Earnings call transcript Q1 2023

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Operator

Good morning. My name is Chad and I will be your conference operator today. And at this time, I would like to welcome everyone to Energizer's First Quarter Fiscal Year 2023 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. reminder, is a recorded. As Instructions] this being call [Operator

conference to Jon Investor I like the Relations. over and would now Treasurer turn to President, Poldan, Vice

You may conference. begin your

Jon Poldan

conference Energizer's Good welcome first call. quarter morning, to fiscal and XXXX

me Relations and Drabik, this section website, Officer; call of Joining Chief be available replay Officer. John are our President Chief Mark and today on Executive A will Financial of LaVigne, the energizerholdings.com. Investor

other risks make will and the statements These the company's from based we business management's actual are among which these During future expectations financial performance, materially cause on about forward-looking matters. to are and statements and call, differ may statements. results current subject uncertainties, to

differ not forward-looking are update these statements undertake filed that included statements. in do reports could the to from results materially SEC. we these factors We to with Other cause actual

earlier non-GAAP We measures. market believe and press comparable measures from compete also is financial relates shown measures we on A reconciliation call the our on issued to which presentation in our to reasonable. categories be our non-GAAP estimates this financial our website. GAAP today, refer in on where Information share is and is available we to of internal analysis discussed data, categories industry based Energizer's data to and concerning estimated release

to the comparisons battery and all year brick-and-mortar includes Unless Energizer's period year and regarding year in both all the category same and comments quarter XXXX. information otherwise pertain The e-commerce relate retail noted, fiscal sales. fiscal to to prior

Mark. like call to turn the I'd that, to With over

Mark LaVigne

morning, everyone. Good

He Energizer's efforts our will Poldan, who and Treasurer I quarter, of Vice organization Jon President talk going lead has for introduce about and the we Before results Relations to the the been forward. Investor is with XX-years. he want

Now the results. on to

start. strong Our a year is off to fiscal

November, fiscal and as flow highlighted key how the year. During we commence new free reduction last our debt restoration areas of generation, margins, call the were we cash focus

across progress results all of these demonstrate Our significant first quarter areas.

with through In great walk the get it On economic remains able category essential consumers. to category me our as the volume X% for value category categories. we've how been same the global to off November category is three-year U.S. with X% XX-weeks and starts batteries, our stack, environment In up was ended despite an down is X% category. this Let all brands the over It start. a in the Energizer during period. with with roughly XX% over value the up prefer almost consumers up outpacing volumes quarter, resilient

versus performance year Our in value strong U.S. globally prior share behind points a was the X.X up

indicators levels. to has of remained the offsetting turning impact. Auto the Care. benefit growth Now Category leading strong Year-over-year, since value subcategories double-digit more over grew pre-pandemic X% volume with value each our of pricing category and than experienced four

Armor the quarter and which nearly share, year is our of STP the While Auto half Care, appearance smallest subcategory, in including grew this total All represents both Care for portfolio. Auto the of important

with syndicated slightly moment, which categories. John that contributed our last quarter quarter levels. quarter entered batteries, retailers We in explain did with that mentioned across elevated partially a in track not our As will sales the disconnect. data inventory Particularly first to

inventory of low the end levels, below inventory consumer strong their manage levels. strong to demand. As also progressed, either the season, holiday at the After more retailers or quarter despite began many a customers aggressively of our historical were

outlook. the inventory at performance categories, in retail of strength While lower confidence shelf in delivering our our our our net the full-year this us and the quarter, impacted gives sales

category of those fundamentals, our margins begun focus gross backdrop strong on has restoring the to dividends. Against pay

cover First, let's pricing.

first benefit offset Auto expect from And pricing of across were continue the multiple inflationary to taken the experiencing. two both Battery previous we we Care to in discussed in we rounds fiscal As quarters quarters, the to broad-based and have headwinds favorable we year. comps of

any in targeted nature. ahead, actions are additional more Looking be to expected pricing

addition pricing, efficiency improvement initiatives of are progress. year-over-year been Care flow great gross through. has under beginning the by as to our as impacted emphasis has labor where is making margin project benefits suppliers driven margins The one momentum savings we products, from consolidating Auto improving were significantly to already a and inflation business and In from point gross reengineering are

not more around segment momentum project benefits significant detail profit pricing, capital in Our in of working momentum considered gross efforts the the it improvement later in much Project improved is margin, on efficiency, to John call. also will combined is a provide the just contributed improving quarter. driving with which

expanded million pay $XXX which year. to down helped The of million balance four margins our combination the months $XXX leaner the sheet of flow free in cash we use in over over and of of quarter, debt to first generate the

ahead, we primary be As look allocation debt priority. continues down to pay our capital

the me call our turn to additional over let Now provide financial performance. details John to about

