Energizer (ENR) - 2025 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and comprehensive notes on business, accounting, acquisitions, restructuring, and segment performance Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including earnings, balance sheets, cash flows, and equity, with detailed notes on business, policies, acquisitions, and segment performance Consolidated Statements of Earnings and Comprehensive Income (Condensed) The company reported a significant turnaround in net earnings for both the quarter and nine months ended June 30, 2025, primarily driven by a substantial increase in gross profit and the absence of a prior-year intangible asset impairment | Metric (in millions, except per share data) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :---------------------------------------- | :------ | :------ | :------ | :------ | | Net sales | $725.3 | $701.4 | $2,119.9 | $2,081.3 | | Cost of products sold | $325.6 | $424.2 | $1,191.6 | $1,283.8 | | Gross profit | $399.7 | $277.2 | $928.3 | $797.5 | | Selling, general and administrative expense | $128.3 | $129.6 | $395.6 | $380.2 | | Advertising and sales promotion expense | $43.4 | $37.9 | $117.6 | $106.3 | | Research and development expense | $8.2 | $7.4 | $24.3 | $23.1 | | Amortization of intangible assets | $14.7 | $14.5 | $44.1 | $43.5 | | Impairment of intangible assets | — | $110.6 | — | $110.6 | | Interest expense | $39.0 | $38.5 | $114.0 | $117.9 | | Loss on extinguishment/modification of debt | — | $1.2 | $5.3 | $2.1 | | Other items, net | $1.9 | $(5.0) | $(3.3) | $19.5 | | Earnings/(loss) before income taxes | $164.2 | $(57.5) | $230.7 | $(5.7) | | Income tax provision/(benefit) | $10.7 | $(13.7) | $26.6 | $3.8 | | Net earnings/(loss) | $153.5 | $(43.8) | $204.1 | $(9.5) | | Basic net earnings/(loss) per common share | $2.16 | $(0.61) | $2.84 | $(0.13) | | Diluted net earnings/(loss) per common share | $2.13 | $(0.61) | $2.80 | $(0.13) | | Total comprehensive income | $127.6 | $(51.7) | $164.0 | $(35.5) | Consolidated Balance Sheets (Condensed) The company's total assets increased from September 30, 2024, to June 30, 2025, primarily driven by higher inventories and other current assets, while shareholders' equity also saw a notable increase | Metric (in millions) | June 30, 2025 | September 30, 2024 | | :------------------- | :------------ | :----------------- | | Cash and cash equivalents | $171.1 | $216.9 | | Inventories | $870.1 | $657.3 | | Total current assets | $1,642.4 | $1,478.9 | | Total assets | $4,516.0 | $4,342.4 | | Total current liabilities | $924.3 | $819.8 | | Long-term debt | $3,218.4 | $3,193.0 | | Total liabilities | $4,332.8 | $4,206.6 | | Total shareholders' equity | $183.2 | $135.8 | Consolidated Statements of Cash Flows (Condensed) Net cash from operating activities significantly decreased for the nine months ended June 30, 2025, primarily due to working capital changes, particularly an increase in inventories. Investing activities saw a slight decrease in cash used, while financing activities used substantially less cash compared to the prior year | Metric (in millions) | 9M 2025 | 9M 2024 | | :------------------- | :------ | :------ | | Net cash from operating activities | $85.6 | $260.7 | | Net cash used by investing activities | $(81.9) | $(89.0) | | Net cash used by financing activities | $(49.8) | $(223.9) | | Net decrease in cash, cash equivalents, and restricted cash | $(45.8) | $(76.6) | | Cash, cash equivalents, and restricted cash, end of period | $171.1 | $146.7 | Consolidated Statements of Shareholders' Equity (Condensed) Shareholders' equity increased from September 30, 2024, to June 30, 2025, driven by net earnings, share-based payments, and a decrease in treasury stock, despite ongoing dividends and other comprehensive losses Common Stock and Equity Balances (in millions, Shares in thousands) | Metric (in millions, Shares in thousands) | September 30, 2024 | June 30, 2025 | | :---------------------------------------- | :----------------- | :------------ | | Common Stock (Shares) | 71,810 | 69,415 | | Common Stock (Amount) | $0.8 | $0.8 | | Additional Paid-in Capital | $667.6 | $597.5 | | Retained (Losses)/Earnings | $(128.4) | $73.4 | | Accumulated Other Comprehensive (Loss)/Income | $(180.6) | $(220.7) | | Treasury Stock | $(223.6) | $(267.8) | | Total Shareholders' Equity | $135.8 | $183.2 | - The company repurchased 2,793 thousand common shares for $62.6 million during the nine months ended June 30, 2025[15] - Dividends of $0.30 per share were paid to common shareholders each quarter[15] Notes to Consolidated (Condensed) Financial Statements This section provides detailed disclosures on the company's business, accounting policies, acquisitions, restructuring, segment performance, income taxes, debt, and financial instruments (1) Description of Business and Basis of Presentation Energizer Holdings, Inc. is a global manufacturer and marketer of primary batteries, portable lights, and auto care products, operating under various well-known brands. The financial statements are condensed and prepared in accordance with Regulation S-X, with management's opinion that all necessary adjustments for fair presentation have been included - Energizer is a global manufacturer, marketer, and distributor of primary batteries, portable lights, and auto care appearance, performance, refrigerants, and fragrance products[19] - Key brands include Energizer®, Eveready®, Rayovac®, Varta® for batteries and lights, and Armor All®, Nu Finish®, Refresh Your Car!®, LEXOL®, Eagle One®, etc. for auto care products[20] - The company adopted ASU No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures, effective for fiscal year ending September 30, 2025[23] - New accounting pronouncements, ASU No. 