Energizer (US:ENR)2022-02-07 18:40Financial Data and Key Metrics Changes - The company reported revenue of $846 million for Q1 2022, which was roughly flat compared to the prior year on an organic basis [9][22] - Adjusted gross margin decreased by 320 basis points to 37.5% compared to Q1 2021, primarily due to inflationary cost pressures [10][24] - Adjusted earnings per share for the quarter were $1.03, partially offsetting the gross margin decline [10] Business Line Data and Key Metrics Changes - The Battery category experienced a modest decline in organic sales, while Auto Care showed organic growth of 1.3% [22] - The Battery category grew by 9.7% in value and 7.8% in volume on a two-year stack basis, but saw a decline of 3.5% in value and 8.4% in volume in the three months ending November 2021 [12] - The Auto Care category value increased by 9% year-over-year and 20.6% on a two-year stack basis, driven by changing consumer behavior [14][15] Market Data and Key Metrics Changes - The company noted that the macro environment remains challenging, with rising costs in commodities, transportation, and labor impacting operations [16][30] - The company anticipates flat to low-single-digit growth in category value for the Battery segment moving forward [13] Company Strategy and Development Direction - The company is taking aggressive actions to offset rising costs, including additional pricing actions and cost containment measures [8][34] - The focus remains on gross margin recovery and continuous improvement initiatives to offset inflationary pressures [60][70] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed the outlook for net sales, adjusted earnings per share, and adjusted EBITDA for the full year, despite the challenging operating environment [8][35] - The company expects to operate with elevated safety stock for the foreseeable future due to ongoing supply chain disruptions [19] Other Important Information - The segment reporting has changed from geographical segments to product line segments, now categorized as Battery and Lighting Products and Auto Care [21] - The company completed an accelerated share repurchase program, purchasing nearly 2 million shares [29] Q&A Session Summary Question: Can you provide more detail on gross margin progression through the year? - Management indicated that pricing actions will be effective in the second quarter, with expectations for gross margin recovery in the back half of the year [36][41] Question: What are the competitive dynamics regarding pricing? - The company noted that competitive products, including private labels, are experiencing price increases in line with branded products due to inflation [46] Question: How is the company positioned for future acquisitions? - Management stated that M&A is of reduced interest at the moment due to leverage levels, with a focus on gross margin recovery first [60] Question: What is the outlook for the Auto Care segment? - Management expressed confidence in the Auto Care segment, citing healthy demand driven by an increasing number of vehicles and miles driven [63] Question: What percentage of the U.S. business is e-commerce? - The company indicated that approximately 17% of the Battery category goes through online sales, although specific breakdowns were not provided [77]