Q3 2024 Energizer Holdings Inc Earnings Call

and Uncertainties, which may cause actual results to differ materially from these statements.

Unknown Executive: We do not undertake to update these forward-looking statements. Other factors that could cause actual results to differ materially from these statements are included in reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed in this call relates to the categories where we compete and is based on Energizer's internal data.

Unknown Executive: We do not undertake to update these forward-looking statements. Other factors that could cause actual results to differ materially from these statements are included in reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures.

We do not undertake to update these forward-looking statements.

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

We also refer in our presentation to non-GAAP financial measures.

Unknown Executive: A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed in this call relates to the categories where we compete and is based on Energizer's internal data, data from industry and houses, and estimates we believe to be reasonable. The battery category information includes both brick-and-mortar and e-commerce retail sales.

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

Information concerning our categories and estimated market share discussed in this call relates to the categories where we compete and is based on Energizer's internal data, data from industry analysis, and estimates we believe to be reasonable.

Unknown Executive: Data from industry analysis and estimates that we believe to be reasonable. The battery category information includes both brick and mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year, and all comparisons to the prior year relate to the same period in fiscal 2023. With that, I would like to turn the call over to Mark.

The battery category information includes both brick-and-mortar and e-commerce retail sales.

Unknown Executive: Unless otherwise noted, all comments regarding the quarter of a year pertain to Energizer's fiscal year, and all comparisons to prior year relate to the same period in fiscal 2023.

Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year, and all comparisons to prior year relate to the same period in fiscal 2023.

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

Mark LaVigne: Good morning, everyone. And thanks for joining our third quarter earnings call. It is always rewarding to highlight the tremendous work of this organization, particularly when it shows up in the financial results as it did this quarter. We made several strategic decisions over the past couple of years, and we are at the early stages of seeing tangible dividends from that focus. We started with Project Momentum, designed to accelerate margin recovery, free cash flow restoration, and debt reduction. Once we made significant progress against those objectives and established a healthy pipeline to ensure ongoing improvement, we turned our attention to growth.

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

Mark LaVigne: Good morning, everyone, and thanks for joining our third quarter earnings call. It is always rewarding to highlight the tremendous work of this organization, particularly when it shows up in the financial results as it did this quarter. We have made several strategic decisions over the past couple of years, and we are at the early stages of seeing tangible dividends from that focus. We started with Project Momentum, designed to accelerate margin recovery, free cash flow restoration, and debt reduction.

Mark: Good morning, everyone, and thanks for joining our third quarter earnings call.

Mark: It is always rewarding to highlight the tremendous work of this organization, particularly when it shows up in the financial results as it did this quarter. We made several strategic decisions over the past couple of years, and we are at the early stages of seeing tangible dividends from that focus.

Mark: We started with Project Momentum, designed to accelerate margin recovery, free cash flow restoration, and debt reduction.

Mark: Once we made significant progress against those objectives and established a healthy pipeline to ensure ongoing improvement, we turned our attention to growth.

Mark LaVigne: This quarter demonstrates progress in each of those areas.

Mark LaVigne: Let me start by summarizing a very good third quarter. Highlights include 1.2% organic net sales growth, adjusted gross margin expansion of 270 basis points, 46% adjusted earnings growth, and debt paydown for the eighth consecutive quarter, bringing our total debt paydown to $150 million year to date and reducing net leverage to five times. Both batteries and auto care generated a great result throughout the P&L. Starting with batteries, organic net sales were up roughly 60 basis points, supported by solid category fundamentals and distribution gains. We also drove expansion and segment profit, improving by 160 basis points in the quarter.

Mark LaVigne: Once we made significant progress against those objectives and established a healthy pipeline to ensure ongoing improvement, we turned our attention to growth. This quarter demonstrates progress in each of those areas. Let me start by summarizing a very good third quarter.

Mark: This quarter demonstrates progress in each of those areas. Let me start by summarizing a very good third quarter.

Mark LaVigne: Highlights include 1.2% organic net sales growth, adjusted gross margin expansion of 270 basis points, 46% adjusted earnings growth, and debt pay down for the eighth consecutive quarter, bringing our total debt pay down to $150 million year to date and reducing net leverage to five times. Both batteries and auto care generated great results throughout the P&L, starting with batteries.

Mark: Highlights include 1.2% organic net sales growth.

Mark: Adjusted Gross Margin Expansion of 270 Basis Points, 46% Adjusted Earnings Growth, and Debt Paydown for the 8th consecutive quarter, bringing our total debt paydown to $150 million dollars year-to-date and reducing net leverage to five times.

Mark: Both batteries and auto care generated great results throughout the P&L, starting with batteries. Organic net sales were up roughly 60 basis points supported by solid category fundamentals and distribution gains.

Mark LaVigne: Organic Met Sales were up roughly 60 basis points, supported by solid category fundamentals and distribution gains. We also drove an expansion in segment profit, improving by 160 basis points in the quarter. And the overall battery category continues to perform well, as global volume and value both grew in the latest three-month data. In the U.S., category volume increased over 4% in the latest 13 weeks, while value declined roughly 1% as pricing and promotional investments are driving healthy demand.

Mark: We also drove expansion in segment profit, improving by 160 basis points in the quarter.

Mark LaVigne: And the overall battery category continues to perform well, as global volume and value both grew in the latest three-month data. In the U.S., category volume increased over 4% in the latest 13 weeks. Value declined roughly 1%, as pricing and promotional investments are driving healthy demands. In addition to the positive trends we are seeing in digital commerce and measured channels, trends and not-and-track channels are improving as we lab softness which began in the spring last year. Consumers are continuing to select brands in the category. Private label value and volume share declined globally in the quarter. With value shared and out declining in eight of the last 10 months globally, and volume share declining in seven of the last 10.

Mark: And the overall battery category continues to perform well, as global volume and value both grew in the latest three-month data.

Mark: In the U.S., category volume increased over 4% in the latest 13 weeks.

Mark LaVigne: In addition to the positive trends we are seeing in digital commerce and measured channels, trends in non-track channels are improving as we address softness, which began in the spring last year, and Segment Profit Margin increased by an impressive 470 basis points. This business is hitting its stride. We have grown the top line by over 20% since our first full year of ownership, delivered organic growth for four consecutive quarters, and expanded segment profit by over 700 basis points relative to fiscal 2022.

Mark LaVigne: Moving to AutoCare, where we are seeing continued momentum, organic net sales increased nearly 3% in the quarter, as the June heat wave in the U.S. drove strong replenishment in our refrigerant's business. This was complemented by a strong quarter internationally, uply 19% organically as we continue our expansion plans, and segment profit margin increased by an impressive 470 basis points. This business is hitting its drive. We have grown the top line by over 20% since our first full year of ownership, delivered organic growth for four consecutive quarters, and expanded segment profit by over 700 basis points relative to fiscal 2022.

Mark: This was complemented by a strong quarter internationally, probably 19% organically as we continue our expansion plan.

Mark: and Segment Profit Margin increased by an impressive 470 basis points.

Mark LaVigne: Also, during that time, we have developed a healthy pipeline of innovation, the strongest we have seen in many years, to generate margin of creative growth in both the U.S. and international markets. The success in AutoCare is just one of the reasons we are so confident about the future. As I stated at the top of the call, we have also made tremendous progress over the past two years, rebuilding our margins, restoring our free cash flow, and strengthening our balance sheet, all while investing in our business to deliver sustainable growth over the long term.

Mark: Also, during that time, we have developed a healthy pipeline of innovation, the strongest we have seen in many years, to generate margin accretive growth in both the U.S. and international markets.

Mark LaVigne: If we take a step back, I would like to reflect on not only where we are today, but where we've been, where we are headed, and why we are so confident in our ability to deliver growth and shareholder value over the long term. First, let me summarize where we are. Our categories have proven to be healthy and resilient. This quarter, we delivered organic growth, and expect to achieve the back half growth we provided in our outlook at the beginning of the year, even with the caution we are seeing with the consumer. Our execution of project momentum has delivered nearly $120 million in savings to date, driving a just to gross margins to 40.3% in the trailing 12 months, an expansion of 300 basis points when compared to fiscal 22.

Mark LaVigne: First, let me summarize where we are. We have also resumed top-tier free cash flow generation and expect to deliver between 10 to 12% for the second consecutive fiscal year. We have reduced leverage by over a full turn in the last two years and remain on track to end the year under five times net leverage.

Mark LaVigne: We have also resumed top tier free cash flow generation, and expected to deliver between 10 to 12% for the second consecutive fiscal year. We have reduced leverage by over a full turn in the last two years, and remain on track to end the year under five times net leverage. Having paid down that in eight consecutive quarters totaling over $430 million, we have prioritized allocating cash flow to debt reduction as a key driver in our investment thesis. All of this progress provides us with the flexibility to invest in long-term growth and value creation.

Mark: Having paid down debt in eight consecutive quarters totaling over $430 million, we have prioritized allocating cash flow to debt reduction as a key driver in our investment thesis.

