Earnings call transcript Q2 2023

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Operator

Good morning. My name is Dave, and I will be your conference operator today. At this time, I would like to welcome everyone to Energizer's Second Quarter Fiscal Year 2023 Conference Call. After the speaker's remarks, there will be a question-and-answer session.

As a reminder, this call is being recorded.

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

You may begin your conference.

Jon Poldan

welcome and Conference morning, to Quarter Second Good Fiscal Call. Energizer's XXXX

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

matters. financial These statements forward-looking are During results the may these performance, the do undertake from future current among business will cause statements. materially other subject and not management's call, on to about and are to statements statements. company's based make actual and these uncertainties, update differ We we expectations to risks which forward-looking

to results differ we actual cause materially in these are could that with factors file statements reports SEC. included the from Other

We reconciliation A our measures release financial available which also of comparable to shown is non-GAAP issued in our refer GAAP non-GAAP to press our today, is measures measures. presentation earlier website. financial on

Information is be categories the information compete we analysis to call estimates we this battery categories The and internal where share relates and market concerning and discussed includes and on data from both to Energizer's believe data, industry retail our category brick-and-mortar e-commerce reasonable. based on estimated sales.

all year to the relate and Unless year in and prior to XXXX. pertain comments quarter noted, regarding the year same otherwise comparisons to Energizer's all fiscal fiscal period

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

Mark LaVigne

Jon. to second you, our quarter earnings Thank morning, call. everyone, Good welcome and

generation priorities: across We improving Battery demonstrate focus generating remain sales few and on pay XXXX gross delivered debt. and results flow growth, healthy gross our we margins Care, performance We while laser-focused maintaining restore organic margins, as Our our fiscal across free a another by terrific entered cash reestablish operating on our second down both while margin. team. Auto with portfolio; growth quarter key

organic areas also top X.X%. of quarter, significant line We this each delivering of have progress against while these made growth

are resilient in difficult even environment. a categories Our

consumers on portfolio Our up mind When a are. iconic broad increases, which year, X.X% brands last last in batteries, category In that and X.X% against price meet category is is is the of allow global cycling comparison March. and down keep volume year-over-year basis. occurred us where the considering they to through products value

pricing, In addition impacts fuel as to food, categories, also cautiously utilities. expected critical elasticity and are from prioritizing shopping consumers and such

for expect Batteries From perspective, of half and the essential to demand back larger for usage pandemic the long-term our and volume than consumers, the device remains resilient, a pricing. in an by are a both value, year. has volume in and and increased category we to product been as result, driven ownership, trends products improve the prior meaningfully

March, X% XX ending example, For in is up with category US, as the in the pre-pandemic over to volumes levels. weeks up compared almost XX% value

Our the as and our share selecting consumers leading X.X markets, in as Germany performance within category points brands, are Canada. behind we remains performance globally as US, such robust the strong, gained

demand, category have larger with business, results. have driven, of car pricing pre-pandemic resulted along category miles In of park, started our positive with with the have season The and in These size Care in solid we levels. peak drivers nearly combined factors, trends. age XX% value underlying Auto the all than

more the as declines. than quarter, offset increases price grew X.X%, the During volume category

of by remainder quarter the nearly We We growth of well offset in year, the Care organic declines. led delivered X%, the and year on by volume pricing, growth ago top quarter. expect XX% of performed continued value growth in for the Auto

America Our International. and across growth and was distribution by driven a of expanded pricing North combination both

in job market. business, innovation category-leading improving the to terrific Our our teams Care margins have bringing Auto while in a done also

products. portfolio appearance launched ceramics of refrigerant line a and expanded include products this our within year line New an

ahead, look in will environment both to we of our is shopping and overall categories. close we behaviors the how impacting consumers stay their current As

solutions, to best-in-class meet portfolio, shop, broad make, and are the the we our their sizes choose they positioned distribution where and connect pack brands with influence expansive they needs. including that With they shopper-based the consumers choices and

see Finally, Driven progress gross as the momentum, basis our pricing, points results this prior you last year's today, made targeted and of the pricing benefits adjusted can from of profitability versus XXX expanded have margins our the we broad-based year. restoring business. project significant by year's

