ENR - Earnings call transcript Q3 2018 | Energizer Holdings, Inc.

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Operator

Good morning. My name is Steven and I will be your conference operator today. At this time, I'd like to welcome everyone to Energizer's Third Quarter Fiscal 2018 Conference Call. After the speakers' remarks, there will be a question-and-answer session.

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

You begin may your conference.

Jacqueline E. Burwitz

Good joining morning us. for and thank you

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

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

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

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

Alan R. Hoskins

the In execute quarter, priorities organic everyone. its strategic morning, strong good and with against to Energizer Jackie, Thanks, continued growth. revenue

our closing with of our and acquisition auto added We we scale business of appearance acquisition Nu business Spectrum the our also toward made to Finish. progress care

an in year the $XXX of improved capital. versus cash flow year-to-date as adjusted $XX And is $X.XX. up was flow On $XX due above of to prior million the million free basis, increase working million, free $XX quarter cash adjusted year, strategy. results the These three driving improvements million, prior were a gains. partially lower leading productivity Innovation against a continuing operating by in of proceeds As sales. achieved innovation, prior asset and of focus were and is our and prior and optimization third Gross lapping the this the was optimization. of release from excluding share adjusted the basis team foreign start in year. benefits earnings continuing year. mix gains, announced primarily favorability, quarter, unusuals, per expansion to earnings portfolio margins, points resulted distribution the morning, unfavorable up delivered Organic solid carryover momentum the was Organic to of pricing, year results revenue due in our currency. continued increased net volume impact and X.X% our excellence, executing on component working with in portfolio capital our with offset primarily the priorities: and our pricing key revenue due margin XXX growth versus by This investment from gross to our our strategic

accessible visible optimization realize category we Ultimate AA our longest-lasting the simplify benefits to portfolio world's to more make and and quarter, batteries, the Lithium, consumers. to continued of During Energizer the the

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

in with excellence. focused We also continue operating remain to

and And, meeting the the is still that focused current base Spectrum the delivering for closing goals growth, XXXX. they acquisition, distribution demonstrates team overhead. effectiveness our Even such as the on and our engaged optimization volume focus. results improvements as necessary and fiscal achieve of our their manufacturing organic ensuring team steps pricing, gains, improvement in by footprint in streamlining quarter's are optimizing continues and heavily the by business The to solid our to international finally, is initiatives investing driven continuous portfolio drive productivity

be in focus As fourth in our we business. our drive have quarter. and the now further to embedded we improvement continue efficiencies benefits see margin discussed in projects our previous and expect quarters, will these Continuous the rate gross is in an to to ongoing in of culture SG&A

Value to response was driven global for to markets. latest multiple the turning X.X% category and volume the and several through was actions global improved in slightly for value The XX.X% Now, trends and category performance pricing weeks innovation across XXXX. year cycled flat. as weeks shelf up May share was consumers' markets. space ended of year's prior XX international was versus the in changes by U.S. last also share up XX Energizer's market gained the we

grew market Energizer's share XX.X%, XX with points. ago to year value a X And online period U.S., on share. the growing more U.S. the same the Energizer battery versus just was share e-commerce XX at Looking category XX% focusing channel, up the specifically basis nearly sales a points

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

capital turning Now, allocation. to

in a opportunistically as M&A. a well take to balanced paying by business, to as continue approach capital to repurchasing capital dividend, meaningful shareholders strategic allocation We the returning shares, and by reinvesting

after Spectrum on levels. focus a ensure we the a sheet. the balance use addition, close we includes This from flow increased to maintain debt deleveraging will acquisition, cash seek healthy to In our we strong

to Spectrum on the business. like provide acquisition update of an I'd our Now,

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

acquisition. to and on ability and our compete our closing customers our opportunity team will January Spectrum category along also brand Energizer's of outside through in this product products. portfolio. to range with efficiencies consumers the number a announcing and have completed Energizer advisors wider Spectrum team and from In broader provides from benefit combination innovation steps XX, and the Since of the cost This acquisition addition, accelerated toward a enhance an drive a

achieved have authorities, jurisdictions two continue the and obtaining in We from number Commission towards approval work the European Australia. and remaining to approval regulatory of a

integration of from Energizer to Our in smooth order to teams and business. Spectrum and a continue transition for work prepare orderly together closing the

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

at our $XX ownership. third further expect run we million. $XXX year end We achieve accretion expect million following to realization the to of to of of a And full of rate targeted synergies our hit

with through existing fits vision both business. what expands portfolio a acquisitions. and and already the addition, and auto care transaction existing further building shared completed Finish Adding And, finally, the to growth Lexol to flow recently year we Eagle auto close and expect will In creation. the free Scratch previously, we've the enable our XXXX. line also strategic Brands care One us of value in nicely our top products business, of and that strengthen our by to end calendar we cash acquisition from tuck-in long-term auto Doctor to organically Consistent with the of strength acquisition our Nu our continues drive this appearance

progress per our $X.XX low maintaining our full $X.XX. full our Looking of closing while our single-digit growth outlook outlook and a business in and in on core forward adjusted we delivering towards of Overall, Tim earnings and to to in we year continue great quarter remain making the organic just XXXX, review moment. share will execute growth fourth are of the strategic focused sales business. to integrating Spectrum initiatives results fiscal

