Energizer Holdings Inc.
02/05/2026 | Press release | Distributed by Public on 02/05/2026 12:44
Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion is meant to provide investors with information management believes is helpful in reviewing Energizer's historical-basis results of operations, operating segment results, and liquidity and capital resources. Statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") that are not historical may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should read the following MD&A in conjunction with the Consolidated (Condensed) Financial Statements (unaudited) and corresponding notes included herein.
All amounts discussed are in millions of U.S. dollars, unless otherwise indicated.
Forward-Looking Statements
This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future sales, gross margins, costs, earnings, cash flows, tax rates and performance of the Company. These statements generally can be identified by the use of forward-looking words or phrases such as "believe," "expect," "expectation," "anticipate," "may," "could," "will," "intend," "belief," "estimate," "plan," "target," "predict," "likely," "should," "forecast," "outlook," or other similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:
•Global economic and financial market conditions beyond our control might materially and negatively impact us.
•Competition in our product categories might hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers.
•Changes in the retail environment and consumer preferences could adversely affect our business, financial condition and results of operations.
•Loss or impairment of the reputation of our Company or our leading brands or failure of our marketing plans could have an adverse effect on our business.
•Loss of any of our principal customers could significantly decrease our sales and profitability.
•Our ability to meet our growth targets depends on successful product, marketing and operations innovation and successful responses to competitive innovation and changing consumer habits.
•We are subject to risks related to our international operations, including tariffs and currency fluctuations, which could adversely affect our results of operations.
•We must successfully manage the demand, supply, and operational challenges brought on by any disease outbreak, including epidemics, pandemics, or similar widespread public health concerns.
•If we fail to protect our intellectual property rights, competitors may manufacture and market similar products, which could adversely affect our market share and results of operations.
•Changes in production costs, including raw material prices and transportation costs, from tariffs, inflation or otherwise, have adversely affected, and in the future could erode, our profit margins and negatively impact operating results.
•Our reliance on certain significant suppliers subjects us to numerous risks, including possible interruptions in supply, which could adversely affect our business.
•Our business is vulnerable to the availability of raw materials, as well as our ability to forecast customer demand and manage production capacity.
•The manufacturing facilities, supply channels or other business operations of the Company and our suppliers may be subject to disruption from events beyond our control.
•Our future results may be affected by our operational execution, including our ability to achieve cost savings as a result of any current or future restructuring efforts.
•If our goodwill and indefinite-lived intangible assets become impaired, we will be required to record impairment charges, which may be significant.
•Sales of certain of our products are seasonal and adverse weather conditions during our peak selling seasons for certain auto care products could have a material adverse effect.
•We may use artificial intelligence in our business, which could result in reputational harm, competitive harm, and legal liability, and adversely affect our operations.
•A failure of a key information technology system could adversely impact our ability to conduct business.
•We rely significantly on information technology and any inadequacy, interruption, theft or loss of data, malicious attack, integration failure, failure to maintain the security, confidentiality or privacy of sensitive data residing on our systems or other security failure of that technology could harm our ability to effectively operate our business and damage the reputation of our brands.
•We may not be able to attract, retain and develop key employees, as well as effectively manage human capital resources.
•We have significant debt obligations that could adversely affect our business.
•Our credit ratings are important to our cost of capital.
•We may experience losses or be subject to increased funding and expenses related to our pension plans.
•The estimates and assumptions on which our financial projections are based may prove to be inaccurate, which may cause our actual results to materially differ from our projections, which may adversely affect our future profitability, cash flows and stock price.
•If we pursue strategic acquisitions, divestitures or joint ventures, we might experience operating difficulties, dilution, and other consequences that may harm our business, financial condition, and operating results, and we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses.
•Our business involves the potential for product liability claims, labeling claims, commercial claims and other legal claims against us, which could affect our results of operations and financial condition and result in product recalls or withdrawals.
•Our business is subject to increasing government regulations in both the U.S. and abroad that could impose material costs.
•Section 45X of the Internal Revenue Code contains production tax credits for certain battery components. Our ability to benefit from Section 45X production tax credits is not guaranteed and is dependent upon the federal government's ongoing implementation, guidance, regulations, or rulemakings.
•Increased focus by governmental and non-governmental organizations, customers, consumers and shareholders on sustainability issues, including those related to climate change, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
•We are subject to environmental laws and regulations that may expose us to significant liabilities and have a material adverse effect on our results of operations and financial condition.
