Energizer Holdings Q1 2026 Energizer Holdings Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Energizer Holdings Inc Earnings Call
Speaker #1: Answers. fiscal year, 2026, First conference call. After the speakers' remarks, there will be a question-and-answer session. If you'd like to ask a question, please press star, followed by the number one on your touch-tone phone.
Speaker #1: If you'd like to withdraw your question, please press star, followed by two. As a reminder, this call is being recorded. I would now like to turn the conference over to John Poldan.
Speaker #1: Vice President, Treasurer. And Investor Relations, please go ahead.
Speaker #2: Good morning. And welcome to Energizer's first quarter fiscal 2026 conference call. Joining me today are Mark Officer; and John Drabik, Executive Vice President and Chief Financial LaVigne, President and Chief Executive Officer.
Speaker #2: In just a moment, Mark will share a few opening comments and then we'll take your questions. A replay of this call will be available on the Investor Relations section of our website, energizerholdings.com.
Speaker #2: In addition, please note that our earnings release, prepared remarks, and a slide deck are also posted on our website. During the call, we will make forward-looking statements about the company's future business and financial performance, among other matters.
Speaker #2: These statements are based on management's current expectations and are subject to risk and uncertainties, which may cause actual results to differ materially from these statements.
Speaker #2: these forward-looking statements. Other factors that could cause We do not undertake to update actual results to differ materially from these statements are included in reports we file with the in our presentation to non-GAAP financial SEC.
Speaker #2: reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today which is available on our Information concerning our categories and We also refer 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.
Speaker #2: The battery category information includes both brick-and-mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding fiscal year and all comparisons to prior year relate to the same period in fiscal 2025.
Speaker #2: With that, I would like to turn the call over to
Speaker #3: As the quarter and year pertain to Energizer's we've done in prior quarters, we posted prepared remarks on our website which provides a comprehensive overview of our achievements this quarter and our forward outlook.
Speaker #3: But I first wanted to open the call with just a few comments before we head into Q&A. As we close our first quarter of 2026, our agenda is unchanged and firmly aligned with long-term value creation.
Speaker #3: Restore growth, rebuild margins that were pressured by tariffs and return the business to our historical cash flow profile. In the first quarter, we made meaningful progress on all fronts.
Speaker #3: Our performance exceeded expectations and we've established a clear foundation for sequential gross margin expansion and a return to meaningful earnings growth in the back half of the year.
Speaker #3: The quarter demonstrated that our strategy is working. We secured final customer decisions on the APS to Energizer brand to contribute over $30 million most of it landing in the third and fourth distribution across our value and across both batteries and lights and auto care, and substantially completed the supply chain realignment that is central to restoring margin.
Speaker #3: These actions position us to deliver over $300 basis points of gross margin expansion from Q1 to Q2, with another $300 to $400 basis points anticipated by year-end.
Speaker #3: We also delivered robust cash generation that allowed us to pay down over $100 million of debt while returning nearly shareholders through dividends and share repurchases, reinforcing the $28 million in capital to durability of our cash flow finally, I wanted to spend a brief moment on model.
Speaker #3: And our capital allocation strategy which remains a cornerstone of long-term value creation. We will continue to prioritize reducing debt which directly shifts value to equity holders while strengthening our balance sheet.
Speaker #3: In addition to reducing leverage, our free cash flow supports a balanced shareholder-first capital allocation strategy. We intend to return capital through an attractive dividend ongoing cash generation and which reflects our confidence in through share repurchases when market conditions create attractive entry points.
Speaker #3: This disciplined deployment of cash, paying down debt, maintaining an attractive dividend, and buying back shares reinforces our commitment to maximizing long-term shareholder value. Thank Energizer and with that, let's open the call for
Speaker #3: questions. Thank you, as a reminder, if
Speaker #1: you'd like to ask a question, press If you'd like to withdraw your question, press star two. One moment, please, for your first question. Your first question comes from Lauren Lieberman from star one on your touch-tone phone.
Speaker #1: Barclays. Please go ahead.
Speaker #4: Great. Thanks so much. Good morning. So one quarter into the year, I wanted to just get a sense for how you're thinking about things broadly versus what you might have said three months ago.
Speaker #4: So thinking about the consumer backdrop, maybe what you're seeing in terms of category trends, any kind of uptick from private label. We know the continued pressure on the lower-end consumer has been a dynamic.
Speaker #4: And it just feels like there's a lot of moving parts and now a very back halfway to year. So just kind of degree of half.
Speaker #4: Thanks.
Speaker #3: Sure. Good morning, Lauren. Let me start high level. So when we were building our plan for '26, we knew it was going to be a transitional start to the year.
Speaker #3: We saw a softening consumer trends in October and November. We were lapping last year's hurricane-driven demand. And we had some orders which were planned for the first quarter which benefited the fourth quarter of fiscal '25.
Speaker #3: On the cost side, we were managing through elevated tariff pressures which were the result of tariffs which were levied at higher than the current rates.
Speaker #3: were reshaping our network which also And in light of that, we created some short-term operational inefficiencies, including some absorption. These affected the results at the end of last year.
Speaker #3: And we expected them to continue into the first half of '26. These were understood going in. We're fully embedded in our plan. And the quarter thus far has the year has thus far unfolded largely as we expected.
Speaker #3: Looking ahead, we're encouraged by the trends we're seeing in the stabilized. We saw a strong rebound in business. Consumer demand is December volumes in the US.
Speaker #3: Which remains our largest market. We also strengthened our in-store presence with broader and higher-quality distribution across major retailers which you'll see over the back half of the year.
Speaker #3: At the same time, we've done additional work to reposition our cost structure. And that's starting to take hold. We are starting to cycle through inventory which are impacted by those higher rates and are mitigation efforts are starting to come to fruition.
Speaker #3: That includes relocating production capacity in the US, diversifying sourcing, and investing in efficiencies to make the network more efficient. We've taken targeted steps to increase production to increase the tax credits which we expect to earn this year which should drive a benefit of roughly 50% above last year.
Speaker #3: These dynamics are all coming together and setting us up for a strong acceleration of net sales and earnings in the back half so while the first half reflects the short-term factors, the underlying trajectory is improving.
Speaker #3: This year is really about restoring growth, restoring margins, and restoring free cash flow. And thus far, we're off to a great start. Specific, Lauren, to your question on battery consumption trends, we saw meaningful improvement in the quarter, as I just mentioned.
Speaker #3: December inflected the volume growth. You see in the scanner trends, the 13-week volume was slightly negative. But then when you see the December data, in the positive.
Speaker #3: Obviously, January is going to have a very positive volume growth with the winter storms in the we expect the category to be stable. And the trajectory of the category is essentially what we assume going into the year.
Speaker #3: Anything I missed?
Speaker #4: No. I think that was perfect. Thank
Speaker #4: you. Thanks,
Speaker #3: Lauren. Your next
Speaker #1: question comes from Peter Grom from UBS. Please go
Speaker #1: ahead. Great.
Speaker #5: Thank you. Good morning, guys. I guess I wanted to follow up on that last point, right? Just on the January trends and kind of the impact of weather and so I asked this in the context of you mentioned in the release that you're outlook does not contemplate any impact from the recent winter storm activity.
Speaker #5: So just whether it's based on what you've seen thus far, maybe what you've seen over time, can you maybe just help us understand what this could do to your guidance as it relates to either the outlook?
Speaker #5: Thanks.
Speaker #3: Sure. Peter, why don't I start with
Speaker #3: this storm impact and then maybe John can bridge a little bit of kind of the front half, back half dynamic that we're seeing. I mean, the storm volume in the US clearly was a benefit to POS.