John Drabik

provide on the will update summary more and the good on of momentum a color and additional outlook Mark and project Thanks of our detailed quarter everyone. year. the I some for morning, remainder

down net X.X% X.X%. revenue quarter, down with sales were organic the For reported

initial entering outlook business due year. retail organic response exit margin lower the year the inventory in slightly over declines, to of levels pricing the for lower Our and The current quarter. volumes battery last low-single-digit quarter to actions was for elevated

Care basis the inventory in management expectations, to retailer performed XXX points. and both better additional the basis or points at created line XXX quarter of our Auto our headwinds Battery end While original businesses categories across than of

by savings the to quarter. benefit The XXX momentum exiting and battery of offset lower that project pricing volume the XX%, to quarter in business Adjusted increased from the pricing. points partially of were basis basis margin gross margin generated declines by in actions, driven roughly XXX points

see operating prior unfavorable cost has stabilized, environment year including ocean material the freight we to continue and elevated the quarter. currency While costs, and impacts versus costs

increases the momentum favorable transformation X%, partially impacts. driven increased prior of SG&A stock was and planned rising sales and in X.X% our by the by were better to The QX A&P depreciation of align primarily of by QX to factoring amortization, spend tied prior as initiatives. to and support project Adjusted year holiday interest percent compensation higher The from up currency related year fees the season. was million, year. $X.X from increase driven offset with rates, expense digital a to shifting this brand savings

million per $X.X mainly respectively. year-over-year, were neutral earnings adjusted increased offset $XXX.X and and share interest per earnings delivered expense to a per adjusted adjusted EBITDA On per and $X.XX rising debt Interest currency We basis respectively. share adjusted and $X.XX XXX.X due average million outstanding. rates, lower million share share of partially EBITDA by

of long-term algorithm of nearly our of percent combination sales. retirement with also cash million results over We nearly to We capital as XX% of $XXX XX% quarter, free year. strong market repurchases. of of generated the In in these net combining XXX loan sales working net excellent flow of earnings the bond achieved basis point a operating debt since quarter, term the we double the through million start $XX improvement in and over a paid a down open by

months. over cash of to down loan strong the $XXX another million months pay flows five of year the the and us this paid also we fiscal $XXX million over term Our down enabled debt million in $XX in previous payment, have first Including four in of January. the

fixed average great shape. until of remains with XXXX. Our meaningful debt debt of maturities weighted With and structure no around a capital in XX% cost X.XX

a savings off $X.X quarter to also momentum solid million. of start Project in with the is

each rate in plans optimization, these $XX transformation. gross the savings million generating efforts million our Our roughly enabled benefits results of throughout our sourcing to We we fiscal on track benefit of million strategic and segments. by of margin the $XX benefits those run anticipate savings million efforts digital rest are XX% previously as savings program focused those of remainder on through savings to $XXX XXXX. in mentioned, network impact to our P&L. with the is and The recognized $XX SG&A of deliver the will And to impacting expect

Working are inventory, Bolstering over our improvement across off improvements a with million of receivables management. this $XX momentum efforts and capital to payables quarter. project generating fast start also

over over program, We continue initiatives flow the deliver further to working cash our the expect of supporting life efforts. capital to $XXX free in improvements million our

our of the I finally, additional outlook like our provide quarter And year. color remainder on and for would the to second

line top by lower from to we with in reported expect actions, volumes organic the of offset reported low-single-digits. growth benefitting to revenue continue partially second low our to pricing flat the expect We quarter basis, mid-single-digits. in On a

actions While and with year our points gross project goods improve will the pricing previously the savings impact costs, benefit by of from points total inventory of cost basis continue negative momentum higher built expected quarter. to XXX both XXX to from basis prior should to margins gross margin reflect our at

a on levels investment sales year We roughly expect prior to flat A&P SG&A with basis. a begin as quarter of percent the and in consistent dollar

and to expect million. by softness driven Interest partially the category debt in up as million finally, impact $X guided sales line and as quarter. rates, to on by the remain rates we track higher in Despite the expense at pricing outstanding approximately quarter's to offset And volumes and deliver interest to by the still November. average $X headwinds led year. million million be year, progress top recovering we pretax current expected is $XX from by full-year currency in net growth We low-single-digit the to QX, forecast we $X throughout earnings lower prior organic