Mark LaVigne: As we turn to where we are going, I want to highlight areas of future growth where we have and will invest in order to drive it consistently. There are some emerging areas where we see healthy opportunities. First, market expansion, energizers global platform, and broad distribution network position us to identify and strategically accelerate growth in a number of developing markets across the globe where we can expand our business. In addition, as we mentioned before, we have shown healthy growth in our international auto care business and expect to continue to roll that out more aggressively. particularly now that we have improved the margins.

Mark: As we turn to where we are going, I want to highlight areas of future growth where we have and will invest in order to drive it consistently.

Mark LaVigne: There are some emerging areas where we see healthy opportunities. With the investments and health of our innovation pipeline, we have plans to deliver industry-leading innovation across each of our categories. We will do so without compromising our focus on maintaining healthy markets. As you can tell, we are very pleased with where we are and excited about what's ahead. Now, I will turn the call over to John to provide more detail on the third quarter.

Mark: First, market expansion. Energizer's global platform and broad distribution network position us to identify and strategically accelerate growth in a number of developing markets across the globe where we can expand our business.

Mark: In addition, as we mentioned before, we have shown healthy growth in our international auto care business and expect to continue to roll that out more aggressively.

Mark LaVigne: Second, innovation. With the investments and health of our innovation pipeline, we have plans to deliver industry-leading innovation across each of our categories. We expect to generate healthy growth over the next couple of years as we introduce these products to our customers and consumers. In addition, we have invested in already strong and foundational areas to accelerate growth even further.

Mark: particularly now that we have improved the margins.

Mark: Second, innovation.

Mark: With the investments and health of our innovation pipeline, we have plans to deliver industry-leading innovation across each of our categories. We expect to generate healthy growth over the next couple of years as we introduce these products to our customers and consumers.

Mark: In addition, we have invested in already strong foundational areas to accelerate growth even further.

Mark LaVigne: Several areas to highlight. First, digital commerce. This channel continues to grow in size and importance, and we are increasing our investment to realign and enhance our organizational structure to accelerate growth in both existing and new digital commerce platforms in North America and international markets. There are also distribution opportunities as a core strength of this organization. We are investing to improve the placement and mix in existing customers. We will do so without compromising our focus on maintaining healthy margins. Finally, pricing and mix management. Fueled by our investments in digital transformation, we are leveraging improved analytic capabilities to identify opportunities and action more quickly, enabling us to drive growth through enhanced mix management.

Mark: Several areas to highlight.

Mark: There are also distribution opportunities. As a core strength of this organization, we are investing to improve the placement and mix in existing customers, while also aggressively pursuing new white space opportunities. We will do so without compromising our focus on maintaining healthy margins.

Mark: And finally, pricing and mixed management. Fueled by our investments in digital transformation, we are leveraging improved analytic capabilities to identify opportunities and action more quickly, enabling us to drive growth through enhanced mixed management.

Mark LaVigne: As you can tell, we are very pleased with where we are and excited about what's ahead.

John Drabik: Now let me turn the call over to John to provide more detail on the third quarter and our fourth quarter outlook.

John Drabik: Thanks, Mark, and good morning, everyone. I will provide a more detailed summary of the quarter and update on project momentum and some additional color on our expectations for the fourth quarter and full year. For the quarter, net sales were up 30 basis points with an organic increase of 1.2%. Improve battery category trends, distribution gains, and warmer weather driving the North America refrigerant business contributed to organic volume growth of 4.6%. Offset by planned strategic pricing and promotional investments of 3.4%. Primarily within battery and lights. For the last two quarters, we've invested a little over 300 basis points of pricing and promotional investments back into the battery business.

Mark: Thanks, Mark, and good morning, everyone. I will provide a more detailed summary of the quarter, an update on project momentum, and some additional color on our expectations for the fourth quarter and full year. For the quarter, net sales were up 30 basis points with an organic increase of 1.2 percent.

John Drabik: primarily within Batarang. For the last two quarters, we've invested a little over 300 basis points of pricing and promotional investments back into the battery business. These benefits were partially offset by the plan's strategic pricing and promotional investment. Our strong free cash flow generation has enabled us to pay down $150 million of debt during the first three quarters, already hitting the low end of the full year range that we provided at the beginning of the year.

John Drabik: We believe these investments have been very successful in continuing to drive healthy volume growth in the category. In addition, the current levels of total pricing and promotion are largely in line with historical averages for the category, and we expect this to remain relatively consistent in the quarters ahead, including in the coming holiday season. Adjusted gross margin increased 270 basis points to 41.5%. Driven by project momentum savings of approximately 14 million, as well as lower input costs, including improved commodities and material pricing, and lower ocean freight. These benefits were partially offset by the planned strategic pricing and promotional investments.

Mark: We believe these investments have been very successful and continue to drive healthy volume growth in the category.

Mark: Adjusted gross margin increased 270 basis points to 41.5%, driven by project momentum savings of approximately $14 million, as well as lower input costs, including improved commodities and material pricing, and lower ocean freight.

Mark: These benefits were partially offset by the plan's strategic pricing and promotional investments.

John Drabik: As Mark mentioned earlier, we have made significant progress over the last two years restoring our gross margin, which has been a key contributor to our ability to generate cash and invest for future growth. We anticipate gross margins will continue to be a positive tailwind for us in Q4, as well as heading into next year due to additional momentum savings. Slightly mixed but overall positive raw material cost trends and reasonably stable freight. Costs adjusted SGNA increased $5.1 million, primarily driven by an increase in labor and benefit costs, fire travel expense, an increased appreciation expense related to our digital transformation initiatives, partially offset by project momentum savings.

Mark: As Mark mentioned earlier, we have made significant progress over the last two years restoring our gross margin, which has been a key contributor to our ability to generate cash and invest for future growth.

Mark: Adjusted SG&A increased $5.1 million, primarily driven by an increase in labor and benefit costs, higher travel expense, and increased depreciation expense related to our digital transformation initiatives, partially offset by project momentum savings.

John Drabik: AMP as a percentage of sales was 5.4%, flat versus the prior year and consistent with our focus on investing behind our brands and business. Interest expense decreased $3.7 million due to lower average debt outstanding, reflecting the benefits of continued debt reduction. Our strong operational performances in both battery and auto care driven by improving top line performance, significant margin recovery, and momentum savings resulted in adjusted EBITDA and adjusted earnings per share of $149.7 million and $0.79 cents per share. This represents a 46% increase in adjusted earnings year over year, well ahead of the outlook we provided last quarter.

Mark: A&P as a percentage of sales was 5.4%, flat versus the prior year, and consistent with our focus on investing behind our brands and business.

Mark: Our strong operational performances in both battery and auto care, driven by improving top-line performance, significant margin recovery, and momentum savings, resulted in adjusted EBITDA and adjusted earnings per share of $149.7 million and $0.79 per share.

Mark: This represents a 46% increase in adjusted earnings year over year, well ahead of the outlook we provided last quarter.

John Drabik: Throughout the first nine months of fiscal 24, we have generated $195 million of free cash flow, or 9.4% of net sales. Our strong free cash flow generation has enabled us to pay down $150 million of debt during the first three quarters, already hitting the low end of the full-year range that we provided at the beginning of the year. Our debt capital structure remains in great shape, and our focus on debt repayment continues to drive significant benefits. Our current weighted average cost of debt is 4.5%, and 96% fixed with no meaningful maturities until December 2027.

Mark: Throughout the first nine months of Fiscal 24, we have generated $195 million of free cash flow, or 9.4% of net sales.

Mark: Our strong free cash flow generation has enabled us to pay down $150 million of debt during the first three quarters, already hitting the low end of the full year range that we provided at the beginning of the year.

Mark: Our debt capital structure remains in great shape and our focus on debt repayment continues to drive significant benefits.

John Drabik: Our current weighted average cost of debt is 4.5% and 96% fixed, with no meaningful maturities until December 2027. As noted in our press release this morning, we recorded a one-time non-cash $111 million impairment charge on certain intangible assets associated with the acquisition of Spectrum's battery. We continue to view these acquired assets as vital components of our portfolio, and this non-cash accounting charge does not have an impact on our strategic plans for these brands or our broader battery business.

Mark: Our current weighted average cost of debt is 4.5% and 96% fixed, with no meaningful maturities until December 2027.

John Drabik: As noted in our press release this morning, we recorded a one-time non-cash $111 million impairment charge on certain intangible assets associated with the acquisition of Spectrum's battery business. We continue to view these acquired assets as vital components of our portfolio, and this non-cash accounting charge does not have an impact on our strategic plans for these brands or our broader battery business.

Mark: As noted in our press release this morning, we recorded a one-time, non-cash, $111 million dollar impairment charge on certain intangible assets associated with the acquisition of Spectrum's battery business.

John Drabik: Lastly, I would like to provide some additional color for our fourth quarter and full year expectations. In Q4, we expect volumes to continue to be a positive driver of performance, although partially offset by pricing and promotional activity. We also experience significant heat-related activity, which shifted some refrigerant sales out of the fourth quarter and into the third. When we combine our plan with the generally defensive posture on the consumer, we expect organic net sales to be roughly flat. We anticipate gross margin in the quarter to improve by roughly 150 basis points year over year, and higher SG&A in the quarter as we make strategic investments in digital transformation and growth initiatives.