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation), are effective for fiscal years ending September 30, 2026, and after December 15, 2026, respectively, with impact currently being assessed[24][25] (2) Revenue Recognition Revenue is primarily generated from finished product sales, recognized when title and risk of loss pass to the customer. The company provides a detailed breakdown of net sales by product category and market segment, including North America, Modern, Developing, Distributor, and Global Professional Markets - Revenue is recognized at a single point in time when title, ownership, and risk of loss pass to the customer, typically upon delivery or carrier pickup[27][29] Net Sales by Products (in millions) | Product Category | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :--------------- | :------ | :------ | :------ | :------ | | Batteries | $515.9 | $486.7 | $1,592.9 | $1,538.2 | | Auto Care | $190.2 | $192.3 | $464.4 | $473.4 | | Lights | $19.2 | $22.4 | $62.6 | $69.7 | | Total Net Sales | $725.3 | $701.4 | $2,119.9 | $2,081.3 | Net Sales by Markets (in millions) | Market Segment | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | North America Market | $408.3 | $410.6 | $1,172.0 | $1,153.6 | | Modern Markets | $111.3 | $98.5 | $356.3 | $339.5 | | Developing Markets | $80.0 | $78.2 | $245.0 | $250.0 | | Distributors Markets | $53.9 | $41.7 | $137.1 | $117.9 | | Global Professional Markets | $71.8 | $72.4 | $209.5 | $220.3 | | Total Net Sales | $725.3 | $701.4 | $2,119.9 | $2,081.3 | (3) Acquisitions Energizer completed three acquisitions: Advanced Power Solutions NV (APS NV) in May 2025 for additional production capacity and customer base in Europe, Centralsul Ltda. in May 2024 to expand Auto Care presence in Brazil, and battery manufacturing assets in Belgium in October 2023. These acquisitions resulted in goodwill recognition for Centralsul and Belgium, and the company incurred related acquisition and integration costs - On May 2, 2025, Energizer acquired Advanced Power Solutions NV (APS NV) for EUR13.3 million (USD$15.2 million), gaining production capacity and an expanded customer base in Europe[33] - On May 8, 2024, the company acquired Centralsul Ltda. for approximately $15 million, increasing its Auto Care presence in Southern Brazil, recognizing $14.6 million in goodwill[37][38] - On October 27, 2023, Energizer acquired battery manufacturing assets in Belgium for EUR3.5 million, recording $0.7 million in goodwill[39] Acquisition and Integration Costs (in millions) | Expense Category | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :--------------- | :------ | :------ | :------ | :------ | | SG&A | $1.3 | $1.4 | $4.8 | $2.8 | | Cost of products sold | — | $0.2 | — | $3.1 | | Other items, net | — | — | — | $(1.0) | | Total | $1.3 | $1.6 | $4.8 | $4.9 | (4) Restructuring Project Momentum, a profit recovery program, continued with an expanded scope to optimize manufacturing, distribution, and supply chain networks, and enhance organizational efficiency. The program is expected to incur over $180 million in cash operating costs, approximately $30 million in non-cash costs, and $80-90 million in capital expenditures by the end of fiscal 2025, aiming for over $200 million in total pre-tax savings - Project Momentum aims to recover operating margins, optimize manufacturing, distribution, and global supply chain networks, and enhance organizational efficiency[45] - Estimated total pre-tax exit-related cash operating costs are over $180 million, non-cash costs approximately $30 million, and capital expenditures $80-90 million by end of fiscal 2025[46] Project Momentum Restructuring Program Costs (in millions) | Cost Category | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :------------ | :------ | :------ | :------ | :------ | | Costs of products sold | $2.9 | $13.4 | $21.0 | $41.7 | | SG&A | $3.4 | $7.0 | $12.0 | $17.3 | | SG&A - IT Enablement | $1.7 | $2.8 | $13.2 | $10.0 | | Other items, net | — | $(4.4) | $(0.3) | $(4.4) | | Total | $8.0 | $18.8 | $45.9 | $64.6 | Restructuring and Related Costs Reserve Activity (in millions) | Reserve Category | Balance Sep 30, 2024 | Charge to Income | Cash Utilized | Non-Cash Utilized | Balance Jun 30, 2025 | | :--------------- | :------------------- | :--------------- | :------------ | :---------------- | :------------------- | | Severance & termination related costs | $7.2 | $4.0 | $3.8 | — | $7.4 | | Accelerated depreciation & fixed asset write-offs | — | $4.2 | — | $4.2 | — | | Other restructuring related costs | $12.4 | $24.5 | $33.6 | — | $3.3 | | IT enablement | $2.1 | $13.2 | $12.9 | $2.1 | $0.3 | | Total | $21.7 | $45.9 | $50.3 | $6.3 | $11.0 | (5) Segments Energizer manages its operations through two product segments: Batteries & Lights and Auto Care. Segment performance is evaluated based on segment operating profit, excluding corporate-level expenses. Both segments saw an increase in net sales and segment profit for the nine months ended June 30, 2025, with Batteries & Lights showing stronger growth - Segment performance is evaluated based on segment operating profit, excluding general corporate expenses, amortization of intangibles, impairment, acquisition/integration costs, restructuring costs, network transition costs, production credits, litigation, and other corporate items[54] Segment Net Sales (in millions) | Segment | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :--------------- | :------ | :------ | :------ | :------ | | Batteries & Lights | $535.1 | $509.1 | $1,655.5 | $1,607.9 | | Auto Care | $190.2 | $192.3 | $464.4 | $473.4 | | Total Net Sales | $725.3 | $701.4 | $2,119.9 | $2,081.3 | Segment Profit (in millions) | Segment | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :--------------- | :------ | :------ | :------ | :------ | | Batteries & Lights | $158.8 | $129.4 | $390.4 | $375.3 | | Auto Care | $24.1 | $26.8 | $79.8 | $74.1 | | Total Segment Profit | $182.9 | $156.2 | $470.2 | $449.4 | Total Segment Assets (in millions) | Segment | June 30, 2025 | September 30, 2024 | | :--------------- | :------------ | :----------------- | | Batteries & Lights | $1,595.5 | $1,421.1 | | Auto Care | $405.5 | $352.7 | | Total segment assets | $2,001.0 | $1,773.8 | | Corporate | $438.7 | $451.7 | | Goodwill and other intangible assets | $2,076.3 | $2,116.9 | | Total assets | $4,516.0 | $4,342.4 | (6) Earnings per share The company reported significantly improved basic and diluted net earnings per common share for the quarter and nine months ended June 30, 2025, compared to losses in the prior year, with a slight increase in weighted average shares outstanding Basic and Diluted Earnings/(Loss) Per Share (in millions, except per share data) | Metric | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :----- | :------ | :------ | :------ | :------ | | Net earnings/(loss) | $153.5 | $(43.8) | $204.1 | $(9.5) | | Weighted average common shares outstanding - Basic | 71.2 | 71.8 | 71.8 | 71.7 | | Basic net earnings/(loss) per common share | $2.16 | $(0.61) | $2.84 | $(0.13) | | Weighted average common shares outstanding - Diluted | 72.1 | 71.8 | 72.9 | 71.7 | | Diluted net