Good morning and welcome to the Edgewell Personal Care Q1 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this call is being recorded. I would now like to turn the conference over to Chris Gough, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us this morning as we discuss Edgewell's first quarter 2020 earnings. 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 then we'll hand over to Dan to discuss quarter one results and full-year 2020 outlook, 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. 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 the 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.

Thanks, Chris. And good morning, everyone. In our call this morning, I'm going to focus my comments on two core topics. First, I will address the Harry's transaction, including our release this morning announcing that we have terminated the merger agreement. Then I will talk more broadly about Edgewell business, the journey that we are on, the positive results we continue to see in our go-forward strategic priorities. Dan will then take you through our operational and financial performance for the quarter as well as update the full-year outlook. As I stated a week ago, we're obviously disappointed by the FTC's decision to seek to block the proposed transaction with Harry's, and we continue to disagree with the merits of their position. We believe that the consummation of the merger would've brought together complementary capabilities for the benefit of all of our stakeholders, including consumers. That said, given the ongoing uncertainty about the potential outcome and the required investment in resources, time and resulting distraction to our business with a continuing legal battle with the FTC would entail, and after detailed deliberation with our Board of Directors on these factors, we have terminated the merger agreement. As was stated in the press release, Harry's has informed us of their intent to pursue litigation. We believe that such litigation has no merit and I won't be commenting on this matter any further. As such, we're moving forward with the improving underlying performance of our business, underpinning our confidence in our path ahead. We will build on our core strengths in technology, IP, and innovation, strategically adding to our capabilities in support of brands that resonate in increased engagement with consumers and retailers, enhancing our ability to drive growth and value creation. We are committed to building a next-generation consumer products company.…

Thank you, Rod. Good morning, everyone. As Rod mentions, we're very pleased with how we started the year and the solid Q1 results reflect the continued focus on our fundamentals. Good execution on shelf, the efficient balance of brand and trade spend and further progress on becoming a more productive and effective organization with Project Fuel now entering mature execution and core to how we run this business. Our top line results continued to improve, with flat organic net sales and, importantly, underpinned by our return to growth in North America. We estimate that, on an underlying basis, run rate sales for the business in Q1 were also flat, adjusting for the impact of the Japan VAT load-in in Q4 of last year and cycling the sun care reformulation headwinds of a year ago. Gross margins were also strong, benefiting from improved market and product mix and the continued execution of Project Fuel. Q1 was therefore a good demonstration of our full-year objectives, to deliver stable organic net sales and gross margin results year-over-year. We also successfully closed on the infant and pet care divestiture, utilizing the proceeds to further strengthen our balance sheet. This was an important step in the transformation of our portfolio, enabling us to focus on our core brands and new growth opportunities. This business was simply not a strategic fit for us where we lacked a clear right to win as evidenced by the significant profit erosion we experienced over the past several years. Although the foregone segment profit and associated stranded costs from the divestiture negatively impacts earnings per share, this streamlining of our portfolio better positions us to be a stronger company in the long run while freeing up capital that can be potentially deployed elsewhere at higher returns. We've updated our full-year…

Yes, thank you. [Operator Instructions]. And the first question comes from Jason English with Goldman Sachs.

Hey. Good morning, folks. A couple of questions for me. First, the organization I imagine has been in a state of paralysis, a degree of turmoil, I suspect in the wake and anticipation of the merger with Harry's, with the decision to not move forward with that, obviously, in light of the FTC's pressure on this, can you give us a state of the union on current status of the organization, how much turnover you had, whether we've seen an exit of good talent and whether or not we should expect to see how to incur some costs to go out there and rebuild?

Hey. Good morning, Jason. Thank you for the question. The organization has been very resilient. We have kept the focus of the organization on building the business, executing our plan, and I think you see that in the continued improvement of our results from a trend perspective. The team we have working on the transaction, we had pulled some people off full time to work on integration planning to do that work. We've had no meaningful change in turnover, no loss of any key talent. In fact, the organization was energized and moving forward with or without a transaction. We're making a lot of changes here in how we work, how we operate, what we value, what we expect people to do when they come in the office around accountability and focus. And with that, I think the organization has been resilient and the results show that.