John Drabik: Lastly, I would like to provide some additional color for our fourth quarter and full year expectations. Finally, our expectations for strong full year cash generation will enable us to pay down debt at the high end of our originally guided rate.

Mark: Lastly, I would like to provide some additional color for our fourth quarter and full year expectations.

Mark: In Q4, we expect volumes to continue to be a positive driver of performance, although partially offset by pricing and promotional activity.

Mark: We also experienced significant heat-related activity, which shifted some refrigerant sales out of the fourth quarter and into the third.

Mark: When we combine our plan with a generally defensive posture on the consumer, we expect organic nut sales to be roughly flat.

Mark: We anticipate gross margin in the quarter to improve by roughly 150 basis points year-over-year.

Mark: And hire SG&A in the quarter as we make strategic investments in digital transformation and growth initiatives.

John Drabik: We expect adjusted earnings per share to be in the range of $1.10 and $1.20. For the full fiscal year, we expect organic revenue to be down roughly 2%. We expect adjusted gross margin improvement of over 150 basis points, an increase from our prior callable of over 100 basis points, primarily driven by incremental project momentum savings and improved input costs. We expect the over delivery and gross margin to drive us to the high end of our original guided adjusted EBITDA in EPS ranges, to $610 to $620 million, and $3.20 to $3.30 per share, respectively. As Mark noted in his earlier comments, project momentum continues to be a driver of significant efficiencies and benefits for our organization.

Mark: We expect adjusted earnings per share to be in the range of $1.10 and $1.20.

Mark: For the full fiscal year, we expect organic revenue to be down roughly 2%.

Mark: We expect adjusted gross margin improvement of over 150 basis points and increase from our prior call of over 100 basis points.

Mark: primarily driven by incremental project momentum savings and improved input costs.

Mark: We expect the overdelivery and gross margin to drive us to the high end of our original guided, adjusted EBITDA and EPS ranges.

Mark: to $610 to $620 million and $3.20 to $3.30 per share, respectively.

Mark: As Mark noted in his earlier comments, Project Momentum continues to be a driver of significant efficiencies and benefits for our organization. Due to continued progress across the program, we now expect to achieve savings of between $180 million and $200 million, up $20 million from our previous guide.

John Drabik: Due to continued progress across the program, we now expect to achieve savings of between $180 million and $200 million, up $20 million from our previous guide. And finally, our expectations for strong, full-year cash generation will enable us to pay down debt at the high end of our originally guided range. Expected to be between $175 million and $200 million for the year.

Speaker Change: And finally, our expectations for strong full-year cash generation will enable us to pay down debt at the high end of our originally guided range, expected to be between $175 million to $200 million for the year.

Mark LaVigne: With that, I will turn it over to Mark for closing remarks.

Mark LaVigne: Thanks, John. In closing, we delivered a strong third quarter with a return to organic growth and continued progress in rebuilding gross margins, resulting in strong earnings growth.

Mark: With that, I will turn it over to Mark for closing remarks.

Mark: Thanks, John . In closing, we delivered a strong third quarter with a return to organic growth and continued progress in rebuilding gross margins, resulting in strong earnings growth.

Mark LaVigne: Our decisive actions and advancement of our strategic priorities over the past two years has set the foundation for investment in our long-term growth objectives and value creation for our shareholders.

Mark: Our decisive actions and advancement of our strategic priorities over the past two years has set the foundation for investment in our long-term growth objectives and value creation for our shareholders. With that, let's open the call for questions.

Unknown Executive: With that, let's open the call for questions.

Unknown Executive: Thank you.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift your hands up before pressing any key.

Unknown Executive: Ladies and gentlemen, you will not begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a free-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please lift your hands up before pressing any keys. We kindly request our Q&A participants to limit themselves to one question and one follow-up. One moment, please, for your first question.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Should you have a question, please press star followed by the number 1 on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number 2.

Speaker Change: If you are using a speakerphone, please lift your handset before pressing any keys.

Operator: We kindly request our Q&A participants to limit themselves to one question and one follow-up. One moment, please, for your first question. Our first question comes from Peter Grom from UBS. Go ahead.

Speaker Change: We kindly request our Q&A participants to limit themselves to one question and one follow-up. One moment please for your first question.

Peter Grom: Our first question comes from the line of Peter's Grom from UBS. Go ahead, please.

Speaker Change: Our first question comes from the line of Peter Grom from UBS. Go ahead please.

Peter Grom: Thanks, Operator. Good morning, everyone. Hope you're doing well. So, just in the context of the top-line trends we've seen, and what we can kind of see in the track performance here, we'd love to kind of get some perspective on the health of the consumer, but maybe specifically on what you were seeing and kind of expecting from your categories. And then for Energizer specifically, you know, recognizing that you delivered 1% growth in the quarter, when we think about the slottish exit rate, can you maybe help us understand how you think about growth looking at the 25 and maybe longer term and just the degree of confidence you have in delivering top-line growth at this stage? Thanks.

Peter Grom: Thanks up, Raider.

Peter Grom: Good morning, everyone. Hope you're doing well.

Peter Grom: So just in the context of the top line trends we've seen, what we can kind of see in the track performance here, we'd love to kind of get some perspective on the health of the consumer, but maybe specifically what you're seeing and kind of expecting from your categories. And then for energizers specifically, you know, recognizing that you delivered 1% growth in the quarter.

Peter Graham: Thanks, operator. Good morning, everyone. Hope you're doing well.

Speaker Change: So just in the context of the top line trends, we've seen what we can kind of see in the track performance here.

Peter Graham: We'd love to kind of get some perspective on the health of the consumer, but maybe specifically what you're seeing and kind of expecting from your categories.

Speaker Change: And then for Energizer specifically, you know, recognizing that you delivered 1%, you know, growth in the quarter.

Peter Grom: When we think about the sladdish exit rate, can you maybe help us understand how you think about growth looking at the 25 and maybe longer term. And just a degree of confidence you have in delivering top line growth at this stage.

Speaker Change: When we think about the flattish exit rate, can you maybe help us understand how you think about growth looking at the 25 and maybe longer term and just the degree of confidence you have in delivering top line growth at this stage? Thanks.

Mark LaVigne: Thanks, Peter.

Mark LaVigne: Thanks, Peter. Good morning.

Mark LaVigne: Good morning. You know, I think when we provided our outlook in November, we were very clear-eyed at that time about the state of the consumer. We highlighted that areas that were taking the toll on a consumer, and we developed plans to make sure that we could we could operate in that environment. We've made smart promotional investments along the way to engage consumers in a cautious time for them. And so I think it's though the year has played out largely as we expected, and we've returned to volume growth in both the U.S. and international markets over the back half of the year.

Speaker Change: Thanks Peter. Good morning. You know, I think when we provided our outlook in November , we were very clear-eyed at that time about the state of the consumer. We highlighted that areas that were taking a toll on a consumer and we developed plans to make sure that we could

Mark LaVigne: You know, I think when we provided our outlook in November, we were very clear-eyed at that time about the state of the consumer. We highlighted areas that were taking a toll on the consumer, and we developed plans to make sure that we could operate in that environment. We've made smart promotional investments along the way to engage consumers in a cautious time for them, and so I think the year has played out largely as we expected.

Speaker Change: We could operate in that environment. We've made smart promotional investments along the way to engage consumers in a cautious time for them.

Mark LaVigne: And we've returned to volume growth in both the U.S. and international markets over the back half of the year. And we're going to deliver financial growth in the back half of the year, just like we anticipated. I think looking ahead, there's real optimism for us in terms of how we've gone about this. I think we have achieved project momentum at exactly the right time. We restored the health of the P&L. We also restored free cash flow. We've paid down our debt.

Speaker Change: And so I think the year has played out largely as we expected, and we've returned to volume growth in both the U.S. and international markets over the back half of the year, and we're going to deliver financial growth over the back half of the year, just like we anticipated.

Mark LaVigne: And we're going to deliver financial growth over the back half of the year, just like we anticipated. I think looking ahead, there's real optimism for us in terms of how we've gone about this. I think we executed Project Momentum at exactly the right time. We restored the health of the PNL. We restored free cash while we've paid down debt. It's given us the ability to reinvest in a business in a way that we haven't had in the last couple of years.

Speaker Change: I think looking ahead, Peter, there's real optimism for us in terms of how we've gone about this. I think we executed Project Momentum at exactly the right time.

Speaker Change: We restored the health of the P&L. We, you know, restored free cash flow. We've paid down debt. It's given us the ability to reinvest in a business in a way that we haven't had in the last couple of years.

Mark LaVigne: It's given us the ability to reinvest in the business in a way that we haven't had in the last couple of years. We're not interested in chasing growth that undoes that. And we don't believe that we have to actually chase after that type of growth because there are plenty of opportunities for us to find. And let me talk you through kind of how we're thinking about that. One of the areas that we're focused on is really just expanding the scope of the business.