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

Timothy W. Gorman

update good fiscal discuss quarter, everyone. XXXX. to and detail and for the I'll the margins, and on morning, provide net Alan, I'll our outlook for Thanks, results gross including year providing sales financial third an

moderated I quarter, net from X.X% and for the adjusted quarter of line against increased the benefit quarter $X.XX earnings $XXX from strengthened top to rate. tax during share or would expectations million the $XX current compared the our quarter quarter to last was versus sales a U.S. For margins, in benefited currency year quarter. improved strong $X.XX, growth, lower up prior of dollar XX% million. benefit The the the third the nearly Total note currencies. as the end at all per

and quarter business creates realignment initiated the a negative by These will million, XXXX. segments of favorable X.X% revenue existing be pricing from a impact of last in X.X%, our contributions X.X% by the fiscal the improvement $X of X.X% amounts currency in favorable from increased lapping and were the divesture May new organic XXXX. actions; This divestiture geographic comparison. impact XX-basis-point negative offset from the this ASI from portfolio benefit grew at both Excluding driven gains in customers; space distribution half back

While be at non-measured our to customer, existing channels, normalized inventory space continue levels. we increased at including levels retail

revenues of at lithium, attributed segment, Looking of XX%. up portfolio net volume up favorable portfolio our optimization organic XX% X.X%, of sales distribution reported grew the the improvements. and the by value X.X% and key Americas, which to pricing, continues included sales benefit growth revenue by with gains, The in beneficiary to realignment, grow

year investments points pricing net year. up rate XXXX. points from The mix, primarily by in organic net of in several the actions due a execution prior initial also from mix. the pricing, our grew was year markets, we quarter. In prior margin up improved growth optimization up back fiscal distribution favorable rate A&P percent of reported third third supporting will in moderate and of to with currency. benefiting the half international, X% was impacts basis As from basis with XXX realignment Gross coupled gains, X.X%, to lapping our the of portfolio lap XX.X% begin the expected, as sales XX portfolio the was and sales prior from gross as quarter, sales improved product margin X.X%

incur year distributed the Our has we fiscal quarter year been to compared less during therefore, A&P year, A&P fiscal this and funding to expect more fourth XXXX. evenly throughout the during

the financing, from attributable debt benefit the and to had quarter consulting, to with foreign closing support higher million, at fourth a basis billion introduction incurred We improved and XX an offering. revolver increased the Currently, our weighted quarter, in about $X.X MAX associated on cost, obtaining acquisition amount million the integration quarter, we due included bond compared of adjustment the dollar legal, and compared integration incurred billion net SG&A, the regulatory approximately year-to-date prior to of EBITDA $XX.X of timing basis, quarter quarter. increased third rates expense to overall acquisition debt debt of acquisition floating quarter. customs million the prior quarter spending for the incurred of is was year a the in The recall, up of year year of to rate our our activities. our optimization a conjunction in and an planning portfolio obtaining cost. X%. points our which commitment of permanent portion current On stood multiple $X.X excluding Euro increased expense. expense We costs Interest excluding debt. fees million approval, million, international and and million borrowings increased SG&A and is our average the and acquisition current times. advisory prior X up sales current costs to benefit primarily the level significantly third On or interest $XX.X basis, $XX to was absolute on with of a offering. in and in integration ended net will you The XX.X% $X currency was also the As in quarter fees, we've contract $XX $XX integration with

about $XXX portion the with the had million end significant held on outside U.S. at also We hand a of the cash of quarter

third in effective the $XX third tax not compared of primarily We rate quarter year the dividend quarter. the In in the lower a did tax U.S. quarter, The during fiscal rate we XX.X% by Our ex-unusual XXXX. XX.X% any decrease paid in of effective third fiscal was repurchase quarter the rate was shares prior driven million. to for the XXXX.

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

cash last in during call, and to flow focused conjunction acquisition. Spectrum acquisition the we free expect use the with be the closing on discussed deleverage also we from the incurred and levels debt integrating will our in near-term, As to quarter's

a to topics. cover our wanted Before outlook year turning XXXX, for fiscal I off to couple of on

impacts on our on material we imported quarter's the well Europe, cans. business, as as on costs call pricing global year to update. component and gross such than tariffs, from absent mentioned points of XXXX activities expected we finished impact raw in I fiscal wanted on I impact in impacts rate actions. into to today's input the U.S. basis tariff respect XXXX expect we of with as year the fiscal headwind First, monitor continue to minimal, steel including margin tariffs the of XX an last to the goods call, the and less On impact be provide to our Overall, be