That's encouraging to hear. And maybe related to that and the energy in the organization, in the press release, you mentioned that you're committed to building a next-generation CPG company. Maybe I missed it, but I don't remember that language being used by you in the past. What does that mean to you and what are the implications as we think about the strategic direction of Edgewell going forward?

The next generation language is forward-looking. Just simply said, an organization that's built to win based on the current landscape of where the consumer is, what he or she wants from a product and experience, how the consumer shops, do they want to buy online, late in the evening to have it delivered to their home, do they want to buy in a brick-and-mortar retail store, and being able to offer our products up in an efficient way wherever that consumer wants to shop. And as part of that, how you reach consumers with marketing messages that are on point and target that are relevant, that are interesting, that drive the consumer to want to try the products, then have a great experience when they do it, architecting all of that where the eyeballs are in a world where increasingly it's online, its' digital, it takes a modern forward-looking skillset to go architect all of that, and ultimately drive resonance with the consumer all the way through the purchase. And it's very different than the legacy consumer products model, certainly that I grew up in over the last 20, 25 years. And so, that's what we mean by that. And, again, we were on that path before the Harry's acquisition opportunity came along, and we'll remain on that path as we go forward. Albeit, being transparent and honest, it's going to take us longer to get there in some cases than what we would have had with plug-and-play DTC, for example, with the Harry's expertise there.

Got it. thanks a lot, guys.

Thank you, Jason. Operator, next question please.

Yes. And that comes from Ali Dibadj with Bernstein.

Hey, guys. I have a few questions. One is just if you step back from this Harry's deal, many CPG investors look at CPG companies along kind of a spectrum or continuum. On the one hand, it's real, high growth, so something like a luxury or you're a cosmetics company. On the other end of the spectrum, it's something like a good free cash flow driver, a good margin driver, a good return to shareholders story like think of tobacco almost in that sense. It certainly felt like you guys decided to take a shot, a quite risky shot given what happened to your leverage, but a shot at moving from one end of the spectrum to a faster growth part of that spectrum and thought you might be rewarded with Harry's. Would this change and not doing Harry's, how should investors think about you guys? I've heard kind of two almost conflicting pieces of language in your prepared remarks here about where you want to sit. So, just want to get a sense of where are you on that spectrum? I think the easy answer is always we're in the middle, but where do you tend to lean one way or the other, more growthy or more return of cash to shareholders, free cash flow?

Yeah. Good morning, Ali. Thanks for the questions. I think where we sit today, we do have characteristics of the strong free cash flow generator, consistent reliable delivery of cash flow, and so we're very much, I would say, just in that place in terms of the profile, although we do aspire to be more of a growth-oriented company. And we think in our core categories where we play, certainly beyond Wet Shave, Wet Shave has stabilized now to flat to up 1%, 1.5% in absolute growth, so it's healthier than where we were one, two years ago. But beyond that, the growth is really going to come from skin care in men's and women's grooming. When you look at growth rates, high-single digits, even double digits in some areas. Sun care is growing. So, we're in categories that are actually growing and getting healthier. And so, as we look at our ability to innovate and partner with retailers and bring better ideas and innovations that the consumer wants, then we absolutely can grow on top of generating strong free cash flow and stability. And so, I think we still aspire to being, let's just call it, very much in that middle, consistent, reliable, predictable player. I do think the opportunity with Harry's was to even be a little more than that and to be at the top of the pack on a consumer product certainly versus that peer set, and what we could have done together just uniquely with the combination of assets and capabilities that, frankly, if there's not another combination out there that I see that would match that, and so it will just be a different plan going forward and probably less aggressive on top line.

That's very helpful in terms of kind of setting guardrails up. In that context, how should we think about the role of M&A now going forward versus returning cash to shareholders? Part one. Part two is, how should we think about the sustainable level of advertising that you want to put back into the marketplace, given that it sounds like, Rod, attempt to move a little bit more growthy, although not a leapfrog that you would have imagined with Harry's?