and to are close pricing progress, our as levels, and there to historical our margin this gap. our management, approach we that remains the project are While is in with impact we work confident below momentum profile do encouraged to revenue both with more of ability

off we actions are of business, will momentum, market optimize centers create network. our designed we improve of kicked that These the all manufacturing while to route redesign and operational portfolio. When the excellence product our packaging project resiliency across significant and our our highlighted savings of to driving

a include reduce costs, improving to our engineering reduce as or to to team on costs efficacy, our well focus maintaining while Additional our as efforts the securing plant. supply sources of of leverage proximity product areas closer value approaches new value creation including procurement of to and

activities, also the savings to optimize shipment including such ocean from costs. as our driving transformation, investments are improved data analytics, we in and We which our predictive making are digital enable modeling

a is has a program as with year. capital growth, executing working start $XX are Year-to-date, capital gross contributed relative of the improvement to and million combination great sales. in free to of margin savings The teams off to significantly organic and percentage excellence. flow enabled sales behind us working improve reduction cash reductions a prior the and The to these meaningful generated efforts, in the program

in generated of XX% cash Through excess of sales. first net free flow have of almost we quarters, $XXX two the million

the navigate million solid second down quarter. the year. to ability $XXX paid as we the $XXX And of admittedly confident in ahead, actions we over first analytics the That over half and stems opportunities uncertain taken our the in operational couple an including more are improve mitigate we leverage We environment. delivered debt dynamic half from macro during transformational enterprise risks. have a to of environment. from digital Energizer past million These visibility of capture with in both, a the confidence years, a in much across and agile to savings of first data are efforts, momentum We positioning our responsible look have combined and in to the year, organization transformation as and

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

John Drabik

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

X.X%. XXX partially basis points margin with actions, pricing benefit driven reported increased up to exiting Adjusted gross organic costs. quarter, increased XX.X%, savings the Momentum generated For by net input lower-margin Project were sales offset business, the flat of battery and revenue by from

to Adjusted and million, stock $X.X tied factoring roughly higher our fees the reflecting by A&P compensation percent seasonality by with interest in SG&A primarily X.X%, as Project driven Momentum line prior the decreased offset was and a of amortization business and rates. partially savings currency, rising of favorable sales year.

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

paid XXX in X.X months nearly a first over the we down earnings a flow of net operating the debt. working $XXX turn the of or also quarter We excellent Through We $XXX basis adjusted strong, have with improvement year, of year. over times, X.X million combining of of six a achieved of year-over-year. we with free approximately net the EBITDA of by million these generated capital XX% cash since sales. results the quarter, ended debt the reduction to start In point

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

$XXX value show SG&A continue on of We by with and improvements program million to transformation. Momentum quarter. digital enabled as gross remainder the track sourcing remains And of the those We efforts, recognized value-added in to $XX $XX.X of of optimization, million P&L. million million run benefit the in XX% savings, engineering impacting Project are progress network rest we generated savings roughly $XX to we and through fiscal the additional The throughout an remainder with to deliver anticipate the on focused benefits margin strategic continued savings solid to $XX our XXXX. rate of savings million

to year. free inclusive receivables $XX support management, half initiatives improve improvement million another of resulting inventory payables of of critical Project built Momentum our This reduction in capital efforts and in inventory have our aspect cash to incremental a the of capital working flow. roughly first is Working network across changes. effort the is bolstered

over deliver We improvements continue working the life the $XXX program. of our million in expect to over to initiatives capital

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

organic of to moderation the Reported X% X%, expect over the volume in are the declines. continued and X% a by back growth X% be We to year driven of of of half benefits revenue same pricing, revenues projected the to period.