Mark LaVigne: We're not interested in it in chasing growth that undoes that, and we don't believe that we have to actually chase after that type of growth because there's plenty of opportunities for us to find, and let me talk you through kind of how we're thinking about that. You know, one of the areas that we're focused on is really just expanding the scope of the business. We want to use our platform to continue to build out in certain higher growth markets, and one of the areas we're looking at is if you look at our emerging market coverage.

Speaker Change: We're not interested in chasing growth that undoes that, and we don't believe that we have to actually chase after that type of growth because there's plenty of opportunities.

Speaker Change: for us to find. And let me, you know, talk you through kind of how we're

Speaker Change: How we're thinking about that, you know, one of the areas that we're focused on is really just expanding the scope of the business.

Mark LaVigne: We want to use our platform to continue to build out in certain higher growth markets. And one of the areas we're looking at is, if you look at our emerging market coverage, you're at about 15% of the consolidated financial results for the business. And we think that could be higher. If you look at markets like Mexico and Brazil, Brazil has had an 8% compounded annual growth rate for us since 19. Mexico is at about 13%.

Speaker Change: We want to use our platform to continue to build out in certain higher growth markets. And one of the areas we're looking at is, if you look at our emerging market coverage, you're at about 15 percent of the consolidated financial results for the business, and we think that could be higher.

Mark LaVigne: You're at about 15% of the consolidated financial results for the business, and we think that could be higher. If you look at markets like Mexico and Brazil, you know, Brazil has an 8% compounded annual growth rate for us. In the past, we've been looking at a lot of things that we've been looking at in the past. We've been looking at a lot of things that we've been looking at in the past. And we think that can provide a tailwind. We spoke on the call of that innovation. We have a deep pipeline of innovation over the last couple of years when we were executing momentum.

Speaker Change: If you look at markets like Mexico and Brazil, Brazil has an 8% compounded annual growth rate for us since 19, Mexico's at about 13%. So as we continue to build out additional markets and expand that coverage for Energizer, we think it can create a tailwind from our growth perspective.

Mark LaVigne: So as we continue to build out additional markets and expand that coverage for Energizer, we think it can create a tailwind from our growth perspective. I think you can also look at a different element of expanding our business with digital commerce. And I think that's not a channel strategy. It's a category strategy where we get deeper penetration within auto care. It's also a geographic area where we can operate multiple platforms, and we have and will invest in that area going forward. And we think that can provide a tailwind.

Speaker Change: I think you can also look at, you know, a different element of expanding our business, you know, with digital commerce.

Mark LaVigne: We spoke on the call about innovation. We have had a deep pipeline of innovation for the last couple of years. When we were executing Momentum, we also repopulated that pipeline in a way that it hasn't been in the last couple of years and are really excited about what we're bringing to the market over the next couple of years.

Mark LaVigne: We also repocketed that pipeline in a way that it hasn't been in the last couple of years and are really excited about what we're bringing to the market over the next couple of years. And then you get down to some more basic fundamentals around distribution that's including to expand the geographic growth that you're seeing in auto care, white spaces, and batteries. Pricing and mixed management, a lot of the digital work we've done is informing a better approach to our retailers in terms of how to get a higher ROI on the investments you're making. So all of these things come together and, you know, where project momentum restored a lot of the financial algorithm health.

Mark LaVigne: That includes expanding the geographic growth that you're seeing in auto care, white spaces, and batteries, pricing, and mixed management. A lot of the digital work we've done is informing a better approach to our retailers in terms of how to get a higher ROI on the investments you're making. So all of these things come together, and where Project Momentum restored a lot of the financial algorithm health below the top line, this new consolidated initiative is really meant to restore that top line growth that we want to see going forward.

Mark LaVigne: You know, below the top line, you know, this new consolidated initiative is really meant to restore that top line growth that we want to see going forward. So, as I think about an extra rate going into 25, this is all about taking the individual opportunities within those areas and generating a one to two percent top line growth on a pretty consistent basis going forward. And then you've really put together back the financial algorithm that we spent a lot of time rebuilding over the last couple of years.

Speaker Change: financial algorithm health, you know, below the top line, you know, this new consolidated initiative is really meant to restore that that that top line growth that we want to see going forward. So as I think about an exit rate going into 25, this is, this is all about taking the individual

Mark LaVigne: So as I think about an exit rate going into twenty-five, this is this is all about taking the individual opportunities within those areas and generating one to two percent top line growth on a pretty consistent basis going forward. And then you've really put back the financial algorithm that we spent a lot of time rebuilding over the last couple of years. So honestly, as we're exiting twenty four and heading into twenty five, we feel really good about where we're sitting as a business.

Speaker Change: opportunities within those areas and generating you know one to two percent top-line growth on a pretty consistent basis going forward and then you've you've really put together back the financial algorithm that we spent a lot of time rebuilding over the last couple of years so honestly from as we're at exiting 24 and heading into 25 we we feel really good about where we're sitting as a business

Mark LaVigne: So, honestly, from a, as we're exiting 24 and heading into 25, we feel really good about where we're sitting at this.

Peter Grom: Great, thanks so much. I'll pass it on.

Peter Grom: Great. Thanks so much. I'll pass it on.

Unknown Executive: Thank you.

Operator: Thank you. Our next question comes from the line of Lauren Lieberman from Barclays. Please go ahead.

Lauren Lieberman: Our next question comes from the line of Lauren Lieberman from Barclays. Please go ahead.

Speaker Change: Thank you. Our next question comes from the line of Lauren Lieberman from Barclays. Please go ahead.

Lauren Lieberman: Great, thanks. I thought it would be interesting, actually, since you mentioned Brazil, to just ask about the acquisition that you made during the quarter. So just curious to hear anything about that. That you can share kind of existing manufacturing footprint in Brazil.

Lauren Lieberman: Great, thanks. I thought it'd be interesting, actually, since you mentioned Brazil, to just ask about this, the acquisition that you made during the quarter. So just curious to hear anything about that, that you can share kind of the existing manufacturing footprint in Brazil. Yeah, so I'm curious about that Brazilian acquisition. And then secondly, just kind of the, I guess, following on that, the Belgium battery acquisition earlier. So just how should we think about the pieces that go with the comments you've made on international expansion? You know, where does capacity come in? Where does the kind of local infrastructure come into that as you think about expanding the scope and going after growth?

Lauren Lieberman: Yeah, I'm curious about that Brazil acquisition. And then secondly, just kind of the, I guess, following on that the Belgian battery acquisition earlier. So just have you think about the pieces that go with the comments you've made on international expansion. You know, where does capacity come in? Where does kind of local infrastructure come into that as you think about expanding the scope and going after growth? Thanks, Lauren.

Lauren Lieberman: Secondly, just kind of the...

Speaker Change: I guess.

Speaker Change: Following on that, the Belgian battery acquisition earlier. So, just how should we think about the pieces that go with the comments you've made on international expansion? You know, where does capacity come in, where does kind of local infrastructure come into that as you think about expanding the scope and going after growth?

Unknown Executive: Thanks, Lauren. I would say both the Belgian and French.

Unknown Executive: Thanks, Lauren. I would say both the Belgian acquisition from previous quarters, as well as this most recent one in Brazil, really helped highlight some of the optimism we have by continuing to build out our platform. If you recall, the Belgian acquisition was largely a manufacturing acquisition, which allows us to now produce region for region, insulates us from a lot of the supply chain disruption, and gives us a cost advantage going forward. So that one, and we were just in that facility a couple of weeks ago, is really operating very well, and with great benefits, particularly for the European business.

Mark LaVigne: I would say both the Belgian acquisition from previous quarters as well as this most recent one in Brazil really help highlight some of the optimism we have by continuing to build out our platform. If you recall, the Belgian acquisition was largely, you know, a manufacturing acquisition, which allows us to now produce in region for region, insulates us from a lot of the supply chain disruption, gives us, you know, a cost advantage and going forward to that one. And we were just, you know, in that facility a couple of weeks ago, is really operating very well and with great benefits, particularly for the European business.

Speaker Change: If you recall, the Belgian acquisition was largely a manufacturing acquisition which allows us to now produce in-region, for-region, insulates us from a lot of the supply chain disruption, gives us a cost advantage going forward. So that one, and we were just in that facility a couple weeks ago, is really operating very well and with great benefits, particularly for the European business.

Mark LaVigne: Similarly, you go down to Brazil and the auto care business. You now have local manufacturing for products in the Brazilian market. You, you have brands that are local and that have really resonated with consumers down there. We have an emerging platform in Brazil where we really think we can drive growth. And that's both in batteries and auto care going forward. So it's really becoming a source of strength where if you look back and kind of where we were in 2019, that entire market looks different right now. And now we're in a position where we have scale, we have local manufacturing about battery and auto care that gives you a strategic advantage.

Unknown Executive: Similarly, you go down to Brazil and the auto care business; you now have local manufacturing for products in the Brazilian market. You have brands that are local and that have really resonated with consumers down there. We have an emerging platform in Brazil where we really think we can drive growth, and that's both in batteries and auto care going forward. So it's really becoming a source of strength where, if you look back at kind of where we were in 2019, that entire market looks different right now.

