ENR - Earnings call transcript Q2 2018 | Energizer Holdings, Inc.

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Operator

Good morning. My name is Sharon, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Energizer's Second Quarter Fiscal 2018 Conference Call.

As a reminder, this call is being recorded. I would now like to turn the conference over to Ms. Investor President, Vice Burwitz, Relations. Jackie begin Madam, conference. you may your

Jacqueline E. Burwitz

for morning and us. you thank Good joining

we our product for will second call, Brands you the During discuss of acquisition fiscal the and Spectrum and on of our quarter and results XXXX our remainder outlook lighting the battery year, available update of the Officer. Gorman, Officer; and be Mark business. With Alan replay are and Financial morning for is Hoskins, Chief recorded Chief website, Chief Operating This our me this Executive call being Officer; energizerholdings.com. Tim via LaVigne, will for

we expectations views forward-looking current call, operating statements and the performance. may future and our reflect with During make respect statements our financial are which for to about Any future statements such plans events.

A comparable release measures our non-GAAP section measures. We is website, reconciliation today of GAAP Relations is press the also in to refer issued in earlier available of energizerholdings.com. shown which financial non-GAAP Investor measures to the financial

I'd remarks, will Energizer's or affecting statements. turn to to of XX-K, our data, we factors statements. from our we the During acquisition key share materially where SEC Information data believe the a these to the not the lighting actual adjustments battery acquisition We Spectrum be are over call business. and factors and analysis, of results concerning on review acquisition to global that, based XX-Q Alan. of do undertake may and cause our the Spectrum's this call industry Form other differ and to the reasonable. Spectrum in relates With we business Investors the forward-looking should discussed market These for using category to portable like and description risk compete markets business. forward-looking update risks prepared products filings as our our estimates refer on from to internal that

Alan R. Hoskins

the Spectrum In teams smooth progress morning, between underway closing business. good of both and everyone. we made Planning continued for the toward well our execute Energizer and is acquisition Jackie, quarter, a Thanks, to integration.

by our this delivered our continuing our share benefits around globe, momentum start of back morning, second the per pricing improvement were for by ASI. announced Adjusted benefits which initiatives, reflects our revenue ongoing offset portfolio fiscal As divestiture pricing investments of was to and the optimization our will up release $X.XX of earnings the results in in as XXXX. actions the in optimization offset of the benefits the continuous the X.X% half Organic solid earnings team start year. from of the in the portfolio materialize carryover partially favorable quarter,

continued was cash million, part the quarter in our items, the flow adjusted efforts. in our down unusual in to $X.X higher costs. build excluding inventory $XX unfavorable Excluding of impact unusuals, absorption year. real was million current versus year, This the a year. fiscal XXXX, returned by associated the normalized by preparation prior sale the decrease reflecting free the points We in excluding in A&P SG&A, product And versus late declined was the of unfavorable benefit level. almost lapping the of grew million a in innovation was due revenue prior control launch cost ongoing mix and basis capital the margins, optimization, driven $XX estate quarter up gain year-over-year like-for-like versus million prior the on on in and the commodity XXX ASI with primarily to basis. $XX of to prior for investment years. Gross overhead versus seasonal investments working more year, prior the X.X% due of divestiture, spending portfolio

results and first was innovation, with priorities: productivity free year, in primarily were year. excellence, capital prior due continuing to during achieved with adjusted basis, $XX the These by year-to-date focus strategic a operating working three on million executing our driving improvements against of the on cash leading gains. However, flow above to the half

our First, to optimization Lithium, the batteries, to months, we the simplify longest visible and category more consumers. continue lead make AA world's with accessible implemented we the lasting last In portfolio to Energizer innovation. nine Ultimate and have

needs In Energizer so launched our pricing to quarter that invest to high-drain best-performing continue XXXX can several our we for markets of in in and in the that during devices. consumer's MAX products addition, innovation, fiscal we meet batteries offset fourth took power their investment

pipeline behind across remains to product businesses our improve we strong innovation invest experiences. as continue Our and shopper both performance