to mix will gross recently as quarter and completed in be have expect product roughly quarter quarter-over-quarter. flat second be consistent margins input to our the costs We third stabilized relatively

gross year-over-year. both savings to tailwinds, We cost expansion also Momentum specifically Project gross margins freight, expect fourth meaningfully input from incremental benefit significant quarter and driving margin

expect invest A&P year continue of with for will full in sales. We of expectation spending year slightly the to X% and a remainder prior of our net be the brands above to year levels of support roughly

a We flat expect prior that roughly on be year. basis to will SG&A relative dollar the

the rates, year. up debt average over by prior fourth finally, higher current in is of be headwinds rates to from year third and year modest in driven over at in of remainder the quarter, to outstanding earnings fiscal the expect a pickup expense offset XXXX, quarter. $X be lower expected the by impact partially currency year, neutral the million offset on the Interest interest by the the remainder And with to about we relative the

full track on We remain the guided year in as November. deliver to

$X management expect to savings in expected points XXX and cost Pricing, reaffirming to $X.XX. are adjusted for sales in basis of EBITDA result of the net continue with management single-digit still low for to Project XXX We million Momentum earnings gross the our to per full $XXX are to rest we growth the range improved outlook million margins year. organic the $XXX mix of Combined share and year-over-year. P&L, continued down adjusted of

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

Mark LaVigne

the delivered a shareholder of We value. am team's year. strong and I brands environment flow. and long-term look profitability our improved proud John. in our cash We continuing and half Thanks, of organic to exceptional growth execution generated first forward generate dynamic both to a

I will questions. that, the for open With call

Operator

go Please We first question ahead. Jefferies. [Operator The from will now Instructions] Grundy begin the Kevin question-and-answer session. comes with

Kevin Grundy

morning, Good Thanks. Great. everyone.

Mark LaVigne

morning, Good Kevin.

John Drabik

Good morning, Kevin.

Kevin Grundy

on just the growth It organic question, First half expecting like the sales to of X%. the year. X% back sounds in phasing of you're

coming maybe I from? or upside provided guidance have that's and of just a gains made to gross on And or your Just follow-up better and and some little little color the related, that international. whether volume phase in potential maybe Thanks. bit also whether specifically of margin. sort initially Mark, was on relative comment Maybe contemplated where a distribution sort breakdown you in where in pricing America the those bit expect little to you initial how into you you're you are the range, feeling more are that P&L. Also about on a North and of bit when a a a

Mark LaVigne

start contemplated US it it the expanded continue international of as in distribution phasing those I'll and of John as Auto second the Care reference, the the one. continued terms outlook in was existing a plan, an some to was of well distribution, in want in And November. roll for original and out some John, we turn markets Kevin, of growth with mean and provided bit that do little you were as the we to to expansion that in Hey, I our retailers with international the that one, over I'll

John Drabik

volumes in seems we Yes, going the our Kevin, the batteries in see half negative projection the really, quarters. in continued of growth carry in organic benefits slightly pricing that anticipate to to In growth. get Auto Care, organic But to slightly volume to mid-single-digit QX. for with to still positive P&L QX year, we back combine that and line declines half. X% to flat of back X% for will that both to pricing top in continue We're positive low the

Kevin Grundy

Got then quick guys. just very a it. And Thank follow-up. you,

On if margin the and gross outlook, this. I apologize I missed

you're basis think outlook I year, XXX the basis for so the points. up to prior up was XXX XXX points

kind you in gross pull you when now of all where terms pricing margin? of maybe cetera, so commodities, productivity, between the and overall Now just pieces are together et

would heard I bit to thought the then sequentially was on be phasing. quarter, to a commentary that it I the flat If sequentially was the with gross And close if just of flat little margin you. second guess, XQ correctly, I or that's cleanup down, a step and sort Thank gross just pass the case, step some a there I'll on imply that the on. year-over-year. quite down, margin, it Maybe then

Mark LaVigne

ahead, Yes. to talk called a out, we little it you Kevin, bit. did want about Go that

So when general, tremendous gross -- we've the and really look top with we us, made at progress in priority just start for I'll there. margin

accomplishment. basis really XXX a this up So good points quarter was

driven In quarter. the really we really costs cost zinc pricing As some that saw, input up input the were that driven it was saw lithium, you EMD, headwind were We headwind by momentum. and the offsetting still a of by batteries, in steel. and

with really first positive, in But that's margins, quarter expecting freight, Care, still at energy impacted that impacting and half And consistent Auto also those really had of businesses, third costs, that say you've silicone. flat. what the costs labor improvement the for negative, seen is ocean a as of market, stabilized, increased it which is you by seen be happened to in have R-XXXa, input product quarter. some some lot was year. the What I'd we've second which mentioned, over we've both us. refrigerant just conversion and the In but and completed we've We're cost seen roughly

now, That's right expect flowing and inventory the to material in fourth improvement we really quarter. see through

year, this expecting year. up in then We're last and big we than third the drop pretty off different saw So where the a bounce quarter a fourth. consistent in

a to So really you're finish fourth second going in to as we see out nice year. end going see up to spot you're third quarter quarter. similar the And then

Kevin Grundy

it. Got

I'll Thank hop in guys. the back Very Okay. Good luck. queue. good. you,

Mark LaVigne

Thanks, Kevin.

