UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________ Securities registered pursuant to Section 12(b) of the Act: FORM 10-Q _______________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-3683 ...

Energizer Holdings, Inc. (NYSE:ENR) Q2 2020 Results Conference Call May 7, 2020 10:00 AM ET Company Participants Jackie Burwitz - Vice President, Investor Relations Alan Hoskins - Chief Executive Officer Mark LaVigne - President and Chief Operating Officer Tim Gorman - Chief Financial Officer Conference Call Participants Wendy Nicholson - Citigroup Dara Mohsenian - Morgan Stanley Bill Chappell - SunTrust Faiza Alwy - Deutsche Bank Olivia Tong - Bank of America Steve Strycula - UBS Kevin Grundy - Jefferies J ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________ FORM 10-Q _______________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36837 _________________________________________________________ ...

+ Fiscal Q2 2020 Earnings May 7, 2020 Forward-Looking Statements and non-GAAP Financial Measures Energizer Holdings, Inc. (the "Company") and its management may make certain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "anticipates," "targets," "expects," "hopes ...

Energizer Holdings, Inc. (NYSE:ENR) Q1 2020 Earnings Conference Call February 5, 2020 10:00 AM ET Company Participants Jackie Burwitz - Vice President, Investor Relations Alan Hoskins - Chief Executive Officer Mark LaVigne - President and Chief Operating Officer Tim Gorman - Chief Financial Officer Conference Call Participants Wendy Nicholson - Citi Bill Chappell - SunTrust Jason English - Goldman Sachs Kevin Grundy - Jefferies Steve Strycula - UBS Lauren Lieberman - Barclays Faiza Alwy - Deutsche Bank Robe ...

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section provides a comprehensive overview of the company's unaudited financial statements, including earnings, balance sheets, cash flows, and detailed notes on business operations, acquisitions, and accounting policies [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Energizer Holdings, Inc., including statements of earnings and comprehensive income, balance sheets, cash flows, and shareholders' equity, along with detailed notes explaining business operations, accounting policies, acquisitions, divestitures, and other financial details for the periods ended December 31, 2019, and September 30, 2019 [Consolidated Statements of Earnings and Comprehensive Income (Condensed)](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Income%20(Condensed)) This statement details the company's net sales, expenses, net earnings, and comprehensive income for the specified periods Consolidated Statements of Earnings and Comprehensive Income (Condensed) (In millions, except per share data - Unaudited) | Metric | Q4 2019 (Millions) | Q4 2018 (Millions) | | :------------------------------------------------------------------------------------------------- | :----------------- | :----------------- | | Net sales | $736.8 | $571.9 | | Cost of products sold | 435.5 | 296.4 | | Gross profit | 301.3 | 275.5 | | Selling, general and administrative expense | 122.1 | 104.6 | | Advertising and sales promotion expense | 46.8 | 40.9 | | Research and development expense | 8.9 | 5.5 | | Amortization of intangible assets | 13.8 | 3.2 | | Interest expense | 51.0 | 48.2 | | Other items, net | — | (16.9) | | Earnings before income taxes | 58.7 | 90.0 | | Income tax provision | 12.9 | 19.2 | | Net earnings from continuing operations | 45.8 | 70.8 | | Net earnings from discontinued operations, net of income tax expense of $7.5 for the quarter ended | 0.3 | — | | Net earnings | 46.1 | 70.8 | | Mandatory convertible preferred stock dividends | (4.0) | — | | Net earnings attributable to common shareholders | $42.1 | $70.8 | | Basic net earnings per common share - continuing operations | $0.60 | $1.19 | | Basic net earnings per common share - discontinued operations | 0.01 | — | | Basic net earnings per common share | $0.61 | $1.19 | | Diluted net earnings per common share - continuing operations | $0.60 | $1.16 | | Diluted net earnings per common share - discontinued operations | — | — | | Diluted net earnings per common share | $0.60 | $1.16 | | Weighted average shares of common stock - Basic | 69.1 | 59.7 | | Weighted average shares of common stock - Diluted | 70.2 | 61.0 | | Net earnings | $46.1 | $70.8 | | Foreign currency translation adjustments | 30.0 | (3.7) | | Pension activity, net of tax of $0.5 and $0.3, respectively. | (0.2) | 1.1 | | Deferred loss on hedging activity, net of tax of ($1.0) and ($1.0), respectively, | (4.6) | (3.3) | | Total comprehensive income | $71.3 | $64.9 | [Consolidated Balance Sheets (Condensed)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(Condensed)) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity at specific points in time Consolidated Balance Sheets (Condensed) (In millions - Unaudited) | Assets | Dec 31, 2019 | Sep 30, 2019 | | :----------------------------------------------------------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $293.5 | $258.5 | | Trade receivables, less allowance for doubtful accounts of $4.4 and $3.8, respectively | 369.9 | 340.2 | | Inventories | 435.8 | 469.3 | | Other current assets | 163.0 | 177.1 | | Assets held for sale | 805.5 | 791.7 | | **Total current assets** | **2,067.7** | **2,036.8** | | Property, plant and equipment, net | 357.7 | 362.0 | | Operating lease assets | 82.9 | — | | Goodwill | 1,022.5 | 1,004.8 | | Other intangible assets, net | 1,946.3 | 1,958.9 | | Deferred tax asset | 23.4 | 22.8 | | Other assets | 66.3 | 64.3 | | **Total assets** | **$5,566.8** | **$5,449.6** | | **Liabilities and Shareholders' Equity** | | | | Current maturities of long-term debt | $68.4 | $— | | Current portion of capital leases | 1.7 | 1.6 | | Notes payable | 28.1 | 31.9 | | Accounts payable | 288.9 | 299.0 | | Current operating lease liabilities | 15.6 | — | | Other current liabilities | 355.1 | 333.6 | | Liabilities held for sale | 387.1 | 402.9 | | **Total current liabilities** | **1,144.9** | **1,069.0** | | Long-term debt | 3,383.6 | 3,461.6 | | Operating lease liabilities | 68.4 | — | | Deferred tax liability | 176.2 | 170.6 | | Other liabilities | 206.2 | 204.6 | | **Total liabilities** | **4,979.3** | **4,905.8** | | Common stock | 0.7 | 0.7 | | Mandatory convertible preferred stock | — | — | | Additional paid-in capital | 852.6 | 870.3 | | Retained earnings | 149.1 | 129.5 | | Treasury stock | (141.8) | (158.4) | | Accumulated other comprehensive loss | (273.1) | (298.3) | | **Total shareholders' equity** | **587.5** | **543.8** | | **Total liabilities and shareholders' equity** | **$5,566.8** | **$5,449.6** | [Consolidated Statements of Cash Flows (Condensed)](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Condensed)) This statement outlines the cash inflows and outflows from operating, investing, and financing activities for the specified periods Consolidated Statements of Cash Flows (Condensed) (In millions - Unaudited) | Cash Flow from Operating Activities | Q4 2019 (Millions) | Q4 2018 (Millions) | | :----------------------------------------------------------------------- | :----------------- | :----------------- | | Net earnings | $46.1 | $70.8 | | Net earnings from discontinued operations | 0.3 | — | | Net earnings from continuing operations | 45.8 | 70.8 | | Non-cash integration and restructuring charges | 4.4 | — | | Depreciation and amortization | 27.6 | 11.6 | | Deferred income taxes | 2.8 | 2.3 | | Share-based compensation expense | 7.2 | 6.5 | | Non-cash items included in income, net | 7.3 | (9.1) | | Other, net | 2.6 | (1.1) | | Changes in current assets and liabilities used in operations | 35.8 | 37.9 | | Net cash from operating activities from continuing operations | 133.5 | 118.9 | | Net cash used by operating activities from discontinued operations | (10.0) | — | | **Net cash from operating activities** | **123.5** | **118.9** | | **Cash Flow from Investing Activities** | | | | Capital expenditures | (11.7) | (4.8) | | Proceeds from sale of assets | 1.5 | 0.1 | | Acquisitions, net of cash acquired | (3.6) | — | | Net cash used by investing activities from continuing operations | (13.8) | (4.7) | | Net cash used by investing activities from discontinued operations | (2.4) | — | | **Net cash used by investing activities** | **(16.2)** | **(4.7)** | | **Cash Flow from Financing Activities** | | | | Cash proceeds from issuance of debt with original maturities greater than 90 days | 365.0 | 1,200.0 | | Payments on debt with maturities greater than 90 days | (400.3) | (1.0) | | Net (decrease)/increase in debt with original maturities of 90 days or less | (4.0) | 28.0 | | Debt issuance costs | (0.9) | (16.5) | | Dividends paid on mandatory convertible preferred stock | (4.0) | — | | Dividends paid on common stock | (22.7) | (19.8) | | Taxes paid for withheld share-based payments | (9.4) | (7.1) | | Net cash (used by)/from financing activities from continuing operations | (76.3) | 1,183.6 | | Net cash used by financing activities from discontinued operations | (1.1) | — | | **Net cash (used by)/from financing activities** | **(77.4)** | **1,183.6** | | Effect of exchange rate changes on cash | 5.1 | (2.3) | | Net increase in cash, cash equivalents, and restricted cash from continuing operations | 48.5 | 1,295.5 | | Net decrease in cash, cash equivalents, and restricted cash from discontinued operations | (13.5) | — | | **Net increase in cash, cash equivalents, and restricted cash** | **35.0** | **1,295.5** | | Cash, cash equivalents, and restricted cash, beginning of period | 258.5 | 1,768.3 | | **Cash, cash equivalents, and restricted cash, end of period** | **$293.5** | **$3,063.8** | [Consolidated Statements of Shareholders' Equity (Condensed)](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Condensed)) This statement presents the changes in the company's shareholders' equity over the reporting period, including net earnings and other comprehensive income Consolidated Statements of Shareholders' Equity (Condensed) (Amounts in millions, Shares in thousands - Unaudited) | Metric | Sep 30, 2019 | Dec 31, 2019 | | :-------------------------------------------- | :----------- | :----------- | | Total Shareholders' Equity | $543.8 | $587.5 | | Net earnings from continuing operations | — | 45.8 | | Net earnings from discontinued operations | — | 0.3 | | Share based payments | — | 7.2 | | Activity under stock plans | — | (9.4) | | Dividends to common shareholders | — | (21.4) | | Dividends to preferred shareholders | — | (4.0) | | Other comprehensive loss | — | 25.2 | | **Total Shareholders' Equity (Dec 31, 2019)** | | **$587.5** | | **Total Shareholders' Equity (Sep 30, 2018)** | $24.5 | | | Net earnings from continuing operations | — | 70.8 | | Share based payments | — | 6.5 | | Activity under stock plans | — | (7.1) | | Dividends to common shareholders | — | (18.4) | | Other comprehensive loss | — | (5.9) | | **Total Shareholders' Equity (Dec 31, 2018)** | | **$70.4** | [Notes to Consolidated (Condensed) Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20(Condensed)%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed financial statements [Description of Business and Basis of Presentation](index=8&type=section&id=(1)%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes Energizer Holdings, Inc.'s global operations, key brands, and the accounting principles applied in preparing the financial statements - Energizer Holdings, Inc. is a global manufacturer, marketer, and distributor of household batteries, specialty batteries, portable lights, and automotive appearance, performance, refrigerants, and freshener products[19](index=19&type=chunk) - The company's battery and light brands include Energizer®, Eveready®, Rayovac®, and Varta® (following the fiscal 2019 Battery Acquisition)[20](index=20&type=chunk) - Automotive product brands include Refresh Your Car!®, California Scents®, Driven®, Bahama & Co.®, LEXOL®, Eagle One®, Armor All®, STP®, and A/C PRO® (following the fiscal 2019 Auto Care Acquisition)[21](index=21&type=chunk) - Subsequent to the quarter, on January 2, 2020, the Varta® consumer battery business in Europe, Middle East, and Africa was sold to VARTA Aktiengesellschaft for €180.0, with initial proceeds of approximately **$345 million**[22](index=22&type=chunk) - The Varta Divestiture resulted in the classification of associated assets and liabilities as held for sale and operations as discontinued operations in the financial statements[25](index=25&type=chunk) - Effective October 1, 2019, the Company adopted ASC 842, Leases, recognizing lease assets and liabilities on the balance sheet, which did not materially impact earnings, cash flows, or shareholder's equity[26](index=26&type=chunk)[29](index=29&type=chunk) [Revenue Recognition](index=9&type=section&id=(2)%20Revenue%20Recognition) This note outlines the company's policies for recognizing revenue from product sales and provides a breakdown of net sales by product and geography - Revenue is primarily generated from finished product sales, recognized at a single point in time when title, ownership, and risk of loss transfer to the customer, typically upon delivery or pickup[31](index=31&type=chunk) Net Sales by Product and Geography (In millions) | Net Sales by Product | Dec 2019 | Dec 2018 | | :------------------- | :------- | :------- | | Batteries | $621.9 | $521.9 | | Auto Care | 78.7 | 20.5 | | Lights and Licensing | 36.2 | 29.5 | | **Total Net Sales** | **$736.8** | **$571.9** | | Net Sales by Geography | 2019 | 2018 | | :--------------------- | :------- | :------- | | North America | $453.7 | $341.0 |\ | Latin America | 60.8 | 32.5 | | **Americas** | **514.5** | **373.5** | | Modern Markets | 142.8 | 127.4 | | Developing Markets | 51.2 | 49.7 | | Distributors Markets | 28.3 | 21.3 | | **International** | **222.3** | **198.4** | | **Total Net Sales** | **$736.8** | **$571.9** | [Acquisitions](index=10&type=section&id=(3)%20Acquisitions) This note details the Battery and Auto Care Acquisitions, including purchase prices, acquired assets, and associated integration costs - The Battery Acquisition was completed on January 2, 2019, for a contractual purchase price of **$2,000.0 million**, expanding the global battery portfolio with Rayovac® and Varta® brands[35](index=35&type=chunk) - The Auto Care Acquisition was completed on January 28, 2019, for a contractual purchase price of **$1,250.0 million**, adding Armor All®, STP®, and A/C PRO® brands and establishing the Company as a global leader in auto care[44](index=44&type=chunk) - Goodwill from the Battery Acquisition (**$496.0 million**) is tax-deductible, while goodwill from the Auto Care Acquisition (**$274.0 million**) is not[43](index=43&type=chunk)[50](index=50&type=chunk) Battery Acquisition Purchase Price Allocation (as of acquisition date, in millions) | Asset/Liability | Amount | | :-------------------------- | :------- | | Cash and cash equivalents | 37.8 | | Trade receivables | 54.2 | | Inventories | 80.8 | | Other current assets | 28.2 | | Assets held for sale | 794.6 | | Property, plant and equipment, net | 133.2 | | Goodwill | 496.0 | | Other intangible assets, net | 805.8 | | Other assets | 10.3 | | Current portion of capital leases | (1.2) | | Accounts payable | (39.2) | | Other current liabilities | (19.3) | | Long-term debt | (14.7) | | Liabilities held for sale | (394.6) | | Other liabilities | (9.5) | | **Net assets acquired** | **1,962.4**| Auto Care Acquisition Purchase Price Allocation (as of acquisition date, in millions) | Asset/Liability | Amount | | :-------------------------- | :------- | | Cash and cash equivalents | 3.3 | | Trade receivables | 39.7 | | Inventories | 98.6 | | Other current assets | 8.9 | | Property, plant and equipment, net | 70.8 | | Goodwill | 274.0 | | Other intangible assets, net | 965.3 | | Deferred tax assets | 4.2 | | Other assets | 1.7 | | Current portion of capital leases | (0.4) | | Accounts payable | (28.6) | | Other current liabilities | (10.9) | | Long-term debt | (31.9) | | Other liabilities (deferred tax liabilities) | (211.9) | | **Net assets acquired** | **1,182.8**| Acquisition and Integration Costs (Pre-tax, in millions) | Quarter Ended Dec 31 | 2019 | 2018 | | :------------------- | :---- | :---- | | Total Costs | $19.3 | $36.5 | [Divestment](index=16&type=section&id=(4)%20Divestment) This note describes the classification and subsequent sale of the Varta® consumer battery business in EMEA as discontinued operations - The Divestment Business (Varta® consumer battery business in EMEA) was classified as held for sale as of December 31, 2019, and its operations as discontinued operations[67](index=67&type=chunk) - The sale to VARTA AG was completed on January 2, 2020, for **€180.0**, with initial combined cash