Edgewell can support higher leverage than current 1.9x, CFO says

By Devika Patel

Knoxville, Tenn., May 18 – Edgewell Personal Care Co. has a debt to EBITDA leverage ratio of 1.9x at the end of the last quarter and as a result of this, and the “tremendous” cash flow that the company generates, management is weighing its options going forward.

Management believes the company could support higher leverage.

“This business spins off tremendous cash flow,” chief financial officer Dan Sullivan said at the virtual Goldman Sachs Global Staples Forum on Monday.

“As a result, the balance sheet is incredibly healthy.

“Liquidity is strong.

“We have over $300 million sitting on the balance sheet at the end of Q2 and another $425 million revolver that is untapped and we’re under 2x levered, so all of that in totality speaks to the healthy cash profile for the business,” Sullivan said.

Sullivan believes the company could handle a leverage ratio as high as 3.5x, and the company is considering its options on how it might increase that ratio going forward.

“I personally am very comfortable with this business being ultimately in the 3x to 3.5x levered position,” Sullivan said.

“I certainly believe our cash flow profile could easily support that.

“Sitting here today at under 2x, though, we have optionality.

“We’re going to be incredibly thoughtful; we’re going to be diligent and we’re going to be extremely disciplined in how we think about the go-forward for the business,” Sullivan said.

The personal care goods company is based in St. Louis.

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