Yeah. I'll cover the M&A one, Ali, and I'll throw it to Dan on how we're thinking about the advertising support for the business. It starts M&A-wise with us having a successful track record with bolt-on acquisitions. Frankly, this company was put together over time from the beginning via a series of acquisitions. Most recently, with Bulldog and Jack Black, which are both performing very, very well. Founder-led businesses, the founders remain with us, flourished, thrived and we were able to bring incremental capability to those businesses to not only keep the growth going, but accelerate it in some cases. It's absolutely a case for a continued bolt-on M&A acquisitions. I think we're out of the market for big transformational things. This was a unique opportunity for us here, but bolt-on M&A is absolutely part of the plan going forward. As Dan mentioned, we have a very clean balance sheet and leverage to go do that. And I also think we have a unique capability of integrating companies into our organization. The final thing I'll say – actually, two more points is, we'll do this in a very disciplined way as we move forward. Being financially disciplined with M&A as we move forward is important. The second piece of this is it's not all about the US and it's not about wet shave. We've got opportunities globally when we look at the map. We've got opportunities beyond wet shave, particularly in sun care is an interesting category for us.

Yeah. And then, on the A&P model going forward, we've said 2020 is a lean-in year for us. We expect to spend about 100 basis points more our rate of sale than we did a year ago. We expect it expect it to largely be seasonal in Q2 and Q3. And I think what we're seeing is our willingness to invest heavily behind campaigns that we believe in. And we're seeing that now in sun care where we will invest behind both Banana Boat and Hawaiian Tropics, we'll have new women shave campaigns coming to the market to be activated in Q2 and Q3 and we're going to put incremental money behind Bulldog because we are seeing great results on the shelf. So, I think our thinking on A&P is now – as we see campaigns we really like that we've got the plans in place to invest behind, we'll do that and you'll see that step up largely in Q2 and Q3.

Okay. Thanks very much, guys.

Thank you, Ali. Operator, next question please.

Yeah, thank you. And that comes from Nik Modi with RBC.

Yeah. Good morning, everyone. I had two questions. First, Rod, you touched on some of the brand streamlining work that you've been doing. Can you give us some update on where you guys are in that process? Have you completed transferable demand analysis to kind of understand which SKU should be coming off the shelf? So, that was the first question. And then, the second question is just bigger picture. As you've been speaking to retailers and kind of re-engaging them, I'm just curious what they're saying to you. What are they asking Edgewell to do? What do they want from you? What do you think you need to do in order to gain back some of the lost shelf space over the last few years?

Thank you, Nik. And good morning. On the brand streamlining point, I think where we've started down the path – we're not complete yet – where we've made meaningful progress is in disposables. As you know, we had multiple disposable brands in lines across both men's and women's and we've consolidated our entire disposables business on the men's side under the Xtreme brand. And on the women's side, we consolidated all of our disposables under the Skintimate brand. It's a big simplification around SKU reduction, it's a big focus around just two brands now versus what was six or seven brands in terms of putting support and building those brands out. And so, we feel good about that progress. There's more work to be done on men's and women's systems. Again, we're on the path to do that. And I think you'll see us continue to make progress towards fewer, but yet bigger brands that we can put support behind as we go forward. So, I'd say we've started, but far from complete there. In terms of retailers and what they want, I think it's actually quite simple. They want partners that can help them grow the category and deliver products and innovations that consumers want and are willing to buy in higher demand than what we have today. And I think if you look at the landscape and what ultimately made Harry's successful and get to where they got was they were able to take propositions to the retailer that grew the category. And if you look at what Gillette is doing in the space now with the focus on innovation, value to consumer, consumer insights leading us to where growth can be had in the category, that's what retailers want. And I think as we look at our innovation pipeline and road map and what we have coming, we're very encouraged with what we have. As we look at our strategy to move forward in a more consumer centric way with data analytics, insights leading our thinking on what we take to the shelf, we feel good about where that's heading. And certainly, as an overall corporate priority and commitment, including my time with retailers, we are serious about partnering with retailers and delivering across all three of those. And so, I think it's pretty simple what they want. We need to help them grow and bring value back into the category.

Great. Thank you very much.

Thanks, Nik. Operator, next question please.

Thank you. Next comes from Bill Chappell with SunTrust.

Thanks. Good morning.

Good morning, Bill.

I had two questions. First, can you talk a little bit more about international wet shave, kind of the outlook? That seems to be fairly stable and maybe I didn't know if there's any – if it's more products, new product introductions marketing or if there's just some – it's just much more stable than the US.