proceeds of approximately **$345 million**[72](index=72&type=chunk) - The Company estimates a pre-tax loss of **$80 to $90 million** from the divestiture based on preliminary cash proceeds[72](index=72&type=chunk) Assets and Liabilities of Divestment Business Held for Sale (In millions) | Category | Dec 31, 2019 | Sep 30, 2019 | | :----------------- | :----------- | :----------- | | **Assets** | | | | Trade receivables | $60.1 | $50.9 | | Inventories | 44.8 | 59.8 | | Other current assets | 34.7 | 41.5 | | Property, plant and equipment, net | 83.7 | 78.8 | | Goodwill | 47.2 | 50.5 | | Other intangible assets, net | 503.9 | 489.0 | | Other assets | 31.1 | 21.2 | | **Assets held for sale** | **$805.5** | **$791.7** | | **Liabilities** | | | | Current portion of capital leases | $5.5 | $5.3 | | Accounts payable | 29.5 | 45.9 | | Notes payable | 0.6 | 0.6 | | Other current liabilities | 90.8 | 99.8 | | Long-term debt | 22.9 | 23.5 | | Long term deferred tax liability | 166.0 | 169.9 | | Other liabilities | 71.8 | 57.9 | | **Liabilities held for sale** | **$387.1** | **$402.9** | Net Earnings from Discontinued Operations (Quarter Ended Dec 31, 2019, in millions) | Metric | Amount | | :-------------------------------------- | :----- | | Net sales | $115.8 | | Cost of products sold | 88.2 | | Gross profit | 27.6 | | Selling, general and administrative expense | 17.4 | | Advertising and sales promotion expense | 0.3 | | Research and development expense | 0.8 | | Interest expense | 5.2 | | TSA income | (3.8) | | Other items, net | (0.1) | | Earnings before income taxes | 7.8 | | Income tax expense | 7.5 | | **Net earnings from discontinued operations** | **$0.3** | [Restructuring](index=17&type=section&id=(5)%20Restructuring) This note outlines the company's restructuring plans to optimize manufacturing and distribution networks, including associated pre-tax expenses - Energizer's Board approved restructuring plans in Q4 2019 to optimize manufacturing and distribution networks, aiming for completion by December 31, 2021[73](index=73&type=chunk) Restructuring Pre-Tax Expense (Quarter Ended Dec 31, 2019, in millions) | Category | Amount | | :-------------------------------------- | :----- | | Severance and related benefit costs | $0.9 | | Accelerated depreciation & asset write-offs | 3.4 | | Other exit costs | 2.0 | | **Total** | **$6.3** | - Restructuring costs for the quarter were **$6.3 million**, primarily in the Americas (**$5.9 million**) and International (**$0.4 million**) segments, recorded in Cost of products sold[74](index=74&type=chunk) - Additional severance and exit-related costs of approximately **$55 million** are expected through calendar 2021[77](index=77&type=chunk) [Income Taxes](index=18&type=section&id=(6)%20Income%20Taxes) This note explains the company's effective tax rate and the factors influencing its changes Effective Tax Rate | Period | Effective Tax Rate | | :-------------------- | :----------------- | | Q4 2019 | 22.0% | | Q4 2018 | 21.3% | - The increase in the effective tax rate from **21.3% in Q4 2018 to 22.0% in Q4 2019** is due to changes in the country mix of earnings, leading to a higher foreign tax rate, and the expiration of certain foreign tax holidays[78](index=78&type=chunk) [Share-Based Payments](index=18&type=section&id=(7)%20Share-Based%20Payments) This note details the company's share-based compensation plans, including the Omnibus Incentive Plan and various equity awards granted - The Company's shareholders approved the Energizer Holdings, Inc. Omnibus Incentive Plan on January 27, 2020, replacing the 2015 Plan and authorizing **6.5 million new shares** for awards[80](index=80&type=chunk)[81](index=81&type=chunk) Total Share-Based Compensation Cost (In millions) | Quarter Ended Dec 31 | 2019 | 2018 | | :------------------- | :--- | :--- | | Total Cost | $7.2 | $6.5 | - In November 2019, RSE awards for approximately **134,000 shares** (ratably vesting over four years) and **81,000 shares** (vesting on third anniversary) were granted to key employees and executives[83](index=83&type=chunk)[86](index=86&type=chunk) - Additionally, **306,000 performance shares** were granted, with a maximum payout of **612,000 shares** based on cumulative adjusted EPS and free cash flow targets[83](index=83&type=chunk)[86](index=86&type=chunk) [Earnings per share](index=20&type=section&id=(8)%20Earnings%20per%20share) This note defines basic and diluted earnings per share calculations and presents the per-share data for continuing and discontinued operations - Basic EPS is based on average common shares outstanding, while diluted EPS adjusts for dilutive effects of restricted stock equivalents, performance share awards, and deferred compensation equity plans[92](index=92&type=chunk) Basic and Diluted Earnings Per Share (In millions, except per share data) | Metric | Q4 2019 | Q4 2018 | | :------------------------------------------------------------------ | :------ | :------ | | Net earnings from continuing operations attributable to common shareholders | $41.8 | $70.8 | | Net earnings from discontinued operations, net of tax | 0.3 | — | | **Net earnings attributable to common shareholders** | **$42.1** | **$70.8** | | Weighted average common shares outstanding - Basic | 69.1 | 59.7 | | **Basic net earnings per common share from continuing operations** | **$0.60** | **$1.19** | | Basic net earnings per common share from discontinued operations | 0.01 | — | | **Basic net earnings per common share** | **$0.61** | **$1.19** | | Weighted average common shares outstanding - Diluted | 70.2 | 61.0 | | **Diluted net earnings per common share from continuing operations**| **$0.60** | **$1.16** | | Diluted net earnings per common share from discontinued operations | — | — | | **Diluted net earnings per common share** | **$0.60** | **$1.16** | - As of December 31, 2019, all Mandatory Convertible Preferred Stock (MCPS) was considered anti-dilutive and excluded from diluted EPS calculations[94](index=94&type=chunk) [Segments](index=21&type=section&id=(9)%20Segments) This note provides financial information by the company's two reportable segments, Americas and International, including net sales, segment profit, and total assets - Energizer manages operations through two geographic reportable segments: Americas and International[97](index=97&type=chunk) - Segment performance is evaluated based on segment operating profit, excluding corporate expenses, share-based compensation, acquisition/integration costs, amortization, R&D, and other corporate items[97](index=97&type=chunk) Segment Sales and Profitability (In millions) | Metric | Dec 2019 | Dec 2018 | | :----------------- | :------- | :------- | | **Net Sales** | | | | Americas | $514.5 | $373.5 | | International | 222.3 | 198.4 | | **Total net sales**| **$736.8** | **$571.9** | | **Segment Profit** | | | | Americas | $129.2 | $116.1 | | International | 52.2 | 54.6 | | **Total segment profit** | **$181.4** | **$170.7** | Total Assets by Segment (In millions) | Segment | Dec 31, 2019 | Sep 30, 2019 | | :--------------------------- | :----------- | :----------- | | Americas | $1,006.5 | $991.9 | | International | 691.0 | 621.0 | | **Total segment assets** | **$1,697.5** | **$1,612.9** | | Corporate | 95.0 | 81.3 | | Goodwill and other intangible assets | 2,968.8 | 2,963.7 | | Assets held for sale | 805.5 | 791.7 | | **Total assets** | **$5,566.8** | **$5,449.6** | [Leases](index=22&type=section&id=(10)%20Leases) This note details the company's adoption of ASC 842, Leases, and presents information on operating and finance lease assets, liabilities, and expenses - The Company adopted ASC 842, Leases, on October 1, 2019, recognizing operating lease right-of-use assets and liabilities based on the present value of lease payments[105](index=105&type=chunk)[106](index=106&type=chunk) Lease Information (as of Dec 31, 2019, in millions) | Category | Amount | | :-------------------------------------- | :------- | | **Operating Leases:** | | | Operating lease asset | $82.9 | | Operating lease liabilities - current | 15.6 | | Operating lease liabilities | 68.4 | | **Total Operating Lease Liabilities** | **$84.0** | | Weighted-average remaining lease term (in years) | 17.9 | | Weighted-average discount rate | 4.4% | | **Finance Leases:** | | | Property, plant and equipment, net | $45.7 | | Current portion of capital leases | 1.7 | | Long-term debt | 45.1 | | **Total Finance Lease Liabilities** | **$46.8** | | Weighted Average remaining lease term (in years) | 20.8 | | Weighted-average discount rate | 6.7% | Components of Lease Expense (Quarter Ended Dec 31, 2019, in millions) | Component | Amount | | :------------------------ | :----- | | Operating lease cost | $4.5 | | Finance lease cost: | | | Amortization of assets | 0.8 | | Interest on lease liabilities | 0.8 | | Variable lease costs | 0.3 | | **Total lease costs** | **$6.4** | - During Q1 fiscal 2020, Energizer entered into a material embedded operating lease agreement, resulting in a non-cash increase of **$33.6 million** in lease assets and liabilities[113](index=113&type=chunk) [Goodwill and intangible assets](index=24&type=section&id=(11)%20Goodwill%20and%20intangible%20assets) This note provides a breakdown of goodwill by segment and details the net carrying amounts of amortizable and indefinite-lived intangible assets - Goodwill and indefinite-lived intangible assets are not amortized but are evaluated annually for impairment[115](index=115&type=chunk) Goodwill by Segment (In millions) | Segment | Oct 1, 2019 | Dec 31, 2019 | | :-------------- | :---------- | :----------- | | Americas | $861.6 | $866.4 | | International | 143.2 | 156.1 | | **Total** | **$1,004.8**| **$1,022.5** | Total Intangible Assets (In millions) | Category | Dec 31, 2019 Net Carrying Amount | Sep 30, 2019 Net Carrying Amount | | :---------------------------------------- | :------------------------------- | :------------------------------- | | Trademarks and trade names (amortizable) | $48.8 | $49.8 | | Customer relationships | 353.2 | 359.9 | | Patents | 25.7 | 26.3 | | Proprietary technology | 151.4 | 156.8 | | Proprietary formulas | 2.1 | 2.1 | | Non-compete | 0.1 | 0.2 | | **Total Amortizable intangible assets** | **$581.3** | **$595.1** | | Trademarks and trade names - indefinite lived | 1,365.0 | 1,363.8 | | **Total Other intangible assets, net** | **$1,946.3** | **$1,958.9** | [Debt](index=26&type=section&id=(12)%20Debt) This note details the company's long-term debt structure, including various term loan facilities and senior notes, and recent refinancing activities Long-Term Debt Detail (In millions) | Debt Type | Dec 31, 2019 | Sep 30, 2019 | | :------------------------------------------ | :----------- | :----------- | | 2019 Senior Secured Term Loan A Facility Due 2022 | $365.0 | $— | | Senior Secured Term Loan A Facility due 2021 | — | 77.5 | | Senior Secured Term Loan B Facility due 2025 | 660.0 | 982.5 | | 5.50% Senior Notes due 2025 | 600.0 | 600.0 | | 6.375% Senior Notes due 2026 | 500.0 | 500.0 | | 4.625% Senior Notes due 2026 (Euro Notes of €650.0) | 728.8 | 708.4 | | 7.750% Senior Notes due 2027 | 600.0 | 600.0 | | Capital lease obligations | 46.8 | 46.9 | | **Total long-term debt, including current maturities** | **3,500.6** | **3,515.3** | | Less current portion | (70.1) | (1.6) | | Less unamortized debt discount and debt issuance fees | (46.9) | (52.1) | | **Total long-term debt** | **$3,383.6** | **$3,461.6** | - On December 27, 2019, the Company refinanced **$365.0 million** of term loan debt, establishing a new Term Loan A facility due December 2022 and paying down existing Term Loan B and A facilities[124](index=124&type=chunk) - Subsequent to the quarter, proceeds from the Varta Divestiture were used to pay down borrowings on the Term Loan B facility[125](index=125&type=chunk) - As of December 31, 2019, the Company had **$20.0 million** outstanding under the Revolving Facility, with **$372.7 million** available[126](index=126&type=chunk) - The Company was in compliance with all debt covenants as of December 31, 2019[130](index=130&type=chunk) [Pension Plans](index=28&type=section&id=(13)%20Pension%20Plans) This note provides information on the company's defined benefit pension plans, including net periodic pension costs for U.S. and international operations - The Company sponsors several defined benefit pension plans in the U.S. (frozen in fiscal 2015) and other countries[135](index=135&type=chunk) Net Periodic Pension (Benefit)/Cost (In millions) | Component | Q4 2019 (U.S.) | Q4 2018 (U.S.) | Q4 2019 (International) | Q4 2018 (International) | | :------------------------------ | :------------- | :------------- | :---------------------- | :---------------------- | | Service cost | $— | $— | $0.2 | $0.1 | | Interest cost | 4.0 | 5.1 | 0.3 | 0.7 | | Expected return on plan assets | (6.1) | (6.5) | (0.6) | (1.2) | | Amortization of unrecognized net losses | 1.6 | 1.0 | 0.3 | 0.3 | | **Net periodic (benefit)/cost** | **$(0.5)** | **$(0.4)** | **$0.2** | **$(0.1)** | - A pension plan was acquired as part of the Divestment Business and is included in Liabilities held for sale[138](index=138&type=chunk) [Shareholders' Equity](index=28&type=section&id=(14)%20Shareholders'%20Equity) This note details changes in shareholders' equity, including common stock repurchases and dividends declared and paid on common and preferred stock - The Board authorized the repurchase of up to **7.5 million common shares** in July 2015; no shares were repurchased in Q1 fiscal 2020 or 2019[139](index=139&type=chunk) Dividends Declared and Paid (In millions) | Dividend Type | Q4 2019 Declared | Q4 2018 Declared | Q4 2019 Paid | Q4 2018 Paid | | :-------------------------------- | :--------------- | :--------------- | :----------- | :----------- | | Common Stock | $21.4 | $18.4 | $22.7 | $19.8 | | Mandatory Convertible Preferred Stock | $4.0 | — | $4.0 | — | - Subsequent to the quarter, the Board declared a cash dividend of **$0.30 per common share** for Q2 2020 and **$1.875 per MCPS share**[142](index=142&type=chunk)[143](index=143&type=chunk) [Financial Instruments and Risk Management](index=29&type=section&id=(15)%20Financial%20Instruments%20and%20Risk%20Management) This note describes the company's use of derivative instruments to hedge exposures to currency rates, interest rates, and commodity prices - The Company uses derivatives solely for hedging identifiable exposures to currency rates, interest rates, and commodity prices, not for trading or speculative purposes[145](index=145&type=chunk) - Primary foreign currency exposures include the Euro, British pound, Canadian dollar, and Australian dollar, impacting product costs and margins[150](index=150&type=chunk) - Energizer had **$1,025.0 million** in variable rate debt outstanding as of December 31, 2019, with interest rate swaps hedging **$200.0 million** (fixed at **2.03% LIBOR**) and **$250.0 million** (fixed at **2.47% LIBOR**)[152](index=152&type=chunk)[158](index=158&type=chunk) Fair Values and Gains/Losses on Derivative Instruments (In millions) | Derivative Type (Cash Flow Hedges) | Dec 31, 2019 Estimated Fair Value (Liability) | Q4 2019 Recognized OCI (Loss)/Gain | Q4 2019 Reclassified into Income (Gain)/(Loss) | | :--------------------------------- | :-------------------------------------------- | :--------------------------------- | :--------------------------------------------- | | Foreign currency contracts | $(1.4) | $(4.0) | $1.9 | | Interest rate swaps | $(3.7) | $0.5 | $(0.5) | | Zinc contracts | $(1.7) | $(1.0) | $(0.3) | | **Total** | **$(6.8)** | **$(4.5)** | **$1.1** | | Derivative Type (Non-Hedges) | Dec 31, 2019 Estimated Fair Value (Asset) | Q4 2019 Loss Recognized in Income | | :--------------------------------- | :-------------------------------------------- | :-------------------------------- | | Foreign currency contracts | $0.1 | $(0.9) | [Accumulated Other Comprehensive (Loss)/Income](index=34&type=section&id=(16)%20Accumulated%20Other%20Comprehensive%20(Loss)%2FIncome) This note details the changes in accumulated other comprehensive income (AOCI), including foreign currency translation adjustments, pension activity, and hedging gains/losses Changes in Accumulated Other Comprehensive (Loss)/Income (AOCI) (In millions) | Component | Sep 30, 2019 Balance | OCI before Reclassifications | Reclassifications to Earnings | Activity related to Discontinued Operations | Dec 31, 2019 Balance | | :-------------------------------- | :------------------- | :--------------------------- | :---------------------------- | :------------------------------------------ | :------------------- | | Foreign Currency Translation Adjustments | $(124.0) | $14.1 | $— | $15.9 | $(94.0) | | Pension Activity | $(173.3) | $1.3 | $(1.4) | $(0.1) | $(173.5) | | Zinc Contracts | $0.2 | $(0.8) | $0.2 | $(0.4) | $(0.8) | | Foreign Currency Contracts | $3.1 | $(3.0) | $(1.5) | $— | $(1.4) | | Interest Rate Contracts | $(4.3) | $0.5 | $0.4 | $— | $(3.4) | | **Total** | **$(298.3)** | **$12.1** | **$(2.3)** | **$15.4** | **$(273.1)** | Reclassifications out of AOCI to Earnings (In millions) | Details of AOCI Components | Q4 2019 Amount from Reclassified AOCI | Q4 2018 Amount from Reclassified AOCI | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Foreign currency contracts | $1.9 | $2.8 | | Interest rate contracts | $(0.5) | $(0.1) | | Zinc contracts | $(0.3) | $— | | **Total Gains and losses on cash flow hedges** | **$1.1** | **$2.7** | | Actuarial gain/(loss) | $1.9 | $(1.3) | | **Total Amortization of defined benefit pension items** | **$1.9** | **$(1.3)** | | **Total reclassifications to earnings** | **$2.3** | **$1.0** | [Supplemental Financial Statement Information](index=35&type=section&id=(17)%20Supplemental%20Financial%20Statement%20Information) This note provides additional detail on various balance sheet and income statement components, such as inventories, other current assets, and other liabilities Other Items, Net (In millions) | Component | Q4 2019 | Q4 2018 | | :-------------------------------------- | :------ | :------ | | Interest income | $(0.1) | $(0.2) | | Interest income on restricted cash | — | $(5.8) | | Foreign currency exchange gain | $(0.4) | $(1.1) | | Pension benefit other than service costs | $(0.5) | $(0.7) | | Acquisition foreign currency loss/(gain) | 2.2 | $(9.0) | | Gain on sale of assets | $(1.0) | — | | Transition services agreement income | $(0.3) | — | | Other | 0.1 | $(0.1) | | **Total Other items, net** | **$—** | **$(16.9)** | Inventories (In millions) | Category | Dec 31, 2019 | Sep 30, 2019 | | :----------------------- | :----------- | :----------- | | Raw materials and supplies | $73.7 | $70.5 | | Work in process | 92.3 | 103.7 | | Finished products | 269.8 | 295.1 | | **Total inventories** | **$435.8** | **$469.3** | Other Current Assets (In millions) | Category | Dec 31, 2019 | Sep 30, 2019 | | :------------------------------------- | :----------- | :----------- | | Miscellaneous receivables | $15.4 | $16.5 | | Due from Spectrum | 13.0 | 7.6 | | Prepaid expenses | 91.0 | 71.3 | | Value added tax collectible from customers | 32.3 | 23.1 | | Other | 11.3 | 58.6 | | **Total other current assets** | **$163.0** | **$177.1** | Property, Plant and Equipment, Net (In millions) | Category | Dec 31, 2019 | Sep 30, 2019 | | :--------------------------- | :----------- | :----------- | | Land | $9.7 | $9.6 | | Buildings | 121.5 | 119.9 | | Machinery and equipment | 834.8 | 823.0 | | Capital leases | 45.7 | 50.4 | | Construction in progress | 31.9 | 25.8 | | **Total gross property** | **1,043.6** | **1,028.7** | | Accumulated depreciation | (685.9) | (666.7) | | **Total property, plant and equipment, net** | **$357.7** | **$362.0** | Other Current Liabilities (In millions) | Category | Dec 31, 2019 | Sep 30, 2019 | | :----------------------------------------- | :----------- | :----------- | | Accrued advertising, sales promotion and allowances | $26.7 | $11.8 | | Accrued trade allowances | 59.8 | 53.1 | | Accrued salaries, vacations and incentive compensation | 29.8 | 59.2 | | Accrued interest expense | 55.9 | 37.4 | | Due to Spectrum | 4.4 | 2.6 | | Accrued acquisition and integration costs | 6.1 | 7.9 | | Restructuring reserve | 6.9 | 9.8 | | Income taxes payable | 43.3 | 23.4 | | Other | 122.2 | 128.4 | | **Total other current liabilities** | **$355.1** | **$333.6** | Other Liabilities (In millions) | Category | Dec 31, 2019 | Sep 30, 2019 | | :------------------------------- | :----------- | :----------- | | Pensions and other retirement benefits | $107.0 | $109.0 | | Deferred compensation | 28.6 | 28.1 | | Restructuring reserve | 4.5 | — | | Mandatory transition tax | 16.7 | 16.7 | | Other non-current liabilities | 49.4 | 50.8 | | **Total other liabilities** | **$206.2** | **$204.6** | [Related Party Transactions](index=37&type=section&id=(18)%20Related%20Party%20Transactions) This note describes transactions and agreements with Spectrum, a related party, including transition service agreements and supply arrangements - Spectrum, a related party, owns **7.6%** of the Company's outstanding common shares as of December 31, 2019, following the Auto Care Acquisition[186](index=186&type=chunk) - The Company and Spectrum have transition service agreements (TSA) and reverse TSAs for back-office support, with most agreements exited by January 31, 2020, but some information systems and back-office support continuing through fiscal 2020[187](index=187&type=chunk)[188](index=188&type=chunk) - For Q4 2019, the Company incurred **$4.4 million** in SG&A and **$0.2 million** in Cost of products sold related to TSAs, and recorded **$0.3 million** in income from reverse TSAs[190](index=190&type=chunk) - A supply agreement with Spectrum resulted in **$4.8 million** in expense for Q4 2019[191](index=191&type=chunk) [Legal proceedings/contingencies and other obligations](index=37&type=section&id=(19)%20Legal%20proceedings%2Fcontingencies%20and%20other%20obligations) This note addresses the company's involvement in legal proceedings and outlines its purchase obligations from supply and service contracts - The Company is subject to various legal proceedings, but based on current information, the liability from these is not reasonably likely to be material to its financial position, results of operations, or cash flows[193](index=193&type=chunk) - As of December 31, 2019, the Company had approximately **$8.6 million** in purchase obligations from supply and service contracts[195](index=195&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Energizer's financial condition and results of operations for the quarter ended December 31, 2019, discussing key financial highlights, segment performance, liquidity, and capital resources, including the impact of recent acquisitions and restructuring activities [Forward-Looking Statements](index=39&type=section&id=Forward-Looking%20Statements) This section highlights that the document contains forward-looking statements subject to various risks and uncertainties, including market conditions and integration challenges - The document contains forward-looking statements reflecting expectations, estimates, or projections about future results, which are subject to known and unknown risks and uncertainties[199](index=199&type=chunk) - Key risk factors include market and economic conditions, integration of acquired businesses, new product success, customer retention, strategic initiative execution, competitive pressure, foreign currency impacts, commodity costs, and compliance with debt covenants[199](index=199&type=chunk) [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures to provide additional insights into operating performance, excluding certain non-recurring items - Management uses non-GAAP financial measures (e.g., Segment Profit, Adjusted Net Earnings, Non-GAAP Tax Rate, Organic measures) to provide additional meaningful comparisons and assist investors in understanding ongoing operating performance, excluding items like acquisition/integration costs and one-time tax impacts[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) [Battery Acquisition](index=41&type=section&id=Battery%20Acquisition) This section discusses the financial contribution of the Battery Acquisition and the subsequent divestiture of the Varta® consumer battery business - The Battery Acquisition was completed on January 2, 2019, for **$2,000.0 million**, adding Rayovac® and Varta® brands[211](index=211&type=chunk) Battery Acquisition Financial Contribution (Quarter Ended Dec 31, 2019, in millions) | Metric | Amount | | :--------------------- | :----- | | Revenue | $125.5 | | Income before income taxes | $17.1 | - The Varta® consumer battery business in EMEA was sold on January 2, 2020, for **€180.0**, with initial proceeds of approximately **$345 million**, and an estimated pre-tax loss of **$80-$90 million**[212](index=212&type=chunk) [Auto Care Acquisition](index=41&type=section&id=Auto%20Care%20Acquisition) This section details the financial contribution of the Auto Care Acquisition, which expanded the company's automotive product portfolio - The Auto Care Acquisition was completed on January 28, 2019, for **$1,250.0 million**, including Armor All®, STP®, and A/C PRO® brands[213](index=213&type=chunk) Auto Care Acquisition Financial Contribution (Quarter Ended Dec 31, 2019, in millions) | Metric | Amount | | :--------------------- | :----- | | Revenue | $61.4 | | Income before income taxes | $0.4 | [Acquisition and Integration Costs](index=41&type=section&id=Acquisition%20and%20Integration%20Costs) This section outlines the pre-tax costs incurred for acquisitions and integration activities, categorized by expense type Pre-Tax Acquisition and Integration Costs (In millions) | Quarter Ended Dec 31 | 2019 | 2018 | | :------------------- | :---- | :---- | | Total Costs | $19.3 | $36.5 | - Q4 2019 costs included **$6.9 million** in Cost of products sold (facility exit/restructuring), **$11.1 million** in SG&A (integration consulting, IT systems), and **$0.4 million** in R&D[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) - Q4 2018 costs included **$18.9 million** in SG&A (legal, consulting, regulatory approval) and **$32.4 million** in interest expense (escrowed debt ticking fees)[215](index=215&type=chunk)[216](index=216&type=chunk) - Other items, net for Q4 2019 included a **$2.2 million loss** on a hedge contract for Varta Divestiture proceeds, offset by a **$1.0 million gain** on asset sale and **$0.3 million** transition services income[217](index=217&type=chunk) [Restructuring Costs](index=42&type=section&id=Restructuring%20Costs) This section details the pre-tax expenses associated with the company's restructuring plans aimed at improving operational efficiency - Restructuring plans approved in Q4 2019 aim to reduce complexity and improve efficiency in manufacturing and distribution, with completion expected by December 31, 2021[219](index=219&type=chunk) Pre-Tax Restructuring Expense (Quarter Ended Dec 31, 2019, in millions) | Category | Amount | | :-------------------------------------- | :----- | | Total pre-tax expense | $6.3 | - These costs, primarily in Cost of products sold, included severance, accelerated depreciation, asset write-offs, and other exit costs, totaling **$6.3 million** for Q4 2019[220](index=220&type=chunk) - Expected annual cost savings of **$60-$65 million** are anticipated by the end of calendar 2021, mainly from Cost of products sold[221](index=221&type=chunk) [Highlights / Operating Results](index=42&type=section&id=Highlights%20%2F%20Operating%20Results) This section summarizes key financial and operational performance metrics, including net earnings, sales, and segment results [Financial Results](index=42&type=section&id=Financial%20Results) This section presents the company's net earnings and diluted earnings per share, including adjusted non-GAAP measures Net Earnings and EPS (In millions, except per share data) | Metric | Q4 2019 | Q4 2018 | | :------------------------------------------------------------------ | :------ | :------ | | Net earnings from continuing operations | $45.8 | $70.8 | | Diluted net earnings per common share - continuing operations | $0.60 | $1.16 | | Adjusted diluted net earnings per diluted common share - continuing operations | $0.85 | $1.64 | - Adjusted diluted net earnings from continuing operations per common share decreased by **48.2%** year-over-year[223](index=223&type=chunk) - Adjustments for non-GAAP measures include acquisition and integration costs, loss on extinguishment of debt, and the one-time impact of U.S. tax legislation[224](index=224&type=chunk) [Net Sales](index=44&type=section&id=Net%20Sales) This section analyzes the drivers of net sales changes, including organic growth, acquisition impacts, and currency fluctuations Net Sales Breakdown (In millions) | Component | Q4 2019 Change | % Chg |\ | :---------------------------- | :------------- | :---- |\ | Net Sales - prior year | $571.9 | |\ | Organic | $(19.7) | (3.4)%|\ | Impact of Battery Acquisition | 125.5 | 21.9 %|\ | Impact of Auto Care Acquisition | 61.4 | 10.7 %|\ | Change in Argentina | 0.2 | — % |\ | Impact of currency | (2.5) | (0.4)%|\ | **Net Sales - current year** | **$736.8** | **28.8 %**| - Total net sales increased by **$164.9 million (28.8%)** to **$736.8 million** in Q4 2019, primarily driven by acquisitions (**$186.9 million**, or **32.6%**)[230](index=230&type=chunk)[231](index=231&type=chunk) - Organic net sales decreased by **3.4%** due to declining point-of-sale trends (US price increase, competitive launch, lower hurricane-related replenishment volumes) and holiday phasing, partially offset by improved pricing[230](index=230&type=chunk) [Gross Margin](index=44&type=section&id=Gross%20Margin) This section discusses the reported and adjusted gross margin percentages and the factors influencing their year-over-year changes Gross Margin Percentage | Period | Reported Gross Margin % | Adjusted Gross Margin % (Excl. Integration Costs) | | :-------------------- | :---------------------- | :------------------------------------------------ | | Q4 2019 | 40.9% | 41.8% | | Q4 2018 | 48.2% | 48.2% | - Adjusted gross margin decreased by **640 basis points** year-over-year, mainly due to the lower margin profile of acquired businesses, customer mix, unfavorable foreign currency, tariffs, and higher product costs from lower Q4 2019 production volumes[232](index=232&type=chunk) - These decreases were partially offset by improved pricing and realized synergies[232](index=232&type=chunk) [Advertising and Sales Promotion Expense (A&P)](index=44&type=section&id=Advertising%20and%20Sales%20Promotion%20Expense%20(A%26P)) This section details the company's advertising and sales promotion expenses and their impact on net sales Advertising and Sales Promotion Expense (A&P) (In millions) | Period | A&P Amount | A&P as % of Net Sales | | :----- | :--------- | :-------------------- | | Q4 2019| $46.8 | 6.4% | | Q4 2018| $40.9 | 7.2% | - Excluding acquired businesses, legacy A&P increased by **$3.3 million**, reflecting continued support for the broad portfolio and increased spending for product/packaging innovation and promotional support for auto care brands[233](index=233&type=chunk) [Selling, General, and Administrative Expense (SG&A)](index=44&type=section&id=Selling,%20General,%20and%20Administrative%20Expense%20(SG%26A)) This section analyzes reported and adjusted selling, general, and administrative expenses and their percentage of net sales Selling, General, and Administrative Expense (SG&A) (In millions) | Period | Reported SG&A | Reported SG&A as % of Net Sales | Adjusted SG&A (Excl. Acquisition Costs) | Adjusted SG&A as % of Net Sales | | :----- | :------------ | :------------------------------ | :-------------------------------------- | :------------------------------ | | Q4 2019| $122.1 | 16.6% | $111.0 | 15.1% | | Q4 2018| $104.6 | 18.3% | $85.7 | 15.0% | - Adjusted SG&A (excluding acquisition and integration costs) increased by **$25.3 million**, with legacy SG&A as a percentage of net sales increasing by **90 basis points** due to higher mark-to-market adjustments on the deferred compensation plan[234](index=234&type=chunk) [Research and Development (R&D)](index=44&type=section&id=Research%20and%20Development%20(R%26D)) This section presents the company's research and development expenses and their proportion to net sales Research and Development (R&D) Expense (In millions) | Period | R&D Amount | R&D as % of Net Sales | | :----- | :--------- | :-------------------- | | Q4 2019| $8.9 | 1.2% | | Q4 2018| $5.5 | 1.0% | [Interest Expense](index=45&type=section&id=Interest%20Expense) This section details the company's interest expense, highlighting the impact of debt from recent acquisitions Interest Expense (In millions) | Period | Reported Interest Expense | | :----- | :------------------------ | | Q4 2019| $51.0 | | Q4 2018| $48.2 | - Excluding the **$4.2 million loss** on extinguishment of debt in Q4 2019 and **$32.4 million** in acquisition costs in Q4 2018, current year interest expense increased by **$31.0 million**

+ Fiscal Q1 2020 Earnings February 5, 2020 Forward-Looking Statements Energizer Holdings, Inc. (the "Company") and its management may make certain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "anticipates," "targets," "expects," "hopes," "estimates," "intends," ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________ FORM 10-K _______________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 10 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File No. 001-36837 ENERGIZER HOLDINGS, INC. (Exact n ...