to in XXX $XX a improved impacts pretax $XX top expected gross line and of points currency year-over-year. U.S. basis management seen to are weakening and now full-year the We've mix points number our and expect margins of a Pricing, project of of on momentum basis earnings. relative dollar result also million million exposures on the XXX negative savings to

the at cost of outlook million with midpoint $X basis. EBITDA of P&L, our in share of million the adjusted adjusted which the per currency Combined on earnings $XXX represent $XXX a $X.XX, are range to neutral we the of continued rest in of to growth X% and both excess down for reaffirming management

back turn the closing Mark Now, I'd like over for remarks. to call to

Mark LaVigne

a will capital in delivered delivering strong working John. and in momentum savings achieve program Project the rate to and $XXX confident $XXX first million remain We million over improvement. Thanks, $XX is we savings, run quarter. already million

long-term to and our customers projects execute for position and our deliver while driving ability consumers, digital Energizer and momentum value. shareholder transformation delivering like financial Our also algorithm our to

call will the that, questions. for open With I

Operator

Thank you.

Please go session. begin will be now question We ahead. with [Operator will Lieberman Barclays. Instructions] from the Lauren And question-and-answer first

Lauren Lieberman

Good Thanks. morning. Great.

Mark LaVigne

Good morning.

Lauren Lieberman

Just -- I mean, something I've good morning. first off,

So, FX less this the of but full-year, I've to from a already headwind year. the people the morning was holding a question just gotten few times being on

decision less FX just a follow-ups, the curious bad there given interesting range to that So you if and wouldn't improvement have comment on why an and is have -- been I could more one? right? Just

John Drabik

Sure.

FX just the Let to treatment. Lauren specifically me talk

actually into coming the currencies are that we those pretty also us the when the largest for had the position, as the turned over move because a So year, of Those offset aren't line last most flow going pound. the bottom and our top so the that months, much, significant couple the line euro hedge hedge in were reverses. on benefits you're through seeing to

a So on take line positions, those some we and as as so it's through. into the little million that talked me average to, to $X to we only while benefit going come $X say, And for originally. know, versus getting of expected downside incremental we about, let the these bottom you we're to benefits million of

$X to for picking $X to significant we're year. so So change million, overall only the a not million outlook our up

Lauren Lieberman

just the the question call, great. right, during then gross All just -- gotten I've is Okay. gross And commentary. the another margin margin

like almost bit a model maybe at it have what the if in is my second XQ I call quarter. for expansion let's least half For

just if just quarter build? this but too? know wanted well on that margin the ahead was expectations, related know XQ we you talking gross about if timing could anything on comment I So to are of outlook

John Drabik

smaller partially it's one last mix expect points to Auto Well, also to than we year. more I XXX to Yes. so be better our mean, Battery. you points quarters, going XQ, basis be It's impact, XXX than basis get of

expecting to I second we the So XXX XXX will total then quarter. still basis improvement year, of the points the to as think a continue improvement. flow And seeing throughout points into that we've been go lot of basis we're

expect in QX a pretty and good good So pretty to we improvement then full-year place. in improvement be

Lauren Lieberman

share [Technical on just well. Okay, of great. Difficulty] any the And then volume specified reads which the you there discuss in be you the inventory expected? up shaping how destocking that as just effectively you know elasticity? How and would market commentary were I kind versus might seeing elasticity But versus good, what Thanks. that's guess exits, but on have you is market? I performance would

Mark LaVigne

with for we But unanticipated and start well we really that how in -- development we're and season. through with worked of tightly our on Batteries off I way up up were was our really the to Batteries elasticity Auto managed to category. And Lauren, we're retailers one our line Yes, largely performed solid on holiday expectations. with inventory able so expectations. I Care one, as X% our the the ahead your the to of in point is say dealt that categories the think year. a that And outperforming almost X% gain share, obviously, would

to So elasticity we're from margin with as probably in and cash able I would down pay healthy position, our then debt. indicated. We feel say ahead strong John both would free trending we're historical better mentioned, standpoint flow are on analysis a we're like than really and have

to we enough recognize the good get able So the haven't one good our needed a outlook for to to. good but in us start we year made and we're yet, be certainly off reaffirm and that to off to start, quarter

Lauren Lieberman

Okay. All on. I'll Thanks much. so right. it pass

Operator

from The go your with Securities. Please will ahead. proceed. Perhaps you're your line open. question end. next Bill, be Truist Chappell Bill muted on is Please

Bill Chappell

you me? hear Can

Mark LaVigne

There Hey, we Bill. go.