focused on with remain operating to continue also excellence. We

quarter's fiscal to team productivity current initiatives, organization streamline The And, demonstrate effectiveness the the engaged heavily of is XXXX. planning meeting the that our integration and team focus. finally, drive is results the of our our delivering goals manufacturing ensuring on results of continuous their and are our footprint. business still as in focused the acquisition for optimize acquisition we international Even our as through they Spectrum, continues base and improvement

latest Chinese as production moving the Our margin battery the savings this of lower SG&A half and and result continue see has efficiency the cost at scale These Singapore, year. improved in project, back facility. driven in our manufacturing will benefits alkaline of to to from we projects

respectively. category of value pricing February one X.X%, The and includes X.X% driven by particularly the that the season. to was up XXXX. promotions, several like Europe. in turning global for increased and improved December, note and XX Now volume innovation trends Value holiday the in I'd category actions to data ended month global weeks performance driven by volumes holiday selling were markets and critical were

quarter. moderated remarks, prepared in As Energizer's we share indicated the last market in quarter's

of shelf share in Going the the of XXX declined were share offset share points. Global e-commerce. and strong changes. channels including XX.X% changes forward, anniversaried space now performance the in our basis several down untracked have value by XXX These market as we data XX-week home was center points share of we and improvements XX.X% basis track latest channels, expect in U.S.

to same period U.S. sales, category ago. Energizer's growing year the online at XX.X% specifically X with the e-commerce XX% grew more versus battery a Looking points share

be core operating on superior great category to Overall, branded and to leader excellence in-store channel. and through in continue this continues do We job execution online. share fundamentals team focusing fast-growing the the both a with

Now to M&A. our we balanced previously three have continue allocation. turning take by with returning reinvesting of will and capital we shares and a shareholders by pillars a the dividend, allocation capital meaningful repurchasing approach opportunistically capital communicated, to across to what Consistent in business, strategic paying

business by pursue advertising activation, remain strong those in committed improvement as will we through of initiatives great strengthening in a our I've First, investments and and we number and our investment we that business operations. about innovation pipeline shopper of investing a have copy, base talked improvements. productivity to and supported continuing continue to today in

we continued that we've million to of shareholders returned capital quarter. million through through fiscal also returned returns. of share a dividend $XX to occurred both the million $XX first In in dividends meaningful with per We the quarter, to first $XX $XX and $X.XX of share. million XXXX, Through shareholders reward shareholders repurchases half the of

Regarding and deleveraging be from on will acquisitions, repurchases we announced the near-term, in the acquisition. share focused recently integrating and

I'd the Spectrum acquisition on $X brands. billion and to including VARTA our Now, provide update Rayovac business, of the like an

manufacturing a in broaden before, combination discussed our capabilities. expand we've of presence this Energizer's markets international number transformational As will and

the order advisors, in regulatory outside efficiencies have also consumers complete ability Hart-Scott-Rodino to in innovation our This to January clearances Since benefit world Energizer's provides drive of In wider U.S., the of compete cost from enhance acquisition from announcing expiration been period customers the to opportunity and transaction. Act. team and XX, of will In obtaining the team and Energizer waiting the around a along Federal the for the accelerated the Spectrum and Commission addition, our necessary the our combination on with allowed Spectrum, working Trade category. on the range the products.

this We significant completion achieved are towards of the step milestone, pleased the to have transaction. a

towards and We continue received Australia, UK Zealand other approval a also New of Germany, number work Colombia jurisdictions, clearance including the achieving in and have Spain. Russia, and from to

bring We prepare the making this closing world enable around and and combination with business. a of had announcing from understanding acquisition, us of Spectrum teams meetings working have number government consumers. productive been will the their of to have both are for Energizer and orderly the filings transition together in smooth the to and order to of customers all a that agencies Since benefits required enhance to the integration in process

earnings Our costs. integration in current adjusted estimate first to year unchanged full per and for ownership, of modest with share accretion accretion remains transaction the one-time excluding

million. We expect in million of to impacts our all targeted further of achieve realization synergies $XXX to favorable $XX accretive

