Investment Rating - The report maintains an "Overweight" rating for the company with a target price of €181 per share [6]. Core Insights - The company reported a record high in new gas turbine orders for Q1 2026, achieving revenue of €9.675 billion, a year-on-year increase of 8%, and a net profit of €1.159 billion, up 240% year-on-year, exceeding expectations by 3% [1]. - The order backlog at the end of Q1 2026 reached €146 billion, expected to cover 90% and 70% of revenues for FY 2026 and FY 2027 respectively, indicating high revenue visibility [1]. - The company forecasts revenue growth of 11-13% and low double-digit percentage growth for FY 2026-2028, with an expected profit margin of 9-11% and 14-16% for special items [1]. Summary by Sections Gas and Power Segment - In Q1 2026, the gas and power segment achieved revenue of €3.097 billion, a 10% increase year-on-year, with a special items profit margin of 16.6%, up 2 percentage points [2]. - New orders in this segment totaled €8.751 billion, a 75% increase year-on-year, with 102 new gas turbine units ordered, marking a historical high [2]. - The company holds a 43% market share for gas turbines over 10MW, leading globally [2]. Grid and Industrial Transformation - The grid segment reported revenue of €3.054 billion, a 23% increase year-on-year, with a profit margin of 17.6%, up 5.2 percentage points [3]. - The company announced a $1 billion investment plan for grid capacity expansion, targeting production facilities in the U.S. and Europe [11]. - The wind power segment generated revenue of €2.355 billion, down 3% year-on-year, but the company aims for breakeven in this segment by 2026 [3]. Profit Forecast and Valuation - The company revised its profit forecasts for FY 2026, 2027, and 2028, projecting net profits of €3.384 billion, €4.563 billion, and €5.754 billion respectively, reflecting an 11-13% upward adjustment [4]. - The report employs a sum-of-the-parts (SOTP) valuation method, assigning a 25.49x EV/EBITDA multiple for FY 2026, leading to a target price of €181 per share [12].

Core Viewpoint - The analysis revisits Energizer Holdings (ENR) following a previous recommendation to buy based on its strong market position and potential for growth [1]. Group 1: Company Analysis - Energizer Holdings was rated as a Buy in mid-September of the previous year due to its strong fundamentals and market opportunities [1]. - The company operates in a financial environment where stocks that are less followed by average investors may present better profit opportunities [1]. Group 2: Market Perspective - The financial markets are viewed as efficient, with most stocks reflecting their real current value, suggesting that mispriced stocks can offer investment opportunities [1].

Core Viewpoint - The analysis revisits Energizer Holdings (ENR) following a previous recommendation to buy based on its strong market position and potential for growth [1]. Group 1: Company Analysis - Energizer Holdings was rated as a Buy in mid-September of the previous year due to its strong fundamentals and market opportunities [1]. - The company operates in a financial environment where stocks that are less followed by average investors may present better profit opportunities [1]. Group 2: Market Perspective - The financial markets are viewed as efficient, with most stocks reflecting their real current value, suggesting that mispriced stocks can offer investment opportunities [1].

Core Insights - Energizer Holdings, Inc. (ENR) reported first-quarter fiscal 2026 results with net sales and earnings exceeding the Zacks Consensus Estimate, although the bottom line declined due to tariff pressures and integration costs from the Advanced Power Solutions (APS) acquisition [1][2][3] Financial Performance - Adjusted earnings were 31 cents per share, surpassing the Zacks Consensus Estimate of 26 cents, but down from 67 cents in the prior year [2][8] - Net sales reached $778.9 million, exceeding the Zacks Consensus Estimate of $715 million, and increased by 6.5% year over year, driven by $64.6 million in acquisition-related sales from APS and favorable currency impacts [3][8] - Organic net sales declined by 4.3%, attributed to weaker volumes and difficult comparisons from the previous year's storm-driven demand [3][4] Segment Analysis - The Batteries & Lights segment saw net sales increase by 8.3% year over year to $685.2 million, supported by APS contributions, although organic sales fell by 3.8% due to softer category trends [4][5] - The Auto Care segment reported net sales of $93.7 million, down 5.6% year over year, with an organic decline of 6.9% due to consumer softness [5][6] Margin and Cost Details - Adjusted gross profit decreased by 7.2% year over year to $271.9 million, with the adjusted gross margin contracting by 510 basis points to 34.9% due to higher tariff costs and production inefficiencies [7][10] - Adjusted SG&A expenses rose by 11.7% to $133.2 million, increasing as a percentage of net sales to 17.1% [8][9] Cash Flow and Financial Health - The company ended the quarter with cash and cash equivalents of $214.8 million and long-term debt of $3,318.7 million, generating $149.5 million in operating cash flow [11] - Energizer repaid over $100 million of debt and returned approximately $23 million to shareholders through dividends [11] Future Outlook - Management expects adjusted gross margin improvement of over 300 basis points in the second quarter, with organic net sales anticipated to return to growth in the second half of fiscal 2026 [12][13] - For fiscal 2026, adjusted earnings are guided in the range of $3.30-$3.60 per share, with organic net sales expected to be flat to slightly up across both segments [15][16]