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including statements of earnings, balance sheets, cash flows, and shareholders' equity, along with detailed notes explaining the company's business, accounting policies, recent acquisitions, divestitures, and other financial details [Consolidated Statements of Earnings and Comprehensive Income (Condensed)](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Income%20(Condensed)) The condensed consolidated statements of earnings show a significant increase in net sales for both the quarter and nine months ended June 30, 2019, primarily due to recent acquisitions. However, net earnings from continuing operations and diluted EPS decreased substantially compared to the prior year, impacted by higher costs and interest expenses Consolidated Statements of Earnings and Comprehensive Income (Condensed) | Metric | Q3 2019 ($M) | Q3 2018 ($M) | 9M 2019 ($M) | 9M 2018 ($M) | |:------------------------------------------------|:-------------|:-------------|:-------------|:-------------| | Net sales | 647.2 | 392.8 | 1,775.5 | 1,340.5 | | Gross profit | 246.3 | 176.1 | 716.0 | 622.9 | | Earnings from continuing operations | 9.2 | 23.8 | 17.7 | 92.0 | | Net earnings/(loss) attributable to common shareholders | 3.0 | 23.8 | (2.8) | 92.0 | | Basic net earnings per common share - continuing operations | 0.07 | 0.40 | 0.15 | 1.54 | | Diluted net earnings per common share - continuing operations | 0.07 | 0.39 | 0.15 | 1.50 | - Net sales increased **significantly** for both the quarter (**64.8%**) and nine months (**32.5%**) ended June 30, 2019, primarily driven by recent acquisitions[11](index=11&type=chunk) - Net earnings from continuing operations decreased by **61.3%** for the quarter and **80.7%** for the nine months ended June 30, 2019, compared to the prior year[11](index=11&type=chunk) [Consolidated Balance Sheets (Condensed)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(Condensed)) The consolidated balance sheet as of June 30, 2019, reflects substantial growth in total assets, liabilities, and shareholders' equity compared to September 30, 2018, largely due to the Battery and Auto Care Acquisitions, which significantly increased goodwill, other intangible assets, and long-term debt Consolidated Balance Sheets (Condensed) | Metric | June 30, 2019 ($M) | September 30, 2018 ($M) | |:-------------------------------------|:-------------------|:------------------------| | Total assets | 5,577.7 | 3,178.8 | | Total liabilities | 5,007.0 | 3,154.3 | | Total shareholders' equity | 570.7 | 24.5 | | Cash and cash equivalents | 206.4 | 522.1 | | Goodwill | 1,062.4 | 244.2 | | Other intangible assets, net | 1,922.2 | 232.7 | | Long-term debt | 3,493.2 | 976.1 | - Total assets increased by **$2,398.9 million** (**75.5%**) from September 30, 2018, to June 30, 2019, primarily driven by goodwill and other intangible assets from acquisitions[14](index=14&type=chunk) - Total liabilities increased by **$1,852.7 million** (**58.7%**), mainly due to a significant rise in long-term debt to fund acquisitions[14](index=14&type=chunk) - Total shareholders' equity saw a **substantial increase** from **$24.5 million** to **$570.7 million**, reflecting new equity issuances[14](index=14&type=chunk) [Consolidated Statements of Cash Flows (Condensed)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Condensed)) The consolidated statements of cash flows for the nine months ended June 30, 2019, show a significant decrease in cash from operating activities and a large increase in cash used by investing activities due to major acquisitions. This was largely offset by substantial cash proceeds from financing activities, primarily debt and equity issuances Consolidated Statements of Cash Flows (Condensed) | Metric | 9M 2019 ($M) | 9M 2018 ($M) | |:------------------------------------------------|:-------------|:-------------| | Net cash from operating activities | 7.0 | 188.0 | | Net cash used by investing activities | (2,893.2) | (11.1) | | Net cash from/(used by) financing activities | 1,325.6 | (37.9) | | Net (decrease)/increase in cash, cash equivalents, and restricted cash | (1,561.9) | 132.9 | - Net cash from operating activities decreased **significantly** from **$188.0 million** in 2018 to **$7.0 million** in 2019, primarily due to working capital changes and acquisition-related cash expenditures[17](index=17&type=chunk) - Net cash used by investing activities surged to **$2,893.2 million** in 2019, mainly driven by the Battery and Auto Care Acquisitions totaling **$2,453.8 million**[17](index=17&type=chunk) - Net cash from financing activities was **$1,325.6 million** in 2019, a **substantial increase** from a net use of **$37.9 million** in 2018, reflecting significant debt and equity issuances to fund acquisitions[17](index=17&type=chunk) [Consolidated Statements of Shareholders' Equity/(Deficit) (Condensed)](index=9&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%2F(Deficit)%20(Condensed)) The consolidated statements of shareholders' equity show a significant increase in total equity from $24.5 million at September 30, 2018, to $570.7 million at June 30, 2019, primarily driven by the issuance of common stock and mandatory convertible preferred stock to fund acquisitions, partially offset by net losses and share repurchases Changes in Shareholders' Equity (9 Months Ended June 30, 2019) | Metric | September 30, 2018 ($M) | June 30, 2019 ($M) | |:-------------------------------------|:------------------------|:-------------------| | Total Shareholders' Equity/(Deficit) | 24.5 | 570.7 | | Additional Paid-in Capital | 217.8 | 867.2 | | Retained Earnings | 177.3 | 109.5 | | Treasury Stock | (129.4) | (161.4) | | Accumulated Other Comprehensive Loss | (241.8) | (245.3) | - Additional paid-in capital increased **significantly** from **$217.8 million** to **$867.2 million**, reflecting proceeds from common stock and preferred stock issuances[19](index=19&type=chunk) - Retained earnings decreased from **$177.3 million** to **$109.5 million**, impacted by net losses and dividend payments[19](index=19&type=chunk) - Treasury stock increased due to common stock repurchases totaling **$45.0 million** during the nine months ended June 30, 2019[19](index=19&type=chunk) [Notes to Consolidated (Condensed) Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20(Condensed)%20Financial%20Statements) This section provides detailed disclosures on the company's business operations, significant accounting policies, recent acquisitions and divestitures, financial instruments, and other material financial information, offering context to the condensed financial statements [(1) Description of Business and Basis of Presentation](index=11&type=section&id=(1)%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Energizer Holdings, Inc. is a global manufacturer and marketer of household batteries, specialty batteries, portable lights, and automotive fragrance and appearance products. The company recently expanded its portfolio through the Battery Acquisition (Rayovac®, Varta®) and Auto Care Acquisition (Armor All®, STP®, A/C PRO®) in early 2019, and is in the process of divesting the Varta® consumer battery business in EMEA - Energizer acquired Spectrum's global battery, lighting, and portable power business (Battery Acquisition) on January 2, 2019, including Rayovac® and Varta® brands[27](index=27&type=chunk) - Energizer acquired Spectrum's global auto care business (Auto Care Acquisition) on January 28, 2019, including Armor All®, STP®, and A/C PRO® brands[28](index=28&type=chunk) - The company entered into an agreement on May 29, 2019, to divest the Varta® consumer battery business in Europe, Middle East, and Africa (Divestment Business) to VARTA Aktiengesellschaft for **€180.0 million**, with Spectrum contributing an additional **$200.0 million**[29](index=29&type=chunk)[32](index=32&type=chunk) - The Divestment Business's assets and liabilities are classified as held for sale, and its operations as discontinued operations[32](index=32&type=chunk) [(2) Revenue Recognition](index=12&type=section&id=(2)%20Revenue%20Recognition) The company adopted ASU 2014-09, Revenue from Contracts with Customers, effective October 1, 2018, with no material impact on financial statements. Revenue is primarily recognized at a single point in time upon transfer of title and risk of loss, with net sales reflecting transaction prices reduced by variable consideration such as discounts and promotional programs - Adoption of ASU 2014-09, Revenue from Contracts with Customers, had **no material impact** on the company's financial statements[36](index=36&type=chunk)[40](index=40&type=chunk) - Revenue is recognized when title, ownership, and risk of loss pass to the customer, typically upon delivery or pickup of finished goods[46](index=46&type=chunk) Net Sales by Product Category and Geography | Category/Segment | Q3 2019 ($M) | Q3 2018 ($M) | 9M 2019 ($M) | 9M 2018 ($M) | |:-------------------|:-------------|:-------------|:-------------|:-------------| | **Product** | | | | | | Batteries | 457.2 | 350.1 | 1,398.5 | 1,204.9 | | Auto Care | 160.8 | 24.1 | 289.9 | 68.9 | | Lights and Licensing | 29.2 | 18.6 | 87.1 | 66.7 | | **Total Net Sales**| **647.2** | **392.8** | **1,775.5** | **1,340.5** | | **Geography** | | | | | | Americas | 465.1 | 241.3 | 1,220.2 | 838.5 | | International | 182.1 | 151.5 | 555.3 | 502.0 | | **Total Net Sales**| **647.2** | **392.8** | **1,775.5** | **1,340.5** | [(3) Acquisitions](index=15&type=section&id=(3)%20Acquisitions) Energizer completed the Battery Acquisition for $2,000.0 million and the Auto Care Acquisition for $1,250.0 million in early 2019, significantly expanding its product portfolios. These acquisitions involved substantial cash and equity considerations, leading to preliminary allocations of purchase price to assets, liabilities, goodwill, and intangible assets, which are subject to finalization - Battery Acquisition completed on January 2, 2019, for a contractual purchase price of **$2,000.0 million**, funded by senior notes, term loans, and cash on hand[54](index=54&type=chunk) - Auto Care Acquisition completed on January 28, 2019, for a contractual purchase price of **$1,250.0 million**, comprising **$937.5 million** in cash and **$312.5 million** in newly-issued common stock[66](index=66&type=chunk)[68](index=68&type=chunk) Preliminary Purchase Price Allocation for Battery Acquisition (as of acquisition date) | Asset/Liability | Amount ($M) | |:--------------------------------|:------------| | Cash and cash equivalents | 37.8 | | Trade receivables | 59.4 | | Inventories | 82.4 | | Assets held for sale | 805.0 | | Property, plant and equipment, net | 138.5 | | Goodwill | 547.2 | | Other intangible assets, net | 747.5 | | Liabilities held for sale | (405.0) | | Net assets acquired | 1,956.2 | Preliminary Purchase Price Allocation for Auto Care Acquisition (as of acquisition date) | Asset/Liability | Amount ($M) | |:--------------------------------|:------------| | Cash and cash equivalents | 3.3 | | Trade receivables | 42.1 | | Inventories | 96.1 | | Property, plant and equipment, net | 66.5 | | Goodwill | 270.1 | | Other intangible assets, net | 972.5 | | Deferred tax assets | 12.1 | | Other liabilities (deferred tax liabilities) | (221.1) | | Net assets acquired | 1,179.2 | Acquisition and Integration Costs (Pre-tax) | Period | Q3 2019 ($M) | 9M 2019 ($M) | Q3 2018 ($M) | 9M 2018 ($M) | |:-------------------|:-------------|:-------------|:-------------|:-------------| | Total Costs | 28.0 | 159.9 | 15.9 | 41.0 | | Cost of products sold | 12.4 | 44.1 | — | — | | SG&A | 15.1 | 63.1 | 22.4 | 44.6 | | Interest expense | — | 65.6 | 3.4 | 6.3 | [(4) Divestment](index=22&type=section&id=(4)%20Divestment) The company is divesting the Varta® consumer battery business in EMEA for €180.0 million, with an additional $200.0 million contribution from Spectrum. This business is classified as held for sale and its operations as discontinued, resulting in a net loss from discontinued operations for the quarter and nine months ended June 30, 2019 - The Divestment Business is expected to be sold by the end of calendar year 2019 for **€180.0 million**, plus a **$200.0 million** contribution from Spectrum[104](index=104&type=chunk) Assets and Liabilities of Divestment Business Classified as Held for Sale (June 30, 2019) | Category | Amount ($M) | |:------------------|:------------| | Assets held for sale | 807.6 | | Liabilities held for sale | 384.9 | Loss from Discontinued Operations (Divestment Business) | Metric | Q3 2019 ($M) | 9M 2019 ($M) | |:------------------------------------------------|:-------------|:-------------| | Net sales | 69.9 | 150.1 | | Loss before income taxes from discontinued operations | (1.4) | (15.3) | | Net loss from discontinued operations | (1.8) | (12.8) | - The loss from discontinued operations for the nine months ended June 30, 2019, included an inventory fair value adjustment of **$11.2 million** and divestment-related pre-tax costs of **$9.9 million**[110](index=110&type=chunk) [(5) Income Taxes](index=24&type=section&id=(5)%20Income%20Taxes) The nine-month effective tax rate decreased to 30.3% from 45.3% in the prior year, influenced by disallowed transaction costs from acquisitions and the impact of the U.S. Tax Cuts and Jobs Act (TCJA), which reduced the corporate tax rate to 21% for fiscal year 2019 - The nine-month effective tax rate was **30.3%** for 2019, down from **45.3%** in 2018[111](index=111&type=chunk) - The current year's tax provision included the estimated impact of disallowed transaction costs related to the Battery and Auto Care Acquisitions[111](index=111&type=chunk) - The U.S. corporate income tax rate was reduced from **35%** to **21%** by the Tax Act, effective for Energizer as of January 1, 2018, with the full **21%** rate impacting fiscal year 2019[112](index=112&type=chunk) - The company completed accounting for the mandatory transition tax, recording an additional **$0.7 million** in 2019 for state tax impact, bringing the total to **$36.7 million**[114](index=114&type=chunk) [(6) Share-Based Payments](index=24&type=section&id=(6)%20Share-Based%20Payments) Total share-based compensation expense for the quarter and nine months ended June 30, 2019, was $6.7 million and $20.8 million, respectively. The company granted Restricted Stock Equivalent (RSE) awards and performance shares to key employees and executives, with vesting contingent on time and performance targets Share-Based Compensation Expense | Period | Q3 2019 ($M) | 9M 2019 ($M) | Q3 2018 ($M) | 9M 2018 ($M) | |:-------------|:-------------|:-------------|:-------------|:-------------| | Total Cost | 6.7 | 20.8 | 7.0 | 21.0 | - In November 2018, the company granted approximately **73,000 RSE shares** vesting ratably over four years, **55,000 RSE shares** vesting on the third anniversary, and **190,000 performance shares** (max **380,000**) based on EPS and free cash flow targets[117](index=117&type=chunk) [(7) Earnings per share](index=26&type=section&id=(7)%20Earnings%20per%20share) Basic and diluted earnings per share calculations reflect the impact of net earnings from continuing and discontinued operations, mandatory preferred stock dividends, and dilutive effects of restricted stock equivalents and performance shares. Mandatory Convertible Preferred Stock (MCPS) was anti-dilutive for all periods and excluded from diluted EPS Basic and Diluted Earnings Per Share | Metric | Q3 2019 | Q3 2018 | 9M 2019 | 9M 2018 | |:------------------------------------------------|:-------------|:-------------|:-------------|:-------------| | Basic net earnings per common share - continuing operations | $0.07 | $0.40 | $0.15 | $1.54 | | Basic net earnings/(loss) per common share | $0.04 | $0.40 | $(0.04) | $1.54 | | Diluted net earnings per common share - continuing operations | $0.07 | $0.39 | $0.15 | $1.50 | | Diluted net earnings/(loss) per common share | $0.04 | $0.39 | $(0.04) | $1.50 | | Weighted average common shares outstanding - Diluted | 70.6 | 61.4 | 66.5 | 61.4 | - Mandatory Convertible Preferred Stock (MCPS) was considered **anti-dilutive** and excluded from diluted EPS calculations for all periods presented[127](index=127&type=chunk) - Performance-based restricted stock equivalents (**0.8 million** for Q3/9M 2019, **0.5 million** for Q3/9M 2018) were excluded from diluted EPS as performance targets were not achieved[127](index=127&type=chunk) [(8) Segments](index=28&type=section&id=(8)%20Segments) Energizer manages operations through two geographic segments: Americas and International. Segment performance is evaluated based on segment operating profit, excluding corporate expenses, share-based compensation, acquisition/integration costs, amortization, and R&D. Both segments showed significant net sales and profit growth, largely driven by recent acquisitions Segment Net Sales and Profit | Metric/Segment | Q3 2019 ($M) | Q3 2018 ($M) | 9M 2019 ($M) | 9M 2018 ($M) | |:-----------------|:-------------|:-------------|:-------------|:-------------| | **Net Sales** | | | | | | Americas | 465.1 | 241.3 | 1,220.2 | 838.5 | | International | 182.1 | 151.5 | 555.3 | 502.0 | | **Total Net Sales**| **647.2** | **392.8** | **1,775.5** | **1,340.5** | | **Segment Profit** | | | | | | Americas | 103.8 | 60.4 | 308.6 | 239.2 | | International | 41.0 | 32.6 | 132.0 | 115.9 | | **Total Segment Profit**| **144.8** | **93.0** | **440.6** | **355.1** | - Americas net sales increased **92.7%** for the quarter and **45.5%** for the nine months, with acquisitions contributing significantly[132](index=132&type=chunk) - International net sales increased **20.2%** for the quarter and **10.6%** for the nine months, also boosted by acquisitions[132](index=132&type=chunk) - Total segment profit increased **55.7%** for the quarter and **24.1%** for the nine months, driven by acquisitions and organic growth[132](index=132&type=chunk) [(9) Goodwill and intangible assets](index=29&type=section&id=(9)%20Goodwill%20and%20intangible%20assets) Goodwill and indefinite-lived intangible assets are not amortized but are evaluated annually for