in run We be to year ownership. of rate achieved our third expect synergies full

cash acquisition from the growth to enhance shareholder value. line further flow addition, long-term In our and will top ability free drive this

market to XXXX. year the next We will expect the second go the we calendar raise to half transaction several in close over permanent financing. months, And of to

year we per share of to integration making portable the and core organic delivering earnings forward of our maintaining on of of and business, XXXX, business. moment. Looking of while progress lighting initiatives in a we acquisition outlook results the adjusted are in continue remainder stay sales focused full outlook growth low-single up on our full to execute Tim fiscal Overall, the strategic and Spectrum closing $X.XX. on great the just battery digits our and will to review $X.XX outlook

and for Tim? the the Tim fiscal Now, outlook results financial I'll of turn call for our review financial to over a XXXX.

Timothy W. Gorman

sales the and income second financial quarter, morning, margins gross metrics. in the everyone. quarter. our good also the Alan, net statement other including results providing I'll and Thanks, and walk the on of details I'll through second detail for discuss

update Finally, year our fiscal I'll provide an XXXX. outlook for to

to our Before to numbers, I call change segments. get a I the wanted attention into made to

two This improvement during now as made international about International. changes discloses Americas release initiatives. was of earnings by continuous quarter part our Our organizational brought segments: and the change

versus per rate, million $X.XX performance, year The strong currency. favorable was or the earnings adjusted tax the $XX.X a lower for X.X% million. of Total quarter year share net quarter, a quarter. improved benefited the quarter from current from overhead, second the $X.XX $XXX sales benefit increased top-line prior tailwinds to For and in

up XXXX, fiscal part partially was of X.X% organic business of Excluding made favorable markets. ASI $X portfolio X.X%. sales in favorable was the attributable increase pricing back organic in and to These that X.X% half currency million, from optimization was our amounts The the the care were several from components: investments in of across of approximately the our acquisition. by auto revenue XXXX May following action divestiture offset

Looking in changes the and primarily lithium optimization, at organic unfavorable our and by offset approximately of in favorable flat customer segment, These sale promotional XX% business. retailer due sales Americas, our and from of the to as net were up were were up and impact revenues respectively, amounts revenues favorable was International organic mix. offset markets. the partially sales essentially number net non-core distribution merchandising by a new volume revenues net XXX%, by with portfolio X.X%, pricing

Before rest the turning also quarter that trends we retail on levels. inventory based to P&L, I the of mention historical normal to exited the second wanted with

slightly prior an was As lower impacted impact by to overhead the X.X%, XX% points levels the to quarter, I Gross quarter. the the our product you changes by sales cost the year, on inventory retailer and end commodity margin rate were quarter which recall percent of the down first favorable de-loads prior quarter of was A&P was the elevated optimization. the last the year XXX of The call, occur. basis basis mentioned less portfolio the and of second at prior as mix, compared unfavorable year. a XXX elevated driven absorption and increases during we quarter's related increase net points expected modest from did levels second second in from versus

and XXXX points cost, As year this was million down year. the On cost throughout the controls. of balanced SG&A we've more the closing the acquisition to approval for was be business. portable increase discussed half weighted spend will quarter, the advisory prior integration SG&A year as that to to lapping due expected prior million, quarter current and full fiscal included On year-to-date incurred the lighting the of our spending absolute million. basis, obtaining $XX.X an a acquisition and fees Spectrum was year year back incurred cost Brands' consulting, integration basis assist of quarter's sales in spending, a total which integration compared fiscal globe reserves plan with basis, versus quarter We around more $XX.X of $X.X or XX.X% costs regulatory call, strong legal on the during the products we dollar excluding of battery and current second percent the the the and decreased legal, quarter. $XX.X increased in XXX primarily last towards as and million and

fees $X.X commitment debt million interest of We in the that in also expense quarter. incurred are included current