Operator

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

Bill Chappell

morning. Thanks. Good

Mark LaVigne

Bill. morning, Good

John Drabik

Bill. Hi,

Bill Chappell

I’ve they the got before of deloading work drive elasticity this remainder people new there's a volume how are money, same more to volumes. know packs question go Because Trying that should at would or on as it works value you're of on up. POS -- people have an think a one are you understand the exacerbated save drop if kind sticker volumes towards the hand, on shock and how to trying year? battery through I right just multi-packs actual I point, don't But batteries. after holidays, if buy and pantry seeing they

how that year. through of work So -- would and the remainder the

color seeing of kind consumer the trends any great. takeaway So, be around would you're

Mark LaVigne

Bill, I'll follow-up can interest, something start, it. you don't -- and on ask then we maybe a of if touch on can I

inflation depending category look we and this experiencing to at last the lot it at that up from started that in of April will all the think you I battery move But a time the the frame as pricing category, look exist the flow in driven level manufacturers pricing that to the March, market really of if and perspective, different globally, at because when be started is macro again when into may dynamics upon category. market. pricing a were

started hit You see the that to at elasticity time. impact

we is And at mid-single-digit range. roughly kind low where we your which digits in And you've so way now, to volume globally, worked started standpoint. back double from that just are of then a

latest down for the the four-week just in continue US, to trajectory that its example, volume expect is We data X%. in over

it's data. I four-week the X.X%, think latest

And consistent a from price seeing what which would with that prior trajectory so you're in manner we flow expect increases. is

has think holidays. work than been Do been is by particularly consumers, impact have exacerbated this price from appreciate, can you that prior different through portion you elasticity macro there's way a environment under executed that of once environment our the what we a as insight. Now, increases

So reacting in calendar cautiously. to more consumers QX, you started the see

which increases. that of category, Within to been in category they're gain able and sort carry the Energizer the performance we've the itself, prior battery our day. brands, pricing is taken the continuing value keep the brand, continuing the to price share to that preference great existed that's premium we've continuing with brand We're as to to

elasticity we're all last to macro spring. analyzing when would on consumer we place of kind achieve metrics pricing on So, a from we pressure track the a with put say, that we elasticity track deal the bit little I as the from an But standpoint, of in were environment.

Bill Chappell

opened And to where on could last of COVID it seemed with it. would tough Got I last has Omicron with well, this kind the I I time fair the just have up some up And guess, follow -- the volumes. in quarter think because environment as of it will a also kind of on Would on still you wrong. comparisons that got so, be summer? home that a but be as this amount year, and consumers to there was at comp year-over-year to was I we that, the changing impact consider

Mark LaVigne

a point. I Bill, No, that's think great

I looking years, last think over comp with three you're a period at dealing anytime multivariable you're situation. a the

demand growth COVID that increased had as certain you comp as drove periods. difficult well So periods, time in

inflation had just had tougher our across it now. store, you within not have the macro and You pricing, backdrop right increased category, a

one bit, worked account our anytime it. comparing think some QX, I more year variable. the To but period was to way prior than carryover you in that it's have take point, your likely diminishing there existed into you're been through a So, little as period-over-period, in likely we

impact So through work a come we think bit, -- way may our be little as be I will but of the there most from pricing.

Bill Chappell

Great. Thanks, so much.

Mark LaVigne

Bill. Thanks,

John Drabik

Thanks, Bill.