impairment. The Battery and Auto Care Acquisitions significantly increased goodwill and indefinite-lived intangible assets, with total intangible assets reaching $1,922.2 million at June 30, 2019 Goodwill by Segment | Segment | October 1, 2018 ($M) | June 30, 2019 ($M) | |:--------------|:---------------------|:-------------------| | Americas | 228.4 | 228.4 | | International | 15.8 | 15.6 | | Unallocated | — | 818.4 | | **Total** | **244.2** | **1,062.4** | - Goodwill increased by **$818.2 million** from October 1, 2018, to June 30, 2019, primarily due to the Battery Acquisition (**$547.2 million**) and Auto Care Acquisition (**$270.1 million**)[138](index=138&type=chunk) Total Intangible Assets, Net (June 30, 2019) | Category | Gross Carrying Amount ($M) | Accumulated Amortization ($M) | Net Carrying Amount ($M) | |:----------------------------------------|:---------------------------|:------------------------------|:-------------------------| | Trademarks and trade names (amortizable) | 61.0 | 8.8 | 52.2 | | Customer relationships | 412.5 | 28.2 | 384.3 | | Proprietary technology | 174.5 | 10.5 | 164.0 | | Trademarks and trade names - indefinite lived | 1,292.4 | — | 1,292.4 | | **Total Other intangible assets, net** | **1,977.8** | **55.6** | **1,922.2** | - Indefinite-lived intangible assets increased from **$76.9 million** at September 30, 2018, to **$1,292.4 million** at June 30, 2019, mainly from the Battery (**$513.0 million**) and Auto Care (**$702.9 million**) Acquisitions[141](index=141&type=chunk) [(10) Debt](index=31&type=section&id=(10)%20Debt) The company's long-term debt significantly increased to $3,493.2 million at June 30, 2019, from $976.1 million at September 30, 2018, primarily due to new senior secured term loans and senior notes issued to fund the Battery and Auto Care Acquisitions. The company also utilizes interest rate swaps to manage variable rate debt exposure and was in compliance with all debt covenants Long-Term Debt Breakdown | Debt Type | June 30, 2019 ($M) | September 30, 2018 ($M) | |:------------------------------------------------|:-------------------|:------------------------| | Senior Secured Term Loan A Facility due 2021 | 77.5 | — | | Senior Secured Term Loan B Facility due 2025 | 997.5 | — | | 5.50% Senior Notes due 2025 | 600.0 | 600.0 | | 6.375% Senior Notes due 2026 | 500.0 | — | | 4.625% Senior Notes due 2026 (Euro Notes of €650.0) | 739.2 | — | | 7.750% Senior Notes due 2027 | 600.0 | — | | Capital lease obligations | 47.4 | — | | **Total long-term debt** | **3,493.2** | **976.1** | - New debt issuances in 2019 included a **$400.0 million** revolving credit facility, **$200.0 million** Term Loan A, **$1,000.0 million** Term Loan B, **$500.0 million** USD Senior Notes, **€650.0 million** Euro Senior Notes, and **$600.0 million** Senior Notes due 2027[146](index=146&type=chunk)[149](index=149&type=chunk)[153](index=153&type=chunk) - The company had **$1,075.0 million** in variable rate debt outstanding at June 30, 2019, with interest rate swaps fixing LIBOR on **$200.0 million** at **2.03%** and on **$400.0 million** (decreasing quarterly) at **2.47%**[196](index=196&type=chunk) - As of June 30, 2019, the company was in compliance with all provisions and covenants associated with its debt agreements[158](index=158&type=chunk) [(11) Pension Plans](index=33&type=section&id=(11)%20Pension%20Plans) The company maintains several defined benefit pension plans, with the U.S. plan frozen in fiscal year 2015. For the nine months ended June 30, 2019, the U.S. plan reported a net periodic benefit of $(1.2) million, and International plans reported a net periodic benefit of $(0.4) million Net Periodic Pension (Benefit)/Cost (Nine Months Ended June 30) | Metric | 2019 U.S. ($M) | 2018 U.S. ($M) | 2019 International ($M) | 2018 International ($M) | |:--------------------------------------|:---------------|:---------------|:------------------------|:------------------------| | Service cost | — | — | 0.4 | 0.4 | | Interest cost | 15.3 | 14.1 | 2.3 | 3.2 | | Expected return on plan assets | (19.6) | (22.6) | (3.8) | (4.8) | | Amortization of unrecognized net losses | 3.1 | 3.3 | 0.7 | 1.6 | | Net periodic (benefit)/cost | (1.2) | (5.1) | (0.4) | 0.4 | - The U.S. pension plan was frozen in fiscal year 2015[163](index=163&type=chunk) - A pension plan was acquired as part of the Divestment Business with the Battery Acquisition and is included in Liabilities held for sale[168](index=168&type=chunk) [(12) Shareholders' Equity](index=34&type=section&id=(12)%20Shareholders'%20Equity) The company repurchased 1.0 million common shares for $45.0 million during the nine months ended June 30, 2019. Common stock dividends of $0.30 per share were declared quarterly, totaling $61.4 million. Additionally, the company issued 4.7 million common shares for $205.3 million and 2.2 million shares of Series A Mandatory Convertible Preferred Stock (MCPS) for $199.5 million to fund the Auto Care Acquisition - The company repurchased **1,036,000 common shares** for **$45.0 million** during the nine months ended June 30, 2019, at an average price of **$43.46 per share**[169](index=169&type=chunk) - Total common stock dividends declared for the nine months ended June 30, 2019, were **$61.4 million**, with quarterly dividends of **$0.30 per share**[172](index=172&type=chunk) - In January 2019, the company issued **4,687,498 shares** of common stock, generating net proceeds of **$205.3 million**, and **5,278,921 shares** to Spectrum as partial consideration for the Auto Care Acquisition, valued at **$240.5 million**[174](index=174&type=chunk)[175](index=175&type=chunk) - In January 2019, the company issued **2,156,250 shares** of Series A Mandatory Convertible Preferred Stock (MCPS), with net proceeds of **$199.5 million**, to fund the Auto Care Acquisition[180](index=180&type=chunk) - Dividends on MCPS are payable quarterly at an annual rate of **7.50%**, with total declared dividends of **$7.7 million** and paid dividends of **$4.0 million** for the nine months ended June 30, 2019[182](index=182&type=chunk)[184](index=184&type=chunk) [(13) Financial Instruments and Risk Management](index=36&type=section&id=(13)%20Financial%20Instruments%20and%20Risk%20Management) Energizer uses derivatives solely for hedging identifiable exposures to currency, commodity, and interest rate risks, not for speculative purposes. The company employs cash flow hedges for foreign currency and zinc purchases, and interest rate swaps for variable rate debt. Derivatives not designated as hedges are used for balance sheet exposures - The company uses hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain materials and commodities, such as zinc[192](index=192&type=chunk)[193](index=193&type=chunk) - Foreign currency risk is managed through forward currency contracts to hedge cash flow uncertainty of inventory purchases, with primary exposures in Euro, British pound, Canadian dollar, and Australian dollar[194](index=194&type=chunk)[200](index=200&type=chunk) - Interest rate risk on variable rate debt is managed through interest rate swap agreements, fixing LIBOR on **$200.0 million** at **2.03%** and on **$400.0 million** (decreasing quarterly) at **2.47%**[196](index=196&type=chunk) Estimated Fair Values of Derivatives (June 30, 2019) | Derivative Type | Estimated Fair Value Asset/(Liability) ($M) | |:--------------------------------|:--------------------------------------------| | Foreign currency contracts | 1.3 | | Interest rate swaps | (3.9) | | Zinc contracts | (0.7) | | Foreign currency contracts (non-hedge) | (1.0) | [(14) Accumulated Other Comprehensive (Loss)/Income](index=41&type=section&id=(14)%20Accumulated%20Other%20Comprehensive%20(Loss)%2FIncome) Accumulated Other Comprehensive Loss (AOCI) increased slightly from $(241.8) million at September 30, 2018, to $(245.3) million at June 30, 2019. This change reflects foreign currency translation adjustments, pension activity, and gains/losses from zinc, foreign currency, and interest rate hedging contracts, with some reclassifications to earnings Changes in Accumulated Other Comprehensive (Loss)/Income (9 Months Ended June 30, 2019) | Component | Balance at Sep 30, 2018 ($M) | OCI before Reclassifications ($M) | Reclassifications to Earnings ($M) | Activity related to Discontinued Operations ($M) | Balance at Jun 30, 2019 ($M) | |:----------------------------------------|:-----------------------------|:----------------------------------|:-----------------------------------|:-------------------------------------------------|:-----------------------------| | Foreign Currency Translation Adjustments | (113.6) | 3.3 | — | 1.0 | (109.3) | | Pension Activity | (136.4) | (0.2) | 3.2 | — | (133.4) | | Zinc Contracts | — | (0.5) | — | 0.6 | 0.1 | | Foreign Currency Contracts | 3.3 | 2.9 | (5.2) | — | 1.0 | | Interest Rate Contracts | 4.9 | (8.3) | (0.3) | — | (3.7) | | **Total** | **(241.8)** | **(2.8)** | **(2.3)** | **1.6** | **(245.3)** | - Reclassifications to earnings for the nine months ended June 30, 2019, included **$7.1 million** from cash flow hedges (foreign currency and interest rate contracts) and **$(3.8) million** from pension items[222](index=222&type=chunk) [(15) Supplemental Financial Statement Information](index=42&type=section&id=(15)%20Supplemental%20Financial%20Statement%20Information) This section provides detailed breakdowns of 'Other items, net', inventories, other current assets, property, plant and equipment, and other current and non-current liabilities, offering granular insights into specific balance sheet and income statement accounts Other Items, Net (Nine Months Ended June 30) | Item | 2019 ($M) | 2018 ($M) | |:----------------------------------------|:----------|:----------| | Interest income | (1.3) | (1.2) | | Interest income on restricted cash | (5.8) | — | | Foreign currency exchange (gain)/loss | 2.4 | 7.7 | | Pension benefit other than service costs | (2.1) | (5.1) | | Acquisition foreign currency loss/(gain) | (8.1) | (9.9) | | Settlement of acquired business hedging contracts | 1.5 | — | | Transition services agreement income | (0.8) | — | | Other | 0.3 | (0.6) | | **Total Other items, net** | **(13.9)**| **(9.1)** | Inventories (June 30, 2019 vs. September 30, 2018) | Category | June 30, 2019 ($M) | September 30, 2018 ($M) | |:-------------------------|:-------------------|:------------------------| | Raw materials and supplies | 85.6 | 40.0 | | Work in process | 143.2 | 86.5 | | Finished products | 295.5 | 196.6 | | **Total inventories** | **524.3** | **323.1** | Property, Plant and Equipment, Net (June 30, 2019 vs. September 30, 2018) | Category | June 30, 2019 ($M) | September 30, 2018 ($M) | |:-----------------------------|:-------------------|:------------------------| | Total gross property | 1,025.4 | 823.6 | | Accumulated depreciation | (664.4) | (656.9) | | **Total property, plant and equipment, net** | **361.0** | **166.7** | [(16) Related Party Transactions](index=43&type=section&id=(16)%20Related%20Party%20Transactions) Following the Battery and Auto Care Acquisitions, Energizer entered into transition service agreements (TSA) and a supply agreement with Spectrum. Spectrum owns 7.7% of Energizer's common shares as of June 30, 2019. These agreements involve mutual provision of back-office support services and supply of goods, resulting in associated expenses, income, and intercompany balances - Spectrum owns **7.7%** of Energizer's outstanding common shares as of June 30, 2019, following the Auto Care Acquisition[227](index=227&type=chunk) - Energizer and Spectrum entered into transition service agreements (TSA) for back-office support, with Energizer incurring **$10.7 million** in SG&A expense and **$0.7 million** in COGS, and recording **$0.8 million** in income from reverse TSAs for the nine months ended June 30, 2019[230](index=230&type=chunk)[232](index=232&type=chunk) - A supply agreement with Spectrum resulted in **$9.2 million** in expense for the nine months ended June 30, 2019[233](index=233&type=chunk) [(17) Legal proceedings/contingencies and other obligations](index=45&type=section&id=(17)%20Legal%20proceedings%2Fcontingencies%20and%20other%20obligations) The company is involved in various legal proceedings in the ordinary course of business but believes that any resulting liability is not reasonably likely to be material to its financial position, results of operations, or cash flows. Additionally, Energizer had approximately $22.7 million in purchase obligations at June 30, 2019 - The company believes that its liability from pending legal proceedings is **not reasonably likely to be material** to its financial position, results of operations, or cash flows[236](index=236&type=chunk) - As of June 30, 2019, the company had approximately **$22.7 million** in purchase obligations for goods and services[237](index=237&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Energizer's financial condition and results of operations, including a discussion of non-GAAP measures, forward-looking statements, recent acquisitions and divestitures, operating highlights, segment performance, and liquidity and capital resources [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) Management uses several non-GAAP financial measures, such as Segment Profit, Adjusted Net Earnings From Continuing Operations, Adjusted Diluted Net Earnings From Continuing Operations Per Common Share (EPS), Organic growth, and Adjusted Selling, General & Administrative (SG&A) as a percent of sales, to provide additional meaningful comparisons and insights into ongoing operating performance, excluding non-recurring items and currency fluctuations - Non-GAAP measures exclude items not reflective of ongoing operating performance, such as acquisition and integration costs and the one-time impact of U.S. tax legislation[241](index=241&type=chunk) - Segment Profit excludes general corporate expenses, share-based compensation, acquisition and integration activities, amortization, R&D, gain on sale of real estate, interest expense, and other corporate items[242](index=242&type=chunk) - Organic measures adjust for the impact of acquisitions, changes in Argentina Operations (due to hyperinflation), and currency fluctuations[244](index=244&type=chunk)[245](index=245&type=chunk)[247](index=247&type=chunk) [Forward-Looking Statements](index=47&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements that reflect expectations, estimates, or projections about future results, which are subject to known and unknown risks, uncertainties, and assumptions. Key factors that could cause actual results to differ materially include market conditions, integration challenges, divestiture risks, new product success, customer relationships, strategic initiatives, foreign currency impacts, commodity costs, regulatory changes, and debt compliance - Forward-looking statements are not guarantees of performance and are subject to known and unknown risks, uncertainties, and assumptions[249](index=249&type=chunk) - Key risk factors include the ability to integrate acquired businesses, realize projected results and synergies, and successfully close the Varta divestiture[249](index=249&type=chunk) - Other significant risks include market trends, ability to attract/retain customers, impact of foreign currency exchange rates, raw material costs, legislative changes, cyber-attacks, and compliance with debt covenants[249](index=249&type=chunk) [Recent Acquisitions and Divestitures](index=48&type=section&id=Recent%20Acquisitions%20and%20Divestitures) Energizer completed the Battery Acquisition ($2,000.0M) and Auto Care Acquisition ($1,250.0M) in early 2019, significantly boosting revenue but also incurring substantial acquisition and integration costs. The Varta consumer battery business is being divested, with its operations reported as discontinued. The Nu Finish Acquisition ($38.1M) also contributed to revenue - Battery Acquisition (Jan 2, 2019) for **$2,000.0 million**, contributed **$109.1 million** in revenue and **$6.1 million** in income before taxes for Q3 2019[252](index=252&type=chunk)[254](index=254&type=chunk) - Auto Care Acquisition (Jan 28, 2019) for **$1,250.0 million**, contributed **$135.6 million** in revenue and **$13.6 million** in income before taxes for Q3 2019[255](index=255&type=chunk)[256](index=256&type=chunk) - Nu Finish Acquisition (Jul 2, 2018) for **$38.1 million**, contributed **$3.0 million** in revenue for Q3 2019[257](index=257&type=chunk) Pre-tax Acquisition and Integration Costs | Period | Q3 2019 ($M) | 9M 2019 ($M) | Q3 2018 ($M) | 9M 2018 ($M) | |:-------------------|:-------------|:-------------|:-------------|:-------------| | Total Costs | 28.0 | 159.9 | 15.9 | 41.0 | | Cost of products sold | 12.4 | 44.1 | — | — | | SG&A | 15.1 | 63.1 | 22.4 | 44.6 | | Interest expense | — | 65.6 | 3.4 | 6.3 | [Highlights / Operating Results](index=49&type=section&id=Highlights%20%2F%20Operating%20Results) Energizer reported a decrease in Net earnings from continuing operations and Adjusted diluted EPS for both the quarter and nine months ended June 30, 2019, despite significant net sales growth driven by acquisitions. Gross margin percentage declined due to the lower margin profile of acquired businesses and unfavorable currency. SG&A and interest expenses increased, largely due to acquisition-related costs and higher debt Net Earnings and Adjusted Diluted EPS from Continuing Operations | Metric | Q3 2019 | Q3 2018 | 9M 2019 | 9M 2018 | |:------------------------------------------------|:-------------|:-------------|:-------------|:-------------| | Net earnings from continuing operations | $9.2 | $23.8 | $17.7 | $92.0 | | Adjusted diluted net earnings per diluted share - continuing operations | $0.37 | $0.54 | $2.07 | $2.55 | Total Net Sales Growth Drivers | Driver | Q3 % Chg | 9M % Chg | |:---------------------------|:---------|:---------| | Organic | 3.6% | 2.3% | | Impact of Battery Acquisition | 27.8% | 15.6% | | Impact of Auto Care Acquisition | 34.5% | 16.4% | | Impact of Nu Finish Acquisition | 0.8% | 0.4% | | Change in Argentina operations | —% | (0.3)% | | Impact of currency | (1.9)% | (1.9)% | | **Total Net Sales % Chg** | **64.8%**| **32.5%**| - Gross margin percentage for Q3 2019 was **38.1%** (**40.0%** excluding inventory step-up and integration costs), down from **44.8%** in prior year, primarily due to the lower margin profile of acquired businesses and unfavorable foreign currencies[280](index=280&type=chunk) - Interest expense increased **significantly** to **$51.9 million** for Q3 2019 (from **$17.7 million**) and **$177.3 million** for 9M 2019 (from **$47.6 million**), driven by higher debt associated with acquisitions and related financing fees[287](index=287&type=chunk)[288](index=288&type=chunk) [Segment Results](index=53&type=section&id=Segment%20Results) Both Americas and International segments experienced substantial net sales and segment profit growth for the quarter and nine months ended June 30, 2019, predominantly driven by the positive impact of recent acquisitions. Organic growth also contributed, while unfavorable foreign currency movements partially offset these gains Americas Segment Net Sales and Profit Growth Drivers (Q3 2019) | Driver | Net Sales % Chg | Segment Profit % Chg | |:---------------------------|:----------------|:---------------------| | Organic | 3.0% | 4.6% | | Impact of Battery Acquisition | 37.3% | 21.5% | | Impact of Auto Care Acquisition | 51.7% | 47.7% | | Impact of Nu Finish Acquisition | 1.2% | (0.2)% | | Change in Argentina | —% | (1.0)% | | Impact of currency | (0.5)% | (0.7)% | | **Total % Chg** | **92.7%** | **71.9%** | International Segment Net Sales and Profit Growth Drivers (Q3 2019) | Driver | Net Sales % Chg | Segment Profit % Chg | |:---------------------------|:----------------|:---------------------| | Organic | 4.6% | 16.0% | | Impact of Battery Acquisition | 12.7% | 19.3% | | Impact of Auto Care Acquisition | 7.2% | 4.3% | | Impact of Nu Finish Acquisition | 0.1% | 0.3% | | Impact of currency | (4.4)% | (14.1)% | | **Total % Chg** | **20.2%** | **25.8%** | - Global segment profit improved by **55.7%** for the quarter and **24.1%** for the nine months, with acquisitions contributing **$49.5 million** (Q3) and **$89.3 million** (9M)[306](index=306&type=chunk)[309](index=309&type=chunk) [General Corporate and Global Marketing Expenses](index=56&type=section&id=General%20Corporate%20and%20Global%20Marketing%20Expenses) General corporate and other expenses increased for both the quarter and nine months ended June 30, 2019, primarily due to costs related to acquisitions. However, legacy business expenses decreased due to lower deferred compensation expense and continuous improvement initiatives. Global marketing expenses remained relatively stable General Corporate and Global Marketing Expenses | Expense Category | Q3 2019 ($M) | Q3 2018 ($M) | 9M 2019 ($M) | 9M 2018 ($M) | |:-----------------------------------|:-------------|:-------------|:-------------|:-------------| | General corporate and other expenses | 29.9 | 24.7 | 78.3 | 71.0 | | Global marketing expense | 3.0 | 4.6 | 12.5 | 13.0 | | **Total** | **32.9** | **29.3** | **90.8** | **84.0** | | **% of Net Sales** | **5.1%** | **7.5%** | **5.1%** | **6.3%** | - General corporate and other expenses for the legacy business decreased by **$3.2 million** in Q3 and **$7.1 million** in 9M, driven by lower mark-to-market expense on deferred compensation and benefits from continuous improvement initiatives[314](index=314&type=chunk)[316](index=316&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) Energizer's liquidity is focused on operating activities, working capital, strategic investments, and debt reduction. The company's cash position decreased significantly due to substantial cash used for acquisitions, which was largely funded by new debt and equity issuances. Operating cash flow declined due to working capital changes, while financing activities provided significant cash. The company also continued its common stock dividend and share repurchase programs - Cash and cash equivalents were **$206.4 million** at June 30, 2019, with approximately **96%** held outside the U.S[319](index=319&type=chunk) - Cash flow from operating activities from continuing operations decreased by **$157.6 million** to **$30.4 million** for the nine months ended June 30, 2019, primarily due to working capital changes (increased receivables and inventory) and acquisition-related cash expenditures[325](index=325&type=chunk)[326](index=326&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) - Net cash used by investing activities from continuing operations was **$2,490.1 million** for the nine months ended June 30, 2019, mainly for the Battery (**$1,518.4 million**) and Auto Care (**$935.4 million**) Acquisitions[330](index=330&type=chunk)[331](index=331&type=chunk) - Net cash from financing activities from continuing operations was **$1,328.5 million** for the nine months ended June 30, 2019, driven by **$1,800.0 million** from debt issuance and **$404.8 million** from common and preferred stock issuances, partially offset by debt payments and dividends[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) Contractual Obligations (June 30, 2019) | Obligation Category | Total ($M) | < 1 year ($M) | 1-3 years ($M) | 3-5 years ($M) | > 5 years ($M) | |:-----------------------------------|:-----------|:--------------|:---------------|:---------------|:---------------| | Long-term debt, including current maturities | 3,514.2 | 10.0 | 97.5 | 20.0 | 3,386.7 | | Interest on long-term debt | 1,388.5 | 194.5 | 386.3 | 380.8 | 426.9 | | Operating leases | 164.7 | 22.3 | 29.9 | 87.8 | 24.7 | | Capital leases | 95.1 | 4.7 | 9.4 | 10.1 | 70.9 | | Purchase obligations and other | 22.7 | 22.1 | 0.6 | — | — | | **Total** | **5,246.2**| **297.9** | **523.7** | **502.6** | **3,922.0** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Energizer is exposed to market risks from changes in currency rates, commodity prices, and interest rates, which are managed through hedging instruments. The company uses cash flow hedges for foreign currency and zinc purchases, and interest rate swaps for variable rate debt. Additionally, Argentina's economy has been designated as highly inflationary, impacting financial statement translation [Market Risk Sensitive Instruments and Positions](index=61&type=section&id=Market%20Risk%20Sensitive%20Instruments%20and%20Positions) The company uses derivatives to hedge identifiable exposures to foreign currency, commodity (zinc), and interest rate risks. Cash flow hedges are in place for forecasted inventory purchases and variable rate debt, while non-designated derivatives hedge balance sheet exposures. The designation of Argentina as a highly inflationary economy impacts the recognition of exchange gains and losses in current earnings - The company uses forward currency contracts as cash flow hedges to mitigate foreign currency risk on forecasted inventory purchases, with primary exposures to Euro, British pound, Canadian dollar, and Australian dollar[349](index=349&type=chunk)[350](index=350&type=chunk) - Zinc purchases are hedged with cash flow contracts extending into 2020, with a pre-tax loss of **$0.7 million** recognized at June 30, 2019[354](index=354&type=chunk) - Interest rate risk on **$1,075.0 million** of variable rate debt is managed with interest rate swaps, fixing LIBOR on **$200.0 million** at **2.03%** and on **$400.0 million** (decreasing quarterly) at **2.47%**[356](index=356&type=chunk) - Effective July 1, 2018, Argentina's economy was designated as highly inflationary, requiring remeasurement of financial statements into USD and reflecting future exchange gains/losses from monetary assets/liabilities in current earnings[358](index=358&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2019, providing reasonable assurance of accurate and timely reporting. No material changes to internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were **effective** as of June 30, 2019, providing reasonable assurance of achieving reporting objectives[359](index=359&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2019[360](index=360&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings in the ordinary course of business. While these matters are often complex and protracted, management believes that any potential liability arising from them is not reasonably likely to be material to the company's financial position, results of operations, or cash flows, considering established accruals - The company is a party to legal proceedings and claims arising in the ordinary course of business[362](index=362&type=chunk) - Management believes that any liability from these proceedings is **not reasonably likely to be material** to the company's financial position, results of operations, or cash flows[362](index=362&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors, highlighting new risks related to the acquired Battery and Auto Care Businesses, including operational dependencies (Dayton, Ohio facility), seasonal volatility, and regulatory changes concerning refrigerant gas R-134a. Significant risks also pertain to the successful closing of the Varta divestiture and the company's substantial debt levels, which could limit operational flexibility and financial capacity - The Acquired Auto Care Business's operations and profitability are highly dependent on the efficient operation of its Dayton, Ohio facility, which has experienced deficiencies and requires additional investment[364](index=364&type=chunk) - Sales of certain Acquired Businesses' products are subject to seasonal volatility, making forecasting difficult and exposing the company to risks from unfavorable weather conditions[365](index=365&type=chunk) - Changes in governmental regulations regarding the use of refrigerant gas R-134a could materially adversely affect the Acquired Auto Care Business's ability to sell aftermarket A/C products[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk) - The company faces **significant risks** in successfully closing the divestiture of the Divestment Business, including failure to transfer liabilities, potential third-party claims, and disruption to ongoing business[372](index=372&type=chunk)[373](index=373&type=chunk) - The company's **substantial debt** of approximately **$3.5 billion** at June 30, 2019, could adversely affect its business by limiting cash flow, imposing restrictive covenants, and increasing vulnerability to adverse economic conditions[378](index=378&type=chunk)[379](index=379&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2019, Energizer repurchased 1,036,000 shares of its common stock for $45.0 million at an average price of $43.46 per share under its existing authorization. As of August 6, 2019, 2.8 million shares remain available for repurchase Common Stock Repurchases (Q3 2019) | Period | Total Number of Shares Purchased | Average Price Per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | |:-----------------|:---------------------------------|:----------------------------|:---------------------------------------------------------------------------------| | June 1 - June 30 | 1,036,356 | 43.46 | 1,036,000 | - As of August 6, 2019, **2.8 million shares** remain available for repurchase under the **7.5 million share** authorization approved in July 2015[344](index=344&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive index of exhibits filed with the Form 10-Q, including various agreements (e.g., Separation and Distribution, Tax Matters, Employee Matters, Transition Services, Acquisition Agreements) and corporate governance documents (e.g., Articles of Incorporation, Bylaws, Certificate of Designations) [SIGNATURES](index=71&type=section&id=SIGNATURES) This section contains the official signatures, certifying the due authorization and filing of the report on behalf of Energizer Holdings, Inc. by its Executive Vice President and Chief Financial Officer

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Energizer's unaudited consolidated financial statements, including earnings, balance sheets, cash flows, and shareholders' equity, reflecting recent acquisitions [Consolidated Statements of Earnings and Comprehensive Income (Condensed)](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Income%20(Condensed)) Energizer reported a net loss of **$62.3 million** for the quarter and a decrease in net earnings for the six months, primarily due to increased interest and acquisition costs Net Sales and Gross Profit (in millions) | Metric | Qtr Ended Mar 31, 2019 | Qtr Ended Mar 31, 2018 | 6M Ended Mar 31, 2019 | 6M Ended Mar 31, 2018 | | :------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Net Sales | $556.4 | $374.4 | $1,128.3 | $947.7 | | Gross Profit | $194.2 | $168.5 | $469.7 | $446.8 | Net (Loss)/Earnings from Continuing Operations (in millions) | Metric | Qtr Ended Mar 31, 2019 | Qtr Ended Mar 31, 2018 | 6M Ended Mar 31, 2019 | 6M Ended Mar 31, 2018 | | :------------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Net (loss)/earnings from continuing operations | $(62.3) | $7.8 | $8.5 | $68.2 | Basic and Diluted EPS from Continuing Operations | Metric | Qtr Ended Mar 31, 2019 | Qtr Ended Mar 31, 2018 | 6M Ended Mar 31, 2019 | 6M Ended Mar 31, 2018 | | :------------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Basic EPS - continuing operations | $(0.97) | $0.13 | $0.08 | $1.14 | | Diluted EPS - continuing operations | $(0.97) | $0.13 | $0.08 | $1.11 | [Consolidated Balance Sheets (Condensed)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(Condensed)) Total assets and liabilities significantly increased to **$5,642.3 million** and **$4,997.0 million** respectively, driven by recent acquisitions and increased debt Key Balance Sheet Figures (in millions) | Metric | March 31, 2019 | September 30, 2018 | | :------------------------- | :------------- | :----------------- | | Total Assets | $5,642.3 | $3,178.8 | | Total Liabilities | $4,997.0 | $3,154.3 | | Total Shareholders' Equity | $645.3 | $24.5 | | Goodwill | $1,012.4 | $244.2 | | Other Intangible Assets, net | $1,936.8 | $232.7 | [Consolidated Statements of Cash Flows (Condensed)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Condensed)) Operating cash flow decreased to **$1.8 million**, while investing activities used **$2,875.0 million** and financing provided **$1,438.3 million**, primarily due to acquisitions Cash Flow Summary (Six Months Ended March 31, in millions) | Metric | 2019 | 2018 | | :---------------------------------------- | :--------- | :------- | | Net cash from operating activities | $1.8 | $160.6 | | Net cash used by investing activities | $(2,875.0) | $(11.3) | | Net cash from financing activities | $1,438.3 | $(45.4) | | Acquisitions, net of cash acquired | $(2,403.8) | — | | Cash, cash equivalents, and restricted cash, end of period | $332.9 | $490.3 | [Consolidated Statements of Shareholders' Equity/(Deficit) (Condensed)](index=9&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%2F(Deficit)%20(Condensed)) Shareholders' equity increased to **$645.3 million**, primarily driven by common and preferred stock issuances for acquisitions, offset by net loss and dividends Shareholders' Equity Changes (in millions, except shares in thousands) | Metric | March 31, 2019 | September 30, 2018 | | :----------------------------------- | :------------- | :----------------- | | Total Shareholders' Equity/(Deficit) | $645.3 | $24.5 | | Additional Paid-in Capital | $860.5 | $217.8 | | Retained Earnings | $127.9 | $177.3 | | Common Stock (Shares in thousands) | 69,875 | 59,608 | - Issuance of common stock contributed **$445.8 million** to additional paid-in capital for the six months ended March 31, 2019[18](index=18&type=chunk) - Issuance of preferred stock contributed **$199.5 million** to additional paid-in capital for the six months ended March 31, 2019[18](index=18&type=chunk) [Notes to Consolidated (Condensed) Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20(Condensed)%20Financial%20Statements) This section provides detailed notes explaining the company's accounting policies, significant transactions, and financial statement components [1.5.1 Description of Business and Basis of Presentation (Note 1)](index=11&type=section&id=(1)%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Energizer, a global battery and auto care product manufacturer, expanded its portfolio through recent acquisitions, with a portion of the Varta business classified as held for sale - Energizer is a global manufacturer, marketer, and distributor of household batteries, specialty batteries, portable lights, and automotive fragrance and appearance products[22](index=22&type=chunk)[23](index=23&type=chunk) - On January 2, 2019, Energizer completed the Battery Acquisition, expanding its battery portfolio with Rayovac® and Varta® brands[24](index=24&type=chunk)[28](index=28&type=chunk) - On January 28, 2019, Energizer completed the Auto Care Acquisition, adding Armor All®, STP®, and A/C PRO® brands to its auto care portfolio[25](index=25&type=chunk) - The Varta consumer battery, chargers, portable power, and portable lighting business in the Europe, Middle East and Africa region (EMEA) has been classified as held for sale and discontinued operations, with divestiture expected in early Q4 fiscal 2019[28](index=28&type=chunk) [1.5.2 Revenue Recognition (Note 2)](index=12&type=section&id=(2)%20Revenue%20Recognition) The company adopted ASU 2014-09 with no material impact, recognizing revenue from product sales at the point of transfer, with net sales of **$556.4 million** for the quarter - The Company adopted ASU 2014-09, Revenue from Contracts with Customers, effective October 1, 2018, with no material impact to financial statements[32](index=32&type=chunk)[36](index=36&type=chunk) - Revenue is recognized at a single point in time when title, ownership, and risk of loss pass to the customer, typically upon delivery or pickup of finished goods[43](index=43&type=chunk) - Net sales reflect transaction prices reduced by variable consideration, including discounts and promotional programs, which are accrued at the time of sale[44](index=44&type=chunk)[45](index=45&type=chunk) Net Sales by