second in this to takes was in U.S. decrease of the XX.X% XX.X% tax fiscal year statutory prior that compared the withholding now Spectrum rate effective would new tax includes rate million XX.X% by the reform the is the quarter. effective account like driven quarter XXXX. to reported The movement in year U.S. the is point year legislation and earlier acquisition. ex-unusual taxes Our international for enacted rate related out the fund rate anticipated to for to I that cash into $X.X

held Looking balance the in substantially with at sheet, of million we ended offshore. our with it $XXX quarter cash all

the cash quarter level our times to this the year real billion, quarter million investments was second a And we in in the basis. last of at estate and capital. free quarter. $XX essentially working X to prior on unchanged debt in sales at primarily of generated roughly maintained prior flow the decrease year $X.X Our lapping end trailing-XX-month from adjusted approximately We due million debt compared $XX to with $XX quarter in million current EBITDA

in quarter, Our first flow capital adjusted or $XX free an in half we was about working XXXX, in of The the the $XXX compared a cash million. free increase million the dividend due the In of paid was increase million fiscal XX%. half flow $XXX of primarily $XX year adjusted improvements. of first million to to fiscal cash

dividend take long-term share through right will and allocation approach capital investing we capital meaningful repurchases, fit pursuing a our in to always, opportunistic returning opportunities As the continue and, balanced shareholders business are to to a to M&A finally, our support Energizer. for growth, that by

regarding As and future portable earlier, business. Spectrum products in integrating mentioned and will near-term, deleveraging the acquisition Alan share global acquisitions, on we battery repurchases of be the from lighting Brands' focused and

our turning for outlook XXXX. Now, to fiscal

low-single $X.XX. optimization. are distribution million actions are the sales rates. increased be $XX are driven Organic net to digits, maintaining outlook by organic growth favorable to by around a earlier, of including activity adjusted on low-single up and of impact the to Alan Net basis X% globe on benefit of to up approximately mentioned digits. portfolio net Favorable XXXX. impact per X.X% gains lapping sales we to are net earnings expected sales of reported sales pricing is movements and currency The expected primarily share As in based our $X.XX fiscal current in be the lapping expected hurricane

be Our rate the the key will A&P in was requirements spending long-term to spend the points of of to half. I X% on XXXX flat that consistent in to X% to where back to versus is year net impact Again, than remind be XXXX. different locked fully to want is XX for weighted gross XXXX costs. outlook. now range margin that be of The our we transportation up fiscal of our basis with you timing commodity our the essentially to occurred expected commodity respect sales, fiscal now timing during change XXXX. reflects in the With A&P fiscal our costs, are and fiscal spending expected more outlook expected rising

excluding be will the a A&P expect net flat in fiscal by is year, $X in during $X integration as sales year balanced the of more SG&A basis, resulting expected a next to to quarter. the be costs. higher across year and spending percent about spend quarter, million fourth the over million lower of offset We on acquisition

However, year. the evenly throughout cost SG&A will be timing of spread not the

XXXX included streamline processes I investments business to investments to previous we $XX costs million The to second was organization our the to on half our of SG&A. in ramp-up expected during lower projects fiscal first mentioned make and continue e-commerce and the continue were simplify quarter in timing of XXXX, to estimates. capabilities. in than due calls, and fiscal cost As will and approximately In reduced

expect additional quarters. two $X the per to $X costs each reflected next of be million of in We to million quarter

remains on initiative Our continuous improvement track.

between We savings to offset in during of year. be our a now movements expectations majority based outlook. prior portion is the by by net currencies current is of of mentioned, foreign impacts million of expect with a be This impacted versus expected the rates. $XX to favorably the the half upon is income expected Pre-tax will second which hedge of improvement $XX recurring, cost million slight the

rate of ex-unusual be U.S. and to is passed to expected account tax to expected the mix in income our Our December of the in country current impact XX% taking legislation into related earnings. new tax range XX% the

for expect amortization $XX and $XX to the million. unchanged expectations of in million be spending to million Our capital and in range million of range continue depreciation remain the to we to $XX $XX

We continue $XXX in free the $XXX to adjusted flow to be range cash million expect to of million.