Speaker #3: I mean, the one-week numbers were significant. Category value north of 50%. It's really too early to quantify the impact that this will have on our business as we'll need to work through replenishment orders, we need to manage through any shipments which may have been disrupted because of the weather, as well as work through resulting inventory levels at retail inventory levels.
Speaker #3: It will certainly be a benefit for our business, but it's just too early to tell how much. I would say there's just more to come on that in connection with the Q2 earnings call.
Mark LaVigne: It's really too early to quantify the impact that this will have on our business, as we'll need to work through replenishment orders. We need to manage through any shipments which may have been disrupted because of the weather, as well as work through resulting inventory levels at retailer inventory levels. It will certainly be a benefit for our business, but it's just too early to tell how much. I would say there's just more to come on that, in connection with the Q2 earnings call. John, you wanna walk through kind of the bridge as we think through the balance of the year?
Mark LaVigne: It's really too early to quantify the impact that this will have on our business, as we'll need to work through replenishment orders. We need to manage through any shipments which may have been disrupted because of the weather, as well as work through resulting inventory levels at retailer inventory levels. It will certainly be a benefit for our business, but it's just too early to tell how much. I would say there's just more to come on that, in connection with the Q2 earnings call. John, you wanna walk through kind of the bridge as we think through the balance of the year?
Speaker #3: John, you want to walk through kind of the bridge as we think through the balance of
As we will need to work through replenishment orders, we need to manage through any shipments, which may have been disruptive because of the weather as.
Speaker #2: Yeah, Mark, I can take us
Speaker #2: down maybe a level from where you were setting it up. So our view for the year? the back half of the year or the rest of the year is really that the category is relatively flattish.
As well as work through resulting inventory levels at retailer and retailer inventory levels. It will certainly be a benefit for our business, but it's just too early to tell how much I would say, there's just more to come on that connection.
Speaker #2: And as Mark said, that's kind of what we've seen in December and into January. So we've got a good base to build on. Some of the key drivers on the top line that we're looking at, we've called out the transition of APS customers to Energizer-branded product.
Connection with the Q2 earnings call John you want to walk through kind of the bridge as we think through the balance of the year, Yes, Mark I can take us down maybe a level from where you were setting it up so.
John Drabik: Yeah, Mark, I can take us down maybe a level from where you were setting it up. So, you know, our view for the back half of the year, or the rest of the year, is really that the category is relatively flattish, and as Mark said, that's kind of what we've seen in December and into January. So we've got a good base to build on. Some of the key drivers on the top line that we're looking at, we've called out, you know, the transition of APS customers to Energizer branded product. That's like, we expect that to contribute, you know, $30 million or roughly 200 basis points of organic growth.
John Drabik: Yeah, Mark, I can take us down maybe a level from where you were setting it up. So, you know, our view for the back half of the year, or the rest of the year, is really that the category is relatively flattish, and as Mark said, that's kind of what we've seen in December and into January. So we've got a good base to build on. Some of the key drivers on the top line that we're looking at, we've called out, you know, the transition of APS customers to Energizer branded product. That's like, we expect that to contribute, you know, $30 million or roughly 200 basis points of organic growth.
Speaker #2: That's like we expect that to contribute $30 million or roughly 200 basis points of organic growth. One of the other things we have plans to really increase distribution in the back half of the year.
Our view for the back half of the year or the rest of the year is really that the category is relatively flattish and as Mark said, that's kind of what we've seen in December and into January. So we've got a good base to build on some of the key drivers on the top line that we're looking at we've called out the transition of Aps customers to Energizer branded.
Speaker #2: And that's by leveraging innovation and leaning into our full portfolio. That's across both brick-and-mortar and fast-growing e-commerce. So based on current planogram changes that we've got, as well as NPD sell-in, and then that e-com growth, we're expecting 400 to 500 basis points of growth in the back half.
We expect that to contribute $30 million or roughly 200 basis points of organic growth.
Speaker #2: And then we've got some carryover pricing. And as well as some targeted tactical pricing that we expect to have kind of a 50 to 100 basis point benefit as we go into the back half of the year.
John Drabik: One of the other things, we have plans to really increase distribution in the back half of the year, and that's by leveraging innovation and leaning into our full portfolio. That's across both brick and mortar and fast-growing e-commerce. So based on current planogram changes that we've got, as well as NPD sell-in, and then that e-com growth, you know, we're expecting 400 to 500 basis points of growth in the back half. And then we've got some carryover pricing and as well as some targeted tactical pricing that we expect to have kind of a 50 to 100 basis point benefit as we go into the back half of the year. So we're seeing, you know, good things within our plan on the top line. And then gross margin, obviously, Q1 was really impacted by a number of factors.
John Drabik: One of the other things, we have plans to really increase distribution in the back half of the year, and that's by leveraging innovation and leaning into our full portfolio. That's across both brick and mortar and fast-growing e-commerce. So based on current planogram changes that we've got, as well as NPD sell-in, and then that e-com growth, you know, we're expecting 400 to 500 basis points of growth in the back half. And then we've got some carryover pricing and as well as some targeted tactical pricing that we expect to have kind of a 50 to 100 basis point benefit as we go into the back half of the year. So we're seeing, you know, good things within our plan on the top line. And then gross margin, obviously, Q1 was really impacted by a number of factors.
The other things we have plans to really increase distribution in the back half of the year and thats by leveraging innovation and leaning into our full portfolio that's across both.
Speaker #2: So we're seeing good things within our plan on the top line. And then gross margin, obviously, first quarter was really impacted by a number of factors.
Brick and mortar and fast growing E. Commerce. So based on current plan O Gram changes that we've got as well as NPD sell in and then that E. Com growth, we're expecting 4% to 500 basis points of growth in the back half and then we've got some carryover pricing and as well as some targeted tactical pricing.
Speaker #2: A lot of them are not going to continue. So we kind of wanted to give some color around that. I mean, the first one is the tariffs were almost a 300 basis point impact in the first quarter.
Speaker #2: We're still flushing through some of that inventory that we bought in the spring and in the summer. So the rate was higher at that point.
To have kind of a 50 to 100 basis point benefit as we go into the back half of the year. So we're seeing.
Speaker #2: We expect that to improve as we go throughout the second quarter and into the rest of the year. We also you'll see in our report, we sold about 65 million dollars of Panasonic-branded product in Q1.
Good things within our plan on the top line and then gross margin. Obviously first quarter was really impacted by a number of factors a lot of them are not going to continue. So we kind of wanted to give some color around that I mean, the first one is the tariffs were almost a 300 basis point impact in the first quarter were still flushing through some of that inventory that we bought in the spring and in the <unk>.
John Drabik: A lot of them are not going to continue, so we kind of wanted to give some color around that. I mean, the first one is, you know, the tariffs were almost a 300 basis point impact in the first quarter. We're still flushing through some of that inventory that we bought in the spring and in the summer. So, you know, the rate was higher at that point. We expect that to improve as we go throughout, you know, second quarter and, and into the rest of the year. We also, you'll see in our report, we sold about $65 million of Panasonic-branded product in Q1. That's really related to the APS transition. So we sold through. We're losing that market at, you know, at December 31, or we've lost it already.
John Drabik: A lot of them are not going to continue, so we kind of wanted to give some color around that. I mean, the first one is, you know, the tariffs were almost a 300 basis point impact in the first quarter. We're still flushing through some of that inventory that we bought in the spring and in the summer. So, you know, the rate was higher at that point. We expect that to improve as we go throughout, you know, second quarter and, and into the rest of the year. We also, you'll see in our report, we sold about $65 million of Panasonic-branded product in Q1. That's really related to the APS transition. So we sold through. We're losing that market at, you know, at December 31, or we've lost it already.