earnings/(loss) per common share | $2.13 | $(0.61) | $2.80 | $(0.13) | - For Q3 2024 and 9M 2024, all RSU and performance-based RSU shares were excluded from diluted EPS calculation due to the net loss position, making their inclusion anti-dilutive[67] (7) Income Taxes The company recognized a significant reduction to Cost of products sold due to Advanced Manufacturing Production Credits under the Inflation Reduction Act (IRA), retroactive to January 1, 2023. This credit significantly impacted the effective tax rate for the current period, which was also influenced by prior year intangible asset impairment and the December 2023 Argentina Economic Reform - The company recognized an estimated $112.4 million reduction to Cost of products sold for Advanced Manufacturing Production Credits under the IRA, retroactive to January 1, 2023[72] - The credit included $33.9 million for fiscal 2025 production and $78.5 million for the retroactive adjustment[72] - The effective tax rate for Q3 2025 was 6.5% (provision) and 11.5% for 9M 2025, compared to a 23.8% benefit and 66.7% expense for the prior year comparative periods, respectively[73] - The prior year's rate was impacted by a $110.6 million impairment loss and $22.0 million in non-deductible exchange losses from the December 2023 Argentina Economic Reform[74] (8) Goodwill and intangible assets Goodwill increased slightly to $1,050.1 million at June 30, 2025, primarily due to the Centralsul acquisition and cumulative translation adjustments. In fiscal 2024, the company recorded $110.6 million in indefinite-lived intangible asset impairments for the Rayovac and Varta trade names due to missed sales forecasts and elevated cost of capital Goodwill by Segment (in millions) | Segment | Balance at Oct 1, 2024 | Centralsul Acquisition | Cumulative Translation Adjustment | Balance at Jun 30, 2025 | | :--------------- | :--------------------- | :--------------------- | :-------------------------------- | :---------------------- | | Batteries & Lights | $897.9 | — | $3.9 | $901.8 | | Auto Care | $148.1 | $0.1 | $0.1 | $148.3 | | Total | $1,046.0 | $0.1 | $4.0 | $1,050.1 | - During Q3 fiscal 2024, the company recorded $110.6 million in indefinite-lived intangible asset impairments ($85.2 million for Rayovac and $25.4 million for Varta trade names) due to missed sales forecasts and elevated weighted average cost of capital[79] - The Varta trade name was converted to a definite-lived intangible asset with a 15-year useful life after impairment, increasing annual amortization by approximately $0.8 million[81] Total Other Intangible Assets, Net (in millions) | Asset Category | Gross Carrying Amount (Jun 30, 2025) | Accumulated Amortization (Jun 30, 2025) | Net Carrying Amount (Jun 30, 2025) | | :------------- | :----------------------------------- | :-------------------------------------- | :--------------------------------- | | Amortizable intangible assets | $786.8 | $(401.5) | $385.3 | | Trademarks and trade names - indefinite lived | $640.9 | — | $640.9 | | Total | $1,427.7 | $(401.5) | $1,026.2 | (9) Debt The company's total long-term debt increased slightly to $3,250.6 million at June 30, 2025. A significant refinancing occurred in March 2025, extending the maturity of the $760 million Senior Secured Term Loan to 2032 and the $500 million Revolving Credit Facility to 2030, resulting in a $5.3 million loss on extinguishment/modification of debt for the nine months ended June 30, 2025. The company remains in compliance with its debt covenants Long-Term Debt (in millions) | Debt Type | June 30, 2025 | September 30, 2024 | | :---------------------------------------- | :------------ | :----------------- | | Senior Secured Term Loan Facility due 2027 | — | $782.0 | | Senior Secured Term Loan Facility due 2032 | $760.0 | — | | 6.500% Senior Notes due 2027 | $300.0 | $300.0 | | 4.750% Senior Notes due 2028 | $583.7 | $583.7 | | 4.375% Senior Notes due 2029 | $791.3 | $791.3 | | 3.500% Senior Notes due 2029 (Euro Notes) | $766.2 | $723.8 | | Finance lease obligations | $49.4 | $49.2 | | Total long-term debt, including current maturities | $3,250.6 | $3,230.0 | - On March 19, 2025, the company refinanced and extended its $760 million Term Loan to 2032 and its $500 million Revolving Credit Facility to 2030, incurring $8.0 million in debt issuance costs and a $5.2 million loss on extinguishment/modification of debt[90] - As of June 30, 2025, $120.0 million was outstanding under the Revolving Facility, with $372.4 million available[93] Debt Maturities (in millions) | Period | Long-term debt | | :--------- | :------------- | | One year | $7.6 | | Two year | $7.6 | | Three year | $891.3 | | Four year | $1,565.1 | | Five year | $7.6 | | Thereafter | $722.0 | | Total | $3,201.2 | (10) Supply Chain Financing The company operates a voluntary Supplier Financing Program, allowing participating suppliers to receive early payments from third-party financial institutions. Energizer's obligations to suppliers remain unchanged, and it does not guarantee or assume liability for these agreements - The company has a voluntary Supplier Financing Program with financial institutions, allowing suppliers to request early payment of invoices[100] - As of June 30, 2025, $55.9 million in supplier obligations were confirmed under the program, included in Accounts payable[101] (11) Pension Plans The company sponsors several defined benefit pension plans, primarily frozen to new entrants. The net periodic pension cost for both U.S. and International plans showed a net benefit for U.S. plans and a net cost for International plans for the quarter and nine months ended June 30, 2025 Net Periodic Pension Cost (in millions) | Component | U.S. (Q3 2025) | U.S. (Q3 2024) | International (Q3 2025) | International (Q3 2024) | | :-------- | :------------- | :------------- | :---------------------- | :---------------------- | | Service cost | — | — | $0.2 | $0.1 | | Interest cost | $3.0 | $3.7 | $0.9 | $0.9 | | Expected return on plan assets | $(4.0) | $(3.2) | $(0.9) | $(1.0) | | Amortization of unrecognized net losses | $0.5 | $0.5 | $0.5 | $0.2 | | Net periodic (benefit)/cost | $(0.5) | $1.0 | $0.7 | $0.2 | | Component | U.S. (9M 2025) | U.S. (9M 2024) | International (9M 2025) | International (9M 2024) | | :-------- | :------------- | :------------- | :---------------------- | :---------------------- | | Service cost | — | — | $0.4 | $0.3 | | Interest cost | $9.1 | $10.9 | $2.5 | $2.6 | | Expected return