the the tax capital with gross includes and In of associated margin our expectations. legislation, addition impact the U.S. working benefit to improved a range

sales As free organic free regarding which impacts significant inquiries the fiscal not confidence outlook: will included $X.XX of and commodity digit are of million $XXX freight per adjusted as have headlines tariffs. repeated the fiscal million. earnings costs low-single XXXX fiscal flow adjusted results, our in be to XXXX. of asset share well XXXX growth. a following several the $X.XX year in delivering Recently, reminder, reiterate year the to our as To key we cash flow sale from cash received and benefits $XXX adjusted

XX our of many As in lock a out. commodity know, cost we you portion to XX months of

XX% slightly below which include created XXXX, the impactful full is a fiscal lithium, XXXX, and our lithium are locked year, reflected steel and a extent margin essentially Energizer, of silver on are commodity mostly fiscal for XX% fiscal we gross revised to to we for lesser for requirements of steel, is locked. and outlook. commodities, approximately are approximately is which headwind zinc, fully The fiscal basket For in and our X% is has XXXX, X%. under copper. total exposure COGS; Zinc The and

XXXX freight X% about Looking at to freight, of minimal fiscal our representing the total impact with is COGS.

Our increased points cost outlook planned includes approximately of levels. basis XX over

Now from turning continue tariffs. to to impacts business potential monitor tariffs, our to we

the As tariff with $X changes less be you we to At this know, than fiscal to XXXX frequently. impact and of an in impact remains fluid minimal highly situation point million. the time, expect

further in as changes. and sourcing this and necessary currently we million, risks pricing could annual For considerations actions and if be of that as to appropriate and arise will $XX XXXX impact mitigate beyond, fiscal including estimate the any we high actions take the future, risk

Our continuous us to the with enable potential and commodities, initiatives ongoing risk associated tariffs. improvement manage and absorb partially transportation volatility costs

to the Turning acquisition.

As integrating we for and to work continue developing approval Alan obtaining markets the in on mentioned, on regulatory business. plans our several

We term a working new loan a notes. of and consist senior permanent financing obtaining are on of mix also to revolver new and

We mature in existing also maintain notes senior to that XXXX. expect our

term As part facility, financing of existing including loan. will the refinance process, we existing the and credit revolver our

also in acquisition use our million in currently and to given expect presence. in Europe to held fund expanded financing We international to $XXX addition and cash of will $XXX we the the markets European seek between million U.S. the

January, annual SG&A through efficiencies. we reductions expect on in when network In optimization, we acquisition. $XX expect of to million to near the At to our to cost stated synergies times and we announced focus the and we $XXX the this As procurement be run leverage approximately will driven generate by significant million, rate identified time, deal continue value at we after pro deleveraging closing. forma integration term, ratio X

of realize first years one-time to to X.XX ownership. times to our three fully savings synergies cost and of benefits these X within expect approximately achieve the incur We

of to and after anticipated which financing second targets will the you We synergies cost achieve on to in along synergy calendar XXXX. closing, occur the half with now is update

to for to Now, call back I the like Alan closing would remarks. turn

Alan R. Hoskins

half success. of build With strong for of to first continue fiscal results XXXX, continued strong Thanks, foundation a Tim. the execution we for

up portable VARTA the we and about work towards shareholders. and Rayovac brands We're confident build delivering now we excited us opportunities of closing Spectrum's complement for Q&A. value going Eveready the As can that continue remain our Energizer Operator, on to business, forward. for an even we and will battery we stronger and product and integration to of focused are the brands foundation the lighting it open ahead

Operator

Thank you, sir.

The sir. Bill SunTrust. of first go question ahead, is Chappell Please from Mr.

William B. Chappell

Thanks. Good morning.