Core Viewpoint - The article emphasizes the investment philosophy focused on identifying mispriced securities through understanding the financial drivers of companies, often revealed by DCF model valuation [1]. Group 1: Investment Philosophy - The investment approach is centered on small cap companies across US, Canadian, and European markets [1]. - The methodology is flexible, not confined to traditional value, dividend, or growth investing, but considers all prospects of a stock to assess risk-to-reward [1].

Acquisition and Business Performance - The Company acquired Advanced Power Solutions (APS) on May 2, 2025, contributing $64.6 million in net sales and $5.3 million in segment profit for the Batteries and Lights segment during the three months ended December 31, 2025[147]. - Batteries & Lights segment net sales increased by 8.3% to $685.2 million, driven by the APS acquisition, while organic sales declined by 3.8%[177]. - Energizer reported a net loss of $3.4 million, or a loss of $0.05 per common share, for the first fiscal quarter, compared to net earnings of $22.3 million, or $0.30 per common share, in the prior year[158]. - Adjusted diluted net earnings per common share were $0.31 for the first fiscal quarter, down from $0.67 in the prior year quarter[160]. - Net sales for the first fiscal quarter of 2026 were $778.9 million, an increase of $47.2 million, or 6.5%, compared to the prior year quarter[164]. - Organic net sales declined by 4.3%, primarily due to decreased volumes from softer consumer demand in the U.S.[164]. Cost Management and Restructuring - The Company achieved approximately $206 million in savings from the Project Momentum program as of September 30, 2025, primarily within COGS and SG&A[152]. - The Company incurred $20.3 million in pre-tax costs related to Project Momentum during the quarter ended December 31, 2024, primarily consisting of severance, accelerated depreciation, and consulting costs[152]. - The total estimated restructuring and related pre-tax costs for the fourth year of the program are expected to be between $35.0 million and $40.0 million, with additional costs of $25.0 million to $30.0 million related to U.S. manufacturing efficiency initiatives[155]. - The company incurred $30.9 million in pre-tax restructuring and related costs during the quarter, primarily for severance and other benefits[156]. Financial Outlook and Tax Credits - The Company expects future production tax credits from the Inflation Reduction Act to be approximately $55 to $65 million based on current regulations prior to the phase-out period[146]. - The Company recognized a credit of $9.7 million for production credits during the first fiscal quarter of 2026, following the achievement of reasonable assurance over the ability to claim these credits[145]. - The effective tax rate for adjusted net earnings was 22.5%, down from 24.8% in the prior year, attributed to production tax credits[173]. Macroeconomic and Operational Challenges - The Company anticipates continued macroeconomic pressures and geopolitical instability, which may negatively impact financial results and operations in fiscal 2026[149]. - The Company is subject to risks related to international operations, including tariffs and currency fluctuations, which could adversely affect results of operations[133]. - The Company extended Project Momentum into fiscal 2026 to help neutralize the impact of tariffs and optimize manufacturing and supply chain networks[150]. Segment Performance and Profitability - Global reported segment profit declined 17.9%, with an organic profit decline of $35.1 million, or 25.1%, due to decreased organic net sales and increased input costs[180]. - Batteries & Lights segment profit decreased by 11.4%, with an organic segment profit decline of $23.0 million, or 19.3%, impacted by tariffs and increased input costs[181]. - Auto Care reported a net sales decrease of 5.6% compared to the prior year, driven by an organic net sales decline of $6.9 million, or 6.9%[178]. - Auto Care segment profit decreased by 55.6%, with an organic segment profit decline of $12.1 million, or 59.0%, due to increased input costs from tariffs[182]. Cash Flow and Investments - Cash flow from operating activities was $149.5 million for the three months ended December 31, 2025, compared to $77.0 million in the prior year, driven by working capital changes[188]. - Net cash used by investing activities was $25.3 million for the three months ended December 31, 2025, primarily related to capital expenditures[189]. - Total investing cash outflows of approximately $75 to $85 million are anticipated in fiscal 2026 for capital expenditures, including investments from Project Momentum[190]. Debt and Financial Instruments - The Company had $214.8 million in cash and cash equivalents as of December 31, 2025, with approximately 90% held outside the U.S.[185]. - The Company has a Senior Secured Term Loan of $765.7 million due in 2032 and a $500 million Revolving Credit Facility due in 2030[186]. - As of December 31, 2025, Energizer had variable rate debt outstanding of $766.2 million under the Term Loan and international borrowings[209]. - The company recorded an unrealized pre-tax gain of $21.0 million on the interest rate swap as of December 31, 2025[211]. - The company has an interest rate swap that fixes the variable benchmark component (SOFR) at an interest rate of 1.042% on variable rate debt of $500.0 million[210]. - The weighted average interest rate on variable rate debt, inclusive of the interest rate swap, was 4.02% for the quarter ended December 31, 2025[211]. Currency and Inflation Accounting - The change in estimated fair value of foreign currency derivative contracts resulted in a loss of $0.9 million for the quarter ended December 31, 2025[206]. - The Egypt subsidiary's financial statements were consolidated under highly inflationary accounting effective October 1, 2024, due to a cumulative inflation rate exceeding 100 percent[213]. - The Argentina subsidiary's financial statements have been consolidated under highly inflationary accounting since July 1, 2018, also due to a cumulative inflation rate exceeding 100 percent[214]. - The financial impact of using highly inflationary accounting for Egypt and Argentina is difficult to determine and depends on exchange rate movements and monetary assets and liabilities[215]. - The company uses hedging instruments to reduce exposure to price volatility of raw materials[207]. - The company recorded an unrealized pre-tax gain of $2.6 million as of December 31, 2025, on the interest rate swap related to future zinc purchases[208].