Operator

comes Teixeira ahead. go Please JPMorgan. question next with Andrea Our from

Andrea Teixeira

thank and and morning. you, everyone, good Thanks operator

just I question. to back coming Bill's So was

the batteries, down, particular I you and I overall remarks, the has quoted X.X%. what you also, Any believe, think think with up still in said X.X% I carrier prepared globally. volume happened

between does for I volumes, pricing get of for and and just into also comparison quarter as mix third comparison volumes thinking the like the comparison go takes auto tougher of easier for and the and believe the it's So the batteries puts get -- you care.

talk basis? if So of us can kind to a on like sequential that you on

RGM. seeing And we and the of more pretty and heard of then And we've from the premiumized and how that are What the and you. job to in kind regarding you're more go somewhere of sizes expecting? mix to on seeing? way year? planning to price so as great seeing believe in of the -- middle. end Thank terms price Can value going obviously, on conscious? much I consumers we packs through are the sweetening you that that, commentary are the we consumers related mix your that to you in done that a just -- packs talk And reported we've little you in everyone done bit a What far become --

Mark LaVigne

cover breakdown. of your the some part and then over haven't first say I'll it value to But the been movements drastic I for maybe Andrea, question of last what volume pack in there is would John turn sizes.

channel seeing depending some You retailer, shifting that's upon analyzing. you're which are occurring which

consumers they premium achieve to but would purchase trade to in perceived order with some at stay lower get pack again, to value, increase size, better tend terms of a the And to size say pack point a but stay brands. I consumers then continuing other price down still premium brands. will in

news to achieve want gets go our volume on The pack So your an have but the great premiumize individual people a really value? sizes they have that share and category. But Energizer, and level to they're John, to portfolio of broad brands, within point, continued them we up of wherever continue that value down to is the how meet seeking. the with into to also consumer category we to growth. trade

John Drabik

pricing. for to of specifically, used throughout half that calling then year going We with volumes slightly expect improving we see as volumes to And we're and in QX. the the batteries although, I back then Yeah, carryover in just to QX negative Andrea. benefits in are of positive mentioned, combine

XX. we're of kind growth And X%. declines to flat mid single to to all still us, of So to of low growth end the pricing we'll volume side, the expecting that top some see fiscal also, give in fair positive we're X% amount Auto way line the will have then Care then And expecting digit category. slightly see to through that a on

Andrea Teixeira

helpful. super is That

terms mix Just pricing price the the even of like getting of everyone, pricing obviously as mix, anniversary a timing – isn't starting follow-up something is the the better? mix getting happening the you're pretty price big that's rolling on then And that price to over in to increases.

quarter as of not but gives it that and thinking takes, can how kind you've function you roll back. to and of you So over puts that we from pick standpoint, volume of easy bridges up? I well the all a what how be tremendously should that margin the pricing, fourth appreciate and And should course, have a the Is and credit, we, take you the confidence will more of volume of comparison? done

Mark LaVigne

the in Andrea, flat we been what going you're John volume your QX then It's come to I we ultimately patterns off that question last our expect price new That embedded to -- anniversary base from back start the is seen back the work volume way value value out when historically increases. consistent and in think to March there. playing work as past. we've that, is in elasticity we converge, since increases to what's and price as is to initiated mentioned, happen the historical the with and see

volume QX. so to way to baseline start its work And you'll back see in its new

John Drabik

it continue to Yeah. the it, high. down will that is to that portion expect quarter. fourth the the be It still come mix declining that only to Obviously, this Andre, quarter. do XX% the add be tailwind not see I'd will with positive price going to in third quarter, of thing It's impact. in and And we

point, see finish pricing as out flip the So and a we to expect we Mark's volume year. to between

Andrea Teixeira

on. so it you Thank much. I'll pass Okay.

Operator

go Our Ottenstein Evercore. Please ahead. next Robert question with comes from

Robert Ottenstein

review consumer have your how guess, it if versus label has wondering deal Great. responded? how stand the wider, and gets cost the Thank increases Is given as I latter private thesis, played you or squeezed? possibly Rayovac out with. much. original kind work that very increases more giving you retailers ladder with Two as you of you've was I and acquisition, pricing a got pricing got could flexibility back to questions, to related. And please, you've

played So related, you And dynamics give of look trying has in of well? there is possibly helping kind like? then you that if out. an could e-commerce, just to competitive you. And us understand Thank there the how update Rayovac terms what as