Speaker #2: to the APS transition. So we sold through we're losing that That's really related market at 12:31, and we've lost it already. We sold through all that inventory and worked with our customers there in Europe to try to transition.
Summer.
The rate was higher at that point, we expect that to improve as we go throughout second quarter and into the rest of the year.
Speaker #2: That had a pretty big impact on gross margin. So that was a 200 basis point hit. That's not going to recur as we go throughout the rest of the year.
We also.
Youll see in our report we sold about $65 million of Panasonic branded product in Q1, that's really related to the Aps transition. So we sold through were losing that market at 12, 31, and we lost it already.
Speaker #2: The other big one that we've been talking about for a while are the transitional product cost impacts. Those were almost 100 basis points. We've done a lot of work to reset the global supply chain.
Speaker #2: We should flush through most of that as we get through Q2 and then the rest of the year. We should be in really good shape.
John Drabik: We sold through all that inventory and worked with our customers there in Europe to try to transition. That had a pretty big impact on gross margin, so that was a 200 basis point hit. That's not gonna recur as we go throughout the rest of the year. The other big one that we've been talking about for a while are the transitional product cost impacts. Those were, you know, almost 100 basis points. We've done a lot of work to reset the global supply chain. You know, we should, you know, flush through most of that as we get through Q2, and then the rest of the year, we should be in really good shape.
We sold through all of that inventory and worked with our customers. There in Europe to try to transition that had a pretty big impact on gross margin. So that was a 200 basis point hit that's not going to recur as we go throughout the rest of the year.
John Drabik: We sold through all that inventory and worked with our customers there in Europe to try to transition. That had a pretty big impact on gross margin, so that was a 200 basis point hit. That's not gonna recur as we go throughout the rest of the year. The other big one that we've been talking about for a while are the transitional product cost impacts. Those were, you know, almost 100 basis points. We've done a lot of work to reset the global supply chain. You know, we should, you know, flush through most of that as we get through Q2, and then the rest of the year, we should be in really good shape.
Speaker #2: So as we look at Q2, we expect 300 basis points of sequential improvement. And then we see continued expansion as we go through into Q3 and Q4.
Other big one that we've been talking about for a while or the transitional product cost impacts.
Speaker #2: I think our plan is to get back into the low 40s, which is kind of where we were before the tariffs really hit. And I think we're going to get past these transitional one-time costs and leverage targeted pricing and then optimize production credits really in the back half of the year.
Those were almost a 100 basis points, we've done a lot of work to reset the global supply chain.
We should flush through most of that as we get through Q2, and then the rest of the year, who should be in really good shape.
Speaker #2: So we've got some good trends going on.
John Drabik: So, you know, as we look at Q2, we expect 300 basis points of sequential improvement, and then we, you know, see continued expansion as we go through into Q3 and Q4. I think, you know, our plan is to get back into the low forties, which is kind of where we were, you know, before the tariffs really hit. And I think we're gonna get, you know, past these transitional one-time costs and, you know, leverage targeted pricing, and then optimize production credits, really, in the back half of the year. So we've got some good trends going on. Peter, we broadened your question a little bit. We thought it was important to sort of highlight that front half, that back half.
John Drabik: So, you know, as we look at Q2, we expect 300 basis points of sequential improvement, and then we, you know, see continued expansion as we go through into Q3 and Q4. I think, you know, our plan is to get back into the low forties, which is kind of where we were, you know, before the tariffs really hit. And I think we're gonna get, you know, past these transitional one-time costs and, you know, leverage targeted pricing, and then optimize production credits, really, in the back half of the year. So we've got some good trends going on.
So as we look at Q2, we expect 300 basis points of sequential improvement.
Speaker #3: Peter, we broadened your question a little bit. We thought it was important to sort of highlight that front half, back half.
And then we see continued expansion as we go through into Q3 and Q4 I think our plan is to get back into the low <unk>, which is kind of where we were before the tariffs really hit and I think we're going to get past. These transitional onetime cost and leverage targeted pricing and then optimize production credits really in the back half of the year. So we've got some good.
Speaker #5: No, that is helpful. I mean, I guess one follow-up to that, I mean, in the building blocks are really helpful. But it remains a pretty volatile uncertain environment.
Speaker #5: So how would you characterize or how did you think about layering in flexibility or cushion as you think about the guidance from here?
Good trends going on.
Mark LaVigne: Peter, we broadened your question a little bit. We thought it was important to sort of highlight that front half, that back half.
Peter we broaden your question a little bit we thought it's important to sort of highlight that front half back half.
Speaker #3: Yeah, Peter, we always try to build in enough flexibility in the plan to be able to deal with uncertainty. I mean, what you just described has been a constant over the last five or six years.
Peter Grom: Mm-hmm, mm-hmm. No, that's, that is helpful. I mean, I guess one follow-up to that, I mean, and the building blocks are really helpful, but it remains a pretty volatile, uncertain environment. So, you know, how would you characterize, or how did you think about layering in flexibility or cushion as you think about the guidance from here?
Peter Grom: Mm-hmm, mm-hmm. No, that's, that is helpful. I mean, I guess one follow-up to that, I mean, and the building blocks are really helpful, but it remains a pretty volatile, uncertain environment. So, you know, how would you characterize, or how did you think about layering in flexibility or cushion as you think about the guidance from here?
That is helpful. I guess, one follow up to that and the building blocks are really helpful. But it remains a pretty volatile uncertain environment.
Speaker #3: So every year, it evolves differently than you expect going in. I think if one thing this organization has developed over that time period is the muscle memory to be able to read and react to situation and adjust your plans accordingly.
How would you characterize or how did you think about layering in flexibility or cushion.
Think about the guidance from here.
Speaker #3: And that's a daily occurrence around here. So I think we've got the right plans in place. We're confident in the outlook. That we've provided.
Peter we always try to build in enough flexibility in the plan to be able to deal with uncertainty.
Mark LaVigne: You know, Peter, we always try to build in enough flexibility in the plan to be able to deal with uncertainty. I mean, what you just described has been a constant over the last five or six years. So every year evolves differently than you expect going in. I think if one thing, this organization has developed over that time period, is the muscle memory to be able to read and react to situation and adjust your plans accordingly. And that's a daily occurrence around here. So I think we've got the right plans in place. We're confident in the outlook that we've provided. It may not play out exactly as we forecast sitting here today, but ultimately, we feel like we can deliver the financials we've laid out.
Mark LaVigne: You know, Peter, we always try to build in enough flexibility in the plan to be able to deal with uncertainty. I mean, what you just described has been a constant over the last five or six years. So every year evolves differently than you expect going in. I think if one thing, this organization has developed over that time period, is the muscle memory to be able to read and react to situation and adjust your plans accordingly. And that's a daily occurrence around here. So I think we've got the right plans in place. We're confident in the outlook that we've provided. It may not play out exactly as we forecast sitting here today, but ultimately, we feel like we can deliver the financials we've laid out.
Speaker #3: It may not play out exactly as we forecast sitting here today, but ultimately, we feel like we can deliver the financials we've laid
What you just described has been a constant over the last five or six years. So every year evolves differently than you expect going in I think if one thing. This organization has developed over that time period as the muscle memory to be able to read and react the situation and adjust your plans accordingly.
Speaker #3: out.
Speaker #5: Great. Well, thank you so much for
Speaker #5: that. Best of
Speaker #3: Thanks, Peter. Thanks,
Speaker #2: Peter.