As currently be we costs, factors, consider considered innovation. other and future, competitive including with of landscape pricing in and will inflation the currency, actions the in along tariffs impact commodity

the currency, continue bottom currencies been provide situation know, updates we a you information as perspective. results half to of both As in XXXX, benefiting fiscal and to fluid, available. the line a tariff from line will more top tailwind and have becomes our remains respect first With highly

third the U.S. for fiscal moderate modest quarter. begin the XXXX several for while net become euro. including strengthened quarter, sales saw the against headwind rates, X.X%, move half $XX.X in third To top sales X.X%. a net to or first the we Based to quarter current benefit the during the impact the was was moderation, as $X.X million currencies, our as However, in benefit on the fourth line we into currency million illustrate the currency or we benefit of dollar this the to currency expect significantly

gains deemed X, economy the dollars in highly being will re-measurement exchange losses subsidiary U.S. effective reflected rather resulting inflationary our equity. than in be Argentinian future re-measured July from being earnings and addition, in the with In

may in the peso, difficult As it the Argentine impact Argentina highly determine what financial of if upon movements dependent for consolidated our the is of highly on inflationary accounting inflationary impact accounting is any the have statements. to

not impacts to expect do be those we However, material.

outlook in not included We any item. will and highly movements an considered inflationary for such have adjustments any recognized in periods unusual accounting be our subsequent

our million the X.X%. Including interest place, swaps structure. rate in estimate will rate XX% capital million During new it where capital retain, the Term the In to Spectrum now new a to we XXXX all-in fixed Loan Energizer debt our the the to the has of our closing. fund markets between A, team a revolver. will progress debt make U.S. and facilities, of existing acquisition closing issued will comprised billion necessary moving approximately total, quarter, Euro million new cash Loan $XXX combined debt approximately in These Term senior bonds, forma $X.X B, already held our our ultimately of needed will significant and made also and with of at be of $XXX in current the We use international expect undrawn in nature interest we which to raised also the up ultimately finance to and pro subject and notes, with acquisition, cash of be acquisition, $XXX business.

million $XXX disruptive of during to are will acquired on continuity, million for synergy preparation in in to acquisition the activities our ensuring to Spectrum Finally, for and Initially, the three our ability remain focused ownership. of first we planning We closing $XX benefits closing. we after businesses. overly business confident integration be integration not activities our to the achieve continue the expected years progress

we discussed in be balance expect of three. the on and benefits synergies have loaded, will year the we to As ownership two realized more first prior XX% years and synergy in back-end calls, of and realize

fiscal turn to for our XXXX. Now I would year like to outlook

fourth the into year. change full impacts our quarter, a year-over-year are as do currency the for on we there While outlook move the not basis currency headwinds

currency The share our in to a by to XXXX Favorable be million. primarily gains impact $X.XX single impact. favorable net earnings of are from organic increased to in on from moderated to sales sales per our globe, portfolio the have and Organic We X% sales net $X.XX. storm up digits. impact the outlook reported activity optimization, volumes of driven distribution basis Net lapping range are in across the $XX including customer. maintaining approximately actions at growth of digits, are single expected foreign up of expected prior fiscal increased adjusted the to is benefit be expected now flat movements low low and existing pricing are outlook and

We continue rate gross XX to to to expect our up basis unchanged fiscal quarter. margin points be versus flat XXXX, last from year

for range be any to call, quarter's is our As the X% impact cost. transportation the current on locked noted in A&P the commodity are fiscal to sales, consistent outlook. and we long-term year, on of with of net expected our of we spending requirements our also last increased outlook fully X% reflects

way Given the our fourth quarter and we now long-term we to are of year through of for have range. lower the three-quarters expect spending committed of the a full year our the the spending to portion end trend

we SG&A move and of basis, any news a range on product We our efficient discussed, more acquisition we've level as with percent up and a to the level year. to and sales A&P As as effective down and introduction reflecting excluding spend. integration in spending flat of the costs. new is year-over-year given continue of spending expected launched be marketing net pursue current remain comfortable in will

being net income currency revised by has our on by based $XX from previous This our year of expect quarter, up headwinds current and third we current million, to been impact the improvement downward approximately outlook been pre-tax realized quarter. $XX continuous $X benefits to rates. to in fourth impact negatively million. have million Our hedge of currency now fully the in quarter initiatives the Reflecting in with expected savings fourth executed additional the moderation

account XX% of end be the range year at our tax legislation tax rate to income XXXX passed the into new XX% of calendar of taking country in impact expected mix earnings. U.S. the to of expected and x-unusual Our is the

approximately at the and range to Our the in the be to low $XX expectation range. we end of now amortization to million continue previous spending is for $XX And year depreciation million for expect of $XX capital full our million.

We of flow. asset included of to compared $XX cash free prior adjusted in free includes XXXX million million, year. cash range $XX $XX adjusted expect The flow continue XXXX $XXX from the sales million to free up to adjusted million fiscal asset to cash $X million fiscal the of million $XXX in sales in fiscal be to flow

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

Alan R. Hoskins

Thanks, Tim.

Our the continued strong focus and is strong results the for of our our nine execution. months result priorities strategic on

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

Operator

Thank you.

We begin first question-and-answer will comes ahead. Please go Stanley. with the our Morgan from now Dara question session. Mohsenian And

Dara W. Mohsenian

morning, Hey. Good guys.

Alan R. Hoskins

Dara. Morning,

Timothy W. Gorman

Morning, Dara.

