Energizer (ENR)2024-05-07 16:55Financial Data and Key Metrics Changes - The company reported a 13% adjusted earnings growth in the quarter, driven by recovery in the battery category and strong performance in auto [44] - Adjusted gross margin increased by 260 basis points to 40.5%, aided by Project Momentum savings and lower input costs [61] - Adjusted EBITDA and adjusted earnings per share were 0.72, representing a 13% increase year-over-year [62] Business Line Data and Key Metrics Changes - Battery organic net sales decreased by approximately 4% in the quarter, consistent with expectations, but showed improving trends from the prior quarter [52] - Auto Care organic net sales increased over 2%, with the appearance business growing nearly 9% year-over-year [54] - Segment profit for Auto Care expanded by nearly 600 basis points, returning to pre-pandemic profitability [83] Market Data and Key Metrics Changes - U.S. category volume increased by 2.8% in the latest 13 weeks, with healthy trends in measured channels and online [81] - Global battery volume grew nearly 3.5%, a significant improvement from a decline of 5.5% in the prior year [45] - Private label value and volume share declined globally in the quarter, contrasting with growth in other consumer categories [53] Company Strategy and Development Direction - The company is focused on margin improvement, free cash flow generation, and debt pay down, with a long-term view on restoring stability in the supply chain [68] - Project Momentum has been a key driver of efficiencies, with total savings reaching nearly 425 million of debt over the past seven quarters, reducing leverage significantly [63] - The company anticipates Project Momentum to drive savings of 65 million for the full fiscal year [92] - The weighted average cost of debt is around 4.6%, with 96% fixed and no meaningful maturities until 2027 [63] Q&A Session Summary Question: Visibility into Q3 and growth drivers - Management highlighted confidence in returning to growth due to stability in supply chain and improving trends in home center and non-track channels [69] Question: Promotional strategies and their impact - Management noted a healthy promotional environment that is consistent with pre-pandemic levels, driving volume growth [96] Question: Distribution gains and market expansion - Management discussed successful distribution gains in various markets, including the U.S. and internationally, which will contribute to growth in the back half of the year [151] Question: Commodities outlook and gross margin normalization - Management indicated that raw material input costs have turned positive, expecting a positive driver to gross margin for the full year [108] Question: Long-term debt reduction strategy - Management reiterated the focus on reducing leverage below 5x by year-end, with a longer-term goal of reaching below 4x [160]