In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those discussed herein and detailed from time to time in our other publicly filed documents, including those described under the heading "Risk Factors" in our Form 10-K filed with the Securities and Exchange Commission on November 18, 2025.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). However, management believes that certain non-GAAP financial measures provide users with additional meaningful comparisons to the corresponding historical or future period, and are used for management incentive compensation. These non-GAAP financial measures exclude items that are not reflective of the Company's on-going operating performance, such as restructuring and related costs, network transition costs, acquisition and integration costs and the loss on extinguishment/modification of debt. In addition, these measures help investors to analyze year-over-year comparability when excluding currency fluctuations as well as other Company initiatives that are not on-going. We believe these non-GAAP financial measures are an enhancement to assist investors in understanding our business and in performing analysis consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in methods and in the items being adjusted.
We provide the following non-GAAP measures and calculations, as well as the corresponding reconciliation to the closest GAAP measure:
Segment Profit. This amount represents the operations of our two reportable segments including allocations for shared support functions. General corporate and other expenses, Intangible amortization expense, Interest expense, Loss on extinguishment/modification of debt, Other items, net, restructuring and related costs, network transition costs and the charges related to acquisition and integration costs have all been excluded from segment profit.
Adjusted Net Earnings and Adjusted Diluted Net Earnings Per Common Share (EPS). These measures exclude the impact of the costs related to restructuring activities, network transition costs, acquisition and integration and the Loss on extinguishment/modification of debt.
Non-GAAP Tax Rate. This is the tax rate when excluding the pre-tax impact of restructuring activities, network transition activities, acquisition and integration and the loss on extinguishment/modification of debt, as well as the related tax impact for these items, calculated utilizing the statutory rate for the jurisdictions where the impact was incurred.
Organic. This is the non-GAAP financial measurement of the change in Net sales or Segment profit that excludes or otherwise adjusts for the Acquisition impact, the Change in Highly inflationary markets and impact of currency from the changes in foreign currency exchange rates as defined below:
Acquisition Impact. The Company completed the Advanced Power Solutions (APS) acquisition on May 2, 2025. These adjustments include the impact of the operations associated with the acquired branded battery business. The Company transitioned from these branded businesses to legacy brands by December 31, 2025. This does not include the impact of acquisition and integration costs associated with this acquisition.
Change in Highly inflationary Markets. The Company is presenting separately all changes in sales and segment profit from our Egypt and Argentina affiliates due to the designation of the economies as highly inflationary as of October 1, 2024 and July 1, 2018, respectively.
Impact of currency. The Company evaluates the operating performance of our Company on a currency neutral basis. The Impact of Currency is the change in foreign currency exchange rates year-over-year on reported results, which is calculated by comparing the value of current year foreign operations at the current period USD exchange rate versus the value of current year foreign operations at the prior period USD exchange rate. The impact of currency also includes (gains)/losses of currency hedging programs, and it excludes highly inflationary markets.
Adjusted Comparisons. Detail for Adjusted Gross margin and Adjusted SG&A as a percent of sales are also supplemental non-GAAP measures. These measures exclude the impact of costs related to restructuring activities, network transition activities and acquisition and integration. A&P as a percentage of net sales, excluding the APS business, excludes the Net sales from the APS branded business. No material A&P was spent on these sales.
Production Tax Credits under the Inflationary Reduction Act
On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law. The IRA includes multiple incentives to promote clean energy and energy storage manufacturing among other provisions. The tax credits are available from calendar year 2023 to 2032 subject to phase out beginning in calendar year 2030. In December 2024, the United States Treasury issued final regulations related to the Section 45X Advanced Manufacturing Production Credit ("production credit"), which provided updated definitions and additional guidance and examples on production credits. The production credit is a refundable tax credit for battery cells and modules manufactured in the United States, as well as a credit for electrode active material and other components produced for batteries.
Following the final regulations on Section 45X that became effective in December 2024, the Company began reviewing the potential applicability to our batteries and various components produced in the United States for application of the production credits. The Company achieved reasonable assurance over our ability to claim the production credits during the third quarter of fiscal 2025 and recognized a credit of $9.7 during the first fiscal quarter of 2026. No credit was recorded in the first fiscal quarter of 2025 as the Company had not yet achieved reasonable assurance over the ability to claim the production credits.
The Company expects future year credits to be approximately $55 to $65 based on current regulations prior to the phase out period. Amounts recognized in the Consolidated (Condensed) Financial Statements are based on Management's judgment and best estimate utilizing the most current guidance. The Company will continue to evaluate the effects of the IRA to the extent more guidance is issued and the relevant implications to our Consolidated (Condensed) Financial Statements. Actual results could differ from management's current estimate.
Acquisitions
On May 2, 2025, the Company acquired all the shares of APS. The acquisition provides the Company with additional production capacity in Europe as well as an expanded customer base. The acquisition included $64.6 of Net sales and $5.3 of Segment profit for the Batteries and Lights segment during the three months ended December 31, 2025.