Bill Chappell

into Thanks. reductions retail November? this expect inventory I at were expectations? kind they given of a year? expect with you're mean, the Good went to the rest trying makeup had off Battery by -- -- so plan some guess, that of the you season? with Was out is to for in line I in all, guidance do quarter. the understand cushion Or how taking the you it's in that that of, you you just is baked and kind just morning. did when the that And deep Hey sales surprise during the

Mark LaVigne

of things John couple question So I on I will tag and a maybe your there's different separately. in think team and

That December we question, up decline low-single-digit most into low-single-digit is have with mid-single-digit inventory the entirely the a first in explained ended related dealt decline the November, the retailers in is towards December quarter. of think end the We October, way of dealt inventory. your decline. got coming the Really, with part we I as prominently holiday the season. entirely in decline, by retailers change expected in to way the mid-single-digit

revert, I historical are I say way was would are starting we call retailers well said below that averages. the to there are think the in some see it we that

January, soon to of to start were more started and we on see not back as extreme that levels. And those so that for retailers to the get reverse side but normalized that, to as into got we yet closer to

to their they've to of terms just as the been the trended change, it more range, over of In down low to abrupt a the that end where for we basis. work course expect of the historical retailers year them but that normalized wasn't really on an back

in as different change assuming we seeing are particularly it cases, a certainly see We're we So a into did that. already December. we we some saw but got --

scanner and results. related, of And the between through little different. think versus decompose can question, data that John as your walk difference in pieces different also you there's that's I in what's that, a think because part a I bit of but our

John Drabik

in changes obviously what Yes, but -- incremental. was little a outlook, are Right. lot bit our the a of there were of

have pricing in reported actions what was in the in actual that impact talked definitely unit holiday it margin saw to and And The outlook an our move that that our quarter, impact. in accretive our we of this but And margin top make year response the the to our was and our difference was definitely then it business, management So group. low had that line. we current in some on margins, volumes, outlook. lower to did was what I exiting had between results, the about think battery scanner of an was shift part right the orders

more bit saw. And then I we think little also what a of

saw channels Non-track that. were You channels actually strong. track than very performed lower

So as that well drag was on our line. top a

Bill Chappell

Care. a just on follow-up and Yes, then it. Auto Got

either your had we've upcoming been I of kind you've mean, or this the Just seems in business, of four, season, had normal it five have owned years year, the never I we've understanding weather for do a COVID with had to you so expectations the you COVID? normal looking or year? are How we mean, Do it normal, is year? this -- are weather at a And a we expect easy in what just expect comps? we've

Mark LaVigne

the outlook year, provided. that in we're Well, from into built and overall organic care the in we then growth organic expect both expecting growth is auto going batteries, to we which and

bit go little out year, of than remember Pro. what A/C been you year bad there's to be enough would every We plays certainly for we modeled followed as we to sort the when right, previous You're the when But a that us year expected. year particularly into a differently normalized long demand. weather and consider

so extreme cold. extreme not not it's heat, And an it's

growth are standpoint, terms to from but the what forward. you're and volumes be expect sort that our with in day you kind you're growth basis year. organic to do moderate through carry as as that Pricing the call, we and volume pick category be is of down, a the move So the work you point is organic in of by expectations up batteries get that's fiscal progress an from we normalized going going way you really volumes consistent to forward going flat through on time of then going to at to QX, to

Bill Chappell

much. so Thanks it. Got

Mark LaVigne

Thanks, Bill.

John Drabik

Bill. Thanks,

Operator

Goldman question Please is from from go next Jason The ahead. English Sachs.

Jason English

good morning, folks. Hey,

Mark LaVigne

Good morning, Jason.

John Drabik

morning. Good

Jason English

couple A of quick questions.

this little orders. on more detail timing Can holiday don't a on provide I that? understand you First,

Mark LaVigne

for noted was that a part that separate retailers into to were the That inventory holiday of what least and piece in at season QX. destocking in elevated P&L. on provided we declines item QX. related December. terms was QX orders that went of was call. into We incremental known forward the that our pull Jason, QX, we provided previous recall, The You is inventory a outlook impact slightly we some caused as we the outlook, about levels. were as got was the the low-single-digit as we There in They to talked on from on going into

Jason English

Yes, yes. I that. got

Okay. And decline, drag out not then there? volume Why seeing it your as you margin. more are a yet looking this at you're gross lot a calling bridge, is deleverage not gross on substantial margin of

John Drabik

attacking think costs we're I the Look, board. across

that. lot So going project really after you see is momentum of a

had impact, we some seen that last -- we've have We but year. also

it's pretty in and I So overall. this a good year through think spot into we're flowed