Speaker Change: Similarly, you go down to Brazil in the auto care business, you now have local manufacturing.

Speaker Change: [inaudible]

Speaker Change: Where if you look back in kind of where we were in 2019, that entire market looks different right now, and now we're in a position where we have scale, we have local manufacturing of both battery and auto care that gives you a strategic advantage. We have local brands. We have global brands.

Unknown Executive: And now we're in a position where we have scale. We have local manufacturing of both batteries and auto care that gives us a strategic advantage. We have local brands. We have global brands. And at this point, we're going to really push for growth in that market because we think there's a lot of growth to be had there.

Mark LaVigne: We have local brands; we have global brands. And at this point, we're going to really push for growth in that market because we think there's a lot of growth to be had there.

Speaker Change: And at this point, we're going to really push for growth in that market because we think there's a lot of growth to be had there.

Lauren Lieberman: Thank you.

William Chappell: Our next question comes from the line of billed chapel from Tourist Securities.

Operator: Our next question comes from the line of Bill Chappell from Truva Securities. Go ahead, Bill.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Bill Chappell from Truva Securities. Go ahead, please.

William Chappell: Go ahead, please. Thanks.

William Chappell: Good morning. I just want to talk a little bit more about pricing, especially as we move into next year. I guess the one we're here in a lot of CPG companies talk about increased promotion and maybe less chance to price going the next year, but understand that your businesses or the categories a little bit different from some CPG categories. So, with that in mind, and then also I imagine you've done some of your kind of pricing from, you know, bakeoffs for the upcoming holiday season. Can you give us some kind of color of what you're seeing or what you're thinking for the, for not just you, but for the overall category in this in Korean environment and primarily for the US.

William Chappell: Hey Bill, I just want to talk a little bit more about pricing, especially as we move into next year. One, we're hearing a lot of CPG companies talk about increased promotion and maybe less chance of price going into next year. But I understand that your business or the category is a little bit different from some CPG categories. So with that in mind, and also, I imagine you've done some of your kind of pricing from, you know, Bake Offs for the upcoming holiday season, can you give us some kind of color of what you're seeing or what you're thinking for not just you but for the overall category in this inquiry environment, and primarily for the U.S.?

Bill Chappell: Thanks. Good morning.

Bill Chappell: Hey Bill. I just want to talk a little bit more about pricing especially as we move into next year I guess.

Bill Chappell: So one, we're hearing a lot of CPG companies talk about increased promotion and maybe less chance to price going into next year, but I understand that your businesses or the category is a little bit different from some CPG categories. So with that in mind, and then also, I imagine you've done some of your kind of

Bill Chappell: Pricing from, you know...

John Drabik: Sure, Bill.

Unknown Executive: Sure, Bill. So, what I'd say is in Q2 and Q3, you know, we've seen about 300 basis points of pricing and promotion in the P&L. Our plan, you know, as we looked ahead to Q4 for it to be kind of relatively similar, we still think we'll be driving volume growth. And then as you look a little forward, as you go into 25, we don't see a significant change through the holiday season around that pricing and promotion environment. So, you know, we think it's pretty stable at this point, and we'll continue to invest to drive volumes and engage with the consumers in the category.

John Drabik: So what I'd say is in Q2 and Q3, you know, we've seen about 300 basis points of pricing and promotion in the P&L. Our plan, you know, as we looked up Q4 for it to be kind of relatively similar. We still think we'll be driving volume growth.

Bill Chappell: Sure, Bill. So what I'd say is in Q2 and Q3, you know, we've seen about 300 basis points of pricing and promotion in the P&L.

Bill Chappell: Our plan, you know, as we looked up Q4 for it to be kind of relatively similar, we still think we'll be driving volume growth.

John Drabik: And then, as you look a little forward, as you go into 25, we don't see a significant change through the holiday season around that pricing and promotion and promotion environment. So, you know, we think it's pretty, pretty stable at this point, and we'll continue to invest to drive that, you know, the volumes and engage with the consumers in the category.

John Drabik: Okay, so in any update in terms of, you know, how the upcoming holidays are looking in terms of what you're hearing from retailers and timing orders or stuff like that. Bill, as we're sitting today, I would say we're planning for a normal holiday season. We've had the typical dialogue heading into it in terms of the early shipments and the displays that are going in. And then what will typically happen is we'll watch how holiday progresses; it doesn't end up being an early or late shopping season, and then be ready to respond to any retailer needs as they may need.

Unknown Executive: Okay, so, and any update in terms of, you know, how the upcoming holidays are looking in terms of what you're hearing from retailers and Timing of Orders or stuff like that?

Speaker Change: Okay, so and any update in terms of, you know, how the upcoming holidays are looking in terms of what you're hearing from retailers in timing of orders or stuff like that?

Unknown Executive: Bill, from where we're sitting today, I would say we're planning for a normal holiday season. We've had the typical dialogue heading into it in terms of the early shipments and the displays that are going in. And then what will typically happen is we'll watch how the holiday progresses so it doesn't end up being an early or late shopping season and then be ready to respond to any retailer needs as they may need.

Speaker Change: And then what will typically happen is we'll watch how holiday progresses. Does it end up being an early or late shopping season and then be ready to respond to any retailer needs as we...

John Drabik: I would say as of now we're planning for a good holiday season, and we're not seeing any signs that would make us walk back from that. Yeah, last year Q4 was a pretty strong quarter for us. I think we are up a couple percent. Our plan right now is to comp that, so we're not seeing a lot of significant changes from that trend.

Speaker Change: As they may need. I would say, as of now, we're planning.

Unknown Executive: I would say as of now, we're planning for a good holiday season, and we're not seeing any signs that would make us walk back from that. Yeah, last year Q4 was a pretty strong quarter for us. I think we were up a couple percent. Our plan right now is to compare that, so we're not seeing a lot of significant changes from that trend.

Unknown Executive: Got it. And sorry, one housekeeping.

John Drabik: I'm sorry, one housekeeping. Would you expect FX on the top line to be similar impact in 4Q that it wasn't 3Q. Yeah, I think so, roughly.

Unknown Executive: Would you expect FX on the top line to have a similar impact in 4Q as it was in 3Q? Yeah, I think so, roughly. Perfect. Thanks so much.

Speaker Change: Yeah, I think so, roughly.

Operator: Thank you. Our next question comes from the line of Robert Ottenstein from Evercore ISI. Go ahead.

Robert Ottenstein: Our next question comes from the line of Robert up and sign from Evercore ISI. Go ahead, please.

Speaker Change: Thank you. Our next question comes from the line of Robert Ottenstein from Evercore ISI. Go ahead, please.

Robert Ottenstein: Great, thank you very much. There are a couple things I just wanted to touch on. Number one, You know, any more detail about the distribution gains that you've gotten, the timing of them in terms of when that'll hit your results? So that's number one. And then, number two, I was really interested to hear your comments about private labels and what's going on there, and to what extent that has to do with your strategy with Ryovac, what the gaps look like, any channel strategy having an impact there. I would love to hear you touch on those two points. Thank you. I think on the private label. I mean, the commentary we provide.

Robert Ottenstein: Great, thank you very much.

Robert Ottenstein: A couple of things, I just wanted to touch on. Number one, any more detail about the distribution gains that you've gotten, the timing of them in terms of when that'll hit your results. So that's number one.

Robert Attenstein: Any more detail about the distribution gains that you've gotten, the timing of them in terms of when that will hit your results?

Robert Ottenstein: And the number two, I was really interested to hear your comments about private label and what's going on there. And, you know, to what extent that has to do with your strategy, we've liovac, what the gaps look like, any channel strategy having an impact there.

Speaker Change: So that's number one. And then number two, I was really interested to hear your comments about

Speaker Change: Private Label.

Speaker Change: and what's going on there.

Mark LaVigne: So, I'd love to hear you touch on those two points. Thank you. Robert, I think on the private label, I mean, the commentary we provided in the prepared remarks was, you know, a global perspective where volume and value were down. I think, as you dig into it, those from maybe a US or international perspective, it then becomes a very, you know, it becomes a different story depending upon which market, which retailer you're discussing. But I think right now, I think that message from us is private label is largely consistent with what it has been. You are seeing pockets for private label is, you know, has slide up tick and other areas, it's coming down a little bit.

Unknown Executive: Robert, on private label, I mean, the commentary provided in the prepared remarks was, you know, a global perspective where volume and value were down. I think, as you dig into it, both from maybe a US or international perspective, it then becomes a very different story, depending upon which market, which retailer you're discussing. But I think right now, I think the message from us is private label is largely consistent with what it has been. You are seeing pockets where private label is, you know, has a slight uptick in other areas, but it's coming down a little bit.

Speaker Change: Robert, I think on the private label, I mean, we the commentary provided in the prepared remarks was, you know, a global perspective where volume and value were down. I think as you dig into it, both from a, maybe a US or international perspective, it then becomes a very, you know, it becomes a different story, depending upon which market, which retailer you're discussing.