The Company recorded $0.5 and $1.2 in SG&A of legal fees and other costs associated with this acquisition during the quarters ended December 31, 2025 and 2024, respectively.
Macroeconomic Environment
We continue to operate in an inflationary environment where macro-economic pressures and geopolitical instability are expected to continue in fiscal 2026. The risks of future negative impacts due to higher tariffs, transportation, logistical or supply constraints and higher commodity costs for certain raw materials remain present, and the Company could continue to experience corresponding incremental costs and gross margin pressures as well as currency headwinds throughout the year. Macro-economic pressures and geopolitical instability could also result in softening consumer demand, which could negatively impact the Company's forecasted financial results and operations.
We are continuing to assess our incremental tariff cost exposure in light of continuing changes to global tariff policies and the full extent of our potential mitigation strategies to offset the financial and operational impact of tariffs, as well as the associated timing to implement such strategies. As anticipated, the Company was negatively impacted in the first fiscal quarter by transitional tariff costs levied at higher than current rates, as well as the effects of ongoing tariffs and network inefficiencies as we rebalance our network. The Company extended Project Momentum into fiscal 2026 to help neutralize the impact of the tariffs. For the full fiscal year, the impact of tariffs will be largely offset through pricing, initiatives to relocate production capacity to the U.S. and lower tariff exposure locations, shifting and diversifying sourcing partners, investing internally to drive operational efficiencies, maximizing production credits and productivity initiatives.
Project Momentum Restructuring and Related Costs
In November 2022, the Board of Directors approved a profit recovery program, Project Momentum, which included an enterprise-wide restructuring focused on recovering operating margins, optimizing our manufacturing, distribution and global supply chain networks, and enhancing our organizational efficiency across the Company. In July 2023, the Company's Board of Directors approved an expansion of this program to include an additional year, which allowed for additional optimization of our battery manufacturing, distribution and global supply chain networks, further review of our global real estate footprint and the implementation of IT systems that allowed us to streamline our organization and fully execute the program. Following the Belgium Acquisition in the first quarter of fiscal 2024, the Company expanded the Project Momentum program and increased the savings and cost expectations, partially due to the impact the expanded manufacturing capacity had on the Company's battery network.
As of September 30, 2025, the Company successfully realized approximately $206 of savings from Project Momentum during the first three years of the program. The savings were primarily within COGS and SG&A on the Consolidated (Condensed) Statements of Earnings and Comprehensive Income. In the quarter ended December 31, 2024, the total Project Momentum restructuring and related pre-tax costs were $20.3. The expenses primarily consisted of severance and other benefit related costs, accelerated depreciation, asset write-offs, consulting costs, IT enablement, decommissioning, relocation, and other exit related costs. These costs were reflected within Cost of products sold and SG&A on the Consolidated (Condensed) Statements of Earnings and Comprehensive Income.
As a part of the planned Project Momentum decommissioning of certain facilities and relocation of multiple production and packaging lines, the Company incurred incremental costs related to network transition activities necessary to maintain business continuity. During the three months ended December 31, 2024, the Company incurred incremental costs of $14.0, primarily related to freight and third-party packaging support to ensure product availability for key customers during the movement and subsequent prove-in of the relocated lines. These costs were incurred within Cost of products sold on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income. The network transition activities as part of Project Momentum are complete and the Company does not anticipate significant network transition costs in fiscal 2026.
Project Momentum - Tariff Mitigation & Operational Efficiency Program
During the fourth quarter of fiscal 2025, the Company decided to extend the Project Momentum program to a fourth year to help offset the impact of tariffs and the challenging macroeconomic environment. This will be achieved specifically through network and sourcing changes to mitigate tariffs, a redesign of the European manufacturing network to best utilize the acquired APS NV manufacturing facility, the redesign of and investment in our U.S. based manufacturing footprint to increase operational efficiency and production, as well as overall SG&A cost reduction initiatives.
The total estimated restructuring and related pre-tax costs associated with the fourth year of the program is expected to be between $35.0 and $40.0 with additional restructuring related costs of $25.0 to $30.0 related to U.S. manufacturing efficiency initiatives and capital expenditures of $25.0 to $35.0. The estimated savings expected to be achieved through the fourth year of the program are $15.0 to $20.0, along with tariff mitigation and cost avoidance of $15.0 to $25.0. Since the plan was initially set, tariff rates have been slightly reduced resulting in a lower tariff mitigation impact from the program, with no material impact to the Company's overall run rate. Costs and savings are expected to be fully realized by September 30, 2026. Through December 31, 2025, the Company has realized approximately $2 of savings and $1 of cost avoidance.