Jason English

pre-COVID it like your Yet you the looking sounds as both level longer above still gents, In in firm we levels. than much Why lower? volume reset we And to other and for continued wouldn't headwind Okay. now a to year you're shouldn't the volumes suggest? guidance progresses. consumption categories words, for highlighting biometrically why expect expect from came a your value remain are perspective

Mark LaVigne

Jason. Well, perform a categories we're the I way, really think seeing healthy in

we've get those one, got was end trends this expect active think category we impacting in on have day, you I through holiday batteries really, just volume consumer and think as to to continue it at we they we the moderate year behavior. and year an from general a healthy as obviously But this had category that them very as are the market. that's we did behavior, see through into but consumers, expect. essential you're shop going of pricing particular trends showed impact negative quarters. an to as the I consumer the I trend Last the mean, to settle pricing quarter, standpoint in we has a macro

impacts mention at bit your because from of you we year, get Jason, year, of this this have overall to of work And year, category last mitigating through having COVID, the time little you to this were dynamics. going a demand not the still through some also elevated as way as comps COVID you're the fiscal

Jason English

Okay, okay. Thank you.

Operator

be Thank from will with you. Markets. The Modi RBC Capital go next ahead. question Nik Please

Nik Modi

morning, batteries go about market on Good inventories. demand but Yes, end you levels hoping more worried thank not battery I'm can the you. and everyone. for was into. inventories, inventory I necessarily comment

about that So that Have I'm present the road? guys think the how any about potential you guide kind down in just of terms curious and of risk would thought of you kind that?

Mark LaVigne

consumer Are the in you levels terms talking of inventory Nik?

Nik Modi

the I’m of on Yes, more the relates and like controllers demand I'm a might no and talking talking hold to inventories retailers down like items. they remotes -- because about back things TV for it across on feel are board. But more skinning more that obviously those that, discretionary some there's as lot I end market still

the that's of So kind question where from. is coming

painter batteries inventory, things it's inventories not into. go So of retailer it's more that

Mark LaVigne

the is Well, that of homes certainly deal pandemic drive those XX% home already installed at through devices batteries. of in within do were than more consumers Those base There homes consumers usage a pull in controllers worked be base terms the way great devices devices home. to think thing their saw they your that that consumers Understood. primary categories. an just of pandemic, you going take the of there. going our as gaming What's installed great them. the consumption the consumer their existing the expands have our And are really is forward I have is devices. of they of purchasing in drive ample still are to devices stuck during and as of Nik you buy When one devices, to

is battery but the seeing percentage consistently, want or as see you devices online. What one, roughly roll batteries. some new make devices convert we primary same devices I of say sure in take usage is would those into they'll of new And in devices to devices what come terms off we're onboard, that

batteries. consumers' devices, there's and homes they And frequency they in as them So those utilize a more batteries. for with the they then more, increases constant change consume then engage out as replenishment

still household would continue. moderate. growth to that We to the would per expect batteries expect just of is up. consumption We The

also larger. pandemic base. out back said category it growth revert will the from the we rate Coming of pre-pandemic, standpoint, a times but think is was a I of to where a is larger number it

categories been universe device base as So it's a standpoint, say as long from in an installed healthy standpoint, I time. from would a

Nik Modi

you. pass Thank I'll it on. helpful. Very

Operator

with you. will from Teixeira JPMorgan. ahead. be Please next The Thank Andrea question go

Andrea Teixeira

a the Thank -- on mostly largest your you. on a normalized question on partner? this normalized Good you the e-commerce at at everyone. basis? following morning, out. so that's the mostly that up Was that called if sellout any I point? inventory have -- performance And on inventory the clarification Or channels is it drawdown non-tracked

another And question probably are distribution, any lot you're and share you lot or of lapping on of year. a see changes you potential that you gained a that do this COVID, lapping to and understanding, during

So I wonder if what's happening there from a distribution standpoint? Thank you.