Yeah, good morning. It is more stable than the US, particularly in the last 12 weeks in Europe where you might recall, coming out of Q4, we saw a challenging wet shave category in Europe. We saw heightened competitive pressures. We see a slightly more stable outlook today there and the results in Europe reinforce that. We also, as you know, have a very strong presence in Japan and saw good results in the quarter when we normalize for the VAT impact of Q4. So, we feel like we've got the right brands, we're executing better, we're spending incrementally Q1 year-over-year and, yes, we saw more stable wet shave category.

And, Bill, if I could add and build on this, not only is the category more stable, but this is something we've gotten better at around our innovation capability and how we architect and build our brands to resonate with local consumers. Historically, we were at a very global average innovation model. And under the new leadership we have in place, globally, we've gone to a much more regional, local tailored model with our innovation where there is a global menu of innovation that frankly resonates more with local consumers. I'll give you a couple of examples. In Germany, we started the work on a regional rebrand and re-launch of the Wilkinson Sword brand. That was not led by the global team. The global helped do that, but the regional team in Europe led that execution and activation in a way that's much more interesting to the local consumer. Another example is, we're launching Schick 5 in China. It's a razor system architected for the Chinese consumer with local Chinese design firms and insights being put into the market. In the past, that would have been something built for the US market that happen to then travel to those markets. And so, our regional tailoring and our focus on local insights is starting to show up in the market and the results.

Got it. And then, just a follow-up on sun care/skin care, can you just remind us the pricing that went into effect? I assume everyone followed that pricing within the industry. And then, is there anything we need to keep in mind? Last year was, kind of with the reformulation, funky on the quarter. So, just what the next two quarters kind of the flow looks like?

I'll take the first question. So, we won't get into too much of the specifics around the pricing. We took bold steps in both mass to put us on par from a frontline pricing standpoint and in drug. To our knowledge, no one has followed yet, but we had extremely strong execution and sell-in with the retailers. As I said in my remarks, we're quite comfortable now and cautiously optimistic as we think about the sun care season. We think we've got the pricing right based not only on our brand equity, but also based on the significant costs that the entire category has seen over time. So, we feel good about that. Sorry, what was the – can you repeat the second question?

Just over the next two quarters, how sales flow?

Yeah. On the timing of the sales flow, last year, we started the year, the first couple of quarters essentially on allocation as we went through the reformulation. We don't have that headwind this year. That's the simplest way to think about it is, we're more on a like-for-like matching sell-in with consumptions as we go this year. We just weren't there last year due to being on allocation.

Got it. Thank you.

Thank you, Bill. Operator, next question please.

Thank you. And that comes from Steve Strycula with UBS.

Hi. Good morning. So, Rod, my question is, I heard earlier in the call, you're downplaying the US men's shave business. So, I'm curious, as you think out like the next few years, what should investors think about in terms of your top category country combinations where the company is most focused on? A lot of larger multinational will talk about whether they're focused on US laundry or German wet shave, et cetera. So, what are the three big platforms you would kind of point investors to that matter most as you look out, whether it's US private label, Japan shave, US skin care or sun care, anything would be helpful. And then, cleanup question would be, can you comment on the cash breakup fee?

Sure. I'll take them in reverse order. There was no cash breakup fee. And on the first question, the priority is going to be around growing in sun care from a category perspective. Geographically, US and Canada and then broadly international with a particular emphasis on Asia.

And outside of Japan, do you have the scale in-house to really deliver on a lot of these platforms as you look out over these regions or is there any kind of change into how you think about scale specifically outside of the US? Thank you.

Our infrastructure outside of the US is reasonably good, particularly in Europe. We've got good infrastructure there. I think as you get to Asia and, as you point out, outside of Japan, which is a real area of strength for us in terms of our scale, the team there, the talent we have on the ground, we don't just have that level of scale in terms of market share in other markets around Asia. We're in the process of building some of that out already and we have some good distribution partners we work with. However, it's one of the areas, if you think about M&A and where we would put some focus, there's the opportunity to accelerate our progress in building some via the M&A lever as we move forward over time. So, I think it will be a mix of essentially organic and M&A as we think about Asia.

Thank you, Steve. Operator, next question please.

Yes. And that comes from Faiza Alwy with Deutsche Bank.