During the quarter ended December 31, 2025, the Company incurred $30.9 of pre-tax restructuring and related costs associated with the initiatives. The expenses primarily consisted of severance and other benefit related costs, accelerated depreciation, asset write-offs, decommissioning and other exit related costs as well as restructuring related costs to optimize the Company's cost structure and operating efficiency in the U.S. as we exit less productive lines while still expanding our U.S. manufacturing production. These costs were reflected within Cost of products sold and SG&A on the Consolidated (Condensed) Statements of Earnings and Comprehensive Income. Refer to Note 4 Restructuring for further details.
Although the Company's restructuring costs are recorded outside of segment profit, if allocated to our reportable segments, the restructuring and related costs for the quarters ended December 31, 2025 would be incurred within the Batteries & Lights segment in the amount of $30.3 and the Auto Care segment in the amount of $0.6. The Company's restructuring and related costs for the quarter ended December 31, 2024 would be incurred within the Batteries & Lights segment in the amount of $18.7 and the Auto Care segment in the amount of $1.6.
Highlights / Operating Results
Financial Results (in millions, except per share data)
Energizer reported a first fiscal quarter Net loss of $3.4, or a loss of $0.05 per common share, compared to Net earnings of $22.3, or $0.30 per common share, in the prior year first fiscal quarter. Adjusted Diluted net earnings per common share was $0.31 for the first fiscal quarter as compared to $0.67 in the prior year quarter.
Net (loss)/earnings and Diluted net (loss)/earnings per common share for the time periods presented were impacted by certain items related to restructuring and related costs, network transition costs, acquisition and integration costs and the Loss on extinguishment/modification of debt as described in the tables below. The impact of these items is provided below as a reconciliation of Net (loss)/earnings and Diluted net (loss)/earnings per common share to Adjusted Net earnings and Adjusted Diluted net earnings per common share, which are non-GAAP measures. See disclosure on Non-GAAP Financial Measures above.
| For the Quarters Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net (loss)/earnings | $ | (3.4) | $ | 22.3 | |||||||
| Pre-tax adjustments | |||||||||||
| Restructuring and related costs (1) | 30.9 | 20.3 | |||||||||
| Network transition costs (2) | - | 14.0 | |||||||||
| Acquisition and integration (3) | 0.5 | 1.2 | |||||||||
| Loss on extinguishment/modification of debt | 0.9 | 0.1 | |||||||||
| Total adjustments, pre-tax | $ | 32.3 | $ | 35.6 | |||||||
| Total adjustments, after tax (4) | $ | 24.7 | $ | 27.1 | |||||||
| Adjusted Net earnings (4) | $ | 21.3 | $ | 49.4 | |||||||
| Diluted net (loss)/earnings per common share | $ | (0.05) | $ | 0.30 | |||||||
|
Adjustments(per common share)
|
|||||||||||
| Restructuring and related costs | 0.34 | 0.21 | |||||||||
| Network transition costs | - | 0.15 | |||||||||
| Acquisition and integration | 0.01 | 0.01 | |||||||||
| Loss on extinguishment/modification of debt | 0.01 | - | |||||||||
| Adjusted Diluted net earnings per diluted common share | $ | 0.31 | $ | 0.67 | |||||||
| Weighted average shares of common stock - Diluted | 68.4 | 73.2 | |||||||||
| Adjusted Weighted average shares of common stock - Diluted (5) | 69.3 | 73.2 | |||||||||
(1) Restructuring and related costs were incurred as follows:
| For the Quarters Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cost of products sold - Restructuring | $ | 9.2 | $ | 9.4 | |||||||
| Cost of products sold - U.S. operating efficiency project | 6.1 | - | |||||||||
| SG&A - Restructuring costs | 15.6 | 4.8 | |||||||||
| SG&A - IT Enablement | - | 6.1 | |||||||||
| Total Restructuring and related costs | $ | 30.9 | $ | 20.3 | |||||||
(2) This represents incremental network transition costs, primarily related to freight and third-party packaging support, to maintain business continuity and service our customers as the Company decommissions certain facilities and relocates production and packaging lines as part of Project Momentum. These costs were recorded in COGS on the Consolidated (Condensed) Statement of Earnings.
(3) Acquisition and integration costs were recorded in SG&A in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income.
(4) The effective tax rate for the Adjusted Net earnings and Adjusted Diluted EPS for the quarters ended December 31, 2025 and 2024 was 22.5% and 24.8%, respectively, as calculated utilizing the statutory rate for the jurisdictions where the costs were incurred.
(5) For the quarter ended December 31, 2025, the Adjusted Weighted average shares of common stock - Diluted includes the dilutive impact of our outstanding performance shares and restricted stock as they are dilutive to the calculation.