John Drabik

first but Andrea, mostly there. it point, impacted the on the was sellout, probably performance both

Mark LaVigne

And to to of not particularly think you're ultimate lose from did distribution little the I were of I share a during think distribution a even financials were mean, Any we've a okay mentioned share losses of but if for us. pandemic. outlook in an gain the run of moderate, gains, side, gains times distribution we bit the provided, were on if us, of number that's the share long is objective into built have business, to U.S. for is been if share, the able I we trade-off a the lot right. a improve standpoint we our or share we of We've we very had

same gross margin financials far is be in. a more we've at hold while doing terms place it which able to driving is to on preserving we're focused the time, But and focused of improving not So that great on thus the it. that improvement. something been in We're share

Andrea Teixeira

just fine correctly? that on out on that the And a clarification. in parse of I And if On for out quarters? one of if bridge then the getting that a you that -- believe, it of other quarter, that's then kind impact No, understood the what's we can the change few I the, something or point contracts, is commentary of fair. next

John Drabik

low Well, so no the it on very was side. OEM battery margin or business,

be -- to our in visible won't you than other really it you So won't financials. very

Andrea Teixeira

on are compliance? the you not Right,

John Drabik

through will of that continue pace. It sort at

Andrea Teixeira

Alright, Okay. you. thank

Operator

The from Please will from be ahead. next Kevin Jefferies. go question Grundy

Kevin Grundy

is bit still squarely is sort range. Is trying the bit worse? of little like of is you better, quarter the So back guidance gets it on a everyone. but and toward the the question first on It midpoint quarter little I'm you tone morning, sounds the to got the call to currency of better, the trying range. today. midpoint the good little kind but bit understand to just a of based currency on it bit range? maybe sort versus you The kind of quarter your from of just market the full-year environment? Are point I'm a reconcile Hey, the way the Are the follow-up the toward your you're perspective the range? a within high the digesting and of data. guys you what the know have then on I the And volatility understanding relative guidance? a digesting you How to of, just, are Nielsen

Mark LaVigne

off walked get through I've and better as be we're something Kevin, I'll kind maybe into to our can then we've said But intended certainly outlook. it the kick to into the that John get the probably repeating we're that start. working QX. of retailers great we is I from have we're did way We and perspective a QX. to issue but risk that through I'll Yes, earlier, tone already see specifics as starting anticipated performing off than are mean through inventory with categories our reverse we

start a going program. improvement $XXX million $XX million off Working trended pricing, of but plans Margins our capital of which is able sight of off a the we're over million savings. million We've to $XX and great really of also to the advance start. project to great fast is line that to with and work to have momentum great have to of been ahead program on with $XXX the course

we think, year, but the I into well. then gives for also great foundation that, the head confidence as of of All us a great it rest ‘XX lays as

-- think the quarter. about in So way through this working to do. certainly development like space, we I year, inventory our said work I lot The but of to we're only unanticipated start that the feel great a was the retail

specifics anything in the John, outlook? certain and

John Drabik

and you what FX at calling also would so I way thing a that into in a is little on we're the half we of and margin are back had we're only say energy the our surcharges little I'd outlook. Mark, the so for well of if seeing as raw there's from bit Kevin, we're as what headwinds our full-year, the add, The a higher, look hit bit slight originally seeing. benefit you gross some the going material some costs of

calling and had, but XXX push little basis points not we much XXX points a bit that's if up, we're as not for still as So basis the it here FX just to probably headwind. was

Kevin Grundy

helpful. FX, your that because of sort retailer One dynamic was I follow-up, destocking? in the also some of the data that earlier, is given we side, and commentary the closely gap tracking disappointment. think Should expect start the business I the would of Lauren's a think see U.S. sitting together some should and I transactional That's then very, in the was seasonal what the wide. around sort Nielsen agree feel with much But very some we driving that commentary of tying just around probably Okay. now it of your Nielsen, commentary you obviously point on more comfortable, to

seeing So reasonably now. your I'm you just commentary they are where connect comfortable trying to with with

sort pass on. is to of Nielsen on retail of be relying it forward, the investors again more closely that So see going we you. terms Thank then say and that much what should takeaway I'll in

John Drabik

international I is is captured and as And other other certainly well as I recover, are our the that part it's bit, little a I business, the would a on-track closely think negatively which track caution as the of inventory Kevin, to results not business. expect financial one times piece our levels question. But together. more would frequently is because you Nielsen, there we've Yes, impact mean, things positively which in our scanner Both that data. channels and mentioned. great

but patterns be ordering So say, business, that untracked will yes, remains the alignment, I there would our also to other levels, the which the closely inventory pieces closer the both recover become of sort of seen as financials. overall of, of, quarters, sort impact then given, is how