on plan assets | $(11.9) | $(9.8) | $(2.6) | $(2.7) | | Amortization of unrecognized net losses | $1.4 | $1.4 | $1.5 | $0.7 | | Net periodic (benefit)/cost | $(1.4) | $2.5 | $1.8 | $0.9 | (12) Financial Instruments and Risk Management The company uses derivative instruments to manage market risks from currency rates, interest rates, and commodity prices, primarily through forward currency contracts, interest rate swaps, and zinc contracts. These derivatives are used for hedging identifiable exposures, not for speculation, and are classified within a fair value hierarchy - The company uses derivatives to reduce exposure to commodity price, foreign currency, and interest rate risks, not for trading or speculative purposes[106][109] - Foreign currency contracts hedge cash flow uncertainty of inventory purchases, with an unrealized pre-tax loss of $7.7 million at June 30, 2025[116] - Zinc contracts hedge future zinc purchases, with an unrealized pre-tax loss of $0.8 million at June 30, 2025[117] - An interest rate swap fixes the SOFR at 1.042% on $600.0 million of variable rate debt, with an unrealized pre-tax gain of $29.8 million at June 30, 2025[115][118] Estimated Fair Values of Financial Instruments (in millions) | (Liabilities)/Assets at estimated fair value | June 30, 2025 | September 30, 2024 | | :----------------------------------------- | :------------ | :----------------- | | Deferred compensation | $(19.5) | $(21.7) | | Derivatives - Foreign Currency contracts | $(7.7) | $(4.6) | | Derivatives - Foreign Currency contracts (non-hedge) | $2.4 | $2.9 | | Derivatives - Interest Rate Swap | $29.8 | $39.8 | | Derivatives - Zinc contracts | $(0.8) | $4.0 | | Net Assets at estimated fair value | $4.2 | $20.4 | (13) Accumulated Other Comprehensive (Loss)/Income Accumulated other comprehensive loss (AOCI) increased to $(220.7) million at June 30, 2025, from $(180.6) million at September 30, 2024, primarily due to foreign currency translation adjustments and reclassifications of cash flow hedge losses to earnings Changes in Accumulated Other Comprehensive (Loss)/Income (in millions) | Component | Balance Sep 30, 2024 | OCI before reclassifications | Reclassifications to earnings | Balance Jun 30, 2025 | | :-------- | :------------------- | :--------------------------- | :---------------------------- | :------------------- | | Foreign Currency Translation Adjustments | $(96.8) | $(27.0) | $(0.3) | $(124.1) | | Pension Activity | $(113.5) | $(1.4) | $2.2 | $(112.7) | | Zinc Contracts | $3.1 | $(1.1) | $(2.6) | $(0.6) | | Foreign Currency Contracts | $(3.7) | $(0.5) | $(1.8) | $(6.0) | | Interest Rate Contracts | $30.3 | $5.3 | $(12.9) | $22.7 | | Total | $(180.6) | $(24.7) | $(15.4) | $(220.7) | Reclassifications out of AOCI to Earnings (in millions) | AOCI Component | Q3 2025 Reclassified | Q3 2024 Reclassified | 9M 2025 Reclassified | 9M 2024 Reclassified | Affected Line Item | | :------------- | :------------------- | :------------------- | :------------------- | :------------------- | :----------------- | | Foreign currency contracts | $(0.3) | $(0.4) | $(2.5) | $(1.0) | Cost of products sold | | Interest rate contracts | $(5.1) | $(7.7) | $(16.9) | $(23.5) | Interest expense | | Zinc contracts | $(1.1) | $1.2 | $(3.4) | $6.5 | Cost of products sold | | Actuarial loss (pension) | $1.0 | $0.7 | $2.9 | $2.1 | Other items, net | | Total reclassifications to earnings (Net earnings impact) | $(4.2) | $(4.8) | $(15.1) | $(12.1) | Net earnings | (14) Supplemental Financial Statement Information This note provides a detailed breakdown of specific income statement and balance sheet accounts, including 'Other items, net,' inventories, other current assets, property, plant and equipment, and various current and non-current liabilities Other Items, Net (in millions) | Component | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :-------- | :------ | :------ | :------ | :------ | | Interest income | $(0.2) | $(1.4) | $(2.0) | $(9.4) | | Foreign currency exchange loss/(gain) | $2.0 | $(0.3) | $(1.4) | $29.3 | | Pension cost other than service costs | — | $1.1 | — | $3.1 | | Loss on sale of available-for-sale securities | — | — | — | $1.0 | | Transition services agreement income | — | — | — | $(1.0) | | Other | $0.1 | $(4.4) | $0.1 | $(3.5) | | Total Other items, net | $1.9 | $(5.0) | $(3.3) | $19.5 | Inventories (in millions) | Component | June 30, 2025 | September 30, 2024 | | :-------- | :------------ | :----------------- | | Raw materials and supplies | $158.8 | $127.6 | | Work in process | $284.1 | $248.4 | | Finished products | $427.2 | $281.3 | | Total inventories | $870.1 | $657.3 | Other Current Liabilities (in millions) | Component | June 30, 2025 | September 30, 2024 | | :-------- | :------------ | :----------------- | | Accrued advertising, sales promotion and allowances | $19.4 | $19.9 | | Accrued trade allowances | $67.4 | $53.3 | | Accrued freight and warehousing | $50.2 | $42.6 | | Accrued salaries, vacations and incentive compensation | $54.4 | $69.5 | | Accrued interest expense | $10.8 | $20.4 | | Restructuring and related cost reserve | $10.1 | $21.5 | | Income taxes payable | $16.4 | $22.5 | | Other | $110.0 | $104.1 | | Total other current liabilities | $338.7 | $353.8 | (15) Legal proceedings/contingencies and other obligations The company is involved in various legal proceedings, including consolidated class action lawsuits alleging price inflation for battery and lighting products, and a lawsuit by Varta Microbattery GmbH which resulted in a $13.7 million judgment against the company, currently under appeal. The company believes its liability from these matters is not reasonably likely to be material - Three purported class action lawsuits were filed against the company and Wal-Mart Inc. in 2023, alleging conspiracy to inflate prices of certain battery and lighting products[145] - The company has not recorded accruals for the class action lawsuits as the likelihood of loss is not probable nor estimable, and it intends to vigorously defend against the claims[145] - The company has approximately $3.3 million in purchase obligations under supply and service contracts at June 30, 2025[147] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Energizer's financial condition, results of operations, and liquidity, highlighting key financial performance, the impact of macroeconomic factors, production tax credits, intangible asset impairment, acquisitions, and restructuring efforts. It