Speaker #4: See your next question luck. comes from Rob Altenstein from Evercar. Please go ahead.
That's a daily occurrence around here. So I think we've got the right plans in place we're confident in the outlook.
Speaker #6: Great. Thank you. I think you may have just answered my question, but I want to make sure so batteries, much stronger than we would have expected, less increase in gross profit than we would have expected.
We've provided it may not play out exactly as we.
As we forecast sitting here today, but ultimately we feel like we can deliver the financials we've laid out.
Great well. Thank you so much for that and best of luck.
Peter Grom: Great. Well, thank you so much for that, and best of luck.
Peter Grom: Great. Well, thank you so much for that, and best of luck.
Speaker #6: Is that have you just basically totally explained what happened there in terms of Panasonic and the tariffs, or are there other factors? Or do I just have that all wrong?
Thanks, Peter Thanks, Peter.
John Drabik: Thanks, Peter.
John Drabik: Thanks, Peter.
Mark LaVigne: Thanks, Peter.
Mark LaVigne: Thanks, Peter.
Your next question comes from Rob <unk> from Evercore. Please go ahead.
Operator: Your next question comes from Robert Ottenstein from Evercore ISI. Please go ahead.
Operator: Your next question comes from Robert Ottenstein from Evercore ISI. Please go ahead.
Robert Ottenstein: Great. Thank you. I think you may have just answered my question, but I wanna make sure. So, batteries, much stronger than we would have expected, less increase in gross profit than we would have expected. Is that... Have you just basically totally explained what happened there in terms of Panasonic and the tariffs, or are there other factors, or do I just have that all wrong?
Robert Ottenstein: Great. Thank you. I think you may have just answered my question, but I wanna make sure. So, batteries, much stronger than we would have expected, less increase in gross profit than we would have expected. Is that... Have you just basically totally explained what happened there in terms of Panasonic and the tariffs, or are there other factors, or do I just have that all wrong?
Great. Thank you I think you may have just answered my question, but I want to make sure.
Speaker #3: No, that's right, Robert. It's the three items. It's the higher tariffs, APS was really a it was a 200 basis point drag on its own in the quarter.
So batteries much stronger than we would've expected.
Less increase in gross profit than we would've expected is that have.
Speaker #3: And then it's the product cost transitional nature of some of those changes that we've got going on
Have you just basically totally explained what happened there in terms of Panasonic and the tariffs or are there other factors or do I just have that all wrong.
Speaker #3: improve. Great.
Speaker #6: And then can you talk about the strengths
Speaker #6: that the category or was it more you? And does that tell us anything about potential that should continue to market share gains in '26 and maybe you could touch on what you see in calendar '26 in terms of shelf space, just points of distribution, those sorts of drivers?
No that's right Robert it's the three items.
John Drabik: No, that's right, Robert. It's the three items. It's the higher tariffs. APS was really it was a 200 basis point drag on its own in the quarter. And then it's the, you know, product cost transitional nature of some of those changes that we've got going on, that should continue to improve.
John Drabik: No, that's right, Robert. It's the three items. It's the higher tariffs. APS was really it was a 200 basis point drag on its own in the quarter. And then it's the, you know, product cost transitional nature of some of those changes that we've got going on, that should continue to improve.
The higher tariffs.
<unk> was really it was a 200 basis point drag on its own in the quarter and then it's the.
Product cost transitional nature of some of those changes that we've got going on that should continue to improve.
Great and then can you can you talk about the the strength in in December was that.
Robert Ottenstein: Great. And then, can you talk about the strength in December? Was that the category, or was it more you? And does that tell us anything about, you know, potential market share gains in 2026, and maybe you could touch on what you see in calendar 2026 in terms of shelf space, distribution points, you know, those sorts of drivers? Thanks.
Robert Ottenstein: Great. And then, can you talk about the strength in December? Was that the category, or was it more you? And does that tell us anything about, you know, potential market share gains in 2026, and maybe you could touch on what you see in calendar 2026 in terms of shelf space, distribution points, you know, those sorts of drivers? Thanks.
Speaker #6: Thanks.
Speaker #3: Sure, Robert. The category certainly improved in December, but we also have gained share in the latest reporting periods as well. So that's continuing to be so the category is improving and we're improving slightly ahead of the category.
The category or was it more you and does that tell us anything about.
You know potential market share gains in 26, it maybe you could touch on.
Speaker #3: As we look ahead, in calendar '26, we do expect our distribution footprint to increase both to be a broader distribution footprint, but also higher quality distribution.
What you see in calendar 'twenty six in terms of shelf space just points of distribution those sorts of drivers. Thanks.
Sure the category certainly improved in December but we also have gained share in the latest reporting periods as well so thats continuing to be so the category is improving and we're improving slightly ahead of the category. As we look ahead in calendar 'twenty six we do expect our our distribution.
Mark LaVigne: ... Sure, Robert, the category certainly improved in December, but, you know, we also have gained share in the latest reporting periods as well. So that's continuing to be so the category is improving, and we're improving slightly ahead of the category. As we look ahead in calendar 2026, we do expect our distribution footprint to increase, both, you know, a broader distribution footprint, but also higher quality distribution. We're leveraging our full portfolio to do that, from value to premium, to make sure that we're meeting consumers where they are. We also sold in some exciting innovation in both batteries and auto care that you're gonna see in Q2 and Q3. So we're excited about the plans we have with our retailers as we head into the rest of the year.
Mark LaVigne: ... Sure, Robert, the category certainly improved in December, but, you know, we also have gained share in the latest reporting periods as well. So that's continuing to be so the category is improving, and we're improving slightly ahead of the category. As we look ahead in calendar 2026, we do expect our distribution footprint to increase, both, you know, a broader distribution footprint, but also higher quality distribution. We're leveraging our full portfolio to do that, from value to premium, to make sure that we're meeting consumers where they are. We also sold in some exciting innovation in both batteries and auto care that you're gonna see in Q2 and Q3. So we're excited about the plans we have with our retailers as we head into the rest of the year.
Speaker #3: We're leveraging our full portfolio to do that from value to premium to make sure that we're meeting consumers where they are. We also sold in some exciting innovation in both batteries and auto care that you're going to see in Q2 and Q3.
Speaker #3: So we're excited about the plans we have with our retailers as we head into the rest of the
Speaker #3: year. Thank you very Thanks,
Print to increase both in the beef.
Speaker #6: much.
Speaker #3: Robert. See your next question comes
A broader distribution footprint, but also higher quality distribution, we are leveraging our full portfolio to do that from value to premium to make sure that we're meeting consumers where they are we also sold and some exciting innovation in both batteries and auto care that youre going to see in Q2 and Q3. So we're excited about the plans we have with our retailers as we head into the rest of the year.
Speaker #4: from Andrea Teixeira from JP Morgan. Please go
Speaker #4: ahead. Good morning, everyone.
Speaker #7: Thank you for taking the question. I just want to just drill down a little bit on the top line and obviously, you said that stable categories and you also taking pricing, selective pricing, I was curious to see how the dynamics within private label in particular, obviously, are the largest e-commerce partner that you have.
Here.
Thank you very much.
Carla Casella: Thank you very much.
Robert Ottenstein: Thank you very much.
Thanks Robert.
Mark LaVigne: Thanks, Robert.
Mark LaVigne: Thanks, Robert.
Your next question comes from Andrea Teixeira from Jpmorgan. Please go ahead.
Operator: Your next question comes from Andrea Teixeira from J.P. Morgan. Please go ahead.
Operator: Your next question comes from Andrea Teixeira from J.P. Morgan. Please go ahead.
Hi, Good morning, everyone. Thank you for taking the question just wanted to.