Mark LaVigne

answer I is think the it's to question, yes, your Robert, short helping us deal. a great

in -- the better the to happy a order It It's their we're the the may gave upon to think supplier the to better us able for ability be. portfolio what our supplier, the manufacturing depending allows particularly Rayovac even I extremely to retailers efficient be us with brand us us needs given acquisition be occurred it pandemic. our which gives the demand value And capacity meet brand. address a to of more It during be to their to needs. extra supplier surge another a in continue and retailers. drive

it's you've from couple been result, overall healthier years. share made consistently certainly of over share it business we continue perspective a a gain us the an last trade as from us, perspective, As a seen consistently We've our which trade Energizer to share because a And hugely a for been to successful brand, acquisition online. particularly great up able up the think I into from is perspective.

able as able continue when e-commerce and against mature sales We've use we we brand fairly is, do you online. we've in that our had effort a acquired what been Energizer able our been to we've know, fold the Now Rayovac to drive to to been to business.

continued value terms premium more shifting and value be brand as And the have equation, in a of them well. end plays migrate the the going consumers at emphasize offerings as going within Amazon but and role. online for some we've there seen certainly that You've great we're to Energizer level well. around of brands, to Rayovac if to

Robert Ottenstein

much. Thank you very

Mark LaVigne

Thanks, Robert.

Operator

Barclays. from go ahead. Next question with Holden comes Please Hale

Hale Holden

or in else? The $XXX paid just million term the had that guys you I question. morning. in debt Good somewhere against loan quarter one the down was that applied

Mark LaVigne

was It Hale. loan all term

Hale Holden

you Thank so Great. much.

Mark LaVigne

thanks. Yes,

Operator

Casella Our next ahead. Carla go JPMorgan. Please from question comes with

Carla Casella

clarify, just -- I the Hi. the pulled this, how This year was there of kind -- weather weather but your season this you given last? answered might sales timing of be is of to given say partly versus in storms forward much think March, would you just in

Mark LaVigne

would I the assuming warmer referencing specifically, in say, retailers QX all Care. sets Auto season the new Certainly, you peak and for is hotter of QX. you're Care, weather, weather really go of beginning Auto in the earlier, Look, And over I'm saw only the it the but going continue QX. continues, will Auto the I drive obviously, really a season to to early in season solid through start momentum helps very say in needs But If would that that off build we're weather Care. business forward.

Carla Casella

unseasonable I there pull business? forward was any there the March, just a storms. Is In batteries, think do thought of lot mean, in about -- I you like battery what

Mark LaVigne

what lot sort you from surge of of I at that demand. you power outages, inventory see to levels would retail. Well, will A see mean, in some get terms storms will of

inventory It emphasis levels. back would say was out yet. to coming of a not We've seen improvement. We've pull of holiday. have of seen a point big have seen of historical We mild forward. we amount I not tremendous levels gone some inventory

have of we not forward pull a QX because storms. QX bunch into So of seen from

Carla Casella

some was batteries? your press suits. that anything And are before happened just some some you Okay. for I'm Spectrum? of past then there Great. an acquisition – the indemnified potential that over indemnification Is XXXX there with litigation was And just agreement curious, there

Mark LaVigne

the you litigation I I'm want make referring asking. sure to answering to you're recent the that of question was terms what Are in filed?

Carla Casella

Yes.

about the litigation suite. they the the Act Cartwright fixing. And the XXXX about complaints the of full not I California recent think price I I've saw and through gone article. Sherman in mentioned the

Mark LaVigne

leave of I legal our we're obviously, within view our comments merit. of mean don't Understood. of And respond to just of we'll is because litigation can't going the pieces those No, we litigation, a I it. on confines process, factors result, any they I as the there. the and think comment that have

Carla Casella

you bought know for assuming Okay. there a an when just batteries, wasn't sorry, you'd own was sure the I'm provisioning with I that it's -- agreement I'm you with But period indemnified. be the I if the in agreement if didn't the agreement Spectrum? it

Mark LaVigne

want Yes. get I the specifics the into litigation. don't to of

we We'll the the agreement separately to think the legal deal any within But with Spectrum. just ought them recourse I process. acquisition. have Spectrum that for to think within any we under I with respond now, extent

Carla Casella

Okay.