Product (in millions) | Product | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :----------------- | :--------------------- | :-------------------- | | Batteries | $419.4 | $941.3 | | Auto Care | $108.6 | $129.1 | | Lights and Licensing | $28.4 | $57.9 | | **Total Net Sales** | **$556.4** | **$1,128.3** | Net Sales by Geography (in millions) | Region | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :----------------- | :--------------------- | :-------------------- | | North America | $323.9 | $664.9 | | Latin America | $57.7 | $90.2 | | **Americas** | **$381.6** | **$755.1** | | Modern Markets | $102.5 | $229.9 | | Developing Markets | $44.9 | $94.6 | | Distributors Markets | $27.4 | $48.7 | | **International** | **$174.8** | **$373.2** | | **Total Net Sales** | **$556.4** | **$1,128.3** | [1.5.3 Acquisitions (Note 3)](index=14&type=section&id=(3)%20Acquisitions) Energizer completed three acquisitions totaling over **$3.2 billion**, significantly increasing goodwill and intangible assets, and incurring **$131.9 million** in integration costs for the six months - Battery Acquisition completed on January 2, 2019, for a contractual purchase price of **$2,000.0 million**, adding Rayovac® and Varta® brands[50](index=50&type=chunk) - Auto Care Acquisition completed on January 28, 2019, for a contractual purchase price of **$1,250.0 million** (comprised of cash and newly-issued common stock), adding Armor All®, STP®, and A/C PRO® brands[60](index=60&type=chunk)[61](index=61&type=chunk) - Nu Finish Acquisition completed on July 2, 2018, for **$38.1 million**[74](index=74&type=chunk) Preliminary Purchase Price Allocation for Battery Acquisition (as of acquisition date, in millions) | Asset/Liability | Amount | | :------------------------- | :------- | | Cash and cash equivalents | $37.8 | | Inventories | $81.0 | | Assets held for sale | $855.0 | | Goodwill | $498.6 | | Other intangible assets, net | $747.5 | | Liabilities held for sale | $(405.0) | Preliminary Purchase Price Allocation for Auto Care Acquisition (as of acquisition date, in millions) | Asset/Liability | Amount | | :------------------------- | :--------- | | Cash and cash equivalents | $3.3 | | Inventories | $97.8 | | Goodwill | $268.4 | | Other intangible assets, net | $972.5 | | Other liabilities | $(221.1) | Acquisition and Integration Costs (Pre-tax, in millions) | Period | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :------------------------- | :--------------------- | :-------------------- | | Total Costs | $95.4 | $131.9 | | Costs of products sold | $31.7 | $31.7 | | SG&A | $29.1 | $48.0 | | Interest expense | $33.2 | $65.6 | Pro Forma Financial Information (in millions, except per share data) | Metric | 6M Ended Mar 31, 2019 | | :------------------------------------------------------------------ | :-------------------- | | Pro forma net sales | $1,353.2 | | Pro forma net earnings/(loss) from continuing operations | $103.2 | | Pro forma diluted net earnings/(loss) per common share - continuing operations | $1.34 | [1.5.4 Divestment (Note 4)](index=21&type=section&id=(4)%20Divestment) The Varta EMEA business was classified as held for sale, with **$848.2 million** in assets and a net loss of **$11.0 million** from discontinued operations for the quarter - The Divestment Business (Varta EMEA) was classified as held for sale and discontinued operations, with the sale expected in early Q4 fiscal 2019[95](index=95&type=chunk) Divestment Business Assets and Liabilities Held for Sale (March 31, 2019, in millions) | Category | Amount | | :--------- | :------- | | Assets | $848.2 | | Liabilities | $389.6 | Net Loss from Discontinued Operations (in millions) | Metric | Qtr/6M Ended Mar 31, 2019 | | :-------------------------------------- | :------------------------ | | Net sales | $80.2 | | Loss before income taxes | $(13.9) | | Net loss from discontinued operations | $(11.0) | [1.5.5 Income Taxes (Note 5)](index=22&type=section&id=(5)%20Income%20Taxes) The six-month effective tax rate was **46.9%**, influenced by disallowed acquisition costs and a finalized mandatory transition tax totaling **$37.5 million** - The six-month effective tax rate was **46.9%** for March 31, 2019, compared to **50.1%** for the prior year comparative period[100](index=100&type=chunk) - The current year provision included the estimated impact of disallowed transaction costs related to the Battery and Auto Care Acquisitions[100](index=100&type=chunk) - The Company finalized accounting for the mandatory transition tax, recording an additional **$1.5 million**, for a total tax of **$37.5 million**[103](index=103&type=chunk) - The Company elected to treat Global Intangible Low Taxed Income (GILTI) as a current period expense[104](index=104&type=chunk) [1.5.6 Share-Based Payments (Note 6)](index=23&type=section&id=(6)%20Share-Based%20Payments) Share-based compensation costs totaled **$14.1 million** for the six months, reflecting RSE awards and performance shares granted in November 2018 Total Share-Based Compensation Cost (in millions) | Period | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :------------------------- | :--------------------- | :-------------------- | | Total Compensation Cost | $7.6 | $14.1 | - In November 2018, the Company granted RSE awards of approximately **73,000 shares** (vesting ratably over four years) and **55,000 shares** (vesting on the third anniversary)[108](index=108&type=chunk) - Approximately **190,000 performance shares** were granted in November 2018, vesting subject to meeting target amounts for cumulative adjusted EPS and cumulative free cash flow over a three-year period[108](index=108&type=chunk) [1.5.7 Earnings per Share (Note 7)](index=23&type=section&id=(7)%20Earnings%20per%20share) Basic and diluted net loss per share from continuing operations was **$(0.97)** for the quarter, with Mandatory Convertible Preferred Stock excluded as anti-dilutive Basic and Diluted EPS from Continuing Operations | Metric | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :------------------------------------- | :--------------------- | :-------------------- | | Basic EPS - continuing operations | $(0.97) | $0.08 | | Diluted EPS - continuing operations | $(0.97) | $0.08 | Weighted Average Common Shares Outstanding (in millions) | Metric | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :------------------------------------- | :--------------------- | :-------------------- | | Weighted average common shares - Basic | 67.3 | 63.5 | | Weighted average common shares - Diluted | 67.3 | 64.6 | - The Company's Mandatory Convertible Preferred Stock (MCPS) was considered anti-dilutive for all periods and excluded from diluted earnings per share calculations[115](index=115&type=chunk) [1.5.8 Segments (Note 8)](index=24&type=section&id=(8)%20Segments) Energizer operates in Americas and International segments, with both showing increased net sales and segment profit for the quarter, driven by acquisitions - Operations are managed via two major geographic reportable segments: Americas and International[117](index=117&type=chunk) - Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation, acquisition and integration activities, amortization, and R&D costs[117](index=117&type=chunk) Segment Net Sales (Qtr Ended March 31, in millions) | Segment | 2019 | 2018 | | :------------ | :----- | :----- | | Americas | $381.6 | $224.1 | | International | $174.8 | $150.3 | | **Total** | **$556.4** | **$374.4** | Segment Profit (Qtr Ended March 31, in millions) | Segment | 2019 | 2018 | | :------------ | :---- | :--- | | Americas | $88.7 | $55.7 | | International | $36.4 | $34.1 | | **Total** | **$125.1** | **$89.8** | Total Segment Assets (in millions) | Segment | March 31, 2019 | September 30, 2018 | | :------------ | :------------- | :----------------- | | Americas | $1,047.1 | $504.2 | | International | $652.3 | $851.5 | | **Total** | **$1,699.4** | **$1,355.7** | [1.5.9 Goodwill and Intangible Assets (Note 9)](index=27&type=section&id=(9)%20Goodwill%20and%20intangible%20assets) Goodwill and indefinite-lived intangible assets significantly increased to **$1,012.4 million** and **$1,292.6 million**, respectively, primarily due to recent acquisitions - Goodwill and indefinite-lived intangible assets are not amortized but are evaluated annually for impairment[125](index=125&type=chunk) Goodwill by Segment (in millions) | Segment | Balance at Oct 1, 2018 | Battery Acquisition | Auto Care Acquisition | Balance at Mar 31, 2019 | | :------------ | :--------------------- | :------------------ | :-------------------- | :---------------------- | | Americas | $228.4 | — | — | $228.4 | | International | $15.8 | — | — | $16.0 | | Unallocated | — | $498.6 | $268.4 | $768.0 | | **Total** | **$244.2** | **$498.6** | **$268.4** | **$1,012.4** | - Indefinite-lived intangible assets increased to **$1,292.6 million** at March 31, 2019, from **$76.9 million** at September 30, 2018, primarily due to the Battery Acquisition (**$513.0 million**) and Auto Care Acquisition (**$702.9 million**)[127](index=127&type=chunk) Total Intangible Assets (March 31, 2019, in millions) | Category | Gross Amount | Accumulated Amortization | Net Carrying Amount | | :---------------------------------------- | :----------- | :----------------------- | :------------------ | | Total Amortizable intangible assets | $685.4 | $41.2 | $644.2 | | Trademarks and trade names - indefinite lived | $1,292.6 | — | $1,292.6 | | **Total Other intangible assets, net** | **$1,978.0** | **$41.2** | **$1,936.8** | [1.5.10 Debt (Note 10)](index=28&type=section&id=(10)%20Debt) Total long-term debt surged to **$3,627.1 million** due to new credit agreements and senior note issuances to finance recent acquisitions Long-Term Debt Breakdown (in millions) | Debt Type | March 31, 2019 | September 30, 2018 | | :-------------------------------------- | :------------- | :----------------- | | Senior Secured Term Loan A Facility due 2021 | $150.0 | — | | Senior Secured Term Loan B Facility due 2025 | $1,000.0 | — | | 5.50% Senior Notes due 2025 | $600.0 | $600.0 | | 6.375% Senior Notes due 2026 | $500.0 | — | | 4.625% Senior Notes due 2026 (Euro Notes) | $729.2 | — | | 7.750% Senior Notes due 2027 | $600.0 | — | | Capital lease obligations | $47.9 | — | | **Total long-term debt, including current maturities** | **$3,627.1** | **$988.0** | - Entered into a new credit agreement on December 17, 2018, providing a **$400.0 million** revolving credit facility and **$1,200.0 million** in term loans (Term Loan A and B)[131](index=131&type=chunk) - Finalized pricing of **$600.0 million** in 7.750% Senior Notes due 2027 on January 17, 2019, to fund the Auto Care Acquisition[136](index=136&type=chunk) - Finalized pricing of **$500.0 million** in 6.375% Senior Notes and **€650.0 million** in 4.625% Senior Notes due 2026 in June 2018, with proceeds used for the Battery Acquisition[138](index=138&type=chunk)[139](index=139&type=chunk) - Entered into interest rate swap agreements to fix the variable benchmark component (LIBOR) on **$200.0 million** of debt at **2.03%** (through June 2022) and on **$400.0 million** of debt at **2.47%** (effective Oct 1, 2018, decreasing quarterly until Dec 31, 2020)[140](index=140&type=chunk)[141](index=141&type=chunk) Aggregate Maturities of Long-Term Debt (as of March 31, 2019, in millions) | Year | Long-term debt | Capital leases | | :-------- | :------------- | :------------- | | 2020 | $10.0 | $4.8 | | 2021 | $60.0 | $4.8 | | 2022 | $110.0 | $4.7 | | 2023 | $10.0 | $4.6 | | 2024 | $10.0 | $5.3 | | Thereafter | $3,379.2 | $72.6 | [1.5.11 Pension Plans (Note 11)](index=30&type=section&id=(11)%20Pension%20Plans) The company sponsors defined benefit pension plans, with a net periodic pension benefit of **$(0.4) million** for the U.S. plan and **$(0.1) million** for International for the quarter - The Company has several defined benefit pension plans, with the U.S. plan frozen in fiscal year 2015[147](index=147&type=chunk) Net Periodic Pension (Benefit)/Cost (Qtr Ended March 31, in millions) | Component | U.S. | International | | :-------------- | :----- | :------------ | | Service cost | — | $0.2 | | Interest cost | $5.1 | $0.8 | | Expected return | $(6.5) | $(1.3) | | Amortization | $1.0 | $0.2 | | **Net periodic (benefit)/cost** | **$(0.4)** | **$(0.1)** | - A pension plan was acquired as part of the Divestment Business and is included in Liabilities held for sale[153](index=153&type=chunk) [1.5.12 Shareholders' Equity (Note 12)](index=31&type=section&id=(12)%20Shareholders'%20Equity) The company paid **$40.8 million** in common stock dividends and issued common and preferred stock totaling **$404.8 million** to fund the Auto Care Acquisition - The Board of Directors declared a cash dividend of **$0.30** per share of common stock for the first and second quarters of fiscal 2019[155](index=155&type=chunk) - Total dividends paid on common stock were **$40.8 million** for the six months ended March 31, 2019[156](index=156&type=chunk) - In January 2019, the Company issued **4,687,498 shares** of common stock, generating net proceeds of **$205.3 million**, used to fund a portion of the Auto Care Acquisition[158](index=158&type=chunk) - On January 28, 2019, **5,278,921 shares** of common stock were issued to Spectrum as partial consideration for the Auto Care Acquisition, valued at **$240.5 million**[159](index=159&type=chunk) - In January 2019, the Company issued **2,156,250 shares** of Series A Mandatory Convertible Preferred Stock (MCPS), generating net proceeds of **$199.5 million**, used to fund the Auto Care Acquisition[164](index=164&type=chunk) - Dividends on MCPS are payable quarterly at an annual rate of **7.50%** of the liquidation preference (**$100.00** per share)[166](index=166&type=chunk) [1.5.13 Financial Instruments and Risk Management (Note 13)](index=33&type=section&id=(13)%20Financial%20Instruments%20and%20Risk%20Management) Energizer manages market risks from currency, commodity, and interest rates using derivatives, with Argentina's highly inflationary economy impacting financial statement translation - The Company uses derivatives only for identifiable exposures to manage market risk from currency rates, interest rates, and commodity prices, not for speculative purposes[172](index=172&type=chunk)[175](index=175&type=chunk) - In February 2019, the Company entered into a hedging contract on zinc purchases, recognized a pre-tax gain of **$0.2 million** at March 31, 2019, and classified it as a cash flow hedge[177](index=177&type=chunk) - Energizer uses forward currency contracts to hedge cash flow uncertainty of forecasted inventory purchases, with an unrealized pre-tax gain of **$3.6 million** at March 31, 2019[184](index=184&type=chunk) - The Company uses interest rate swap agreements to fix the variable benchmark component (LIBOR) on **$200.0 million** and **$400.0 million** of its variable rate debt[180](index=180&type=chunk) - At March 31, 2019, the estimated fair value of the Company's financial assets and liabilities carried at fair value are primarily classified as Level 2 inputs[198](index=198&type=chunk)[201](index=201&type=chunk) [1.5.14 Accumulated Other Comprehensive (Loss)/Income (Note 14)](index=37&type=section&id=(14)%20Accumulated%20Other%20Comprehensive%20(Loss)%2FIncome) Accumulated other comprehensive loss improved to **$(227.5) million**, influenced by foreign currency translation, pension activity, and cash flow hedges Accumulated Other Comprehensive (Loss)/Income (in millions) | Metric | March 31, 2019 | September 30, 2018 | | :---------------------------------------- | :------------- | :----------------- | | Balance at period end | $(227.5) | $(241.8) | | Foreign Currency Translation Adjustments | $(97.0) | $(113.6) | | Pension Activity | $(134.3) | $(136.4) | | Zinc Contracts | $1.5 | — | | Foreign Currency Contracts | $2.8 | $3.3 | | Interest Rate Contracts | $(0.5) | $4.9 | - OCI before reclassifications for the six months ended March 31, 2019, was **$14.7 million**[202](index=202&type=chunk) - Total reclassifications to earnings for the six months ended March 31, 2019, amounted to **$1.7 million**[206](index=206&type=chunk) [1.5.15 Supplemental Financial Statement Information (Note 15)](index=38&type=section&id=(15)%20Supplemental%20Financial%20Statement%20Information) "Other items, net" showed **$(13.1) million** income for six months, while inventories and property, plant, and equipment significantly increased due to acquisitions Other Items, Net (in millions) | Item | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :---------------------------------------- | :--------------------- | :-------------------- | | Interest income | $(0.7) | $(1.0) | | Interest income on restricted cash | — | $(5.8) | | Foreign currency exchange loss | $3.8 | $2.7 | | Pension benefit other than service costs | $(0.7) | $(1.4) | | Acquisition foreign currency gains | — | $(9.0) | | Settlement of acquired business hedging contracts | $1.5 | $1.5 | | Transition services agreement income | $(0.1) | $(0.1) | | **Total Other items, net** | **$3.8** | **$(13.1)** | Inventories (in millions) | Category | March 31, 2019 | September 30, 2018 | | :--------------------- | :------------- | :----------------- | | Raw materials and supplies | $89.3 | $40.0 | | Work in process | $130.2 | $86.5 | | Finished products | $271.6 | $196.6 | | **Total inventories** | **$491.1** | **$323.1** | Property, Plant and Equipment, Net (in millions) | Category | March 31, 2019 | September 30, 2018 | | :------------------------------------- | :------------- | :----------------- | | Total gross property | $1,016.8 | $823.6 | | Accumulated depreciation | $(653.1) | $(656.9) | | **Total property, plant and equipment, net** | **$363.7** | **$166.7** | [1.5.16 Related Party Transactions (Note 16)](index=39&type=section&id=(16)%20Related%20Party%20Transactions) Energizer incurred **$5.4 million** in TSA expenses and **$4.4 million** from a supply agreement with Spectrum, a related party, following recent acquisitions - Spectrum owns **7.6%** of Energizer's outstanding common shares as of March 31, 2019, following the Auto Care