Speaker #7: How are you thinking of pricing against volume within that guide? And from there, what is your expectation in terms of shelf reset? You did say, I believe you did say, as usual, some additional shelf space.
Andrea Teixeira: Hi, good morning, everyone. Thank you for taking the question. Just wanna just drill down a little bit on the top line. Obviously, you said that stable categories, and you're also taking pricing, selective pricing. I was curious to see how the dynamics within private label in particular, obviously, are the largest e-commerce partner that you have. Like, how are you thinking of pricing against volume within that guide? From there, like, what is your expectation in terms of shelf resets? You did say... I believe you did say, as usual, like, some additional shelf space. Just thinking of that. Since we haven't discussed the autos yet, like, just a state of the union there, that would be great. Thank you.
Andrea Teixeira: Hi, good morning, everyone. Thank you for taking the question. Just wanna just drill down a little bit on the top line. Obviously, you said that stable categories, and you're also taking pricing, selective pricing. I was curious to see how the dynamics within private label in particular, obviously, are the largest e-commerce partner that you have. Like, how are you thinking of pricing against volume within that guide? From there, like, what is your expectation in terms of shelf resets? You did say... I believe you did say, as usual, like, some additional shelf space. Just thinking of that. Since we haven't discussed the autos yet, like, just a state of the union there, that would be great. Thank you.
Just drill down a little bit on the topline.
And obviously, you said stable categories, and you're also taking pricing selective pricing.
Just curious to see how the dynamics within private label in particular, obviously the largest.
Speaker #7: So just thinking of that. And since we haven't discussed the autos yet, just a state of the union there that would be great. Thank you.
E Commerce partner that you have.
How are you thinking of pricing against volume within that that guide.
Speaker #3: Sure, Andrea. Let me start with auto. I mean, it's the smallest quarter we have in auto in Q1. There was a slight impact from weather as well as some timing as well within the auto business.
And from there like what what is your expectation in terms of.
Shelf, we said so you did say I believe you did say as usual would like some.
Speaker #3: We're heading into peak season. We're really excited about year-to-year podium series. We have additional innovation that we're launching across the portfolio. We always are excited about the prospects of international growth as well as growth in e-commerce.
Additional shelf space. So just thinking of that is since we haven't discussed the autos yet Mike.
Mike just a state of the Union there that'll be great. Thank you.
Sure Andrew let me start with auto it's the smallest quarter, we have in auto in Q1, there was a slight impact from weather as well as some timing as well within the auto business. We're heading into peak season, we're really excited about your care podium series, we have additional innovation that we're launching across the portfolio.
Speaker #3: You are seeing a little bit more of a bifurcated consumer in the auto category where higher-end parts of the category are showing growth, where middle to lower ends of the category you're having some consumers that are delaying purchases or opting out altogether.
Mark LaVigne: Sure, Andrea. Let me start with auto. I mean, it's the smallest quarter we have in auto. In Q1, there was a slight impact from weather as well as some timing as well within the auto business. We're heading into peak season. We're really excited about our Podium Series. We have additional innovation that we're launching across the portfolio. We always are excited about the prospects of international growth as well as growth in e-commerce. You are seeing a little bit more of a bifurcated consumer in the auto category, where higher end parts of the category are showing growth, where middle to lower ends of the category, you're having some consumers that are delaying purchases or opting out altogether.
Mark LaVigne: Sure, Andrea. Let me start with auto. I mean, it's the smallest quarter we have in auto. In Q1, there was a slight impact from weather as well as some timing as well within the auto business. We're heading into peak season. We're really excited about our Podium Series. We have additional innovation that we're launching across the portfolio. We always are excited about the prospects of international growth as well as growth in e-commerce. You are seeing a little bit more of a bifurcated consumer in the auto category, where higher end parts of the category are showing growth, where middle to lower ends of the category, you're having some consumers that are delaying purchases or opting out altogether.
Speaker #3: I think that makes the podium series launch all the more timely for us, which we're participating now in growth at the high end. So as we head into the auto care for the balance of year, still expecting growth, but you are seeing a little bit more of a pronounced bifurcated consumer in that part than maybe what you're seeing in batteries.
We always are excited about the prospects of international growth as well as growth in E Commerce.
You are seeing a little bit more of a bifurcated consumer in the auto.
In the auto category, where higher end parts of the category are showing growth where middle to lower end of the category Youre, having some consumers that are delaying purchases are opting out altogether I think that makes the podium series launch all of the more timely for us, which we are participating now in growth at the high end, so as we head into auto.
Speaker #3: Now, if I want to switch over to batteries, I mean, let's just talk consumers generally. I mean, consumers are consumers stressed about finances. In light of those dynamics, they're comfortable switching channels.
Mark LaVigne: I think that makes the Podium Series launch all the more timely for us, which, you know, we're participating now in growth at the high end. So as we head into the Auto Care for the balance of the year, still expecting growth, but you are seeing a little bit more of a pronounced bifurcated consumer in that part than maybe what you're seeing in batteries. Now, if I wanna switch over to batteries, I mean, let's just talk consumers generally. I mean, consumers are continuing to search for value. You are seeing consumers stressed about finances. In light of those dynamics, they're comfortable switching channels, retailers, brands, and pack sizes, so they're willing to, you know, rotate their purchases to meet their needs. It's critical that we meet them where they are, and this is where Energizer is uniquely positioned with our full portfolio.
Mark LaVigne: I think that makes the Podium Series launch all the more timely for us, which, you know, we're participating now in growth at the high end. So as we head into the Auto Care for the balance of the year, still expecting growth, but you are seeing a little bit more of a pronounced bifurcated consumer in that part than maybe what you're seeing in batteries. Now, if I wanna switch over to batteries, I mean, let's just talk consumers generally. I mean, consumers are continuing to search for value. You are seeing consumers stressed about finances. In light of those dynamics, they're comfortable switching channels, retailers, brands, and pack sizes, so they're willing to, you know, rotate their purchases to meet their needs. It's critical that we meet them where they are, and this is where Energizer is uniquely positioned with our full portfolio.
Speaker #3: Retailers, brands, pack sizes. So they're willing purchases to meet their needs. It's critical that we meet them where they are and this is where Energizer is uniquely portfolio.
Care for the balance of year, we're still expecting growth, but you are seeing a little bit more of a pronounced bifurcated consumer in that part than maybe what youre seeing in batteries now if I want to switch over to batteries I mean, let's just talk consumers generally I mean consumers are continuing to search for value you are seeing consumers stressed about finances in la.
Speaker #3: positioned with our full Private label plays a role in the category. Certainly, some retailers are looking to connect with consumers in light of those trends.
Speaker #3: In the first quarter, we did see an increase in private label. At certain retailers as well as some aggressive pricing. This results in volume growth for those retailers, but actually erodes category value at the same time.
Are those dynamics they are comfortable switching channels retailers brands pack sizes. So they are willing to.
Rotate their purchases to meet their needs. It's critical that we meet them, where they are and this is where energizer is uniquely positioned with our portfolio.
Speaker #3: And our view is this is all about balance and we've already seen some retailers both private label value and recalibrate their approach and bring more balance to premium equation.
Mark LaVigne: Private label plays a role in the category. Certainly, some retailers are looking to connect with consumers in light of those trends. In Q1, we did see an increase in private label at certain retailers, as well as some aggressive pricing. This results in volume growth for those retailers, but actually erodes category value at the same time. Our view is this is all about balance, and we've already seen some retailers recalibrate their approach and bring more balance to both private label, value, and premium equation. Even with those dynamics, we gained share over the holiday period, and we're excited about some of the plans that we're leveraging in order to be able to compete with private label, but also leverage our value brands and our premium brands to connect with consumers.