Financial Data and Key Metrics Changes - The company reported meaningful progress in restoring growth and rebuilding margins that were pressured by tariffs, with expectations for sequential gross margin expansion and a return to earnings growth in the latter half of the year [4][5] - The first quarter saw robust cash generation, allowing the company to pay down over $100 million in debt and return nearly $28 million to shareholders through dividends and share repurchases [5][6] - The company anticipates over 300 basis points of gross margin expansion from Q1 to Q2, with an additional 300-400 basis points expected by year-end [5][23] Business Line Data and Key Metrics Changes - The transition of APS to the Energizer brand is expected to contribute over $30 million in organic growth, primarily in the third and fourth quarters [5][20] - The company sold approximately $65 million of Panasonic-branded products in Q1, which impacted gross margins but is not expected to recur [22] Market Data and Key Metrics Changes - Consumer demand has stabilized, with a strong rebound in December volumes in the U.S., which remains the largest market for the company [11][12] - The company noted a slight increase in private label products at certain retailers, which has resulted in volume growth for those retailers but has eroded category value [39] Company Strategy and Development Direction - The company’s strategy focuses on long-term value creation, restoring growth, and rebuilding margins while maintaining a balanced capital allocation strategy [4][6] - The company plans to prioritize debt reduction while also returning capital to shareholders through dividends and share repurchases [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a transitional start to the year due to softening consumer trends and elevated tariff pressures but expressed confidence in the underlying trajectory improving [10][12] - The company expects the category to remain stable, with positive volume growth anticipated due to weather-related demand in January [14][20] Other Important Information - The company is actively managing through elevated tariff pressures, which had a significant impact on gross margins in Q1 but is expected to improve as the year progresses [21][50] - Management emphasized the importance of flexibility in planning to adapt to market uncertainties [25] Q&A Session Summary Question: How is the company viewing the consumer backdrop and category trends? - Management noted a softening in consumer trends at the start of the year but observed a strong rebound in December, indicating stabilization in demand [10][11] Question: What impact do recent winter storms have on guidance? - Management indicated that while the winter storms benefited point-of-sale volumes, it is too early to quantify the overall impact on business guidance [18] Question: Can you elaborate on the strength in December and market share gains? - Management confirmed that the category improved in December, and the company gained market share, expecting to increase distribution and quality in 2026 [31][32] Question: What is the leverage target for the end of the year? - The company aims to achieve a leverage ratio of around 5 or slightly below by year-end, continuing to prioritize debt paydown [41] Question: Are M&A opportunities being considered? - Management stated that they will always look at M&A opportunities, but any potential deals would be leverage neutral and not impact the debt paydown trajectory [42] Question: How are input costs affecting pricing strategies? - Management acknowledged some inflation in input costs but indicated that they have locked in a significant portion of their zinc requirements for 2026, which should mitigate some impacts [60]