Thank you. great. Okay,

Operator

go The with Please from next comes Jefferies. ahead. question Kevin Grundy

Kevin Grundy

on marketing the and taking Hey, follow-up. a great, you is better – currently gotten FX thinking I an from guys. levels, Mark, perspective, appreciate for how for the are advertising perspective. Two much from just environment you cost me, clearly probably

the to margin and you're you're also top advertising proceed I trying gross to line, trying trying marketing to restore to concurrently the but reinvestment? towards what's know that margin, the gross your appropriately extent So on to levels. I about able now And try bias Mark, profit. accelerate the just Thanks. gross potential outlook, you're I exceed are a promotion. to reinvestment? get How wanted gross follow-up company the for have And thinking margin, on to you sense your on of then where to quick extent does raise

John Drabik

Kevin. Sure,

those. the We've back, gross year X% progress with that year. of X% flow take the phenomenal a cash priorities, generation, debt. all free into I three think We we're down stay the to within pleased first look really range. of step made half against paying we always I came If improvement, to key with margin really

in to project a Looking confidence two-year and achieve momentum in continue of degree is We're high to the $XXX program accelerating. ahead, million there savings to million. $XX going

reinvest, at As top to we I do something drive and continue line order in we we're to accelerate we -- always growth. things see opportunities that's look able to to will doing if think

I we'll consumer. And now, what top caution can drive we the is can P&L look and be within to the obviously, invest able those and have line that invest the absolutely we're think we around and flexibility that. growth, the right at controlling reach to to extent to consumers consistent the

Kevin Grundy

Mark, quick And is follow-up, on then it. Got levels. just a promotion

kind label. guys seem demand, here I to that? key you're and the sort across at a data, of we are tool promoted, least and that even and look thinking I pre-pandemic leading improvement year-over-year in looks of heavily quite fact the the good, to actually -- the gross wanted ramped relative Because seemingly despite of your to as degree promotion of Nielsen at As your use of is I private of margin the ahead of be drive to relative levels is promotion you the sort just batteries terms competitor sense still that increase And about where US. the look in one as get how of of the to the

then I and Thank very just thoughts pass it So can you, there on. much. some

Mark LaVigne

period, reduction. a displays to always seen where And Sure, with to full thing category of is percentage a of price think the out that degree be going in that say, promotion. I time there's year-over-year look I one, this are Kevin. some uptick promotion. important the versus to term, is price price you've And the would at sales try dissect most cycles. recent XX-week On we longer an so the relative In promotion cycles to

in recent that. little the below time you've bit a XX.X%. it's a category period What Energizer standpoint, is around is from seen most

little above Our levels. a lower historical a horizon that. bit pre-pandemic, over When you competition look is than it actually that's longer-term at

period. against that ago, you would time three connected that in look increase seen to years at distribution Energizer's that we you've it made activity promotional be gains any If over

So know, not need need one We shift stay there's that promote it's promotion. in in our connected think, the to about continue been but you no we to to need lever to battery there category. philosophy inelastic in because the is is overly pull that with a and as relatively we to order still it a pull hasn't category, consumers,

Kevin Grundy

luck. I Good the appreciate taking you follow-up guys. good. Very Okay.

Operator

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

William Reuter

have that know they categories very sets, for any Good next? with one morning. I you've on had holiday is is category of weak. first about be is toys impact batteries if and your whether fourth retail revenues of your that initial how was partners quarter discussions their of that could may quarter planning or the wondering, I that devices

Mark LaVigne

what as for the next of we'll of we're update of provided today. in balance into And this year, year outlook built anything of has aware sort we that Well, battery. battery of in that in the category provide QX get into terms in an we of been fiscal an negative there's will the device offset devices November. if I fragmented for one other us our those subcategory increase there's is say, very trends the would Certainly, which benefit use that devices a of universe, frequently, in those.