Highlights
| Total Net sales | For the Quarter Ended December 31, 2025 | ||||||||||
| $ Change | % Chg | ||||||||||
| Net sales - prior year | $ | 731.7 | |||||||||
| Organic | (31.2) | (4.3) | % | ||||||||
| Acquisition impact | 64.6 | 8.8 | % | ||||||||
| Change in highly inflationary markets | 0.1 | - | % | ||||||||
| Impact of currency | 13.7 | 2.0 | % | ||||||||
| Net Sales - current year | $ | 778.9 | 6.5 | % | |||||||
See non-GAAP measure disclosures above.
Net saleswere $778.9 for the first fiscal quarter of 2026, an increase of $47.2 as compared to the prior year quarter. Organic Net sales declined 4.3%, primarily driven by the following items:
•Volumes declined 4.5% due to softer consumer demand in the U.S. across both segments, and higher storm activity in the prior year, partially offset by Batteries & Lights distribution gains and growth in ecommerce; and
•Pricing increases of 0.2% driven by tariffs and innovation, primarily in the Batteries & Lights segment, partially offset the volume declines.
The APS acquisition completed on May 2, 2025 contributed $64.6 to Net sales.
Gross margin percentage on a reported basis for the first fiscal quarter of 2026 was 32.9%, compared to 36.8% in the prior year. For the quarter ended December 31, 2025, excluding restructuring and related costs in the current and prior year of $15.3 and $9.4, respectively, and prior year network transition costs of $14.0, Adjusted Gross margin was 34.9% compared to 40.0% in the prior year.
| For the Quarter Ended December 31, 2025 | |||||
| Gross margin - FY'25 Reported | 36.8 | % | |||
| Prior year impact of restructuring and related costs and network transition costs | 3.2 | % | |||
| Gross margin - FY'25 Adjusted | 40.0 | % | |||
| FY26 production credits | 1.4 | % | |||
| Pricing | 0.2 | % | |||
| Tariffs | (2.9) | % | |||
| Acquisition impact | (1.7) | % | |||
| Product mix | (1.5) | % | |||
| Product cost impacts | (0.8) | % | |||
| Currency impacts, including highly inflationary markets | 0.2 | % | |||
|
Gross margin - FY'26 Adjusted
|
34.9 | % | |||
| Current year impact of restructuring and related costs | (2.0) | % | |||
| Gross margin - FY'26 Reported | 32.9 | % | |||
Adjusted Gross margin decline was driven by increased input costs from production inefficiencies associated with rebalancing our network, increased tariff costs, unfavorable product mix and the lower margin profile of the APS business. These declines were partially offset by the production tax credit of $9.7 and benefits from price increases implemented to offset tariff impacts.
SG&Awas $149.3 in the first fiscal quarter of 2026, or 19.2% of Net sales, as compared to $131.3, or 17.9% of Net sales, in the prior year period. Included in SG&A during the first fiscal quarter of 2026 and 2025 were acquisition and integration costs of $0.5 and $1.2, respectively, and restructuring and related costs of $15.6 and $10.9, respectively. Excluding these items, adjusted SG&A was $133.2, or 17.1% of Net sales in the first fiscal quarter of 2026, as compared to $119.2, or 16.3% of Net sales in the prior year period. The year-over-year dollar increase was primarily driven by increased SG&A from the APS business of $6.8, investment in digital transformation and growth initiatives, as well as increased legal fees, recycling fees and stock compensation expense. The increase was partially offset by Project Momentum savings of approximately $2 in the quarter.
Advertising and sales promotion expense (A&P)was $49.2, or 6.3% of net sales, in the first fiscal quarter of 2026, as compared to $53.4, or 7.3% of Net sales, in the first fiscal quarter of 2025. Excluding the impact of the APS business, A&P expense was 6.9% of Net sales in the current year.
R&Dwas $7.8, or 1.0% of Net sales, for the quarter ended December 31, 2025, as compared to $8.0, or 1.1% of Net sales, in the prior year comparative period.
Interest expense was $39.1 for the first fiscal quarter of 2026, compared to $37.0 for the prior year comparative period. The increase in interest expense was due to a higher average debt balance in the current year quarter.
Loss on extinguishment/modification of debtwas $0.9 and $0.1 for the first fiscal quarters of 2026 and 2025, respectively, related to the Company's early payment of $90.0 and $22.0, respectively, outstanding on the term loan.
Other items, net was expense of $1.1 and a benefit of $5.0 for the first fiscal quarters of 2026 and 2025, respectively.
| For the Quarters Ended December 31, | |||||||||||
| Other items, net | 2025 | 2024 | |||||||||
| Interest income | $ | (0.7) | $ | (1.2) | |||||||
| Foreign currency exchange loss/(gain) | 1.3 | (3.8) | |||||||||
| Pension cost other than service costs | 0.5 | - | |||||||||
| Total Other items, net | $ | 1.1 | $ | (5.0) | |||||||
The effective tax rateon a year to date basis was a benefit of 29.2% as compared to expense of 25.9% in the prior year.