Yes. Hi. Good morning. So, two questions. One is just, I was wondering if you could give us a few more comments around the Harry's litigation that you referenced. Sort of, what's the premise of that? Like, are they saying that you operated out of bad faith or just sort of like what is that litigation about? And then, my second question is just around gross margin. Maybe if you could give us some color around the impact of mix, input costs, volume deleveraging, tariffs, et cetera, in the quarter and how we should be thinking about those metrics on a go forward basis?

Good morning, Faiza. I'll take the first one on litigation and throw it to Dan for gross margin. On the litigation point, first to clarify, to our knowledge, we do not know that Harry's has filed a lawsuit as of me coming into this call. We don't have knowledge that they've filed the lawsuit. But their counsel sent us a letter saying that they do intend to pursue litigation. And again, our view, as we stated in the press release, is we believe that any litigation that would be brought from Harry's towards us has absolutely no merit. I'll leave it at that.

In terms of the gross margin question, as I mentioned in my prepared remarks, the margin performance in the quarter was slightly stronger than we had anticipated. There was a combination of, what I would call, tailwinds. We mixed out quite well both in product and market, which certainly helped the margin profile. Promotional intensity in the quarter eased a bit from what we anticipated. And then, we also performed really well in terms of the fuel program and executing to help mitigate inflationary pressure. So, it's a good quarter. There are some timing and unique tailwinds there, but it keeps us feeling comfortable with our full-year outlook which is a much more stable gross margin profile than we've seen.

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

Yes. That comes from Olivia Tong with Bank of America.

Great. Thanks. Now that the deal isn't happening, I was hoping you could focus on two different areas. First, in terms of sales mix, what you expect it to look like going forward? Is it further diversification? Obviously, Sun and Skin have been growing disproportionately. So, just your view in terms of how you're going to support sales mix. And then, what kind of investments do you think you have to make to build out some of the areas that you expected Harry's to help you on, specifically digital capabilities and some go-to-market investments? Thank you.

Good morning, Olivia. Thanks for the questions. On the sales mix, I think as we look forward, we would continue to expect, in broad terms, moving forward, that Sun and Skin Care, so that grooming and skin care area will continue to lead the growth for us. We know we've got some headwinds, as Dan mentioned, on Fem Care around distribution and the planogram set changes for this year, but over time we would expect to have that continue to improve trend wise. But, certainly, grooming, skin, sun care would lead the way. From a Wet Shave business, I think we still feel really good about our international business and would expect those trends to continue to improve in the US is an area where we just know, particularly with what you see in Nielsen, the distribution changes as we look at that, we're going to continue to have some headwinds. That's all factored into what we've thought about and we would be optimistic over time that we can improve those trends in the US in shave. And we would expect to do that. The other thing I'll tell you about trends, and you don't see it in all the measured Nielsen data, but e-commerce in the quarter just finished for us was up 47%. And so, there is an increasingly large base of sales that are not captured in Nielsen. So, when you put that together, our trends obviously look better, but those would be the areas. And then, in terms of investment required to build out around direct-to-consumer, digital marketing and the infrastructure capability to make that happen, we were on a journey to do that and have made significant investments leading up to the Harry's transaction. We'll continue to put investment in that area, and that looks like technology choices in what the technology stack that we use to run any DTC channels that we have. It'll be incremental resources in direct to consumer, managing the e-commerce channel. We'll add people in there and I think we also thought about some incremental resources in the marketing area around digital marketing, and specifically in some areas where we know we want to take control of some of the value chain around social media management, how we do some design work. Today, that is third-party managed for us. We'll look at bringing some of that in-house. So, that's all contemplated in our go-forward investment plan. I won't put a number on it, but it's contemplated within the Project Fuel work and how we looked at reallocating where we put investment in the company.

Great, thanks.

Thank you, Olivia.

Thank you. And the last question comes from Kevin Grundy with Jefferies.

Thanks. Good morning, everyone. Two quick ones from me. First one maybe for Dan on capital deployment and the balance sheet now with the Harry's news and debt leverage at about 2.5 times or even less than that. So, why is 3 to 3.5 times the right level for this business? And then, second, in light of the Harry's news, was there any thought to pivoting more aggressively towards share repurchases with the stock down here? And then, of course, in the process, you're moving more towards your target leverage ratio. And then, I have a follow-up on Harry's. Thanks.