-- area, we we because category I say, the it's can overly not would base of now weather that and we amount is concerned any can relatively economic experiencing but there's need-based that, -- a weather So enough have product, concern conditions the inelastic. a fragmented we're one overly in

William Reuter

then that when year, a for kind or on case? had I financial would down And shareholder cash leverage are free Okay. you me the to target. around that your to either leverage other of in and has Historically, for things guess, flow. reducing does leverage? be out deleveraging they where laid that, you secondarily And would formal be returns, company not were where not priorities to the of focused consider remain M&A light all the need

John Drabik

So target, I'll still We have working formal first as to objective. Bill, with part. our we delever are a start but don't primary the

we're So down turn making X.X that last around we over the months, a we progress. can done nine We've really take leverage already think good year.

we I forward. think continue on we'll focus deleveraging as to go

think but much like us think for not long I we get the I that's run. target, below. operate a comfortable, to or more leverage X% something that all specific better if we will place feel can level a to in be would that Again,

at that M&A far as material think investment primary As down our is is I as looking at that we're objective. a paying not this something M&A, debt is point.

before pay a need that we target. make progress a the down of So would debt we on be material anything consider to M&A lot

William Reuter

very you. Great. That's Thank all helpful.

Operator

with Our Genuity. Canaccord comes from Brian next McNamara question Please ahead. go

Brian McNamara

good strong Hey, on results, for and the taking morning. question. Congrats the you thank

CPG to inventory general thereof? contribute that I'd terms consumer if not, haven't volume we does or as the opinion you. how declines of hear levels And in QX, your that destocking your secondly, be out opinion? but lack the in through on this several in in heard Thank retailers, in to you companies really much. destocking Are pantry quarter at called then quarter? So and curious loading And

Mark LaVigne

part. the Sure. last with I'll start

a cautious I standpoint, are you consumer. from seeing consumer more think a

inventory they result, a as to buy is decreased really continue And that, as as store. think they're seen levels at I less it's to across them safe home you've frequently. inflation have hit say shop cautiously the more

yet. outlook but standpoint, in historical our of of way quo back the and the kind snap a levels retail, where have status year. all are contemplates we have From balance coming at And now retailer it to not mild seen levels the we inventory seen the for we just of not improvement back

John Drabik

a add just little to that would I of comment. last color bit Yeah.

for So to on we the rest tight expect year manage of more basis. retailers the kind do a of

So probably a XX XXX outlook. our point we're for full to year as that viewing basis headwind

didn't that So of we it all come it. come way off and the the expect top back, to

Brian McNamara

Great. Thank you, guys.

Mark LaVigne

you. Thank

Operator

Our from ahead. Andrea Teixeira go next question with Please JPMorgan. comes

Andrea Teixeira

Thank you for taking my follow-up.

one also just sell-in. sell-out this and on the and So on the volume prior the question

here, And the right basis if gave in the if to gave full math out in you you just I'm you the year. that and So take you my called comparison decline prepared doing volume I the for was XX points remarks. then X.X% think XXX channels your globally, our category

it's declining I volume you -- as share to destocking. well? the a in you if had think number not, XXX about XXX And and basis would if, are tracking big math if points So you from that -- one, imply

other volumes X% you in were X.X%. category about X% had XX% down the any So to to you in batteries in And both volumes across by decline -- X% words, categories. actually

quarter the had, I I'm that understand that share And just number is of than part given the to are accelerating? being in be was few a pricing now if some why? right manufacturers next private that rolling decline just So stronger it just up trying then question, on the pass-through coming destocking may label that not, quarter, of And that volume label, probably one, this you And commodities over. it's like private in the reconcile. in quarters have this

the have heard happening there's Are that sort? actually they anything of So when that to or some you. reduce seeing you anniversary, Thank prices. of

John Drabik

impact volume was the So I in quarter. Andrea, the on talking about the occurred point, first that where first

So quarter, I second really we wasn't of midst the quarter. but bounce -- the saw back some in the first attribute

not question. or the catching to if that's right. a it on on differential, the statement quarter label go-forward I'll turn volume I'm Mark over second your question a So private

Mark LaVigne

Andre, globally, flat. label, On it's private

levels of previously. You're seen US, seeing the we've small above not what a increase in but historical of sort

category. premium the we As of continue end to the consumers we've see mentioned, to migrate

Andrea Teixeira

Okay. Perfect. Thank you.

Mark LaVigne

Thank you.

Operator

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

Mark LaVigne

your in call rest the today. of has a interest for great you joining for Thank the everyone Energizer I hope day.

Operator

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

You may now disconnect.

Energizer (ENR) 8 May 232023 Q2 Earnings call transcript