Speaker Change: But I think right now, I think the message from us is private label is largely consistent with what it has been. You are seeing, you know, pockets where private label is, you know, has slight uptick in other areas. It's coming down a little bit, but on balance, it is.

Unknown Executive: But on balance, it has been sort of held at bay thus far, and I don't think we anticipate that changing. And I think what we try to do, Robert, from a don't watch share for us too closely perspective. I think we've got to react to share shifts a little bit and really understand the root cause. And right now, we're not seeing anything that would give us alarm from a private label perspective. And I don't believe I have touched on your first question.

Mark LaVigne: But on balance, it has been sort of held at bay thus far, and I don't think we anticipate that changing. And I think what we try to do, Robert, is from a, don't watch, share for us perspective too carefully. I think we've got to react to share shifts a little bit and really understand the root cause. And right now, we're not seeing anything that would give us more from a, from a private label perspective.

Speaker Change: It has been sort of held at bay thus far, and I don't think we anticipate.

Speaker Change: that changing. And I think what we try to do, Robert, is from a

Speaker Change: Don't watch Share4Us Perspectives too carefully. I think we've got to react to share shifts a little bit and really understand the root cause. And right now we're not seeing anything that would give us alarm from a private label perspective.

John Drabik: And I don't believe I touched on your first question.

Unknown Executive: Oh, and the distribution gains. Yeah, so on the international side, if you recall last year when we were rolling out additional price increases, we talked about some international distribution losses that we had. Well, as those price increases have been settled into the market, as the teams have gotten back out, and re-engaged with retailers, it really is a broad-based effort on behalf of a lot of the international teams to get back that distribution, and they've been successful in doing so.

John Drabik: Oh, and the distribution gains, you know, yeah, so on the international side, if you recall last year when we were rolling out additional price increases, we talked about some international distribution losses that we had.

Robert Attenstein: And I don't believe I touched on your first question.

Robert Attenstein: Oh, and the distribution gains. Yeah. So on the international side, if you recall last year when we were

Robert Attenstein: Rolling out additional price increases. We talked about some international distribution losses that we had.

John Drabik: Well, as those price increases have been settled into the market, as the teams have gotten back out, re-engaged with retail, as it really is a broad-based effort on behalf of a lot of international teams to get back that distribution, and they've been successful in doing. So there's not any one piece that's worth calling out. It's a lot of little pieces from markets around the world, but a great job by the team in getting that, in getting that distribution back and sort of restoring growth back in the international battery business. You know, we grew 60 basis points in the quarter, so it was a nice job by the international.

Robert Attenstein: Well, as those price increases have been settled into the market, as the teams have gotten back out, re-engaged with retailers, it really is a broad-based effort.

Robert Attenstein: On behalf of a lot of the international teams to get back that distribution and they've been successful in doing so. There's not any one piece.

Unknown Executive: It's a lot of little pieces from markets around the world, but a great deal. Great job by the team, and getting that and getting that distribution back and sort of restoring growth back in the international battery business. You know, we grew 60 basis points in the quarter. So it was a nice job by the international team.

Robert Attenstein: That's worth calling out. It's a lot of little pieces from markets around the world, but a great job by the team.

Robert Attenstein: in getting that distribution back and sort of restoring growth back. In the international battery business, you know, we grew 60 basis points in the quarter, so it was a nice job by the international team.

John Drabik: Thank you.

Operator: Our next question comes from the line of Andrea Teixeira from J.P. Morgan.

Andrea Teixeira: Our next question comes from the line of Andrea Teixeira from JP Morgan.

Speaker Change: Thank you. Our next question comes from the line of Andrea Teixeira from J.P. Morgan. Go ahead, please.

Andrea Teixeira: Go ahead, please. Can you comment on a little bit of what you were seeing in terms of the performance on track and non-track channels, understandably that has been obviously a secular shift in both in batteries and auto care, and wondering back into the distribution gains that you spoke about, like anything that we should be thinking into the holiday season and in terms of you, you just discussed also pricing. Anything you can share other than, I would say, effects-related pricing that we may be seeing towards the holiday season.

Andrea Teixeira: Yeah, good morning. Can you comment on a little bit of what you're seeing in terms of the performance on track and non-track channels? Understandably, there has been obviously a secular shift in both batteries and auto care, and wondering back into the distribution gains that you spoke about, like anything that we should be thinking about for the holiday season and, in terms of, you just discussed pricing, anything you can share other than I would say effects-related pricing that we may be seeing towards the holiday season. Thank you.

Andrea Teixeira: Yeah, good morning. So can you comment on a little bit of what you were saying in terms of the performance on track and non-track channels?

Andrea Teixeira: Understandably, there has been obviously a secular shift, and both in batteries and auto care, and wondering back into the distribution gains that you spoke about, like anything that we should be

Speaker Change: Thinking into the holiday season, and in terms of you just discussed also pricing, anything you can share other than, I would say, effect-related pricing that we may be seeing towards the holiday season? Thank you.

Andrea Teixeira: Thank you. Andrea, I think on the track versus non-track channel discussion, I think one of the things that, because the data sets seem to be changing a little bit more these days, is getting back to what's the data set that we're looking against and just to try to provide a little bit of perspective. If you're using kind of a typical Nielsen data set, you're probably capturing 50% of our US business, so that's 50% of 60% of our business roughly. If you're using the Malk Plus data set, you're probably getting 75 to 80% of the US business. But even with that coverage, I mean, remember that the US is just 60% of our business.

Unknown Executive: Andrea, I think on the track versus non-track channel discussion, I think one of the things that, because the data sets seem to be changing a little bit more these days, is getting back to what's the data set that we're looking against. And just to try to provide a little bit of perspective, if you're using kind of a typical Nielsen data set, you're probably capturing 50% of our U.S. business. So that's 50% of 60% of our business, roughly.

Speaker Change: Andrea, I think on the track versus non-track channel discussion, I think one of the things that because the data sets

Speaker Change: seem to be changing a little bit more these days is getting back to what's the data set that we're looking again and just to try to provide a little bit of perspective.

Speaker Change: If you're using kind of a typical Nielsen data set, you're probably capturing 50%.

Speaker Change: of our U.S. business, so that's 50% of 60% of our business, roughly. If you're using the MULC Plus dataset, you're probably getting 75% to 80% of the U.S. business, but even with that coverage, remember that the U.S. is just 60% of our business.

Unknown Executive: If you're using the MULC Plus data set, you're probably getting 75 to 80% of U.S. business. But even with that coverage, I mean, remember that the U.S. is just 60% of our business. I mean, what you may be leaving out in the U.S. is home center data, B2B, OEM, and some of those data sets, club, and online out of visibility is not what you would want, I assume.

John Drabik: I mean, what you may be leaving out in the US is home center data B to B OEM in some of those data sets. Club and online out of this ability is not what you would want, I assume. And then, you know, the international business as well, and so from a growth standpoint, so if I'm standing in your shoes, I'm trying to bridge 1.2% growth to the standard data you may be seeing. I mentioned 60 basis points of growth in international battery; you had 19% growth in international auto care, so that's some of the growth that you're probably not picking up.

Speaker Change: I mean, what you may be leaving out in the U.S. is home center data, B2B, OEM, and some of those data sets, club and online, out of visibility is not what you would want, I assume. And then, you know, the international business as well. And so from a growth standpoint, so if I'm...

Unknown Executive: And then, you know, the international business as well. And so from a growth standpoint, so if I'm standing in your shoes, I'm trying to bridge 1.2% growth to the standard data you may be seeing. And I mentioned 60 basis points of growth in international battery sales. You had 19% growth in international auto care. So that's some of the growth that you're probably not picking up. As we look forward, you know, in terms of, you know, holiday and I think we are feeling good when we call it flat for Q4, we're still delivering growth in the back half. I would not overemphasize, you know, going from 1.2% to flat.

Speaker Change: Standing in your shoes, I'm trying to bridge 1.2% growth to the standard data you may be seeing.

Speaker Change: And I mentioned 60 basis points of growth in international battery, you had 19% growth in international auto care, so that's some of the growth that you're probably not picking up. As we look forward, you know, in terms of...

John Drabik: As we look forward, you know, in terms of holiday, and I think we are feeling good when we call it flat for Q4. We're still delivering growth in the back half; I would not overemphasize going from 1.2% to flat. I think we're exiting the fiscal year in a very strong position; we're still delivering the growth. We expect growth in 25 based on all the initiatives we talked about. So when you look at it from a financial modeling standpoint, you've got growth; you're going to have growth margin improvement; you're going to have some investments in A&P and SG&A because you're going to want to, you know, we're investing in those in Q4 because we want to make sure we hit the ground running in 25 when we deliver the growth that we're talking about.

Speaker Change: you know, holiday and

Speaker Change: I think we are feeling good when we call the flat for Q4, we're still delivering growth in the back half, I would not...

Speaker Change: Overemphasize, you know, going from 1.2% to flat. I think we're exiting the fiscal year in a very strong position. We're still delivering the growth. We expect growth in 25 based on all the initiatives we talked about. So when you look at it from a financial modeling standpoint, you've got growth.