Excluding the impact of restructuring and related costs, network transition costs, acquisition and integration costs and the Loss on extinguishment/modification in debt, the year to date adjusted effective tax rate was 22.5% as compared to 24.8% in the prior year. The current year rate is lower due to the production tax credits recorded in the current year.
Segment Results
Operations for Energizer are managed via two product segments: Batteries & Lights and Auto Care. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses (including share-based compensation costs), amortization of intangibles, acquisition and integration activities, restructuring and related costs, network transition costs and other items determined to be corporate in nature. Financial items, such as interest income and expense and the loss on extinguishment/modification of debt, other items, net, are managed on a global basis at the corporate level. The exclusion of these costs from segment results reflects management's view on how it evaluates segment performance.
Energizer's operating model includes a combination of standalone and shared business functions between the product segments, varying by country and region of the world. Shared functions include the sales and marketing functions, as well as human resources, IT and finance shared service costs. Energizer applies a fully allocated cost basis, in which shared business functions are allocated between segments. Such allocations are estimates, and may not represent the costs of such services if performed on a standalone basis.
| Segment Net Sales |
Quarter Ended December 31, 2025
|
|||||||||||||
| $ Change | % Chg | |||||||||||||
| Batteries & Lights | ||||||||||||||
| Net sales - prior year | $ | 632.4 | ||||||||||||
| Organic | (24.3) | (3.8) | % | |||||||||||
| Acquisition impact | 64.6 | 10.2 | % | |||||||||||
| Change in highly inflationary markets | 0.2 | - | % | |||||||||||
| Impact of currency | 12.3 | 1.9 | % | |||||||||||
| Net sales - current year | $ | 685.2 | 8.3 | % | ||||||||||
| Auto Care | ||||||||||||||
| Net sales - prior year | $ | 99.3 | ||||||||||||
| Organic | (6.9) | (6.9) | % | |||||||||||
| Change in highly inflationary markets | (0.1) | (0.1) | % | |||||||||||
| Impact of currency | 1.4 | 1.4 | % | |||||||||||
| Net sales - current year | $ | 93.7 | (5.6) | % | ||||||||||
| Total Net Sales | ||||||||||||||
| Net sales - prior year | $ | 731.7 | ||||||||||||
| Organic | (31.2) | (4.3) | % | |||||||||||
| Acquisition impact | 64.6 | 8.8 | % | |||||||||||
| Change in highly inflationary markets | 0.1 | - | % | |||||||||||
| Impact of currency | 13.7 | 2.0 | % | |||||||||||
| Net sales - current year | $ | 778.9 | 6.5 | % | ||||||||||
Results for the Quarter Ended December 31, 2025
Batteries & Lights reported Net Sales increased 8.3% as compared to the prior year period driven by the APS Net sales of $64.6, or 10.2%. Organic net sales declined $24.3, or 3.8%, for the first fiscal quarter due to decreased volumes from softer consumer demand in the U.S. in October and November and higher storm activity in the prior year, partially offset by distribution gains and ecommerce (approximately 4.5%). Pricing increases (approximately 0.7%) from tariffs and innovation partially offset the volume decline.
Auto Care reported Net Sales decreased 5.6% as compared to the prior year period, driven by an organic net sales decline of $6.9, or 6.9%. The decline was driven by volume declines due to broader consumer softness in the U.S. and lapping international distribution gains in the prior year (approximately 4.6%), as well as a shift in product mix in the quarter (approximately 2.3%).
| Segment Profit |
Quarter Ended December 31, 2025
|
||||||||||
| $ Change | % Chg | ||||||||||
| Batteries & Lights | |||||||||||
| Segment profit - prior year | $ | 119.3 | |||||||||
| Organic | (23.0) | (19.3) | % | ||||||||
| Acquisition impact | 5.3 | 4.4 | % | ||||||||
| Change in highly inflationary markets | (0.1) | (0.1) | % | ||||||||
| Impact of currency | 4.2 | 3.6 | % | ||||||||
| Segment profit - current year | $ | 105.7 | (11.4) | % | |||||||
| Auto Care | |||||||||||
| Segment profit - prior year | 20.5 | ||||||||||
| Organic | (12.1) | (59.0) | % | ||||||||
| Change in highly inflationary markets | (0.1) | (0.5) | % | ||||||||
| Impact of currency | 0.8 | 3.9 | % | ||||||||
| Segment profit - current year | $ | 9.1 | (55.6) | % | |||||||
| Total Segment Profit | |||||||||||
| Segment profit - prior year | 139.8 | ||||||||||
| Organic | (35.1) | (25.1) | % | ||||||||
| Acquisition impact | 5.3 | 3.8 | % | ||||||||
| Change in highly inflationary markets | (0.2) | (0.1) | % | ||||||||
| Impact of currency | 5.0 | 3.5 | % | ||||||||
| Segment profit - current year | $ | 114.8 | (17.9) | % | |||||||
Refer to Note 5, Segments, in the Consolidated (Condensed) Financial Statements for a reconciliation from segment profit to (loss)/earnings before income taxes.