Financial Data and Key Metrics Changes - The company reported meaningful progress in restoring growth and rebuilding margins that were pressured by tariffs, with expectations for sequential gross margin expansion of over 300 basis points from Q1 to Q2 and an additional 300-400 basis points anticipated by year-end [4][5][21] - The company generated robust cash flow, allowing for over $100 million in debt repayment and nearly $28 million returned to shareholders through dividends and share repurchases [5][6] Business Line Data and Key Metrics Changes - The transition of APS to the Energizer brand is expected to contribute over $30 million in organic growth, primarily in the third and fourth quarters [5][20] - The company experienced a strong rebound in battery consumption trends, particularly in December, indicating a positive trajectory for the category [11][13] Market Data and Key Metrics Changes - The U.S. market showed stabilization in consumer demand, with a strong rebound in December volumes [11][12] - The company noted an increase in private label products at certain retailers, which has led to volume growth for those retailers but has also eroded category value [39] Company Strategy and Development Direction - The company aims to prioritize debt reduction while maintaining a balanced capital allocation strategy that includes dividends and share repurchases [6][41] - The strategy focuses on restoring growth, margins, and free cash flow, with plans to leverage innovation and increase distribution across both brick-and-mortar and e-commerce channels [12][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a transitional start to the year due to softening consumer trends and elevated tariff pressures but expressed confidence in the underlying trajectory improving [10][12] - The company is optimistic about the back half of the year, expecting strong acceleration in net sales and earnings [12][20] Other Important Information - The company is managing through elevated tariff pressures, which had a significant impact on gross margins in Q1, but expects improvements as inventory is flushed through [21][50] - The company is focused on maintaining flexibility in its plans to adapt to uncertainties in the market [25] Q&A Session Summary Question: How is the company viewing the consumer backdrop and category trends? - Management noted a softening in consumer trends at the start of the year but observed a strong rebound in December, indicating stabilization [10][11] Question: What impact do recent winter storms have on guidance? - Management indicated that while the storms benefited point-of-sale volumes, it is too early to quantify the overall impact on business guidance [18] Question: Can you elaborate on the strength in December and potential market share gains? - Management confirmed that the category improved in December, and the company gained share slightly ahead of the category [31] Question: What is the leverage target for the end of the year? - The company expects to achieve a leverage ratio of around five or slightly below by year-end, with a focus on debt paydown [41] Question: How does the company view M&A opportunities? - Management stated that they will always look at M&A opportunities, but any potential deals would be leverage neutral and not impact the debt paydown trajectory [42]

Financial Data and Key Metrics Changes - The company reported meaningful progress in restoring growth and rebuilding margins that were pressured by tariffs, with expectations for sequential gross margin expansion and a return to earnings growth in the latter half of the year [4][5] - The first quarter demonstrated robust cash generation, allowing the company to pay down over $100 million of debt and return nearly $28 million to shareholders through dividends and share repurchases [5][6] - The company anticipates over 300 basis points of gross margin expansion from Q1 to Q2, with an additional 300-400 basis points expected by year-end [5][24] Business Line Data and Key Metrics Changes - The transition of APS to the Energizer brand is expected to contribute over $30 million of organic growth, primarily in the third and fourth quarters [5][20] - The company sold approximately $65 million of Panasonic-branded products in Q1, which was related to the APS transition, impacting gross margin significantly [22] Market Data and Key Metrics Changes - Consumer demand has stabilized, with a strong rebound in December volumes in the U.S., which remains the largest market for the company [12] - The company noted a meaningful improvement in battery consumption trends, with December showing positive volume growth [13] Company Strategy and Development Direction - The company’s strategy focuses on long-term value creation, restoring growth, rebuilding margins, and returning to historical cash flow profiles [4] - The capital allocation strategy prioritizes debt reduction while maintaining an attractive dividend and share repurchases when market conditions are favorable [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a transitional start to the year due to softening consumer trends and elevated tariff pressures, but expressed confidence in the underlying trajectory improving [11][12] - The company expects the category to remain stable, with plans to leverage innovation and increase distribution in the back half of the year [20] Other Important Information - The company is managing through elevated tariff pressures, which had a significant impact on gross margins in Q1, but expects improvements as inventory is flushed through [21][24] - Management emphasized the importance of flexibility in planning to adapt to uncertainties in the market [26] Q&A Session Summary Question: How is the company viewing the consumer backdrop and category trends? - Management noted continued pressure on lower-end consumers and acknowledged a back-half-weighted year, but expressed confidence in hitting growth targets [9][10] Question: What impact do recent winter storms have on guidance? - Management indicated that while the storm volume in the U.S. was beneficial, it was too early to quantify the exact impact on business guidance [18] Question: Can you elaborate on the strength in December and potential market share gains? - Management confirmed that the category improved in December, with the company gaining share slightly ahead of the category [34] Question: What is the leverage target for the end of the year? - Management expects to achieve a leverage ratio of around 5 or slightly below by year-end, with a focus on debt paydown [44] Question: Are M&A opportunities being considered? - Management stated that they will always look at M&A opportunities, but any potential deals would be leverage neutral and not impact the debt paydown trajectory [45]

Q1 Fiscal 2026 Earnings February 5, 2026 + Forward-Looking Statements This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future sales, gross margins, costs, earnings, cash flows, tax rates, packaging transition, and performance of the Company. These statements generally can be identified by the ...