Yeah, good question. So, I guess, I'd put my remarks in context. We're quite comfortable that this business can easily handle a leverage ratio of 3 to 3.5 times. We think that gives us a very healthy balance of ammunition to invest in this business and just think about a healthy balance sheet that allows us to be aggressive where we want to be aggressive in terms of acquisition, reinvest in growth and opportunistically return capital to shareholders. As you've seen through the Harry's potential deal, we were also comfortable leveraging up even higher than that if something was attractive to us. We don't see that right now. I think Rod's comments are clear. We're looking at acquisitions more through the lens of sort of bolt-on complementary acquisitions. So, we have to think about all of those elements as we think about what's the right profile for this business going forward. And again, because of the healthy balance sheet, 3, 3.5 times for us is a place of comfort.

Okay. Thank you. The quick follow-up is just for Rod. What are the key leadership positions now in North America that need to be filled that were going to be assumed by the Harry's management team? I know there's a lot of enthusiasm around what the founders and what their team was going to bring. What are the big roles, if any, at this point that that need to be filled? And I'll pass it on. Thank you.

Yeah. Thank you, Kevin. I'm going to talk about one role. It's the North America leadership role. We mentioned, Colin has been double-headed now for over a year in running the global operations and also running the North America business. And as we said, that was unsustainable. Colin has done a great job and you can see from the North American results, the results have been proved, we've stabilized. We've got a better team in place in North America now across sales and marketing. And the big thing we need to do is get a dynamic leader in there that's experienced and can come in and really pick up the work that Andy and Jeff were going to lead. And so, as you look at the profile of what we're going to go get, it's a leader that's dynamic and experienced. And that is the position that we need to fill. And then, from that point forward, if there are other changes that need to be made, we'll work hand in hand with that leader accordingly to make further changes, but that's how I would portray it. Starts with the leader.

Thank you.

Thank you, Kevin. Operator, next question please.

And last question comes from Jonathan Feeney with Consumer Edge.

Good morning. Thanks very much. Two questions for me. First, on Wet Shave, you commented on a number of factors on margin within the Wet Shave, but I'm trying to understand mix. When you think about men's systems disposables to women's system shave crafts, it's been my understanding that men's systems are by far the most profitable, and that's been a major issue. But any way you can comment or dimensionalize what mix looks like between those brands and specifically how critical it is to get men's systems flat to growing again in the overall margin plan? That would be great. And second question is, it strikes to me that you have now over 60% of your business in Wet Shave and your manufacturing capabilities are quite unique and there's not really anybody else out there who have those kinds of capability well. There is one other and they're not – they're a lot bigger, a lot more diversified. Are there other ways of taking advantage of that strategic position you're in, whether it's partnership deals to manufacturer or other ways you could think of that could get you that quantum improvement in execution that you're looking forward with Harry's, maybe without all that cost? Thank you.

Yeah. Thank you, Jonathan. Good morning. And thanks for the questions. On Wet Shave, from an overall margin structure, men's and women's systems are the most profitable segments within Wet Shave. Disposables and private label are below that. So, your point is right, is when you are declining in the systems business, economically, it has an outsized impact. And so, that's correct. As we look forward, the uniqueness of the assets that we do have around not only IP technology, patent space, but manufacturing know-how and technology around manufacturing process, it is quite unique. Two of us have it. And so, as we look forward, don't take anything away from our conversation that grooming and sun, we think, have nice growth rates in areas that we can grow and win in. We still fundamentally believe we can be successful in Wet Shave, partly because of the structural dynamics in the assets we do have. And so, as we move forward and allocate investment and look at where we can grow and develop, filling up our manufacturing plants with more volume is a big idea. And so, that's something we're looking at organically as we make investments where a marginal dollar in return can be had. And I think that goes across private label disposable men to women's systems all the way through other partnerships or other ways to create value with those assets, we would look at all of those things as we move forward.

Thanks, Jon. Operator, next question please.

Actually there is nothing else at the present time. And that concludes our question-and-answer session. So, I'd like to return the floor to Rod Little for any closing comments.

Thank you all for your time today. We appreciate the continued interest and investment.

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