also includes forward-looking statements and non-GAAP financial measure reconciliations Forward-Looking Statements This section outlines the inherent uncertainties and risks associated with the company's forward-looking statements, emphasizing that actual results could differ materially due to various factors, including global economic conditions, competition, supply chain issues, and regulatory changes - Forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially[151] - Key risk factors include global economic and financial market conditions, intense competition, changes in the retail environment, loss of brand reputation, reliance on key customers and suppliers, production cost volatility, international operation risks (tariffs, currency fluctuations), and the ability to achieve cost savings from restructuring[151] - Other risks include intellectual property protection, IT system failures, attracting/retaining key employees, significant debt obligations, pension plan losses, inaccurate financial projections, acquisition/divestiture challenges, product liability claims, increasing government regulations, ESG issues, and the uncertainty of Section 45X production tax credits[151][155] Non-GAAP Financial Measures The company uses several non-GAAP financial measures to provide additional insights into its ongoing operating performance, excluding items such as restructuring costs, acquisition and integration costs, intangible asset impairments, and production credits. These measures aim to enhance comparability and understanding for investors - Non-GAAP financial measures exclude items not reflective of ongoing operating performance, such as restructuring and related costs, network transition costs, acquisition and integration costs, FY23 & FY24 production credits, litigation matters, intangible asset impairment, loss on extinguishment/modification of debt, and the December 2023 Argentina Economic Reform[153] - Definitions provided for Segment Profit, Adjusted Net Earnings and Adjusted Diluted Net Earnings Per Common Share (EPS), Non-GAAP Tax Rate, Organic (excluding hyperinflationary markets and currency impact), Acquisition Impact, Change in Hyperinflationary Markets, Impact of currency, Adjusted Gross Margin, Adjusted Selling, General & Administrative Expense (SG&A) as a percent of sales, and Adjusted Other items, net[154][155][157][158][159][160][161] Macroeconomic Environment The company continues to face an inflationary environment, geopolitical instability, and risks of higher tariffs, transportation costs, and commodity prices, which could impact profit margins and consumer demand. Tariffs are expected to have an unfavorable impact of approximately $20 million for the remainder of fiscal 2025, with neutralization anticipated in fiscal 2026 through mitigation strategies - The company operates in an inflationary environment with macroeconomic pressures and geopolitical instability, risking higher tariffs, transportation/logistical/supply constraints, and commodity costs[162] - Tariffs are estimated to have an unfavorable impact of approximately $20 million compared to the prior year for the remainder of fiscal 2025, expected to be neutralized in fiscal 2026 through pricing, sourcing changes, manufacturing network transitions, and cost initiatives[163] Production Tax Credits under the Inflationary Reduction Act Energizer recognized an estimated $112.4 million in Advanced Manufacturing Production Credits under the Inflation Reduction Act (IRA) during the third quarter of fiscal 2025, retroactive to January 1, 2023. The company estimates full-year fiscal 2025 credits to be $40-45 million and future annual credits of $35-40 million, subject to ongoing evaluation and new legislation - The company recognized an estimated $112.4 million reduction to Cost of products sold for Section 45X Advanced Manufacturing Production Credits, retroactive to January 1, 2023[166] - The credit included $33.9 million for fiscal 2025 production and $78.5 million as a retroactive adjustment[166] - Estimated fiscal 2025 full-year production credit is $40-45 million, with future year credits projected at $35-40 million[168] - The company is reviewing the impact of the One Big Beautiful Bill Act, signed July 4, 2025, but does not expect significant changes to future production credits[167] Indefinite-lived Intangible Asset Impairment During the third quarter of fiscal 2024, Energizer recorded $110.6 million in non-cash impairment charges for the Rayovac ($85.2 million) and Varta ($25.4 million) trade names. This was triggered by missed branded sales forecasts and an elevated weighted average cost of capital, with fair values determined using the multi-period excess earnings and relief from royalty methods, respectively - In Q3 fiscal 2024, the company recorded $110.6 million in non-cash impairment charges for indefinite-lived intangible assets ($85.2 million for Rayovac and $25.4 million for Varta trade names)[169] - The impairment was triggered by missed branded sales forecasts and an elevated weighted average cost of capital[169] - The Rayovac trade name's fair value was determined using the multi-period excess earnings method, and Varta's using the relief from royalty model[170][171] - A 50 basis point change in the discount rate would have resulted in an additional impairment of $16.7 million for Rayovac and $0.3 million for Varta[172] December 2023 Argentina Economic Reform The December 2023 Argentine Peso devaluation by approximately 50% led to $22.0 million in currency and related losses for the nine months ended June 30, 2024, recognized in Other items, net. This reform caused operating costs to rise faster than price increases, potentially leading to continued declines in operating profit - The December 2023 Argentine Peso devaluation by approximately 50% resulted in $22.0 million of currency and related losses recognized in Other items, net for the nine months ended June 30, 2024[176] - The losses included $14.7 million from remeasurement of monetary assets/liabilities, $6.3 million in transactional currency exchange losses, and a $1.0 million loss on bond purchases/sales[176] - Argentina's operating costs rose quicker than the company could implement price increases, potentially leading to continued declines in operating profit[175] Acquisitions Energizer completed three acquisitions: battery manufacturing assets in Belgium (Oct 2023), Centralsul Ltda. in Brazil (May 2024), and APS NV in Europe (May 