Unknown Executive: I think we're exiting the fiscal year in a very strong position. We're still delivering growth. We expect growth in 25 based on all the initiatives we talked about. So when you look at it from a financial modeling standpoint, you've got growth, you're going to have gross margin improvement, you're going to have some investments in A&P and SG&A, because you're going to want to, you know, we're investing in those in Q4, because we want to make sure we hit the ground running in 25 when we deliver the growth that we're talking about.

Speaker Change: You're going to have gross margin improvement. You're going to have some investments in A&P and SG&A because you're going to want to, you know, we're investing in those in Q4 because we want to make sure we hit the ground running in 25 when we deliver the growth that we're talking about.

John Drabik: So if that's super helpful, 25 we should be thinking of a normalized long-term algorithm as we can, as I think it will be alluded to now. I think that's the intention. I mean, again, get back to growth on the top line, deliver growth margin improvement, and then the rest of the algorithm kind of falls into place. It's always the objective.

Unknown Executive: So if that's super helpful, 25, we should be thinking about a normalized long-term algorithm as we can, as I think you alluded to.

Speaker Change: So that's super helpful. 25, we should be thinking about a normalized long-term algorithm.

Unknown Executive: I think that's the intention. I mean, again, get back to growth on the top line, deliver gross margin improvement, and then the rest of the algorithm kind of falls into place. It's always the objective.

Speaker Change: as we can, as I think you alluded to.

Speaker Change: Now, I think that's the intention. I mean, again, get back to growth on the top line, deliver gross margin improvement, and then the rest of the algorithm kind of falls into place. It's always the objective.

John Drabik: Okay, great. Thank you so much, both.

Andrea Teixeira: Okay, great. Thank you so much, folks.

Speaker Change: Okay, great. Thank you so much, folks.

Operator: Our next question comes from the line of Carla Casella from J.P. Morgan.

Carla Hodulik: Our next question comes from the line of Carla Castella from JP Morgan. Go ahead. Hi, thank you for taking this question. You've gotten a lot of questions on the promotional environment, but I wonder if you can give us a little bit more color by channel and if you're seeing a shift to more value channels, and it's up dictating kind of how you target promotions going into the back cast. Carla, we always tailor our promotional investments with retailers, trying to meet their strategic objectives. I do think you are seeing consumers, particularly in the low and middle income, but being more value conscious, that does tend to migrate online; it can be in club, it can be in dollar.

Speaker Change: Thank you. Our next question comes from the line of Carla Costello from J.P. Morgan. Go ahead, please.

Carla Casella: Hi, thank you for taking the question. You've gotten a lot of questions on the promotional environment, but I wonder if you can give us a little bit more color by channel and if you're seeing a shift to more value channels, and it's up dictating kind of how you target promotions going into the back half.

Carla Costello: Hi, thank you for taking the question.

Carla Costello: You've gotten a lot of questions on the promotional environment, but I wonder if you can give us a little bit more color by channel, and if you're seeing a shift to more value channels, and if that's dictating kind of how you

Speaker Change: Target Promotions going into the back half.

Unknown Executive: Carla, we always tailor our promotional investments with, you know, retailers trying to meet their strategic objectives. I do think you are seeing consumers, particularly in the low and middle income, being more value conscious that do tend to migrate online.

Speaker Change: Carl, we always tailor our promotional

Carl: Investments with retailers trying to meet their strategic objectives. I do think you are seeing consumers

Unknown Executive: It can be in club, it could be in dollars, and so the benefit we get from that is our ubiquitous distribution that we have. We're in every retailer, we're in every channel, so we don't need to sort of overly incentivize consumers to engage with our product. But I do think, you know, our teams are out there, we're meeting with retailers, and we are making sure we're connecting with them and investing dollars.

Carl: Particularly in the low and middle income.

Carl: of being more value conscious.

Mark LaVigne: And so the benefit we get from that is our youth after distribution that we have. We're in every retailer, we're in every channel, so we don't need to overly incent consumers to engage with our product. But I do think our teams are out there, we're meeting with retailers and we are making sure we're connecting with them and investing dollars. But again, I think it comes back to, from a promotional strategy standpoint, we're looking to drive top-on growth with gross margin improvement. That's those are the guardrails that we go against, and we look at that, and that's going to always be, it's always going to drive our decisions and our investments.

Carl: That does tend to migrate online, it can be in club, it can be in dollar, and so the benefit we get from that is our ubiquitous distribution that we have where it just...

Carl: We're in every retailer. We're in every channel. So we don't need to sort of overly incent consumers to engage with our product. But I do think, you know, our teams are out there, we're meeting with retailers, and we are making sure we're connecting with them and investing dollars. But again, I think it comes back to from a promotional strategy standpoint, we're looking to drive top line growth with gross margin improvement. Those are the guardrails that we go against. And we look at that, and that's going to always be, it's always going to drive our decisions and our investments.

Unknown Executive: But again, I think it comes back to, from a promotional strategy standpoint, we're looking to drive top-line growth with gross margin improvement. Those are the guardrails that we go against, and we look at that, and that's going to always be, it's always going to drive our decisions and our investments. And with Project Momentum, we now have that flexibility to invest, to drive that growth, while still letting gross margin improve.

Mark LaVigne: And with project momentum, we now have that flexibility to invest to drive that growth while still letting growth margin improve.

Carl: And with Project Momentum, we now have that flexibility to invest to drive that growth while still letting growth margin improve.

Carla Hodulik: Can I just do a follow-up on that project momentum? You increase the expected savings 20 million. Any change in the baskets, or can you give us kind of the key remaining baskets to that program? No, I think the percentage is it's still heavily gross margin versus SGNA; just continue to find opportunities within our network to optimize. So we took it up 20 million dollars for the fully three-year program. Okay, great.

Unknown Executive: You know, can I just do a follow-up on that perfect moment when you increase the expected savings by 20 million, any change in the baskets, or can you give us kind of the key remaining baskets for that program?

Speaker Change: Can I just do a follow-up on that profit momentum, you increased the expected savings $20 million, any change in the baskets or can you give us kind of the key remaining baskets to that program?

Unknown Executive: No, I think the percentage is it's still heavily gross margin versus SG&A. Just continue to find opportunities within our network to optimize. So we took it up $20 million for the fully three-year program.

Speaker Change: No, I think the percentage is it's still, you know, heavily gross margin versus SG&A. Just continue to find opportunities within our network to optimize. So we took it up $20 million for the fully three-year program.

Unknown Executive: Okay, great. And your leverage reduction for the year, is that mostly coming now from EBITDA since you're a little bit ahead on the debt reduction?

John Drabik: And in your leverage reduction for the years, that most becoming now from EBITDAX and you're a little bit ahead on the debt reduction. No, Carla, there's with our expectation as we continue to pay down debt in the fourth quarter. If you saw, we raised our call for debt pay down to 175 to 200 million. So that's at the top end of our original guide. So we should have some incremental debt pay down in Q4. Okay, great.

Speaker Change: Okay, great. And your leveraged reduction for the year, is that mostly coming now from EBITDA since you're a little bit ahead on the debt reduction?

Unknown Executive: No, Carla, our expectation is that we continue to pay down debt in the fourth quarter. If you saw, we raised our call for debt paydown to 175 to 200 million. So that's at the top end of our original guide. So we should have some incremental debt paid down in Q4. Okay.

Carla Casella: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Operator: Thank you. Our next question comes from the line of William Reuter from Bank of America. Go ahead, please.

William Reuter: Our next question comes from the line of William Reuters from Bank of America. Go ahead, please.

Speaker Change: Thank you. Our next question comes from the line of William Reuter from Bank of America. Go ahead, please.

William Reuter: Hi. My question is similar to one that I asked last quarter, which is, you know, your leverage is coming down more quickly than you previously expected. Last quarter, you said while you don't maintain a leverage target, you said that maybe, over time, four times makes sense. Given that leverage is improving so significantly, does it change your capital allocation plans in terms of would you do either share repurchases sooner than previously expected? Does it make sense to be at four times? Or would M&A come into the picture? That's it.

William Reuter: Hi. My question is similar to one that I asked last quarter, which is, you know, your leverage is coming down more quickly than you previously expected. Last quarter, you would, you know, while you don't maintain a leverage target, you'd said that maybe over time four times makes sense.

William Reuter: Hi. My question is similar to one that I asked last quarter, which is, you know, your leverage is coming down more quickly than you previously had expected. Last quarter, you had, you know, while you don't maintain a leverage target, you'd said that maybe over time, four times makes sense.

William Reuter: Given that leverage is improving so significantly, does it change your capital allocation plans in terms of would you do either sherry purchases sooner than previously expected? Does it make sense to be a four times, or would M&A come into the picture? That's it. Well, I'd still say that four times is a good target for us, and we're going to prioritize debt pay down. I mean, I think you've always got the options to do other things, but I think we'll focus very much on paying down debt. You know, we'll evaluate other opportunities, but we really want to get that double down.