Kevin Grundy

luck. Okay. Understood. time and for Thanks good the

John Drabik

Kevin. Thanks,

Operator

ahead. go Please Rob Ottenstein is next Evercore. from the And question with

Rob Ottenstein

Are you of little the from couple savings, particular Great. on the going you're are give talking very most more savings operations, plan those of systems net So maybe the first bit Can much. involved? line? they opening in the functions to maybe question. And Thank about? the to a what bottom of follow-ups importantly, us reinvestment you that's some color A improvements commentary. fall are

could And you debt us then confidence possibly more programs other to down just Thank and desire if execute detail you. and the What was pay gives them? to working working give manage you related able that, the on on given more right, capital that I to programs everybody's capital. detail, you're specific wondering

John Drabik

in a There's lot there, Rob.

we Let away it cover. me of start to chip in at kind we can maybe places didn't that direct us and

in capital details $XX sort of Let QX, implement the Cost savings benefits I'll -- just you overall to call savings. million already $X about me $XX of achieved remind $XXX million the the working the of is others on of million roughly in the million by already program XX% and program, QX. We to XXXX. end of

expect bottom margin, We be gross roughly ’XX. fiscal to that to certainly to ahead careful that program. drop line. intention $XX balance of ‘XX split the though to saying SG&A. I ourselves savings provide because the to and to It's the I don't be in XX% from million XX% guidance prematurely. for ’XX And the be get want going would into is And in million want achieved $XX then of

enterprise this as the go back earnings ’XX. certainly be to able But and program the intention ‘XX to drive the margins, as power to into of through we program incremental that's call get is of earnings we improve and

Mark LaVigne

in working And of, details kind the of maybe capital, the that. John,

John Drabik

very that in to to add this really million that's some that of And $XX $XX on drop. those in And drive comments, some us margin only question. going volumes is million, an margin earlier to The the of my that's I’d is Mark to numbers thing much gross came offsetting those helping those Yes. year. inefficiencies gross down

and inventory do outside this On continue even the prioritized working that we've capital, to program. Robert, really

Just we continue taken inventory to million AP, after be working high close were focus. quarter, AR go out and over capital, last to our the it of a we've to able $XXX will

the a was obviously of quarter for very see net as percentage close go you'll this a that'll really half from we're give project throughout and flow think free us us XX% some the more normalization is momentum think the full-year calling back like year. the to for the XX% this good cash XX% opportunity I I sales in year, we and fund to to of as

So rest year. and the free it positive of the number cash to for be us throughout we flow really expect is quarter really a strong this

number allocation. still for as debt pay down, for far us capital one priority As

$XXX the As we in paid the remarks, we about over five last months. almost talk prepared million

throughout as we'll we focus something year. on go So to continue the

Rob Ottenstein

kind had because chain? objectives your transaction? of Have approved and to capital with kind disclosed working every there's your of you two supply sides Alright,

John Drabik

some unilateral in some certainly take there's we're Understood, also and mean, to things a your I counterparties but of through, confidence with which just better certainly have changes in it's we taken mean, implement. confidence working and drive your ability working have our of management, in actions counterparty working are ability, have can are our sort internal to these capital But I we trying of improve Rob. capital that. to we then do the to

Rob Ottenstein

Terrific. Thank very much. you

Mark LaVigne

Thanks, Robert.

John Drabik

Robert. Thanks,

Operator

The with ahead. Reuter William of next Bank from go Please is America. question

Unidentified Participant

our This questions. [Mary] on Thanks Hi. Bill. for for (ph) taking is

in some So quarter, you you down label? first, share on the is I private seeing know of of but the signs touched are any trade value increase to

Mark LaVigne

flat. label, Private the battery particularly category not. are basically We in is

periods of label now staying some private but the just we've as thus seeing consistently markets, flat seen in increases far. in reporting You're international is

Unidentified Participant

if reduction I your debt for if know reduction your expectation that is for And focus, the but potential there share have you one? could M&A? you for year it. Got primary And is any

Mark LaVigne

I mean, in certainly priorities think M&A down, the emphasis I very with stated of business. now point difficult pay to our on absolutes of side be I I be M&A a speak and think, consideration paying our for the line. of would with something mean, secondary but right stated would debt, our down it's priority M&A, debt like with

John Drabik

down And pay around beginning looking growth. through both pay to and we're that's the and of a year half debt earnings a the from down turn

Unidentified Participant

very Thank Great. you much.

Mark LaVigne

Thanks.