Mark LaVigne: Private label plays a role in the category. Certainly, some retailers are looking to connect with consumers in light of those trends. In Q1, we did see an increase in private label at certain retailers, as well as some aggressive pricing. This results in volume growth for those retailers, but actually erodes category value at the same time. Our view is this is all about balance, and we've already seen some retailers recalibrate their approach and bring more balance to both private label, value, and premium equation. Even with those dynamics, we gained share over the holiday period, and we're excited about some of the plans that we're leveraging in order to be able to compete with private label, but also leverage our value brands and our premium brands to connect with consumers.
Private label plays a role in the category.
Certainly re some retailers who are looking to connect with consumers in light of those trends.
Speaker #3: Even with those dynamics, we gain share over the holiday period and we're excited about some of the plans that we're leveraging in order to be able to compete with private label, but also leverage our value brands and our premium brands to connect with consumers.
In the first quarter, we did see an increase in private label at certain retailers as well as some aggressive pricing. This results in volume growth for those retailers, but actually erodes category value at the same time. Our view is this is all about balance and we've already seen some retailers recalibrate their approach and bring more balance to both private label value.
Speaker #4: See your next question comes from Carla Casella from JP Morgan. Please go ahead.
Premium equation.
Even with those dynamics, we gained share over the holiday period and were excited about some of the plans that we're leveraging in order to be able to.
Speaker #8: Hi. I'm wondering if you're with your guidance, do you have a leverage target where you think you would like to get to by the end of this
To compete with private label, but also leverage our value brands and our premium brands to connect with consumers.
Speaker #8: year? Yeah.
Speaker #3: I think by the end of this year, we're expecting to get 5 or a little bit below. We're going to continue to prioritize debt paydown.
Your next question comes from Carla Casella from Jpmorgan. Please go ahead.
Operator: Your next question comes from Carla Casella from J.P. Morgan. Please go ahead.
Operator: Your next question comes from Carla Casella from J.P. Morgan. Please go ahead.
Speaker #3: We feel like we can we've paid down over $100 million in the first quarter. Still targeting 150 to 200. So I think that's what we'll drive the leverage level over the rest of the
Hi, I'm wondering if here.
Carla Casella: Hi, I'm wondering if, with your guidance, do you have a leverage target where you think you would like to get to by the end of this year?
Carla Casella: Hi, I'm wondering if, with your guidance, do you have a leverage target where you think you would like to get to by the end of this year?
With your guidance.
Do you have a leverage target, where you think you would like to get to by the end of this year.
Speaker #3: year. Okay.
Speaker #8: Great. And should we assume that M&A is back burner until you deliver or are you looking at M&A
Mark LaVigne: Yeah, I think by the end of this year, we're expecting to, you know, get 5 or a little bit below. You know, we're gonna continue to prioritize debt paydown. We feel like we can. You know, we paid down over $100 million in Q1, still targeting $150 to 200. So I think that's what will drive the, you know, the leverage level over the rest of the year.
Yes, I think by the end of this year, we're expecting to get five or a little bit below.
Mark LaVigne: Yeah, I think by the end of this year, we're expecting to, you know, get 5 or a little bit below. You know, we're gonna continue to prioritize debt paydown. We feel like we can. You know, we paid down over $100 million in Q1, still targeting $150 to 200. So I think that's what will drive the, you know, the leverage level over the rest of the year.
Speaker #8: opportunities? We
We're going to continue to prioritize debt Paydown, we feel like we can we've paid down over $100 million in the first quarter still targeting 150 to 200, So I think thats, what will drive the leverage level over the rest of the year.
Speaker #3: will always look at M&A opportunities. I think any deals that we would look at would be leverage neutral and not impact our debt paydown trajectory that we're looking to achieve.
Speaker #3: So they would be on the smaller
Okay, great and so should we assume that M&A is a back burner until you delever or are you looking at M&A opportunities.
Speaker #3: side. Okay.
Andrea Teixeira: Okay, great. And should we assume that M&A is, you know, back burner until you delever, or are you looking at M&A opportunities?
Carla Casella: Okay, great. And should we assume that M&A is, you know, back burner until you delever, or are you looking at M&A opportunities?
Speaker #8: Great. And then I know in the past you've often talked about storms. Affecting the hurricanes, winter storms. Are there distinct differences between winter storms and summer storms?
We will always look at M&A opportunities I think any.
Mark LaVigne: We will always look at M&A opportunities. I think any deals that we would look at would be leverage neutral, and not impact our debt paydown trajectory that we're looking to achieve. So that would be on the smaller side.
Mark LaVigne: We will always look at M&A opportunities. I think any deals that we would look at would be leverage neutral, and not impact our debt paydown trajectory that we're looking to achieve. So that would be on the smaller side.
Deals that we would look at would be leverage neutral.
Speaker #8: Do you prefer one or the other? Just
And not impact our debt paydown trajectory that we're looking to achieve so that would be on the smaller side.
Speaker #3: Well, I mean, hurricanes tend to be a little more isolated in terms of impact and whereas this winter storm that we saw over the last couple of weeks really covered a broad section of the country, which is a little different.
Okay, Great and then I know in the <unk>.
Andrea Teixeira: Okay, great. And then I know in the past, you've often talked about storms affecting, you know, the hurricanes, winter storms. Are there distinct differences between winter storms and summer storms? Do you prefer one or the other? Just curious.
Carla Casella: Okay, great. And then I know in the past, you've often talked about storms affecting, you know, the hurricanes, winter storms. Are there distinct differences between winter storms and summer storms? Do you prefer one or the other? Just curious.
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Hurricanes winter storms are are.
Speaker #3: So the response is going to be different and the impact on our business will be different. But I wouldn't say we prefer either, but we make sure that we can deliver products where consumers need them.
Are there much either.
Differences between winter storms, and some restaurants do you prefer one or the other.
Just curious.
Speaker #3: And obviously, this is something that the at.
Well I mean hurricane tend to be a little more isolated in terms of impact.
Mark LaVigne: Well, I mean, hurricanes tend to be a little more isolated in terms of impact, and whereas this winter storm that we saw over the last couple of weeks really covered a broad section of the country, which is a little different. So the response is gonna be different, and the impact on our business will be different. But I wouldn't say we prefer either, but we make sure that we can deliver products when consumers need them. And, you know, obviously, this is something that the organization excels at.
Mark LaVigne: Well, I mean, hurricanes tend to be a little more isolated in terms of impact, and whereas this winter storm that we saw over the last couple of weeks really covered a broad section of the country, which is a little different. So the response is gonna be different, and the impact on our business will be different. But I wouldn't say we prefer either, but we make sure that we can deliver products when consumers need them. And, you know, obviously, this is something that the organization excels at.
Speaker #8: Great. Yeah. That can be a hard word. That was horribly worded, but thank
Whereas this winter storm that we saw over the last couple of weeks really covered a broad section of the country, which is a little different. So the response is going to be different and.
Speaker #8: you. Don't You got my gist.
Speaker #3: worry. We struggle with that
Speaker #3: too. Thanks a
Speaker #8: lot.
And the impact on our business will be different but I wouldnt say, we prefer either but we make sure that we can deliver products for consumers and Haytham and obviously this is something that the organization excels at.
Speaker #4: Pardon me. As a Thanks, Carla. reminder, if you'd like to ask a question, press star 1 on your touchstone phone. Your next question comes from William Reuter from Bank of America.
Speaker #4: Please go ahead.
Speaker #9: Good morning. The first you mentioned that there were impacts of products that were produced during periods when tariffs were elevated, which have since normalized.