2025). These acquisitions expanded production capacity and market presence, incurring $4.8 million in acquisition and integration costs for the nine months ended June 30, 2025 - The company acquired battery manufacturing assets in Belgium (Oct 2023), Centralsul Ltda. in Brazil (May 2024), and APS NV in Europe (May 2025)[178][179][180] - The APS NV acquisition contributed $20.8 million in Net sales and $0.4 million in Segment profit to the Battery and Lights segment[180] - Acquisition and integration costs totaled $4.8 million in SG&A for the nine months ended June 30, 2025, including a $1.1 million earnout adjustment for Centralsul[181] Project Momentum Costs Project Momentum, a profit recovery program, continued to optimize operations, with total pre-tax costs of $45.9 million for the nine months ended June 30, 2025. The program is expected to generate over $200 million in total pre-tax savings by the end of fiscal 2025, with approximately $196 million realized to date - Project Momentum aims for over $200 million in total pre-tax savings by the end of fiscal 2025, with approximately $196 million realized as of June 30, 2025[185] - Total Project Momentum restructuring and related pre-tax costs were $8.0 million for Q3 2025 and $45.9 million for 9M 2025[186] - These costs primarily consisted of severance, accelerated depreciation, asset write-offs, consulting, IT enablement, and facility exit costs[186] - Incremental network transition costs of $17.6 million were incurred for 9M 2025 to maintain business continuity during facility decommissioning and production line relocation[188] Highlights / Operating Results Energizer reported strong financial results for Q3 and 9M 2025, with significant increases in net earnings and adjusted diluted EPS, driven by organic net sales growth, production credits, and Project Momentum savings. Gross margin improved, while SG&A and A&P expenses increased due to investments and acquisition impacts Financial Results The company achieved net earnings of $153.5 million ($2.13 diluted EPS) for Q3 2025 and $204.1 million ($2.80 diluted EPS) for 9M 2025, a significant improvement from prior-year losses. Adjusted diluted EPS increased by 43% for the quarter and 18% for the nine months, after accounting for various pre-tax adjustments Net Earnings/(Loss) and Adjusted Net Earnings (in millions, except per share data) | Metric | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :----- | :------ | :------ | :------ | :------ | | Net earnings/(loss) | $153.5 | $(43.8) | $204.1 | $(9.5) | | Total adjustments, pre-tax | $(70.0) | $132.2 | $(6.6) | $204.2 | | Total adjustments, after tax | $(72.0) | $101.2 | $(23.8) | $161.5 | | Adjusted Net earnings | $81.5 | $57.4 | $180.3 | $152.0 | | Diluted net earnings/(loss) per common share | $2.13 | $(0.61) | $2.80 | $(0.13) | | Adjusted Diluted net earnings per diluted common share | $1.13 | $0.79 | $2.47 | $2.09 | - Pre-tax adjustments for Q3 2025 included $(78.5) million for FY23 & FY24 production credits, $8.0 million for restructuring costs, and $(1.7) million for a litigation matter[193] - The effective tax rate for Adjusted Net earnings was 13.5% for Q3 2025 and 19.5% for 9M 2025, lower than prior year due to FY25 production credits[198][219] Total Net sales Total Net sales increased by 3.4% to $725.3 million for Q3 2025 and by 1.9% to $2,119.9 million for 9M 2025. Organic Net sales grew by 0.1% for the quarter and 1.8% for the nine months, primarily driven by increased volumes in Batteries & Lights, partially offset by strategic pricing and promotional investments Total Net Sales Change (in millions) | Component | Q3 2025 $ Change | Q3 2025 % Chg | 9M 2025 $ Change | 9M 2025 % Chg | | :-------- | :--------------- | :------------ | :--------------- | :------------ | | Net sales - prior year | $701.4 | | $2,081.3 | | | Organic | $0.8 | 0.1 % | $37.2 | 1.8 % | | Acquisition impact | $20.8 | 3.0 % | $20.8 | 1.0 % | | Change in hyperinflationary markets | $1.4 | 0.2 % | $(2.5) | (0.1) % | | Impact of currency | $0.9 | 0.1 % | $(16.9) | (0.8) % | | Net Sales - current year | $725.3 | 3.4 % | $2,119.9 | 1.9 % | - Organic Net sales growth in Q3 2025 was driven by 1.7% volume growth from new and expanded distribution in Battery & Lights, partially offset by 1.6% planned strategic pricing and promotional investments[202] - For 9M 2025, organic volumes grew 3.2% due to new/expanded distribution and storm-related activity in Battery & Lights, partially offset by 1.4% planned strategic pricing and promotional investments[209] Gross margin percentage Reported gross margin percentage significantly increased to 55.1% for Q3 2025 and 43.8% for 9M 2025, primarily due to the recognition of $112.4 million in production credits. Adjusted gross margin also improved, benefiting from Project Momentum savings, despite product cost impacts and strategic pricing investments - Reported gross margin percentage was 55.1% for Q3 2025 (vs. 39.5% prior year) and 43.8% for 9M 2025 (vs. 38.3% prior year)[203][205] - The Q3 2025 gross margin benefited from $112.4 million in production credits, including $33.9 million for FY25 and $78.5 million retroactive to January 1, 2023[203] Gross Margin Percentage Reconciliation | Metric | Q3 2025 | 9M 2025 | | :----- | :------ | :------ | | Gross margin - FY'24 Reported | 39.5 % | 38.3 % | | Prior year impact of restructuring and integration costs | 2.0 % | 2.2 % | | Gross margin - FY'24 Adjusted | 41.5 % | 40.5 % | | FY25 production credits | 4.8 % | 1.6 % | | Project Momentum initiatives | 1.8 % | 2.1 % | | Product cost impacts | (1.5)% | (1.0)% | | Pricing | (1.0)% | (0.9)% | | Acquisition impact | (0.5)% | (0.2)% | | Currency impacts, including hyperinflationary markets | (0.3)% | (0.2)% | | Gross margin - FY'25 Adjusted | 44.8 % | 41.9 % | | Current year impact of restructuring, network transition costs and FY23 & FY24 production credits | 10.3 % | 1.9 % | | Gross margin - FY'25 Reported | 55.1 % | 43.8 % | - Adjusted Gross margin improvement was driven by FY25 production credits ($33.9 million) and Project Momentum savings ($12 million for Q3, $44 million for 9M), partially offset by increased freight, warehousing, production inefficiencies, and strategic pricing[206][207] SG&A SG&A expenses were $128.3 million (17.7% of Net sales) for Q3 2025 and $395.6 million (18.7% of Net sales) for 9M 2025. Adjusted SG&A increased year-over-year due to the APS NV acquisition, digital transformation investments, and