Results for the Quarter Ended December 31, 2025
Global reported segment profit declined 17.9% as compared to the prior year. Organic profit declined was $35.1, or 25.1%, driven by the decline in organic net sales and increased input costs and SG&A in the current year. This is partially offset by the decline in A&P year over year.
Batteries & Lights reported segment profit decreased by 11.4% as compared to the prior year. Organic segment profit decreased by $23.0, or 19.3%, due to a decline in organic net sales as well as the increased input costs from the direct impact of tariffs, the temporary costs as we transitioned the network to address tariff headwinds, and the inclusion of the lower-margin APS business. This was partially offset by a decline in A&P spending year over year.
Auto Care reported segment profit decreased by 55.6% as compared to the prior year. Organic segment profit declined $12.1, or 59.0%, due to a decline in organic net sales as well as increased input costs from tariffs. This decline in gross margin was slightly offset by a decline in SG&A and A&P spending as compared to the prior year.
| General Corporate | For the Quarters Ended December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| General corporate and other expenses | $ | 33.1 | $ | 27.4 | |||||||
| % of Net Sales | 4.2 | % | 3.7 | % | |||||||
For the quarter ended December 31, 2025, general corporate and other expenses were $33.1, an increase of $5.7 as compared to the prior year comparative period driven by increased stock compensation and legal fees.
Liquidity and Capital Resources
Energizer's primary future cash needs will be centered on operating activities, working capital, strategic investments and debt reductions. We believe that our future cash from operations, together with our access to capital markets, will provide adequate resources to fund our operating and financing needs. Our access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) our financial condition and prospects, (ii) for debt, our credit rating, (iii) the liquidity of the overall capital markets and (iv) the current state of the economy. There can be no assurances that we will continue to have access to capital markets on terms acceptable to us. See the "Risk Factors" section of our Annual Report on Form 10-K for the year ended September 30, 2025 filed with the Securities and Exchange Commission on November 18, 2025 for additional information.
Cash is managed centrally with net earnings reinvested locally and working capital requirements met from existing liquid funds. At December 31, 2025, Energizer had $214.8 of cash and cash equivalents, approximately 90% of which was held outside of the U.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations.
The Company has a Senior Secured Term Loan (Term Loan) of $765.7 due in 2032 and a $500 Revolving Credit Facility (Revolving Facility) due in 2030. Borrowings under the Term Loan require quarterly principal payments at a rate of 0.25% of the original principal balance, or $2.2. Borrowings under the Revolving Facility bear interest at a rate per annum equal to, at the option of the Company, adjusted SOFR or the Base Rate (as defined in the Credit Agreement) then in effect plus the applicable margin. The Term Loan bears interest at a rate per annum equal to SOFR plus the applicable margin. During the first fiscal quarter, the Company paid down $92.2 of borrowings on the Term Loan.
As of December 31, 2025, the Company had no outstanding borrowings under the Revolving Facility and $7.6 of outstanding letters of credit. Taking into account outstanding letters of credit, $492.4 remained available under the Revolving Facility as of December 31, 2025. The Company is in compliance with the provisions and covenants associated with its debt agreements, and expects to remain in compliance throughout the next twelve months.
Operating Activities
Cash flow from operating activities was $149.5 in the three months ended December 31, 2025, as compared to $77.0 in the prior year period. This change in cash flows of $72.5 was primarily driven by working capital changes, year-over-year, of approximately $63 as well as the net refund from production tax credits received in the first fiscal quarter of $34.6, partially offset by the decline in net earnings of $25.7. The working capital change was primarily a result of a decrease in year-over-year inventory of approximately $87 as the Company has worked through much of the plastic free packaging transition build up and is working to get inventory to more normalized levels after the transition and tariff mitigation initiatives.
Investing Activities
Net cash used by investing activities was $25.3 and $34.7 for the three months ended December 31, 2025 and 2024, respectively, and primarily related to capital expenditures during the period.
Total investing cash outflows of approximately $75 to $85 are anticipated in fiscal 2026 for capital expenditures. This includes normal capital replacement, product development and cost reduction investments, as well as approximately $25 to $35 of investment from Project Momentum Tariff and Operational Efficiency initiatives.