Great.
Carla Casella: ... Great. Yes, I couldn't figure out how to word that. That was horribly worded, but thank you. You got my gist.
Carla Casella: ... Great. Yes, I couldn't figure out how to word that. That was horribly worded, but thank you. You got my gist.
I had a word atlas.
Thank you Jeff.
John Drabik: Don't worry. We struggle with that, too.
John Drabik: Don't worry. We struggle with that, too.
Struggles that too.
Thanks, a lot.
Carla Casella: Thanks a lot.
Carla Casella: Thanks a lot.
Thanks Raj.
Speaker #9: To the current levels, can you talk about what the amount of impact that we should kind of normalize this quarter's EBITDA by based upon the elevated tariff
John Drabik: Thanks, Carly.
John Drabik: Thanks, Carly.
Operator: Pardon me. As a reminder, if you'd like to ask a question, press star one on your touch-tone phone. Your next question comes from William Reuter from Bank of America. Please go ahead.
Operator: Pardon me. As a reminder, if you'd like to ask a question, press star one on your touch-tone phone. Your next question comes from William Reuter from Bank of America. Please go ahead.
As a reminder, if you'd like to ask a question press star one on your Touchtone phone.
Our next question comes from William Reuter from Bank of America. Please go ahead.
Speaker #9: rates? Well, I
Good morning.
William Reuter: Good morning. The first, you mentioned that there were impacts of products that were produced during periods when tariffs were elevated, which have since normalized to the current levels. Can you talk about what the amount of impact that we should kind of normalize this quarter's EBITDA by based upon the elevated tariff rates?
William Reuter: Good morning. The first, you mentioned that there were impacts of products that were produced during periods when tariffs were elevated, which have since normalized to the current levels. Can you talk about what the amount of impact that we should kind of normalize this quarter's EBITDA by based upon the elevated tariff rates?
The first you mentioned that there were impacts of.
Speaker #3: think I'd probably I think we're calling for something like 60 to 70 million dollars of tariffs or around 60 was maybe the last where we were.
Products that were produced during periods when tariffs were elevated which has since normalized.
Speaker #3: I think that'd be relatively fixed as you go through. We took maybe a bigger hit in the first quarter, but that should be the run rate.
The current levels can you.
Talk about what the amount of impact that we should kind of normalize this quarter's EBITDA.
Speaker #9: Okay. So I guess I thought you guys had highlighted that the elevated tariff rates, the 145 probably on some products, impacted you. Did I misunderstand that?
Based upon elevated tariff rates.
John Drabik: Look, I think we're calling for something like $60 to 70 million of tariffs or around 60 was maybe the last where we were. I still think that'd be relatively fixed as you go through. We took maybe a bigger hit in Q1, but that should be the run rate.
Look I think I'd, probably I think.
John Drabik: Look, I think we're calling for something like $60 to 70 million of tariffs or around 60 was maybe the last where we were. I still think that'd be relatively fixed as you go through. We took maybe a bigger hit in Q1, but that should be the run rate.
We're calling for something like $60 million to $70 million of tariffs or around 60 was maybe the last where we were I think that'd be relatively fixed as you go through we took maybe a bigger hit in the first quarter, but that should be the run rate.
Speaker #3: Yeah. It will go down a bit as you go through the year. I don't have the exact tariff hit in the first quarter.
Speaker #9: Got it.
Speaker #3: Yeah. We'll come back to you on that exact number, but it does get a little bit better. Plus, remember, we've got pricing and credits, and the credits, the tax credits that we've got will continue to grow as we go throughout the year.
Okay. So I guess I thought you guys had highlighted that there were.
William Reuter: Okay, so I guess I thought you guys had highlighted that there were, you know, the elevated tariff rates, the 145, probably on some products impacted you. Did I misunderstand that?
William Reuter: Okay, so I guess I thought you guys had highlighted that there were, you know, the elevated tariff rates, the 145, probably on some products impacted you. Did I misunderstand that?
Elevated tariff rates the 145, probably on some products impacted you did I misunderstand that.
Speaker #3: So the total impact that we're calling for tariffs will improve as
Yes, it will it will go down a bit as you go through the year I don't have the exact.
John Drabik: Yeah, it will, it will go down a bit as you go through the year. I don't have the exact when the tariff hit in Q1.
John Drabik: Yeah, it will, it will go down a bit as you go through the year. I don't have the exact when the tariff hit in Q1.
Speaker #3: we go throughout. Got
Speaker #9: it. And then on the gross margins, you were explicit that the second quarter will improve 300 basis points. And then you said an additional 300 to 400 by the end of the year.
And.
Tariff hit in the first quarter.
William Reuter: Got it. Okay.
William Reuter: Got it. Okay.
Got it.
John Drabik: Yeah, we'll come back to you on the exact number, but it does get a little bit better. Plus, remember, we've got pricing and credits, and the credits, the tax credits that we've got, will continue to grow as we go throughout the year. So you know, the total impact that we're calling for tariffs will improve as we go throughout.
John Drabik: Yeah, we'll come back to you on the exact number, but it does get a little bit better. Plus, remember, we've got pricing and credits, and the credits, the tax credits that we've got, will continue to grow as we go throughout the year. So you know, the total impact that we're calling for tariffs will improve as we go throughout.
We'll come back to you on that number but it does get a little bit better plus remember, we've got pricing and credits and the credits the tax credits that we've got we will continue to grow as we go throughout the year. So the.
Speaker #9: So does that mean you will see a sequential improvement from the second to the third and fourth quarters of 3 to 400
Speaker #9: basis points in each of? Yeah.
Speaker #9: Okay. That's exactly right, Bill.
The total impact that we're calling for tariffs will improve as we go through.
Speaker #3: It'll be sequential. And we did, I mean, our first quarter tariff impact was about 300 basis points. That will get better on a margin rate as we go forward, for sure.
Got it and then on the gross margins you were explicit that the second quarter will improved 300 basis points and then you said an additional 300 to 400 by the end of the year. So does that mean, you will see a sequential improvement from the second to the third and fourth quarters of three to 400 basis in Egypt.
William Reuter: Got it. Then on the gross margins, you were explicit that Q2 will improve 300 basis points, and then you said an additional 300 to 400 by the end of the year. So does that mean you will see a sequential improvement from Q2 to Q3 and Q4 of 300 to 400 basis points?
William Reuter: Got it. Then on the gross margins, you were explicit that Q2 will improve 300 basis points, and then you said an additional 300 to 400 by the end of the year. So does that mean you will see a sequential improvement from Q2 to Q3 and Q4 of 300 to 400 basis points?
Speaker #3: And Bill, just to clarify, just to make sure you're not walking away with a different model. So it's 300 basis points from Q1 to Q2, and then 3 to 400 between Q3 and Q4, not in each of Q3 and Q4.
Speaker #3: That's
John Drabik: Yeah.
John Drabik: Yeah.
William Reuter: - in each of them? Okay.
William Reuter: - in each of them? Okay.
Speaker #3: right.
Okay.
John Drabik: That's exactly right, Bill. It'll be, it'll be sequential. And we did, I mean, our first quarter tariff impact was about 300 basis points. That will get better on a margin rate as we go forward, for sure. And Bill, just to clarify, just to make sure you're not walking away with a different model. So it's 300 basis points from Q1 to Q2, and then 300 to 400 between Q3 and Q4, not in each of Q3 and Q4.