Acquisition[211](index=211&type=chunk) - Energizer and Spectrum entered into transition service agreements (TSA) and reverse TSAs for back office support services[214](index=214&type=chunk) - For the quarter and six months ended March 31, 2019, the Company incurred **$5.0 million** in SG&A and **$0.4 million** in COGS for TSA expenses[216](index=216&type=chunk) - The Company recorded **$0.1 million** in income in Other items, net, related to reverse transition services agreements provided[216](index=216&type=chunk) - A supply agreement with Spectrum resulted in an expense of **$4.4 million** for the quarter and six months ended March 31, 2019[217](index=217&type=chunk) [1.5.17 Legal Proceedings/Contingencies and Other Obligations (Note 17)](index=41&type=section&id=(17)%20Legal%20proceedings%2Fcontingencies%20and%20other%20obligations) The company faces various legal proceedings, with liabilities not expected to be material, and has **$41.1 million** in purchase obligations - The Company is subject to a number of legal proceedings in various jurisdictions arising out of its operations[219](index=219&type=chunk) - The Company believes that its liability, if any, arising from pending legal proceedings is not reasonably likely to be material to its financial position, results of operations, or cash flows[219](index=219&type=chunk) - At March 31, 2019, the Company had approximately **$41.1 million** of purchase obligations[221](index=221&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Energizer's financial condition, operating results, and liquidity, including the impact of recent acquisitions and non-GAAP measures [2.1 Non-GAAP Financial Measures](index=42&type=section&id=Non-GAAP%20Financial%20Measures) Management utilizes non-GAAP measures like Segment Profit and Adjusted EPS to assess ongoing performance, excluding acquisition costs, currency impacts, and one-time tax effects - Non-GAAP financial measures are used to provide meaningful comparisons to historical or future periods by excluding items not reflective of ongoing operating performance, such as acquisition and integration costs and one-time tax impacts[225](index=225&type=chunk) - Segment Profit excludes general corporate and other expenses, global marketing expenses, R&D expenses, amortization expense, interest expense, other items, net, and charges related to acquisition and integration[226](index=226&type=chunk) - Adjusted Net Earnings From Continuing Operations and Adjusted Diluted Net Earnings From Continuing Operations Per Common Share (EPS) exclude the impact of acquisition and integration costs and the one-time impact of new U.S. tax legislation[227](index=227&type=chunk) - Organic growth is a non-GAAP measure that excludes or adjusts for the impact of acquisitions, changes in Argentina Operations, and the impact of currency from foreign exchange rate changes[228](index=228&type=chunk) [2.2 Forward-Looking Statements](index=43&type=section&id=Forward-Looking%20Statements) Forward-looking statements are subject to risks including market conditions, acquisition integration, divestiture challenges, competitive pressures, and debt covenants - Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially[233](index=233&type=chunk) - Key factors that could cause actual results to differ include market and economic conditions, ability to integrate businesses and realize synergies, ability to divest the Varta® consumer battery business, success of new products, customer distribution, strategic initiatives, competitive pressure, cost savings, foreign currency exchange rates, raw material costs, legislative/regulatory changes, cyber-attacks, litigation, and compliance with debt covenants[233](index=233&type=chunk) [2.3 Recent Acquisitions Overview](index=44&type=section&id=Recent%20Acquisitions%20Overview) Energizer completed Battery (**$2,000.0 million**), Auto Care (**$1,250.0 million**), and Nu Finish (**$38.1 million**) acquisitions, incurring **$131.9 million** in pre-tax integration costs for six months - The Battery Acquisition was completed on January 2, 2019, for **$2,000.0 million**, including Rayovac® and Varta® brands[236](index=236&type=chunk) - The Auto Care Acquisition was completed on January 28, 2019, for **$1,250.0 million**, including Armor All®, STP®, and A/C PRO® brands[239](index=239&type=chunk) - The Nu Finish Acquisition was completed on July 2, 2018, for **$38.1 million**[241](index=241&type=chunk) Pre-tax Acquisition and Integration Costs (in millions) | Period | Qtr Ended Mar 31, 2019 | 6M Ended Mar 31, 2019 | | :------------------------- | :--------------------- | :-------------------- | | Total Costs | $95.4 | $131.9 | | Costs of products sold | $31.7 | $31.7 | | SG&A | $29.1 | $48.0 | | Interest expense | $33.2 | $65.6 | [2.4 Highlights / Operating Results](index=45&type=section&id=Highlights%20%2F%20Operating%20Results) The company reported a **$62.3 million** net loss for Q2 2019, despite **48.6%** net sales growth to **$556.4 million** driven by acquisitions, with gross margin declining to **34.9%** Net (Loss)/Earnings from Continuing Operations (in millions) | Metric | Qtr Ended Mar 31, 2019 | Qtr Ended Mar 31, 2018 | | :------------------------------------- | :--------------------- | :--------------------- | | Net (loss)/earnings from continuing operations | $(62.3) | $7.8 | Adjusted Diluted EPS from Continuing Operations | Metric | Qtr Ended Mar 31, 2019 | Qtr Ended Mar 31, 2018 | Change (%) | | :------------------------------------- | :--------------------- | :--------------------- | :--------- | | Adjusted diluted EPS - continuing operations | $0.20 | $0.45 | -55.6% | Total Net Sales Drivers (Qtr Ended Mar 31, 2019, in millions) | Driver | Amount | % Chg | | :------------------------- | :----- | :---- | | Net sales - FY '18 | $374.4 | | | Organic | $7.1 | 1.9% | | Impact of Battery Acquisition | $99.9 | 26.7% | | Impact of Auto Care Acquisition | $84.5 | 22.6% | | Impact of Nu Finish Acquisition | $1.9 | 0.5% | | Change in Argentina operations | $(0.9) | (0.2)%| | Impact of currency | $(10.5)| (2.9)%| | Net sales - FY '19 | $556.4 | 48.6% | - Gross margin percentage for Q2 2019 was **34.9%**, down from **45.0%** in the prior year, primarily due to the lower margin rate profile of acquired businesses and unfavorable foreign currency movement, and a **$31.7 million** inventory step-up[263](index=263&type=chunk) - Interest expense for Q2 2019 was **$77.2 million**, significantly higher than **$16.5 million** in Q2 2018, primarily due to higher debt associated with acquisitions, including **$33.2 million** in issuance fees and ticking fees[270](index=270&type=chunk) - The effective tax rate for Q2 2019 was **46.9%**, compared to **50.1%** in the prior year, influenced by disallowed transaction costs from acquisitions and the one-time impact of U.S. tax legislation[276](index=276&type=chunk) [2.5 Segment Results](index=49&type=section&id=Segment%20Results) Americas net sales grew **70.3%** to **$381.6 million** and International net sales grew **16.3%** to **$174.8 million**, both driven by acquisitions and organic growth Americas Net Sales Drivers (Qtr Ended Mar 31, 2019, in millions) | Driver | Amount | % Chg | | :------------------------- | :----- | :---- | | Net sales - FY '18 | $224.1 | | | Organic | $2.0 | 0.9% | | Impact of Battery Acquisition | $78.1 | 34.9% | | Impact of Auto Care Acquisition | $77.9 | 34.8% | | Impact of Nu Finish Acquisition | $1.8 | 0.8% | | Change in Argentina | $(0.9) | (0.4)%| | Impact of currency | $(1.4) | (0.7)%| | Net Sales - FY '19 | $381.6 | 70.3% | International Net Sales Drivers (Qtr Ended Mar 31, 2019, in millions) | Driver | Amount | % Chg | | :------------------------- | :----- | :---- | | Net sales - FY '18 | $150.3 | | | Organic | $5.1 | 3.4% | | Impact of Battery Acquisition | $21.8 | 14.5% | | Impact of Auto Care Acquisition | $6.6 | 4.4% | | Impact of Nu Finish Acquisition | $0.1 | 0.1% | | Impact of currency | $(9.1) | (6.1)%| | Net Sales - FY '19 | $174.8 | 16.3% | Americas Segment Profit Drivers (Qtr Ended Mar 31, 2019, in millions) | Driver | Amount | % Chg | | :------------------------- | :----- | :---- | | Segment Profit - FY '18 | $55.7 | | | Organic | $1.7 | 3.1% | | Impact of Battery Acquisition | $7.1 | 12.7% | | Impact of Auto Care Acquisition | $24.0 | 43.1% | | Impact of Nu Finish Acquisition | $1.5 | 2.7% | | Change in Argentina | $(0.4) | (0.7)%| | Impact of currency | $(0.9) | (1.7)%| | Segment Profit - FY '19 | $88.7 | 59.2% | International Segment Profit Drivers (Qtr Ended Mar 31, 2019, in millions) | Driver | Amount | % Chg | | :------------------------- | :----- | :---- | | Segment Profit - FY '18 | $34.1 | | | Organic | $1.9 | 5.6% | | Impact of Battery Acquisition | $6.0 | 17.6% | | Impact of Auto Care Acquisition | $0.7 | 2.1% | | Impact of Nu Finish Acquisition | — | —% | | Impact of currency | $(6.3) | (18.6)%| | Segment Profit - FY '19 | $36.4 | 6.7% | [2.6 General Corporate and Global Marketing Expenses](index=52&type=section&id=General%20Corporate%20and%20Global%20Marketing%20Expenses) General corporate and global marketing expenses increased to **$36.1 million** for the quarter, but decreased to **6.5%** of net sales due to acquisition-driven sales growth General Corporate and Global Marketing Expenses (in millions) | Expense Category | Qtr Ended Mar 31, 2019 | Qtr Ended Mar 31, 2018 | 6M Ended Mar 31, 2019 | 6M Ended Mar 31, 2018 | | :--------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | General corporate and other expenses | $29.7 | $24.7 | $48.4 | $46.3 | | Global marketing expense | $6.4 | $5.2 | $9.5 | $8.4 | | **Total** | **$36.1** | **$29.9** | **$57.9** | **$54.7** | | **% of Net Sales** | **6.5%** | **8.0%** | **5.1%** | **5.8%** | - The increase in general corporate and other expenses for the quarter was primarily due to the lapping of a reduction in legal reserves in the prior year fiscal quarter, partially offset by lower compensation costs and mark-to-market expense[299](index=299&type=chunk) [2.7 Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents were **$332.9 million**, with operating cash flow decreasing to **$13.0 million**, while investing used **$2,424.4 million** and financing provided **$1,439.3 million** for acquisitions - Energizer's primary future cash needs are centered on operating activities, working capital, strategic investments, and debt reductions[303](index=303&type=chunk) - Cash and cash equivalents were **$332.9 million** at March 31, 2019, with approximately **70%** held outside of the U.S[304](index=304&type=chunk) - Cash flow from operating activities from continuing operations was **$13.0 million** for the six months ended March 31, 2019, a decrease of **$147.6 million** from the prior year, primarily due to acquisition-related cash expenditures and working capital changes[310](index=310&type=chunk) - Net cash used by investing activities from continuing operations was **$2,424.4 million** for the six months ended March 31, 2019, primarily for the Battery Acquisition (**$1,468.4 million**) and the cash portion of the Auto Care Acquisition (**$935.4 million**)[312](index=312&type=chunk)[313](index=313&type=chunk) - Net cash from financing activities from continuing operations was **$1,439.3 million** for the six months ended March 31, 2019, driven by **$1,800.0 million** from debt issuance, **$205.3 million** from common stock issuance, and **$199.5 million** from Mandatory Preferred Convertible Stock issuance[315](index=315&type=chunk) - Dividends paid on common stock totaled **$40.8 million** for the six months ended March 31, 2019[315](index=315&type=chunk) - No shares were repurchased on the open market during the first six months of fiscal 2019 under the **7.5 million** share repurchase authorization[322](index=322&type=chunk) [2.8 Other Matters](index=55&type=section&id=Other%20Matters) Accrued environmental costs were **$7.1 million** and are not material, while purchase obligations totaled **$41.1 million** - Accrued environmental costs were **$7.1 million** at March 31, 2019[324](index=324&type=chunk) - Environmental costs are not expected to have a material effect on total capital and operating expenditures, earnings, or competitive position[324](index=324&type=chunk) - At March 31, 2019, the Company had approximately **$41.1 million** of purchase obligations[326](index=326&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Energizer manages market risks from currency, commodity, and interest rates using derivatives, with Argentina's highly inflationary economy impacting financial statement translation - The Company is exposed to market risk from adverse changes in currency rates, commodity prices, and interest rates, and uses derivatives for identifiable exposures[327](index=327&type=chunk) - Forward currency contracts are used to hedge cash flow uncertainty of forecasted inventory purchases, with an unrealized pre-tax gain of **$3.6 million** at March 31, 2019[329](index=329&type=chunk) - A hedging contract on zinc purchases was entered into in February 2019, resulting in a pre-tax gain of **$0.2 million** at March 31, 2019[335](index=335&type=chunk) - Interest rate swaps are used to fix the variable benchmark component (LIBOR) on **$600.0 million** of variable rate debt[336](index=336&type=chunk) - Effective July 1, 2018, Argentina's economy was designated as highly inflationary, requiring remeasurement of financial statements into USD and reflecting exchange gains and losses from monetary assets and liabilities in current earnings[338](index=338&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2019, providing reasonable assurance of accurate and timely reporting[341](index=341&type=chunk) - There was no change in the Company's internal control over financial reporting during the quarter ended March 31, 2019, that materially affected or is reasonably likely to materially affect it[342](index=342&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with any resulting liabilities not expected to be material to its financial position or operations - The Company and its affiliates are subject to a number of legal proceedings in various jurisdictions arising out of its operations[344](index=344&type=chunk) - Accruals are established for contingencies where the incurrence of a loss is probable and can be reasonably estimated[344](index=344&type=chunk) - Based on present information, the Company believes its liability from pending legal proceedings is not reasonably likely to be material to its financial position, results of operations, or cash flows[344](index=344&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) New risk factors include operational dependence on the Dayton facility, seasonal volatility, R-134a regulations, divestiture risks for Varta EMEA, and substantial acquisition-related debt - The operations and profitability of the Acquired Auto Care Business are highly dependent on the efficient operation of its Dayton, Ohio facility, which has experienced business disruptions and requires additional investment[346](index=346&type=chunk) - The Acquired Businesses are subject to seasonal volatility, particularly the Auto Care Business, which can be significantly impacted by unfavorable weather conditions and makes forecasting difficult[347](index=347&type=chunk) - Changes in governmental regulations regarding the use of refrigerant gas R-134a could have a material adverse effect on the ability of the Acquired Auto Care Business to sell its aftermarket A/C products[350](index=350&type=chunk)[351](index=351&type=chunk) - The divestiture of the Varta® consumer battery, chargers, portable power, and portable lighting business in EMEA involves significant risks and uncertainties, including the inability to find potential buyers on favorable terms or within the required timeline, and potential asset impairment charges[354](index=354&type=chunk)[355](index=355&type=chunk)[358](index=358&type=chunk) - The Company's significant debt level of approximately **$3.6 billion** at March 31, 2019, incurred to finance acquisitions, could adversely affect cash flow, limit future growth opportunities, and impose restrictive covenants[362](index=362&type=chunk)[363](index=363&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company purchased **262** equity shares for tax withholding, with no open market repurchases under the 7.5 million share authorization during the quarter Purchases of Equity Securities (Q2 Fiscal 2019) | Period | Total Number of Shares Purchased | Average Price Per Share | | :------------------------- | :------------------------------- | :---------------------- | | January 1 - January 31 | — | — | | February 1 - February 28 | 152 | $47.66 | | March 1 - March 31 | 110 | $45.09 | | **Total** | **262** | **$46.58** | - The **262 shares** purchased during the quarter relate to the surrender of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock or execution of net exercises[372](index=372&type=chunk) - No shares were repurchased on the open market during the quarter under the **7.5 million** share repurchase authorization approved on July 1, 2015[373](index=373&type=chunk) - As of May 7, 2019, **3.8 million shares** remain available for repurchase under the authorization[323](index=323&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including various agreements, corporate governance documents, debt instruments, and certifications - The Exhibit Index lists various agreements, including Separation and Distribution, Tax Matters, Employee Matters, Transition Services, and multiple Acquisition Agreements[376](index=376&type=chunk) - Corporate governance documents such as the Third Amended and Restated Articles of Incorporation, Bylaws, and Certificate of Designations for Preferred Stock are included[376](index=376&type=chunk)[378](index=378&type=chunk) - Debt-related documents, including Supplemental Indentures for various Senior Notes, are part of the exhibits[379](index=379&type=chunk)[380](index=380&type=chunk) - Certifications of periodic financial reports by the Chief Executive Officer and Chief Financial Officer are filed herewith[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk)