ENERGIZER HOLDINGS, INC. Q1 FY2025 earnings call

• Strong first quarter results: Organic net sales growth of nearly 4%, adjusted gross margin expanded by 50 basis points, adjusted earnings per share grew by 14%, and $25 million of debt paid down.
• Project Momentum: Generated nearly $20 million in savings in the quarter, with $60 million expected for the year and $200 million total for the program, enabling investment in growth and margin improvement.
• Category health: Battery category volume positive globally and in the U.S. with improving value trends; Auto category showed growth with strong fundamentals like steady increase in car park age and DIY car care shift.
• Strategic initiatives: Focus on five areas (distribution, pricing and revenue management, market expansion, innovation, digital economy); Armor All Podium Series innovation with positive early indicators and distribution in over 15,000 retail locations globally.

The company had organic net sales growth of nearly 4%. The battery business achieved 4% organic growth, and the Auto Care business saw 2% organic growth. The battery segment contributed to the overall growth through distribution gains, while the Auto Care segment was driven by distribution gains, international market expansion, and digital economy growth. Battery and Auto Care are key segments with significant contributions to the organic net sales growth.

• Organic sales outlook: Raised full-year organic sales guidance to 2% to 3% from previous 1% to 2%.
• Adjusted metrics: Reaffirmed adjusted earnings per share and adjusted EBITDA outlook; projected adjusted gross margin expansion of 50 basis points to over 41%.
• Debt and cash flow: Expect to pay down $150 million to $200 million of debt, generate free cash flow of 8% to 10% of net sales.
• Second quarter outlook: Projected organic growth 2% to 3%, reported net sales flat to up 1%, adjusted gross margin flat at 40.5%, adjusted earnings per share $0.60 to $0.70.

• Tariffs and sourcing: Low exposure to tariffs from China and other markets, mitigating through sourcing strategy and pricing; potential impact on competitive landscape with private label competitors.
• Dollar strength: Strengthening U.S. dollar creating headwind to reported revenue.

Q: Impact of tariffs on battery and auto business?

A: John Drabik mentioned low exposure to tariffs, with procurement from China and other markets being a small portion of COGS, mitigating through sourcing strategy and pricing; Mark LaVigne discussed competitive landscape and opportunities as tariff details emerge.

Q: Consumer behavior and investments?

A: Mark LaVigne said consumer is stable but cautious, value-seeking; John Drabik talked about investments in A&P, SG&A, and digital transformation.

Q: Distribution gains and consumer channels?

A: Mark LaVigne said distribution gains are broad-based across channels; John Drabik mentioned distribution contributing to growth, with 200 basis points expected from distribution in fiscal 2025.

Q: Sourcing in China/Mexico and M&A?

A: John Drabik mentioned lights and auto components from China/Mexico; Mark LaVigne said M&A focus on small bolt-ons, emphasis on debt pay-down.

Q: E-commerce and pricing promo?

A: Mark LaVigne said e-commerce growth expected, 30% growth in fiscal 2025; John Drabik discussed pricing investment related to distribution and launches, front-loaded in the year.