John Drabik: That's exactly right, Bill. It'll be, it'll be sequential. And we did, I mean, our first quarter tariff impact was about 300 basis points. That will get better on a margin rate as we go forward, for sure. And Bill, just to clarify, just to make sure you're not walking away with a different model. So it's 300 basis points from Q1 to Q2, and then 300 to 400 between Q3 and Q4, not in each of Q3 and Q4.
Speaker #9: Not
That's exactly right bill it'll be it'll be sequential.
Speaker #9: in each. Okay. I might send you an email just to make sure I understand that correctly. Lastly, for your input costs, certainly there's some inflation in some of those metals.
And we did.
Our first quarter tariff impact was about 300 basis points that will get better on a margin rate as we go forward for sure.
Bill just to clarify just to make sure you're not walking away with a different model. So it's 300 basis points from Q1 to Q2, and then $3 to 400 between Q3 and Q4 not in each of Q3 and Q4 that's right.
Speaker #9: Can you talk about what you're seeing now, how much you have locked in, and then what that might mean for necessary price increases next year for products which you haven't hedged if these elevated input costs remain?
William Reuter: That's right. Not in each. Okay, I might send you an email just to make sure I understand that correctly. Lastly, for your input costs, certainly there's some inflation in some of those metals. Can you talk about what you're seeing now, how much you have locked in, and then what that might mean for, you know, necessary price increases next year for products which you haven't hedged if these elevated input costs remain?
William Reuter: That's right. Not in each. Okay, I might send you an email just to make sure I understand that correctly. Lastly, for your input costs, certainly there's some inflation in some of those metals. Can you talk about what you're seeing now, how much you have locked in, and then what that might mean for, you know, necessary price increases next year for products which you haven't hedged if these elevated input costs remain?
No.
Okay I might send you an email just make sure I understand that correctly.
Speaker #3: Yeah. We did see a bit of a drag in the first quarter. It was about 80 basis points, and we had some momentum offset to that, but it was really input costs, especially freight and some of our production inefficiencies.
Lastly for your input costs.
Certainly there is some inflation in some of those metals.
Can you talk about what Youre seeing now how much you have locked in and then what that might mean for necessary price increases next year for products, which you havent hedged if these elevated input cost remain.
Speaker #3: Raw materials were right now, we're about a bit of a push, but I'm spot prices we're seeing, especially zinc has gone up. We've also seen some moves, some negative moves in lithium.
Yes, we did see a bit of a drag in the first quarter. It was about 80 basis points and we had some momentum offset to that but it was really input costs, especially.
Speaker #3: then R134A, which is the Obviously, silver, and products. On zinc, we're over 90% fixed for '26. We've got between contracts and inventory, we're gas and a lot of our refrigerant probably in a decent position on a lot of these.
John Drabik: Yeah, we, we did see a bit of a drag in Q1. It was about 80 basis points, and we had some momentum offset to that, but it was really input costs, especially freight and some of our production inefficiencies. Raw materials were, right now, were about a bit of a push, but on spot prices, we're seeing especially zinc has gone up. We've also seen some moves, you know, some negative moves in lithium, obviously silver, and then R-134a, which is the gas and a lot of our refrigerant products. On zinc, we're over 90% fixed for 2026. We've got between contracts and inventory, we're probably in a decent position on a lot of these. You know, I think we'll continue to see pressure as we go more into 2027.
John Drabik: Yeah, we, we did see a bit of a drag in Q1. It was about 80 basis points, and we had some momentum offset to that, but it was really input costs, especially freight and some of our production inefficiencies. Raw materials were, right now, were about a bit of a push, but on spot prices, we're seeing especially zinc has gone up. We've also seen some moves, you know, some negative moves in lithium, obviously silver, and then R-134a, which is the gas and a lot of our refrigerant products. On zinc, we're over 90% fixed for 2026. We've got between contracts and inventory, we're probably in a decent position on a lot of these. You know, I think we'll continue to see pressure as we go more into 2027.
Freight and some of our production inefficiencies.
Raw materials, we're right now we're about a bit of a push but spot prices, we're seeing especially zinc has gone up.
Speaker #3: I think we'll into '27. We've also taken some targeted pricing, especially on the auto side, for some of those cost quarter, and that's a little bit what we alluded to earlier.
Also seen some moves some negative moves in lithium obviously silver and then are $1 34, which is the gas and a lot of them are refrigerant products.
On zinc where over 90% fixed for 2006, we've got between contracts in inventory, we're probably in a decent position on a lot of these.
Speaker #3: So all in, the trends are slightly negative. I don't expect it to be a huge impact to '26, but it's something that we've got to continue to
Speaker #3: So all in, the trends are slightly negative. I don't expect it to be a huge impact to '26, but it's something that we've got to continue to manage.
Speaker #9: Got it. All right. That's all from me. Thank
I think we will continue to see pressure as we go more into 'twenty seven.
Speaker #3: Hey, Bill. One follow-up on
Speaker #3: your question on margin. We have a slide you. within the earnings deck that provides a little bit progression over the balance of the year, which I think you may find helpful.
John Drabik: We've also taken some targeted pricing, especially on the auto side, for some of those, those cost impacts, that should come in the Q2 and Q3, and that's a little bit what we alluded to earlier. So all in, the trends are slightly negative. I don't expect it to be a huge impact at 26, but it's something that we've got to continue to manage.
John Drabik: We've also taken some targeted pricing, especially on the auto side, for some of those, those cost impacts, that should come in the Q2 and Q3, and that's a little bit what we alluded to earlier. So all in, the trends are slightly negative. I don't expect it to be a huge impact at 26, but it's something that we've got to continue to manage.
We've also taken some targeted pricing, especially on the auto side for some of those cost impacts that.
And that should come in in the second and third quarter, that's a little bit what we alluded to earlier.
Speaker #3: But I'm happy to connect after the call as
So all in the trends are slightly negative I don't expect it to be a huge impact to 'twenty six but it's something that we've got to continue to manage.
Speaker #9: Great. I'll take a look at that. Thank you.
Speaker #4: And there are no further Thanks. questions at this time. I will turn the call back over to Mark LaVigne for closing
Got it alright, that's all for me. Thank you.
William Reuter: Got it. All right. That's all for me. Thank you.
William Reuter: Got it. All right. That's all for me. Thank you.
Speaker #4: remarks.
Hey, Bill one one follow up on your question on margin, we have a slide within the earnings deck that provides a little bit more color on the margin progression over the balance of the year, which I think you may find helpful. But.
John Drabik: Hey, Bill. One follow-up on your question on margin. We have a slide within the earnings deck that provides a little bit more color on the margin progression over the balance of the year, which I think you may find helpful, but happy to connect after the call as well.
John Drabik: Hey, Bill. One follow-up on your question on margin. We have a slide within the earnings deck that provides a little bit more color on the margin progression over the balance of the year, which I think you may find helpful, but happy to connect after the call as well.
Speaker #3: Thanks for joining us today. Hope everyone has
Speaker #3: a great rest of the day.
Speaker #4: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
Happy to connect to after the call as well.
William Reuter: Great. I'll take a look at that. Thank you.
William Reuter: Great. I'll take a look at that. Thank you.
Great I'll take a look at that thank you.
Thanks.
John Drabik: Thanks.
John Drabik: Thanks.
Operator: There are no further questions at this time. I will turn the call back over to Mark LaVigne for closing remarks.
Operator: There are no further questions at this time. I will turn the call back over to Mark LaVigne for closing remarks.
There are no further questions at this time I will turn the call back over to Mark Levine for closing remarks.
Thanks for joining us today hope everyone has a great rest of the day.
John Drabik: Thanks for joining us today. Hope everyone has a great rest of the day.
John Drabik: Thanks for joining us today. Hope everyone has a great rest of the day.
Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.