Dara W. Mohsenian

of so the outlook, includes first, couple yet you've worst year guidance. EPS The currency So, full full questions. guidance just a detailed unchanged kept year your

on type half, EPS gross then, So, place? basis mentioned of where second, would within and us more be you'd on you actions that you FX are fiscal current terms the unchanged in give there I have favorable XXXX you that? driving any impact sales here spot margin Can maybe bit hedging clarity can outlook in idea in and more in helpful. impact. of with see And assume based FX the of an back on you moderating offsets something rough any the the me we rates detail today what a a but org underlying ranges what's give you're

Timothy W. Gorman

both I'll take Dara. your Yeah, questions. of

the outlook So, impacts of does yeah, the currency. reflect

we spend impact, that, gross so, that And with overhead, improved and margin offsetting impact. A&P improved with slightly combined favorable combined rate tax see offsetting lower a

and With you four the a headwind move we taken we yes, from our it currency, for would into as will currency, EPS. Again, likely we those I'd for in view So, quarter, fourth the like as respect have for and really year currencies. of so headwind together year. the offsetting year the we in headwind the for factors see kind the does that as become are outlook adjusted to up November, that into But outlook November. full move normally we next everything provide our XXXX give continue XXXX, and fiscal fiscal do to business we'll of combine

Dara W. Mohsenian

And in follow-up. enough. Fair slip one if I just Okay. could

that a You continues Can Brands. I the mentioned comment And it shelf for of to What's coming distribution bit trying gains won't about guess us in recently a you besides I'm deal on What incrementality that organization I incremental I'm much type gains? total how benefit the expect? magnitude just seen of just weakness to Spectrum's in from quarters? space at there? but the color we closes happen wondering existing the few should U.S. in business, Did those so is driving some once Thanks. customers. given just more to Spectrum think know others we've industry you want recently. Spectrum give

Mark Stephen LaVigne

Dara. It's that Mark. one. take I'll

it's the On of gains, some markets to well. spread those globe. gains the in in coming France, number share as a the you expect gains across see across the distribution really the We that name benefit the the again, to it's see a which UK, continue of in to with for Germany, numbers In just would started are quarters recently. international, U.S. you'll few. and There distribution

So, those are all distribution gains.

business, of our competitors' all market deal. of came in terms I a gains again Spectrum business. those Spectrum competitors, number is including those, we would of to and compete expense, compete today the of we have. announced the always as they some allocation before we the probably We're share In some at of think different were our from no the Spectrum of than the against continuing

Alan R. Hoskins

growth not DIY, measure, in as seeing both well we only the the in Alan. non-tracked Dara, it's we're deals seeing home e-commerce. center, We're and

Dara W. Mohsenian

Thanks.

Alan R. Hoskins

you. Thank

Operator

with Chappell ahead. SunTrust. Please comes Our Bill next question go from

William B. Chappell

Thanks. Good morning.

Alan R. Hoskins

Good morning, Bill.

Timothy W. Gorman

Bill. morning, Good

William B. Chappell

goal pricing I to prior looking be right that that – tariffs, X, other to at the stand? I holidays, timeframe, your offset things, would to if guess would Is something question October case, first pricing. we of and commodities, know by that's assume, the fiscal now where the if the kind next you the wouldn't or you're implement year. on Hey. on

Alan R. Hoskins

going We independent it's in our look our warranted always that We Bill, business. in not look factors So, – do at We at the a we're of of whether is to competitors. Alan. or do category. pricing number

So, we're pipeline, commodity, taking that certainly, There occurring internally category that hikes movement and innovation in on in Whether any conditions. other certainly a are are consideration into around dynamics And inflation marketing look overall certainly news. is factors, have and our or we macro to currencies. at regular not we then basis. discussions currently number attach including we'll pricing of any

the Energizer do category in the promotion be in is of information going be XXX look the different to and we'll are at That's to year team. So, and decisions to We take in best going with every around it regularly, think an to we about forward on our the pricing take discussion pricing interest management markets that world. that use going way going our ongoing across markets the on pricing.

William B. Chappell

back Okay. around U.S. give distribution gains, a from? come on pretty market gains on and could good more distribution color world. you where share little the gains in have ACV You And then the maybe and

will up into hold understand to holiday and we accounts what go these that as gains trying So, that I'm we well-positioned, assume means then you're you're season? should getting into, are the pretty new

Mark Stephen LaVigne

Mark. it's Bill,

that expanded distribution I distribution with way to existing gains, about customers. is think the the think on

the fighting U.S. In We is be gain the space the that little went able were space, tends the to continue more the for sure to additional base one of a there's reset. U.S., to driving U.S. we're throughout We make international, recently retailer In some in through large customer which fragmented. that additional some numbers shelf a

So, one drives there's customer necessarily that it. not

good terms We us You're We to well-positioned. We're and of heading be well. period. good something I plans. in about And at about DIY – unmeasured as holiday forecast holiday. XXXX our don't our talk that feel want quarter execution. feel first for in channels November healthy seeing we're we're all where of of sort also as growth And fiscal it's e-commerce the sitting about will this into new then the that's giving because point, Obviously, about we'll guidance, in year. the with

Alan R. Hoskins

that Bill, And, that factor new focused our getting the organization customers. you'll recall, doors, in that's space existing as on. only is our expanding approach and is not It's availability

the new So, and doors U.S. able both you're new to well. those and customers will particular, an seeing focus Energizer, internationally expand and count going expand pick be in That's both in ongoing up us as forward as for store we're new customers.

William B. Chappell

Thanks. Got it.

Alan R. Hoskins

Thank you, Bill.

Operator

Alwy Bank. Our ahead. next with question comes from Deutsche Faiza go Please

Faiza Alwy

Yes. Hi. Good morning.

Alan R. Hoskins

Good morning.

Faiza Alwy

A questions. couple

steel The first one you're little some a are we're is, a increasing if increased you about then prices commodity what quite prices and inflation bit cost Like, have seeing the environment. could talk and in bit. seeing EMD seem to

XX% locked last you in said you for that XXXX. were quarter think I

us and next you are commodities generally maybe you about could update year. give that thinking an how If on

Timothy W. Gorman

Yes.

for for So, locked. indicated next as call, we indicated year, mentioned during we the this last And were locked prepared we're as remarks, you year. XX%

year locked As in now, we're XX% fiscal excess we sit of here XXXX. for

to the in the through some we as to forward we in about, look, saw our in we seeing XX year XXXX. We're level requirements we XX fiscal same out increase commodities are year not fiscal seeing forward and we that buys look inflation months. We XXXX. as lock But of talk

procurement strategy so, is forward. we as move team And our executing that

Faiza Alwy

free said achieve flow guided Spectrum doing Great. were flow of related previously you had combined you what around maybe sort Spectrum some you million. that adjusted some what What's for then to think, know the if give update include the year. the give – amount deal? I when going Okay. us actual account the to just a an free And costs an of then, And into would cash cash the And on deal? you of with synergies with total taking the number to this I these you costs us related $XXX of encountered could Does be that if to the costs could cost be.

Timothy W. Gorman

Yeah.

to out. cost the achieve of terms laid that X that we was to in have that the benefits times synergy we indicated we what So, X.XX synergies,

we first In terms quarters, $XXX the Through right year, now the current where $XX three cash of free stand of flow million. the approximately million. $XXX for integration million adjusted are costs and to that acquisition

rate gain we quarter. consistent in probably the You'd see run the reflected that third a had ex

So, our commitment roughly fourth approximating $XX rate out the million. have financing we the would that gain the and we saw new in $XX on you and the the have if see fees interest back debt million we moving been quarter, got that move I cost forward. as of third you've something into that on the then run quarter,

in those to the baked fundamental free as all because So, of we adjusted would forward. that free really adjusted flow underlying lower move focus really flow. that's do the on We business the cash cash be

Faiza Alwy

Okay. Thank you.

Alan R. Hoskins

Thank you.

Operator

question next ahead. Citi. Wendy with comes Our Please Nicholson from go

Wendy C. Nicholson

morning. Good Hi.

Alan R. Hoskins

Wendy. morning, Good

Wendy C. Nicholson

Two questions.

the track the but terrific now? Is Just And change? helping that First look impact like reflective divergent shares trend distribution also Eveready it's can care whether margins right not. the some on Eveready the that of design. But channel the data, been by of Energizer that's couple over last looks giving is gross share tell market gross up wondering if months. I me Is should or you lower help gross significantly or a your on us that? margin understand that from margins, about I'm

Timothy W. Gorman

Yes.

part forward. trade-up and So, about as mix of improved is trend longer-term we talked move Wendy, we've the

the is positive profile brand. higher-margin seeing you're in versus given decline a that of Energizer the growth the So, in Energizer Eveready

on forward. is we move So, margin as gross positive impact it a having

a basis to a out – improvement that despite impact. currency points basis quantified up impact we've positive called it of it maintain initiatives, We is That, on XX what is, our commodities, costs. haven't combined transportation helping or with the are year-over-year headwinds us and called positive continuous that but

Wendy C. Nicholson

Perfect.

antitrust question That other my great. is But Okay. sounds Europe. then on in Western the review

in the just be European about? approval, that's I the think came how color if there That's all that if specific can when you you approval fast. we bit my through after don't wondering the there there's Is I I'm of, being little negotiated? was but seems Europe my gosh, And awesome. just thing taking kind that worried longer. know should we can like, get a U.S., were anything close? be quickly, to you any that's Is interpretation, offer. any

Mark Stephen LaVigne

it's thought announced I'll the be would the deal end by On this Wendy, review, antitrust cover we January, we of in one. when it Mark. year. again, the

of tracking still progress made we We Australia. the the the hit a talked. at in with expect their in optimism active We're the and the We've before. reason against of we're I a still go tend turns. time for by think discussions variety well there's timing These I the through as they and any on was as things lot of a less both last to of twist end than own think take to EU that. there life since don't today regulators year.

are explaining simply ultimately down this consumers there's and And why the merging. approved. be is It believe doing that. to time regulators, transaction with we're able deeper for good them is down for do sitting two that what why we so we And to the takes should sit believe we to believe competitors still them that achieve when analysis and a we'll be

Wendy C. Nicholson

any deal with But big retail not – maintain you're to Spectrum sense contracts before European get right? the to any it's Is done a going work, whether say You've private-label of any that. to has of have at got be for have able fair has or point that right? of the partners where you those any conversations allowed lot closed this to historically to you're Rayovac that or

Mark Stephen LaVigne

– as we restricted our what have they mean conversations I that we're exactly sure regulators with in want terms that's we the us and is can making and with expect. to about what customers So, are obviously before both we can communications There doing. they are what customers businesses were of for operate have of we're

make terms a that be where in do in between they that given and they will gotten usual being it so think, on terms it's with or we working expect cooperation be weeks, and us the we couple close. the you could the in they're two in But your and we communications when has when coordinate And those us question, it a of lot of from great sure is do are to in of quarter month same as a Wendy, future. to a of terms us terms weeks teams actually Spectrum, close, I get And clearance on you counterparty message business from given both can then ready, ready able what three A how want the probably been for from so you of we've to depend close. pull are in that hear Spectrum other when to together of fast them. you'll together.

feel about terms to we're the be couple regulatory we'll to approval, of get in once within business be that a close and weeks position good in. So, the ready final will able

Wendy C. Nicholson

so Thanks Terrific. Fantastic. much.

Alan R. Hoskins

Thanks, Wendy.

Timothy W. Gorman

Thank you.

Operator

Our is with question Grundy Kevin next go ahead. Jefferies. from Please

Kevin Grundy

morning, Good everyone. Hey.

Alan R. Hoskins

Kevin. morning, Good

Timothy W. Gorman

Kevin. morning, Good

Kevin Grundy

there battery for driving the question improving and markets up. Can end the price outlook the May, factors Energizer. comments thinking to if I you debt growth Alan, category the towards "stable look are back us with composition for now sustainable wanted provide roadshow for be on and biggest your slide included between global the a to mix? outlook presentation in Are about what's the optimism And at that prepared I potential Should back for I in volume new for industry. long-term this Street? growth the market sales organic so, a this through the with the in optimism? X% like trends" And some and follow the start talk you more have then company? X% to

Alan R. Hoskins

Okay. Kevin. Yeah. Thanks,

financial faster So, objectives our the rate than obviously, grow one algorithm, a in category. to is our of at

prepared point So, of November. that at answers specifically without until it sort guidance more give to this in one Tim is the quantifying last

low category Since driven outlook, time, response had been the level of as the know, down separation, outlook pricing certainly terms the both consumer that category. in to you some we've innovation up, to to brought value that's of we've digits an single since category. the flat and the seen In of by

in forward, stabilization look device the we're we population. As seeing

completion They markets. maturity developing with developed in for upside and to the category of that. our both The nears onboard to, the some to biggest smart alluded as we've in of And would growth home, again requiring smaller type drivers now. that's batteries, Internet be of several devices. conversion is higher-performing you So, the devices over the and that to outpace stabilization as seen particular battery smart really Things. outlook and potential quarters There of in the this is both health-connected potential, the consistently

and hearing an of as loss into miniaturization forward. and devices shifts. the continued hearing markets, thirdly, presence aid portfolio. well hearing as level around with sub-segment smaller example, And then That's we're Second, well as the AAA to need play continued awareness you've requirement. of that seeing of such demographic going sizes the aging in with a population for that's know, specialty an developing which, satisfy got then, a look of and households an both, our along as you requiring at you higher cell bodes increased and for aids adoption That children disposable And income. higher

to a trends there's over revise a requirement to as to be better position markets. we our result, brands. call. And many that several see in were certainly monitor to quarters to being change So, outlook. those that before awareness for we continue trends make a we we higher developing We're we'd to a in and If help sustainable, feel the as expect going

Timothy W. Gorman

focus aspects look the U.S. the factor addition other in is was to at if you just the volume the in particular. Kevin, about, And, environment. that promotional talking on Alan And I'll

environment be that seen You've stable.

you're weeks, down percentage of seeing So, promotion latest slightly. dollars XX on

decreases of up. percent seeing you're AUP flat. be seeing dollar actual trends price to You're And

all are tracking And to those those at so Energizer, we're if look favorably positive. metrics. you actually And

So, that, longer-term. looking coupled we're with as that look the are things we the volume, at

Alan R. Hoskins

discounting merchandise a is data you sold less through know, being seeing well. as consumers. is there's relatively improving good as to that's And full-priced call particular so thing the out that that's on quarter-to-quarter in the sequentially that's you're and important to floor, that's category, more that And, displays for occurring with

Kevin Grundy

Okay. hope is for fairly of it you can these All very online. follow-up. sort quickly, probably One to peck pertains and helpful. This Mark. I through

from? you we AmazonBasics that coming you're to the What online X I'll and Alan, that. online cited? demand on hands consumer our So taking share? take respect us – data. with year-over-year. points percent broad can up be And AmazonBasics then, for thanks a battery are is category you market market Energizer's U.S.? have as share behavior, XX% Anything now You supplier the that up the that relative of brushstrokes mentioned stab in to for Where cetera? respect contract, this. terms when a update mention is trouble Where Where with getting the So, anything coming you'd on elasticities, learnings all may of broadly, at even in bid? you et with to is

Alan R. Hoskins

Sure.

Mark Stephen LaVigne

Kevin. right, Yeah. All

I answers have think I to of those. all

Basics that is a tracked Kevin? We which is those untracked. up grew same again, it's over on through XX% is XX% Percentage sitting about roughly Anything that goes one, a at sales period of Still category actually to Amazon. at mentioned settled of of share XX%. the X.X%. it's X% of e-commerce, roughly So, through we've category in and at XX%. I overall, numbers, tracked in at going that's the AmazonBasics, is time and outpaced Amazon which at XX%, missed the Energizer you've online. overall mentioned. update XX% and XX% battery grew category XX%. Duracell the

Kevin Grundy

up probably very consumer can in broad guess, was brushstrokes with terms any other on of I And interested comes when Mark, helpful. update And demand too. jump one, I bid. they That elasticities, you suspect Any the No. even you very AmazonBasics or, in, would also in the et it. supplier behavior to for online, then be Alan for then guys cetera. respect learnings contract,

Mark Stephen LaVigne

where that in Alan I can start miss. fill can I So, and

question. to of the label Obviously, to we're private to with engage have answer it. I'll terms it want to private if that happy Amazon, in a label In discussion, them retailers leave contract

brands. way with private to label with would extent As the a But a in we've retailers. way we that we Amazon described treat our will generally the that engage wants about contract, discussion past, private a same strategy to our we label the do in advantage other it have it

In the lot terms the in A different obviously I engaging are the leading consumers demographics. U.S. of in category learnings depending of online, is this with mean upon ways,

that some UK the the parts with would you the changing in Europe are and behaviors pockets some You Germany of more France other traditional consumer some of of the and see world. also in ahead see of markets where

applies are constantly to pack well. what how modern are that that mining both if a that international the are U.S., that sizes, can terms from that get the market But markets do So, it you SKUs, it points dedicated what what you pain in digital We learnings the do experiencing. have that's there are applying phenomenon. consumers with in advertising, team data, as are seeing the do applying a have in how be there engage and them does them, tend developed you of

Alan R. Hoskins

lot And our Kevin, drive, data at the analytics within look we're to how a maximize team, of is have, online. investments I'd ROI the on using conversion, continue that add only increase we and

Amazon. Beyond that, more too to our use relationship going reasons I'm share much team we have probably to we'd build because those for the with to to and like grow continue hesitate competitive as

Kevin Grundy

all guys. for Good time, Thanks the Understood. luck.

Alan R. Hoskins

Kevin. Thanks,

Timothy W. Gorman

Kevin. Thanks,

Operator

with ahead. Lynch. Tong go Olivia Our next question America comes from Merrill Please of Bank

Olivia Tong

Great. Thanks. morning. Good

how you think the want think – And growth think incremental sustainable Just can can you that talk do be and is that you. Why you above them? outpacing support great below you the on It's online. to growth net the do Thank case? spending you're to long revenue outpacing you see both you've online done through to to how line? do follow-up that that potentially And AmazonBasics that's and actually Amazon.

Mark Stephen LaVigne

Yeah.

Mark. So, that kick I'll off. this is

which is just what pack and you bit I content think intent sure and the brick-and-mortar. in a in impacts way we're doing do little is making engaging purchase visibility that what than we're the get their size online, different we that that a and consumers

past, need to investments you make. there are As in we've talked the that about

visibility. on to need make the You investments

of the in is different composition but But from need to investments you because, a than spend investments place. make net same up profitability, you we're are make different in again, brick-and-mortar. You the the Those line the end bottom search. roughly on agnostic

previously. success, our and more content visibility the online I see they more visibility online enhances terms they and create a to of allows of actually would have than search. basics you where that that And back in engage and easily getting your terms In then again, readily say momentum it's to that consumers

overall the Duracell in of we've the the think intent. great our do that to some do will without ability what but or to our in That's team online. that's have to AmazonBasics continue for we or outpace momentum of knowing the know up challenged to We think we our us, terms our growth is task they team cut have. other work I certainly what competition out category, the

Olivia Tong

of terms Got it. ranges. then the in outlook, Thanks. And wanted just talk the to about

of at organic on low-single-digits range fairly wide end imply low a which First a would the sales, clearly obviously low-single-digit decline.

imagine realm then understanding something decline, EPS in narrowed years, possibility that QX. the the year not low-single-digit the that it's few you've would I just on for certainly on historically range. outlook. full last for So, your of possibility EPS, based you're of be a looking And the but would within realm

at So, of sort through why the either this point, of you talk at that gets to a range kind range? can decision end wider you keep and what it to of

Timothy W. Gorman

year going last that Olivia, and account we have I hurricane we're year. thing move had take Yeah. the activity that lapping we into you're into the as distribution fourth is to quarter, think, the last to

this that our the activity hurricane potential go decline for may you activity we're So, will current activity, we as organic any in because slight into year as lapping year. does fourth quarter, that see a storm not occur include

get this full does range, we a kept fairly in significant have called as it quarter range the us moved just movement. as Relative and into I low-single-digit been and the to where we've organic out forward, year. look reason that as the the moving, for the currencies the So, is, revenue is prepared remarks, we growth to

that we despite is outlook prudent, the we're range we've So, are we maintaining and think maintaining we before that headwinds our had but that the incurred.

Olivia Tong

Great. Thank you.

Alan R. Hoskins

Thanks.

Operator

ahead. go with next of comes question William from Reuter Please Merrill America Our Bank Lynch.