Operator

ahead. next Casella Please question Carla from from The JPMorgan. is go

Carla Casella

-- in just each debt of loan? of of Hi, thank term And you the versus the buybacks? paydown much which was the how you. bought quarters that say Did you bonds

John Drabik

half Yes. when half and In we the loan it term versus And all first quarter, bonds paid was term to then loan. down, was about it start quarter. second

Carla Casella

quarter, -- spring, any great. this in think dictated we was with support? change if that and of some there next of And can Okay, your into Or the cadence -- that the brand go in set about change? of mentioned in what's month Is is Meaning should differences you there you advance? And brand surprise I'm a holiday, and then support. you is by any summer kind wondering on is as retailer? going were it something timing

John Drabik

about you wasn't Last it this No, surprise. a into we why some of shifting that's quarter, had the holiday talked higher. it saw season,

I be quarters think because first got quarter, third care. summer the biggest you've then for and got battery in, for are our auto and going general, the to quarter you've the holiday

you'll you'll and in full-year, to lowest as fourth. in about third expect also but lower to the you're be first X% would the we talked second the X% quarter, be the the and in for going I spike So

Carla Casella

the cost, Can a you comments could made material how freight. when is is that Okay, just mentioned you are? little because you you just called locked some great. come And you the inflationary in versus where the what we cost a about still of it and give then And color more ocean much see some and more there? talk about you've you down can clarity, cost give markets on any and should

John Drabik

cost and we've locked for Well, experienced. year that's so in we're positions our already inventory and on XX% the total about hand what

the a we coming a us What headwinds the in the metals really of good on little side. in battery bit at So down pretty of for seeing is some are what's of we're rest shape for year. knowing these

So plants, which impacts costs some metals. as well conversion zinc, lithium, seeing as for energy also of those we're energy, our own the

headwind we're half. for building this bit So all next round we've for of a moderate. the a But back of free inventory seen as that's ocean of us

outlook. anticipated had we of of kind that some our Now in

And but then So not calling, to in positive. distribution, did than also upside it's North the lower in warehousing had call and it's still we was big that and quarter, bit we was a which some I a were anticipated. little mostly America, outperformance what originally first

positive a there. So

Carla Casella

That's Thanks. Okay. great.

Operator

from Hale Holden next Barclays. from The question Please Instructions] [Operator is go ahead.

Hale Holden

ones. quick had I Good just morning. two

factoring if of could called like and that in looked script you what an of sort of attractive And your on headwinds source cash? is the us higher a it changes You negative from rates. out give wondering whether factoring if view was I sense

John Drabik

it, a kind rate, looking there's that's SG&A. we so that is And out use the because can We We'll are of at might that Yes, pro. called less. it I good also through we extent it to we question. think variable to that optimize goes be whether use and it factoring look

for are multiple but it that ones evaluating. something have us, is find try to we're the we'll that the We programs, best

Hale Holden

Great.

bought you need The to. which wait question back tell was you you the I bonds me the queue for could wondering us second if if can I was, in quarter. fourth

John Drabik

one, you with get you that I Let follow-up details. on me the

Hale Holden

much. very you Thank Great.

John Drabik

Thanks, Hale.

Operator

from question Genuity. Brian Please is next Canaccord McNamara from The go ahead.

Brian McNamara

guys. Thanks morning, for the taking good question. Hey,

Mark LaVigne

Good morning.

Brian McNamara

levels. on inventory a I horse hate you beat the dead

which opinion curious thereof the I'm guys mentioned batteries? pantry at or curious are inventories shape or of auto inventory You in businesses? care moment, Thank business your consumer lack at both terms then stocking the And in secondly, loading be better retailers channel you. I'd in of

Mark LaVigne

revisit No, point. we're an obviously to happy important it’s this

I think continue a see to buying immediate consumer from standpoint, we for consumers needs.

individual for most consumers. seeing migrating and that consumer sizes upon to larger are we anticipate are that do pack we something They a a pack the immediate buying in to need. we're are means seeing, overall percentage But are research are consumers very value consumer standpoint. seeing depending different of high that nor from either pantries or the loaded sizes So not we smaller

when November, for Retailer December, you quarter batteries. standpoint, October, go critical a it's

time shift inventory that a You levels during see to bit tend period. quite

inventory builds the We are work it season we QX season, and will as that so tend QX quarters auto now the peak care, for spring our entering which to way big for business. be into be

that's the in season. be was main auto a because side, going we're recovery, which on recovery into But battery a would going just I you're that to care, the impact to in also see you peak also QX. but seeing we're say So heading saw

Brian McNamara

you. Thank

Operator

to would Ladies like session. remarks. conference and gentlemen, any the Mark over this question-and-answer to back turn concludes I LaVigne for our closing

Mark LaVigne

interest the again I a and once hope day. everyone ongoing has Energizer. joining great call in Thanks for

Operator

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

You now may disconnect.

Energizer (ENR) 6 Feb 232023 Q1 Earnings call transcript