higher legal fees, partially offset by Project Momentum savings - SG&A was $128.3 million (17.7% of Net sales) for Q3 2025, compared to $129.6 million (18.5% of Net sales) in prior year[208] - Adjusted SG&A for Q3 2025 was $123.6 million (17.0% of Net sales), up from $118.4 million (16.9% of Net sales) in prior year[208] - The increase in adjusted SG&A was driven by $4.5 million from the APS NV business, investments in digital transformation, and increased legal fees, partially offset by $3 million in Project Momentum savings for the quarter[208] - For 9M 2025, adjusted SG&A was $367.3 million (17.3% of Net sales), up from $350.1 million (16.8% of Net sales) in prior year, with $10 million in Project Momentum savings partially offsetting increases[210] Advertising and sales promotion expense (A&P) Advertising and sales promotion expense increased to $43.4 million (6.0% of net sales) for Q3 2025 and $117.6 million (5.5% of net sales) for 9M 2025, primarily due to investments in the launch of the Podium Series and support for the key holiday season - A&P was $43.4 million (6.0% of net sales) for Q3 2025, up from $37.9 million (5.4% of Net sales) in Q3 2024[211] - A&P was $117.6 million (5.5% of net sales) for 9M 2025, up from $106.3 million (5.1% of Net sales) in 9M 2024[211] - The increase was driven by investment in the launch of the Podium Series and support for the key holiday season[211] R&D Research and development expense remained relatively stable at $8.2 million (1.1% of Net sales) for Q3 2025 and $24.3 million (1.1% of Net sales) for 9M 2025 - R&D was $8.2 million (1.1% of Net sales) for Q3 2025, compared to $7.4 million (1.1% of Net sales) in Q3 2024[212] - R&D was $24.3 million (1.1% of Net sales) for 9M 2025, compared to $23.1 million (1.1% of Net sales) in 9M 2024[212] Interest expense Interest expense remained flat at $39.0 million for Q3 2025 and decreased to $114.0 million for 9M 2025, primarily due to a lower average outstanding debt balance in the current year - Interest expense was $39.0 million for Q3 2025, flat compared to $38.5 million in Q3 2024[213] - For 9M 2025, interest expense was $114.0 million, down from $117.9 million in 9M 2024, due to a lower average outstanding debt balance[213] Loss on extinguishment/modification of debt The company recorded a $5.3 million loss on extinguishment/modification of debt for the nine months ended June 30, 2025, primarily due to the refinancing and extension of its Term Loan and Revolving Credit Facility in March 2025 - Loss on extinguishment/modification of debt was $5.3 million for 9M 2025, compared to $2.1 million for 9M 2024[214] - The majority of the fiscal 2025 loss resulted from the refinancing and extension of the $760 million Term Loan and $500 million Revolving Credit Facility in March 2025[214] Other items, net Other items, net, was an expense of $1.9 million for Q3 2025 and a benefit of $3.3 million for 9M 2025. The nine-month period in the prior year included a significant $29.3 million foreign currency exchange loss, primarily from the December 2023 Argentina economic reform Other Items, Net (in millions) | Component | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :-------- | :------ | :------ | :------ | :------ | | Interest income | $(0.2) | $(1.4) | $(2.0) | $(9.4) | | Foreign currency exchange loss/(gain) | $2.0 | $(0.3) | $(1.4) | $29.3 | | Pension cost other than service costs | — | $1.1 | — | $3.1 | | Loss on Sale of Argentina Bonds | — | — | — | $1.0 | | Acquisition and integration - TSA income | — | — | — | $(1.0) | | Other | $0.1 | $(4.4) | $0.1 | $(3.5) | | Total Other items, net | $1.9 | $(5.0) | $(3.3) | $19.5 | - The foreign currency exchange loss for 9M 2024 included $21.0 million from the December 2023 Argentina economic reform and Peso devaluation[216] Segment Results Both Batteries & Lights and Auto Care segments contributed to overall performance. Batteries & Lights saw strong organic net sales and profit growth driven by distribution gains and production credits. Auto Care experienced a slight organic net sales decline but improved organic segment profit due to Project Momentum savings, despite increased A&P investments Segment Net Sales Batteries & Lights Net Sales increased by 5.1% for Q3 2025 and 3.0% for 9M 2025, driven by organic growth and the APS NV acquisition. Auto Care Net Sales decreased by 1.1% for Q3 2025 and 1.9% for 9M 2025, primarily due to pricing declines, partially offset by volume gains Segment Net Sales Change (in millions) | Segment | Q3 2025 $ Change | Q3 2025 % Chg | 9M 2025 $ Change | 9M 2025 % Chg | | :--------------- | :--------------- | :------------ | :--------------- | :------------ | | Batteries & Lights | | | | | | Net sales - prior year | $509.1 | | $1,607.9 | | | Organic | $2.5 | 0.5 % | $41.6 | 2.6 % | | Acquisition impact | $20.8 | 4.1 % | $20.8 | 1.3 % | | Net sales - current year | $535.1 | 5.1 % | $1,655.5 | 3.0 % | | Auto Care | | | | | | Net sales - prior year | $192.3 | | $473.4 | | | Organic | $(1.7) | (0.9) % | $(4.4) | (0.9) % | | Net sales - current year | $190.2 | (1.1)% | $464.4 | (1.9)% | - Batteries & Lights organic net sales growth in Q3 2025 was due to increased volumes from new and expanded distribution (1.6%), partially offset by strategic pricing (1.1%)[223] - Auto Care organic net sales decline in Q3 2025 was due to pricing declines (2.9%), partially offset by increased volumes from new distribution, international expansion, and digital economy growth (2.0%)[224][225] Segment Profit Global segment profit increased by 17.1% for Q3 2025 and 4.6% for 9M 2025. Batteries & Lights organic segment profit grew by 21.4% for Q3 and 5.6% for 9M, driven by gross profit improvement from production credits and Project Momentum. Auto Care organic segment profit was flat for Q3 but increased by 15.1% for 9M, benefiting from Project Momentum savings despite increased A&P investments Segment Profit Change (in millions) | Segment | Q3 2025 $ Change | Q3 2025 % Chg | 9M 2025 $ Change | 9M 2025 % Chg | | :--------------- | :--------------- | :------------ | :--------------- | :------------ | | Batteries & Lights | | | | | | Segment profit - prior year | $129.4 | | $375.3 | | | Organic | $27.7 | 21.4 % | $20.9 | 5.6 % | | Acquisition impact | $0.4 | 0.3 % | $0.4 | 0.1 % | | Segment profit - current year | $158.8 | 22.7 % | $390.4 | 4.0 % | | Auto Care | | | | | | Segment profit - prior year | $26.8 | | $74.1 | | | Organic | — | — % | $11.2 | 15.1 % | | Segment