William Michael Reuter

of didn't dollar you at a color what talking being that more like? products higher much any were as XXXX, Good there XX% prices but percentage or in a of look morning. higher, on were us When terms your give in for levels, on locked say you how you either they you mentioned about basis. Can those

Timothy W. Gorman

Yeah.

that's input our input So, locked we've of XX% that called raw costs. more in out, than what our in of on material terms costs, we

quantified what year fiscal provide outlook XXXX parts want haven't on We'll for as not of We full that. I the maintain our that And, and part full to component again, provide that outlook impact is. of XXXX. we that just

William Michael Reuter

Brands That with Okay. then the you And have guys sense. hands more. acquisition. full makes one Obviously, your Spectrum just

that next pipeline you're that. sure I'm years? of last innovation, about How to year, compares how for to innovation work feel and of handful continuing do maybe you say your terms In would the you on of

Timothy W. Gorman

can't and customers. is as products our in with think discuss on auto our in presented But additional of it's we in the have I both put We accepted been a that pipeline years. position and really strong robust care of innovation and R&D under we something position pipeline good number reveal our until feel the line a Obviously, as in about reviews lights, been it really good marketing pipeline. a batteries, and future. us go a as really, innovation have really has

So, where we good feel really are. we about really,

William Michael Reuter

others. you. I'll Thank pass to Great.

Alan R. Hoskins

Thank you.

Timothy W. Gorman

you. Thank

Operator

comes question next UBS. from Strycula with go ahead. our And Please Steve

Steven Strycula

morning. question. Good Hi. Two-part

Thanks. is the spend, that cost savings question. some million So, That'd that to number? $XX million. for Is $XXX to first first a the number get my synergies, net the be or clarity of reinvestment a on gross wanted part of

Timothy W. Gorman

Yeah. times. million achieve the number, to X million gross That's that $XXX a then the and indicated we X.XX to $XX to cost

Steven Strycula

trying million, $XXX would type Because of of considerations reinvestment, million think models number we other our just Great. price the $XX what that. think is kind like building to implying were of accretion how that you off you be to Okay. about as much about

that helpful was the reflective you. that loss logistics the additional document. the that else higher the now? when the of Spectrum, So, from Any run from Is results I there that we're share year. helpful. in debt or second rate it revenue costs? seeing the than would way last be right I put would the was Thank be, through was it And XX-month trailing Is anything noticed filing, language maybe color that went for be part lower would then EBITDA

Timothy W. Gorman

Yeah.

aid you And latest see two the they XX factors that. launched was in decline months One there new the that a hearing were that with that, investment decline. driving So, associated with really there's that product. is,

on so launch, a in. than did that they a launch back rather took they soft product hard So,

half so, And fiscal reflected year in that's first of the XXXX.

You'll this throughout benefits see that year beyond. they launch and move of the as

benefits actually increased we them impacting costs. So, move us The that the half closing. was commodity as factor was that additional

so, those XX reflected And are in months. that latest

Steven Strycula

of continent-by-continent Okay. of And non-U.S. is it regions then is in battery understanding fly battery some versus up quick to those call regions? where follow-up for a the that My just in lot some of give the where brand question you. there on in step terms margin as those points versus lower-gross dynamic opportunity going And the those in of to Thank of the nature. is quick Can markets just part us non-U.S. component premium some over is markets are I in understanding, you the an puck the is a what and value? it price today business. structurally? guess

Alan R. Hoskins

Alan. It's Hi. Yeah.

distributor it So, international of about the we traditional lot dual-brand as have markets, trade strategy. we particular a what markets, think way classify in our to in a

markets: because an of leveraging those in those to Energizer both find has brand of decades, markets, strategy. that have you'll brands, we in Many markets, been for leverage Australia when dual-brand and we've share share think We the Eveready of and particular our Malaysia, about In those that those ability leverage advantage Energizer markets. significant Zealand. leadership, you that our New dual Asian majority

able lighting consumers with their businesses. our is meet we'll going the that much from both the the be and forward. able a across wants expectation strength anticipate to portable We be that going to offer continue and Our standpoint battery a to broader from forward, for needs broader and will both see portfolio and business a consumer perspective. need portfolio We that,

can that You continue. will anticipate

Timothy W. Gorman

globally, the share. go look is and a private Yeah. as globe And private the XX% around if at dynamic specifically you labels, so, roughly you at label you if look

America, approximately If a you it's focus North share. XX% on

share. to with Europe, label the private being component a of move a it becomes you larger excess XX% in overall category of As

it's less at If Asia, LatAm, you share. X% share. look a roughly X% a roughly it's And – in

label in Europe. higher of private So, level

and label. you between So you label, brands the talked that private interaction pricing exist see dynamic, but premium ladders that historically between branded about we've premium see do private and that and products those,

Steven Strycula

Thank Okay. you.

Alan R. Hoskins

Thanks.

Operator

concludes call. That portion question-and-answer the the of

Now, closing remarks. I over Hoskins back would like Alan to for to turn the conference any

Alan R. Hoskins

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

Operator

The conference has for you presentation. attending Thank now concluded. today's

disconnect. now may You

Energizer (ENR) 1 Aug 182018 Q3 Earnings call transcript