Alan R. Hoskins

Bill. morning, Good

Timothy W. Gorman

Bill. morning, Good

William B. Chappell

back parts, Spectrum particular nice second or half kind any anything Just the I there. or from that. the would circling it's other as of July, close back if country or window. understand is six-month then questions which on lot wide but to a is start be prepared on still clarity half, the that second executing there's kind and might of moving close as that you technically in early might the guess Germany more deal to there? And be delay also, it a to Any we've in pushed second of notices – company had in I getting gives and

Mark Stephen LaVigne

that. this is cover I'll Bill, Mark.

of are clearance, have We and of in then but Germany, know, markets active the questions or we we those that to tend discussions they ask with just UK, the you continue with discussions as Australia in regulators tenor and in gotten because terms the all them. we mentioned. the to tone continue in run them, want the and We've speculate process of others. discussions I to three to don't of

with when are second the wide closed regulators going We are terms It's of close the and to uncertain discussions in periods year. out range because the it's these of run. expect time to a be in to half when going

with your very meeting. week, to them our readiness, working questions a to second that in with be of in We For large on arises. half last working We're diligently discussion had we're whenever term group close had where just prepared Spectrum a integration. the we counterparts going

And our so. close, to So, as ready to able that's goal. and as going soon have we clearance are be to we're do

get that the that's ready sure worry we to won't are we wouldn't because if case. teams be the hard that not working I clearance So, make

William B. Chappell

lithium And U.S. market Okay. back the the to in then, strategy.

on first two How further terms we it into And as expect share of you coming lapping I that gone that, an should year then, update how of real cut kind versus expansion? a look that's we expected? I of market back? do going just Would you you on move we're think expansion. forward? what up that Can the in us give at

Mark Stephen LaVigne

Mark it's So, again. Bill,

value On in of customers latest the of very share and our net to the Overall, expect XXX% the the our has at really sales up very that When consumption, you Lithium were is weeks Lithium. well-received XX% did been and We we of year-to-date been of the and everyone, was would retailers. customers. product category, repositioning accessibility it's XX We've It so consumers. is to XX% in what successful. teams product and it success up remind to value look both QX, up a because the achieved our in result and – two as Ultimate leverage volume expand availability Ultimate with by well-received. continue XX% that is U.S.

and not more stop pull continue. push We're back. are We going as going there the to for to and more quarters

would it from pull expect I back So, there. to not

Operator

of Tong Bank madam. America. Please is Olivia ahead, go question from of next The

Christopher M. Carey

taking is Carey our for Hi, everyone. question. This Chris Olivia. for on Thanks

Alan R. Hoskins

Chris. Hi,

Christopher M. Carey

on the horizon? you if of you is headwinds you that in that on can projects so to pull So do need facility how you – just you and of potential many sort So, and cost foresee have waiting there. that of mentioned the the production need you you? those if speak, savings guys how are are expect that wings, deep the Like how have productivity there that to? initiatives that to cost some Singapore to Like you you offset of moving on these the

Timothy W. Gorman

Yeah.

restructuring. we've historically, mentioned, project a As the was major transformers

we improvement identified overhead. we move number of well both integrated as our of a initiatives As corporate have pipeline a supply in forward, continuous and chain, our as

a move sequencing that chain, events. forward. into Singapore, those offset to number the as initiatives have balance integrated we Specifically, but from ability we'll pipeline. are baked on going we at But that our initiatives of And the Spectrum confident have we we're look activities there in with the integration of volatility our the are our supply against

Christopher M. Carey

headwind comment, nearly value and X%, just the for this me category think if with could me on just was category wrong, mentioned has growth that correct than Okay. the And in that been just your better it than a volume. up industry And latest, that. thesis. strikes I'm Thanks. of trends less up little then, you bit the if volumes maybe I consistently sort And views you value on secular longer-term wonder I

Alan R. Hoskins

question. Hi, Alan. Yeah. It's a Chris, great

current that also premium So the and consistent action was growth around you're several what the seen specialty really driven The in was the X.X% that with the was markets up price just spot most previous we've quarter on. taken value in segments and pricing Value by reflects in in is which globe. periods. around

would headline current that So, be bigger the on the quarter.

several As you volume consistent we've past periods, slightly pretty over around the been Certainly reporting outlook down look digits. ahead, you've for category the our to – flat low-single seen to flat up.