Unknown Executive: Well, I'd still say that four times is a good target for us, and we're going to prioritize that pay down. I mean, I think you've always got options to do other things. But I think we should focus very much on paying down debt. You know, we'll evaluate other opportunities, but we really want to get that level down. And I think if we look at M&A, kind of like what Mark talked about earlier, very closely into the categories that we're in. And I would hope that they would be leverage-neutral, so nothing of significance. So we'll continue to strive to pay down debt going forward for a while.

William Reuter: And I think if we look at M&A, kind of like what Mark talked about earlier, very close into the categories that we're in. And I would hope that they would be leverage neutral. So nothing of significance.

Speaker Change: we'll evaluate other opportunities, but we really want to get that debt level down. And I think if we look at M&A, kind of like what Mark talked about earlier, very close into the categories that we're in, and I would hope that they would be leveraged neutral, so nothing of significance. So we'll continue to strive to pay down debt going forward for a while.

William Reuter: So we'll continue to strive to pay down debt going forward for a while.

William Reuter: Got it. And then, if I can just have one follow-up question. In terms of when you've seen periods of greater consumer weakness, do you expect that consumers would either try and increase the size of the packs of batteries that they buy to attain better value, or are they more focused on trying to reduce the dollars that they spend in any given period, and so maybe they will move to smaller packs which may have some higher margins?

William Reuter: Got it.

William Reuter: And then, if I can just have one follow-up. In terms of one you've seen periods of greater consumer weakness, do you expect that consumers would either try and increase the size of the packs of batteries that they buy to attain better value, or are they more focused on trying to reduce the dollars that they spend in any period. And so maybe you've moved smaller packs, which may have some higher margins.

Speaker Change: Got it. And then if I can just have one follow-up. In terms of when you've seen periods of greater consumer weakness,

William Reuter: I'll build a short answer to both. We are seeing consumers migrating up to larger packs and as well as some of them migrating down the smaller packs to hit a lower price point. Right now, I would say the migration to larger packs is slightly greater than the migration to the lower size packs, but you do see both dynamics playing out. And, you know, fortunately, our offerings, you know, allow for consumers to make that choice.

Unknown Executive: Bill, the short answer is both. We are seeing consumers migrate up to larger PACs, as well as some of them migrating down to smaller PACs to hit a lower price point. Right now, I would say the migration to larger PACs is slightly greater than the migration to lower-size packs, but you do see both dynamics playing out. And, you know, fortunately, our offerings, you know, allow for consumers to make that choice.

William Reuter: Great. That's all for me. Thank you.

William Reuter: Great.

Unknown Executive: That's all for me.

Operator: Ladies and gentlemen, just a reminder, should you have a question, please press star followed by the number one on your touchstone phone. We have our next question coming from the line of Brian McNamara from Canuco Genuity. Go ahead, Brian.

Unknown Executive: Ladies and gentlemen, just a reminder: should you have a question, please press star, followed by the number one on your touchstone phone.

Speaker Change: Thanks so much.

Speaker Change: Thank you. Ladies and gentlemen, just a reminder, should you have a question, please press star followed by the number one on your touchstone phone.

Brian McNamara: We have our next question coming from the line of Brian McNamara from Cano Corgenarity.

Brian McNamara: Go ahead, please. Okay.

Brian McNamara: Hey, good morning, guys. Thanks for taking the questions. So we've heard from other suppliers recently that don't really have as optimistic a view as the home centers do for an improvement in calendar H2 relative to H1. I'm curious what's contemplated in your guidance for that channel in Q4, given it's untracked, and any thoughts into fiscal 2025 there?

Brian McNamara: Good morning, guys. Thanks for taking the questions. So we heard from other suppliers recently that don't really have as optimistic of you as the home centers do for an improvement encounter, H2 relative to H1.

Speaker Change: Hey, good morning, guys. Thanks for taking the questions. So, we've heard from other suppliers recently that don't really have as optimistic a view as the home centers do for an improvement in calendar H2 relative to H1. I'm curious what's contemplated in your guidance for that channel in Q4, given it's untracked, and any thoughts into fiscal 2025 there?

John Drabik: I'm curious what's contemplated in your guidance for that channel in Q4 given it's untracked and any thoughts into fiscal 2025 there. Brian, we don't break it down by customers in terms of the external outlook we provided. I would say all of the factors that we've talked about play into the call that we've had for flat, you know, obviously delivering the growth in the back half. You know, I would say you are seeing improving trends in home center; you're seeing signs of life in B2B and OEM. But there is some caution, you know, in terms of what's the state of the consumer, but you are seeing healthy volume growth in terms of the measured channels. You know, your volumes up three percent globally in the battery category in the US.

Unknown Executive: We don't break it down by customers in terms of the external outlook we provided. I would say all of the factors that we've talked about play into the call that we made for flat Q4, but then obviously, delivering growth in the back half. I would say you are seeing improving trends in HomeCenter. You're seeing signs of life in B2B and OEM, but there is some caution in terms of what the state of the consumer is, but you are seeing healthy volume growth in terms of the measured channels.

Speaker Change: Brian , we don't break it down by customers in terms of the external outlook we provided. I would say all of the factors that we've talked about play into the call that we've had for flat.

Unknown Executive: Your volume's up 3% globally in the battery category. In the U.S., it's up 4%, so there's growth there to be had. You've got online, which is a source of growth, and clubs are a source of growth, so I think we are seeing those signs, and so all of that baked in gives us the outlook we're providing, and we're not overly beholden to just one channel to

John Drabik: It's up 4%. So there's growth there to be had. You've got online, which is a source of growth clubs, sorts of growth. So I think we are seeing those signs. And so all of that baked in gives us the outlook we're providing, and we're not overly beholden to do one channel deliver that growth.

Speaker Change: You know your volumes up 3% globally in the battery category in the US it's up 4% so there's there's growth there to be had You've got online which is a source of growth club sort of growth So I think we are seeing those signs and so all of that baked in gives us the outlook We're providing and we're not overly beholden to just one channel deliver that growth

John Drabik: Great. And then secondly on this nice gross margin recovery that we've seen.

Brian McNamara: Great. And then secondly, on this nice gross margin recovery that we've seen, I think you alluded to the fact that this should continue into fiscal 25. Like, how much legs does this still have? I mean, I would imagine the top line would have to start cooperating to get some leverage on that line, or correct me if I'm wrong. Well, you know, look, think about this.

John Drabik: I think you will lose to the fact that this should continue into fiscal 25. Like how much legs does this still have? I mean, I would imagine the top line would have to start cooperating to get some leverage on that line, or correct me if I'm wrong.

John Drabik: Well, you know, look, you think about fourth quarter and then heading into next year, we still have a full year of momentum that's going to benefit gross margin. Our raw material input costs, like spot rates, have been pretty favorable. We've seen a little bit of increases in like things like zinc and manganese over the last couple of months, but still net net. I think we're on a positive trend. And you know, like freight rates are very positive for us this year. They've gone back a bit. I'd say we're hedged with a lot of our contracts.

Unknown Executive: Well, you know, look, think about fourth quarter and then heading into next year, we still have a full year of momentum that's going to benefit gross margin. Our raw material input costs like spot rates have been have been pretty favorable. We've seen a little bit of increases in like things like zinc and manganese over the last couple of months but still net net I think we're on a positive trend and you know like freight rates were very positive for us this year they've gone back a bit I'd say we're hedged with a lot of our contracts but that still should be a you know reasonably favorable trend going into 25 so we're optimistic that there's continued room to run on the gross margin

Speaker Change: And, you know, like, freight rates were very positive for us this year. They've gone back a bit. I'd say we're hedged with a lot of our contracts, but that still should be a, you know, reasonably favorable trend going into 2025. So we're optimistic that there's continued room to run on the gross margin line.

John Drabik: But that still should be a reasonably favorable trend going into 25. So we're optimistic that there's continued room to run on the gross margin line.

Unknown Executive: Great.

Unknown Executive: Thanks, guys.

Speaker Change: Great, thanks guys.

Mark LaVigne: This closes the Q&A portion of today's call.

Operator: Thank you. This closes the Q&A portion of today's call. I'd now like to turn the call back over to Mr. Mark LaVigne for final closing.

Brian: Thanks Brian . Thanks. Thank you.

Mark LaVigne: I don't like to turn the call back over to Mr. Mark LaVigne for final closing comments. Thanks, operator. Thanks to all of you for joining us today and your interest in an energizer.

Speaker Change: This closes the Q&A portion of today's call. I'd now like to turn the call back over to Mr. Mark LaVigne for final closing comments.

Mark LaVigne: Thanks, Operator. Thanks to all of you for joining us today and for your interest in Energizer. Hope everyone has a great rest of the day.

Mark LaVigne: Thanks, operator. Thanks to all of you for joining us today and your interest in Energizer. Hope everyone has a great rest of the day.

Mark LaVigne: Hope everyone has a great rest of the day.

Unknown Executive: Thank you, Sen.

Operator: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.

Unknown Executive: Ladies and gentlemen, this includes your conference call for today. We thank you for participating and ask to please disconnect your lines.

Speaker Change: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.

Unknown Executive: Have a lovely day.