profit - current year | $24.1 | (10.1)% | $79.8 | 7.7 % | | Total Segment Profit | | | | | | Segment profit - prior year | $156.2 | | $449.4 | | | Organic | $27.7 | 17.7 % | $32.1 | 7.1 % | | Acquisition impact | $0.4 | 0.3 % | $0.4 | 0.1 % | | Segment profit - current year | $182.9 | 17.1 % | $470.2 | 4.6 % | - Batteries & Lights organic segment profit increased due to higher organic net sales and improved gross profit from current year production credits and Project Momentum savings, partially offset by increased SG&A and A&P spending[230][233] - Auto Care organic segment profit was flat for Q3 2025, as improved gross profit was offset by increased SG&A and $3.2 million in A&P investment for the Podium Series launch[231] General Corporate General corporate and other expenses increased to $33.1 million for Q3 2025 and $91.0 million for 9M 2025, driven by higher legal fees, deferred compensation mark-to-market expenses, and compensation costs, partially offset by lower factoring fees General Corporate and Other Expenses (in millions) | Metric | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :----- | :------ | :------ | :------ | :------ | | General corporate and other expenses | $33.1 | $29.1 | $91.0 | $86.6 | | % of Net Sales | 4.6 % | 4.1 % | 4.3 % | 4.2 % | - The increase in general corporate expenses was driven by increased legal fees, higher mark-to-market expense on deferred compensation plans, and increased compensation costs, partially offset by a decline in factoring fees[235][236] Liquidity and Capital Resources The company's liquidity is supported by cash from operations and access to capital markets, with primary cash needs focused on operations, working capital, strategic investments, and debt reduction. Recent debt refinancing extended maturities, and the company remains in compliance with debt covenants. Cash flow from operating activities decreased significantly due to working capital changes, particularly increased inventories Overview Energizer's future cash needs will focus on operating activities, working capital, strategic investments, and debt reductions, funded by cash from operations and capital markets. The company refinanced its Term Loan and Revolving Credit Facility in March 2025, extending maturities to 2032 and 2030, respectively, while maintaining compliance with debt covenants - Primary future cash needs are for operating activities, working capital, strategic investments, and debt reductions[237] - At June 30, 2025, Energizer had $171.1 million in cash and cash equivalents, with approximately 89% held outside the U.S.[238] - In March 2025, the company extended its $760 million Senior Secured Term Loan to 2032 and its $500 million Revolving Credit Facility to 2030, with the transaction being leverage neutral[239] - As of June 30, 2025, $372.4 million remained available under the Revolving Facility, and the company was in compliance with debt covenants[241] Operating Activities Cash flow from operating activities decreased significantly to $85.6 million for the nine months ended June 30, 2025, from $260.7 million in the prior year, primarily due to a $169 million change in working capital, driven by increased inventories and higher accounts payable payments - Cash flow from operating activities was $85.6 million for 9M 2025, a decrease from $260.7 million in 9M 2024[242] - The change was primarily driven by a $169 million year-over-year change in working capital, resulting from approximately $130 million in increased inventory and $22 million in higher accounts payable payments[242] Investing Activities Net cash used by investing activities was $81.9 million for the nine months ended June 30, 2025, a slight decrease from $89.0 million in the prior year. This included capital expenditures of $69.1 million and $12.8 million for acquisitions, net of cash acquired. Total investing cash outflows of $80-90 million are anticipated for fiscal 2025 - Net cash used by investing activities was $81.9 million for 9M 2025, compared to $89.0 million for 9M 2024[243] - Investing activities included capital expenditures of $69.1 million and acquisitions, net of cash acquired, of $12.8 million for 9M 2025[243] - Total investing cash outflows of approximately $80-90 million are anticipated in fiscal 2025, including $25-35 million for Project Momentum IT systems[244] Financing Activities Net cash used by financing activities significantly decreased to $49.8 million for the nine months ended June 30, 2025, from $223.9 million in the prior year. This included $198.2 million in debt issuance proceeds, $221.0 million in debt payments, $118.4 million net increase in short-term debt, $62.6 million in common stock repurchases, and $66.6 million in dividends paid - Net cash used by financing activities was $49.8 million for 9M 2025, a decrease from $223.9 million in 9M 2024[245] - Key financing activities for 9M 2025 included $198.2 million cash proceeds from debt issuance, $221.0 million in debt payments, a $118.4 million net increase in short-term debt, $8.0 million in debt issuance costs, $62.6 million in common stock repurchases, and $66.6 million in dividends paid[247] - The company repurchased approximately 2.8 million shares for $62.6 million at an average price of $22.40 per share during 9M 2025, with 4.7 million shares remaining under authorization[248] - The Board of Directors declared quarterly cash dividends of $0.30 per share for all four quarters of fiscal 2025[245] Other Matters Accrued environmental costs were $10.3 million at June 30, 2025, with no material effect expected on capital or operating expenditures. The company has contractual commitments for long-term debt ($3,201.2 million) and future purchase obligations ($3.3 million), along with operating and finance lease payments - Accrued environmental costs were $10.3 million at June 30, 2025, with no material effect expected on capital and operating expenditures[251] - Long-term debt contractual commitment is $3,201.2 million, with $7.6 million due within the next twelve months[252] - Interest commitments are $673.0 million, with $137.8 million expected within the next twelve months[252] - Future purchase commitments for goods and services total $3.3 million, all due within the next twelve months[254] - Total future operating and finance lease payments are $151.5 million and $89.0 million, respectively, with $20.1 million and $4.2 million due within the next twelve months[256] [Item 3. Quantitative and