to be with you. We've seen all ends of the spectrum. We've got a product, Wet Ones, that is actually part of the hygiene regimen and the solution to dealing with coronavirus around being clean. And we can't make enough of that.

We have products like Playtex, Carefree, and Stayfree in the feminine hygiene space that are in high demand. And we have razors, as you talked about, and then the sunscreen products, Banana Boat and Hawaiian Tropic. And I think there is a question around what's going to happen with the sun care season right now with beaches closed, people having been inside and under quarantine. Although as we look at the category and we look at behavior starting to change-- people are wanting to be outside. The CDC-- increasingly, I think, as we learn more about the virus-- is actually encouraging people to be outside.

And skin cancer is a leading killer of people. Millions of people in this country are diagnosed with skin cancer every year. So sun protection is more important than ever. It just may be in different ways-- in the backyard with the family, out for a walk with the family, as opposed to the beach. But it's very interesting in terms of how different the dynamics are this year versus what a typical year is.

JULIA LA ROCHE: Hi, Rob. It's Julia La Roche. Thank you so much for joining us from what I understand is your first broadcast interview. I want to shift a little bit away from the consumer product side and talk about the operations. Because from what I understand, at Edgewell, you all went remote for much of your workforce months ago, even before the pandemic and not related to the pandemic. And as we have this bigger conversation about remote work, work from home for other companies, I want to just get your insights into that. How's that working out for you? How do your employees respond to it? How did they respond to it, maybe, from the connectivity side of things and not being around their colleagues?

ROD LITTLE: Yeah. Hi, Julia. So great question, and this is an area that we're very proud of it. At Edgewell, we're a values-driven company. And our leading value is people first. And I believe deeply that people are our most important asset, my leadership team does as well. And so through that lens, as we looked at how work gets done today, we're very comfortable with a distributed environment-- work from home, flexibility, remote work.

And so we had moved early on that. We had made the right IT investments to enable that, keep the connection between the teams. And so from an office standpoint, it was almost a non-event as we went to a full work-from-home. We beat the guidance [AUDIO OUT] very early on mandating work from home, travel bans really through a lens, again, of keeping people healthy, keeping people safe.

The most interesting thing, though, that we had to deal with, as Julie talked about-- we have pieces of our portfolio that are in high demand. When the consumer goes to the shelf, or she goes to check out at Amazon or one of the other retailer sites, they expect our product to be there. And we have 4,000 people in global manufacturing and operations that we needed to keep safe through this. So we made it a hard requirement early in and out of our facility-- thermal temperature scans, no letting our guard down our personal protective equipment. In some cases, we manufactured our own face shields, for example, when we couldn't get them. The distancing, the cleanliness standards-- we didn't let any of that get in the way of how we ran the company.

The other thing we did that, I think, actually has been the game changer for us, that's let us have nearly perfection on supply and distribution, is we instituted a pandemic pay policy where we said for a three-month period, if you're sick and you're hourly, don't come in. We'll pay you. If you think you've been exposed to someone who has the virus, who come in. We'll pay you. If you have little kids at home who are in school, or your child care arrangement's been disrupted, deal with that. Get that right. We'll pay you while you sort that out.

And so that assurance we gave our employees-- almost 50% of our hourly workers took advantage of that. And as a result, we have no spread of coronavirus in our facilities. And we've kept up with production, and we've been fully operational through all of this. And so as our employees look at that and look what's happening elsewhere, I think there is a badge of honor and pride of how we've done what we've done. Everybody's safe.

ADAM SHAPIRO: Rod, hey. It's Adam Shapiro. I don't know if you can see me holding up here, but yes, I'm a fan of the products. I've got my Hydro 5 here. I've got my Edge gel here. I use them every day. I want to ask you about these. They're kind of expensive. I wait for the CVS 30% off to go buy them, but I love them.

But are men going to keep shaving? I'm looking at half of my team from Yahoo who are younger than me. They don't have beards. And you had tried to get Harry's razors, a less expensive blade, a while back. But going forward, is that going to be a contracting market, men who shave? And is there going to be a need for a less expensive blade?

ROD LITTLE: Yeah. Great question, Adam. Thank you for the loyalty and the purchase ahead of time. I'm very appreciative of that. You know, as we look at the shaving market, trends had been negative on shave incidents as young people, more and more, have gone to facial hair and more relaxed standards.

But despite that, the market overall has been roughly flat. And so we've gotten to a point where the market's flat. It's our job to bring growth back into the market and play our portfolio in a way that we give you that value offering. So we've got Schick Hydro, the best technology on the market. We've got a brand, Bulldog, where we're launching a razor in the value space right where that Harry's price point is. And so that's how we look at it.

The other thing we do is men, more than ever, are into skin care and broader grooming. We have our Bulldog brand. We have the Jack Black brand, which is all around beard care, and maintenance, and facial hair standards that are quite different. And so as we see shaving incidents potentially declining, men's use of skincare products is way up. So we've got a portfolio that meets that need as well.

JULIA LA ROCHE: Hey, Rod. It's Julia. Adam just brought up Harry's as an example. I'm just thinking. As you look at your portfolio mix, are you thinking about deals? Where would you like to grow the portfolio, anything that particularly interests you?

ROD LITTLE: Yeah. So because the Harry's transaction was blocked by the FTC back in the winter months, we have a really clean balance sheet. We have a lot of cash flow. We generate free cash flow at a very high rate. And we have the ability to invest in things. We're looking at our organic business, and making sure that's strong, and we're investing there first. But we are very interested in a creative tack-on M&A. There's no doubt when you look at our portfolio.

Our ability to acquire brands-- this company was built via a series of acquisitions over time. So we feel like we're good at that. And if you look at where growth rates are-- that skin care space I referenced, broader grooming, potentially sun care where we have overlapping capability-- those are all areas that would be interesting to us both in the US and out.

JULIE HYMAN: Well, Rod, let's keep in touch as you go on that journey, potentially, of acquiring some more brands Rod Little, thank you so much for your time. Rod is the CEO of Edgewell. I appreciate it.

ROD LITTLE: Thank you all.


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