the And make bit that adjustments we'll trends warranted give you little there that may upside potential outlook. to at look To we're and be continue potential may to our more overall for outlook. it. outlook. We will At number believe a to we to might continue holding to time, currently our of provide a why color on monitor this if

first, universe. So, the in device seeing a stabilization you're

the to consumption conversion battery owned both also nearing of onboard and steady are number So, devices seeing and the maturity. you're

more to Second, take the those batteries population. Internet powerful connected a of of Things create specialty. the AAA of in AA, whole smart health like continues new smaller, and Many devices home, smart class device specifically

just smart require of household batteries. devices home an example, connected you If over those take XX% as

miniaturization the of The continued just third is thing devices. really

share have you're usage, finally, usage bodes and in calls. shifts greater and devices of overall aid adoption growth aid growing binaural developing see which aging and more sub-segment an hearing happening result this both look ears, We category. which AAA you that devices when forward. markets, of share the a to alluded going an I've population, hearing you in both within know of rate aid the means for and demographic hearing as with what's there increase at in specialty are consumption to then, prior well And a of going of both developed So, powering means types in those of

in potential So, factor four correlation the outlook. device around is and what seeing there things to you that in universe the directly if we're to volume, those upside

Operator

is Bank. Please ahead. Alwy go question from next of The Faiza Deutsche

Faiza Alwy

morning. Hi. Good Yes.

Alan R. Hoskins

morning. Good

Timothy W. Gorman

morning. Good

Faiza Alwy

Hi.

So, talk to of a pricing about terms the you're I just environment. want seeing little what bit in

points impact pricing So, had positive three I think quarter. from you last of

bit it's this so lowered quarter. a And little

So, the is of ability if in I outlook cost, any sort transportation change. any you then as your to in just just wanted there And what just incremental on and take was see year? the pricing to commodities see the rise later

Alan R. Hoskins

and answer to Alan, Tim for provide part of you. Yeah. also Hi. ask I'll It's the

So, look action the at that's XX in us from and reflects markets globe, new periods, offset it in been of that when we currency And rates. we seeing benefited the It's the U.S. around currently over changes we're pricing, the last the behind helped commodity innovation. product inflation particularly the over pricing introduction

As able been we've actions, overall in category value, improvement a U.S. to particularly result of the see the in pricing

at you a that. headlines of impact the As really look pricing, around there's couple of

a remain you prices the most reporting in promotional seen quarter is past standpoint, of the actually as you're hold So consistent markets. several continues in And periods. We've pricing result unit a to from seeing U.S., a good that the first, promotion look to the at environment, if consumers current That average increase the thing. stable. over

the of promotion sales percent flat. relatively is So, coming from

some and We sold actually batteries are are the is which of displays is category, a good thing for level of declining. price in percent seeing actually with price an the decrease that full increase

we're and take improving of comfortable up going everyday pricing shelf pricing and a combination overall stable So, the where environment, is. with promotional very if you

future Anyway, of category we're think of to certainly our hand you products we currency that we pricing use market, on what that dynamics, both take around rates. changes and pricing new promotion for markets take more information commodities decisions decisions terms innovative look independently. to bring product a of any best that we pricing, technology a pricing seeing in Tim into it any Energizer. we bit I'll future we to and – the and macroeconomic consideration, all of everything interest at are pricing, on and – in certainly to inputs, when little take do And from In talk about we then about over variables number conditions,

we're continue then as to we're bring evaluate that well. new commodity to what as around transportation that we'll innovation market, around seeing also what we based And pricing costs. do seeing of on will We inflation, certainly

let commodity a place. speak in little seeing. we're more some Tim a And relatively feel to we of the we're I'll good overall, bit maybe that So inflation

Timothy W. Gorman

and Yes. in on the With commitments respect evolution as first remarks, commodities, as I my and XX-month impacts, And look to well the lock both do at now we transportation, to XX commodities, forward range. we mentioned potential prepared all in as to those. in look of the tariff fuel

be fully locked year. to in locked the and these expected XX% been For year. fiscal we're current in are They headwinds headwinds the current year, for next Obviously, have XXXX.

