Energizer (US:ENR)2021-08-09 20:04Financial Data and Key Metrics Changes - The company reported a topline growth of nearly 10% driven by strong growth in the auto care business and international battery sales, partially offset by declines in the North America battery business [9][10] - Organic sales growth was 5.8%, with adjusted EPS increasing to $0.74, a nearly 50% increase year-over-year [10][25] - Adjusted EBITDA for the quarter was $144 million, up 7% compared to the prior year [25][30] Business Line Data and Key Metrics Changes - The auto care business experienced over 25% growth, while the international battery business also showed strong growth [10][26] - The Americas segment grew 4.7%, with auto care showing strong double-digit growth, while the international segment grew 9.1% [26] - The gross margin decreased by 160 basis points to 39.2% due to rising input costs and the lower margin profile of the auto care business [10][27] Market Data and Key Metrics Changes - Battery consumption was down 11.6% year-over-year but up 9.5% compared to 2019, indicating a recovery trend [16] - The auto care category grew 19% year-over-year and 21% compared to two years ago, driven by increased consumer engagement in DIY activities [17][19] - The company gained a 2.8 share point in the battery category due to increased distribution and visibility [16] Company Strategy and Development Direction - The company is focused on offsetting rising operating costs through cost reduction initiatives and pricing strategies [8][12] - Plans to repurchase $75 million of stock through an accelerated share repurchase program, indicating confidence in future growth [11] - The company is investing in inventory to mitigate supply chain disruptions and ensure high service levels during peak seasons [13][50] Management's Comments on Operating Environment and Future Outlook - Management noted that operating costs have risen rapidly and are expected to continue, with a focus on managing these pressures [13][30] - The company increased its full fiscal year outlook for net sales growth to 8% to 9% [10][32] - Management expressed confidence in the long-term growth prospects of their categories, driven by sustained changes in consumer behavior [15][36] Other Important Information - The CFO announced his retirement, with John Drabik set to take over the role effective October 1 [20][21] - The company has recognized approximately $124 million in synergies since its acquisitions, exceeding initial targets [28] Q&A Session Summary Question: Discussion on pricing cost offsets and gross margins - Management indicated that pricing actions are expected to provide minimal benefit in Q1, with more significant impacts anticipated in the second half of fiscal 2022 [39][40] Question: Insights on auto care season and consumer behavior - Management noted that consumer behaviors around cleaning and car care have persisted, contributing to elevated demand [45][46] Question: Reinvestment in SG&A and supply chain visibility - Management confirmed that current reinvestment plans are included in the outlook, with improved visibility into the supply chain leading to proactive inventory management [49][50] Question: CapEx expectations and inventory accumulation - Management indicated that CapEx is expected to return to historical levels of 1.5% to 2% of net sales, with inventory accumulation primarily in raw materials [59][60] Question: Share buyback program and competitive environment - Management explained that the share buyback program is part of a broader capital allocation strategy, with recent distribution gains coming primarily at the expense of Duracell [62][64]