Financing Activities
Net cash used by financing activities was $145.8 for the three months ended December 31, 2025 as compared to $56.1 in the prior fiscal year period. For the three months ended December 31, 2025, cash used by financing activities consists of the following:
•Payments of debt with maturities greater than 90 days of $92.5, primarily related to the Term Loan payments;
•Net decrease in debt with original maturities of 90 days or less of $16.0 primarily related to international borrowings;
•Debt issuance costs from the Senior Note offering which was finalized in the fourth fiscal quarter of 2025 of $1.5;
•Common stock repurchases of $4.5 at an average price of $18.26 per share (see below);
•Dividends paid on common stock of $23.3 (see below); and
•Taxes paid for withheld share-based payments of $8.0.
For the three months ended December 31, 2024, cash used by financing activities consisted of the following:
•Payments of debt with maturities greater than 90 days of $25.2 primarily related to term loan principal payments;
•Net increase in debt with original maturities of 90 days or less of $0.2 primarily related to international borrowings;
•Dividends paid on common stock of $23.6; and
•Taxes paid for withheld share-based payments of $7.5.
Dividends and Share Repurchases
On November 10, 2025, the Board of Directors declared a cash dividend for the first quarter of fiscal 2026 of $0.30 per share of common stock, payable on December 10, 2025. On January 30, 2026, the Board of Directors declared a cash dividend for the second quarter of fiscal 2026 of $0.30 per share of common stock, payable on March 11, 2026, to all shareholders of record as of the close of business on February 18, 2026.
In November 2024, the Company's Board of Directors put in place an authorization for the Company to acquire up to 7.5 million shares of its common stock, which replaced the Company's prior authorization. During the quarter ended December 31, 2025, the Company repurchased approximately 245,000 shares for $4.5, at an average price of $18.26 per share, under this authorization. The Company had 3.3 million shares remaining under this authorization at December 31, 2025.
Future share repurchases, if any, will be determined by the Company based on its evaluation of the market conditions, capital allocation objectives, legal and regulatory requirements and other factors. Share repurchases may be effected through open market purchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934.
The timing, declaration, amount and payment of future dividends to shareholders or repurchases of the Company's Common stock will fall within the discretion of our Board of Directors. The Board's decisions regarding the payment of dividends or repurchase of shares will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, covenants associated with certain of our debt service obligations, industry practice, legal requirements, regulatory constraints and other factors that our Board of Directors deems relevant.
Other Matters
Environmental Matters & Legal Matters
Accrued environmental costs at December 31, 2025 were $9.8. It is difficult to quantify with certainty the cost of environmental matters, particularly remediation and future capital expenditures for environmental control equipment. Total environmental capital expenditures and operating expenses are not expected to have a material effect on our total capital and operating expenditures, earnings or competitive position. However, current environmental spending estimates could be modified as a result of changes in our plans or our understanding of underlying facts, changes in legal requirements, including any requirements related to global climate change, or other factors.
Contractual Obligations
The Company believes it has sufficient liquidity to fund its operations and meet its short-term and long-term obligations. The Company's material future obligations include the contractual and purchase commitments described below:
The Company has a contractual commitment to repay its long-term debt of $3,304.0 based on the defined terms of our debt agreements. Within the next twelve months, the Company is obligated to pay $8.6 of this total debt. Our interest commitments based on the current debt balance and SOFR rate on drawn debt at December 31, 2025 is $715.7, with $142.7
expected within the next twelve months. The Company has entered into an interest rate swap agreement that fixed the variable benchmark component (SOFR) on $500.0 of variable rate debt. Refer to Note 9, Debt, for further details.
The Company has an obligation to pay a mandatory transition tax of $7.1 due in the second fiscal quarter of fiscal 2026.
Additionally, Energizer has material future purchase commitments for goods and services which are legally binding and that specify all significant terms including price and/or quantity. Total future commitments for these obligations over the next 15 years is $15.2, of which $3.9 such amount is due within the next twelve months. Refer to Note 15, Legal proceeding/contingencies and other obligations, for additional details.
Energizer is also party to various service and supply contracts that generally extend approximately one to three months. These arrangements are primarily individual, short-term purchase orders for routine goods and services at market prices, which are part of our normal operations and are reflected in historical operating cash flow trends. These contracts can generally be canceled at our option at any time. We do not believe such arrangements will adversely affect our liquidity position.
Finally, Energizer has operating and financing leases for real estate, equipment, and other assets that include future minimum payments with initial terms of one year or more. Total future operating and finance lease payments at December 31, 2025 are $140.1 and $87.9, respectively. Within the next twelve months, operating and finance lease payments are expected to be $17.4 and $4.6, respectively.
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