at utilization one So, have just at two this we which that and, initiatives moving from had that from better we we the to have benefits: improvement called look it out manufacturing our two, mitigated Singapore and the we one, potential continuous the year is facilities. tariffs Singapore, China impacts

will in benefits occur those the future. So,

But view And actions operating be to in volatility those we as focus to likewise, is at look moving comes again, at pointed we'll out, as potential offset decision additionally, tariffs the And future. pricing we productivity consideration will And indicate pricing that sourcing as actions well. that likewise future. would in categories future play forward. costs we what to in In the the in look into reduce that a potential of have then factors. continuous improvement so, really our changes the of potential Alan those I'd and factors particular, would volatility have initiatives those from factors be a with finalized offset become driving those that cost our our tariffs, the those come of on be clear

Faiza Alwy

then, And Spectrum one you. Thank the Great. just other on thing transaction.

So, first all, on of U.S. approved congratulations in getting the

Alan R. Hoskins

you. Thank

Faiza Alwy

the you U.S.? specific FTC? Can labels you talk was propose how two private a to like you in these that maybe with – Sort sort you'd of are model along running the of envisioning about there what brands

Alan R. Hoskins

customers we believe dug as they in the they of the decision. why cleared in want and transaction And themselves regulators think both speak and questions, arrived that to and I just into for analyzed is our it U.S. they the consumers. what presented beneficial was this why I clarifying to that transaction. we ultimately terms our ultimately So, asked the they at don't details

Rayovac going provide discussions and capacity can businesses brands going own can actually manufacturing excited we'll of strategic We're Spectrum with what them. terms leave modeling to But the outlook the we excited that of forward, has. these we're VARTA our subsequent to are with that when have do and do In and we what we business for the it. about to

Operator

go question Jefferies. Mr. of Please next from Kevin sir. The is Grundy ahead,

Kevin Grundy

guys. morning, Good Thanks.

Alan R. Hoskins

Good morning, Kevin.

Timothy W. Gorman

morning, Good Kevin.

Kevin Grundy

help so help in Two – back first commodities expected had implies you can material there? one margins you So, of of higher freight the gross us you more key some questions, with us in some drivers the than guidance Tim, and improvement your the Can half before. year. detail-oriented. the

will of benefit a in in pricing. should You like productivity contributor at if the than first year. least quarter, some get be not was, from sounds It half it the bigger the

drive FX But there. looking freight. I to want from the you the get larger be appropriately I the that's of of given this going your magnitude improvement there, make terms about to You're headwind sure commodity implied favorable mix, how a and and then And just some to in then, follow-up. have guidance there's I'm and in in thinking

Timothy W. Gorman

Sure.

year of portfolio unfolds, last implementing recall, the year, began as Kevin, So, we you'll kind the as changes.

in the And the half of investments so, we made beginning latter year.

half QX, that the that obviously, lapping actions optimization. we'll look that significant the investment were at the one, be investments as activity. the the of have benefit and But taken. year. QX in portfolio were and that we in headwind will benefits of have the made We're forward benefits lapping we The as that lapping back a moving of also hurricane getting pricing So, be we is those

you As in of fourth of recall, really U.S. fiscal lapping into XXXX. the last year over QX year majority the and the occurred of beginning quarter

And that the for tailwind have benefits for are that'll currency well. us in identified So, we a a tailwind us be then as of likewise, fiscal year XXXX.

Kevin Grundy

quantify Okay. be for are of freight to us, X Tim? X-basis-point points. Is there by anything going headwind and pricing Commodities basis offset you can

carry on that you of the don't level call. So, detail particularly

Timothy W. Gorman

level that Yeah. into really of We detail. get don't

Kevin Grundy

Okay.

Operator

conference call. turn to of question-and-answer This remarks. Mr. the would closing the back concludes any over I Alan Hoskins to portion like now for the

Alan R. Hoskins

us Thank your the in on you, operator, interest today Energizer. and continued and for thank everyone call you joining for

Operator

Ladies thank you joining. and gentlemen, for

your disconnect telephones. now may You

Energizer (ENR) 2 May 182018 Q2 Earnings call transcript