Energizer Holdings, Inc. (ENR) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several positive aspects, such as expected double-digit EPS growth, strong innovation pipeline, and operational efficiency improvements. Despite some transitional challenges, the company anticipates a strong acceleration in sales and earnings later in the year. The Q&A section highlights positive drivers like APS customer transition and gross margin improvement. While there are concerns about tariffs and input costs, management is confident in its strategies. With the absence of major negative factors and a focus on growth and efficiency, the sentiment leans positive.
Key Financial Performance
Organic Growth Over $30 million of organic growth expected in the year, primarily in the third and fourth quarters, driven by the APS to Energizer brand transition.
Gross Margin Expansion Over 300 basis points of gross margin expansion from Q1 to Q2, with an additional 300 to 400 basis points anticipated by year-end, attributed to supply chain realignment and other strategic actions.
Debt Reduction Over $100 million of debt paid down in the first quarter, supported by robust cash generation.
Capital Returned to Shareholders Nearly $28 million returned to shareholders through dividends and share repurchases, reflecting the durability of the cash flow model.
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Operating Highlights
Innovation in Batteries, Lights, and Auto Care: Advanced innovation across these categories to strengthen product offerings.
Distribution Strengthening: Enhanced distribution across value and premium brands with key U.S. retailers.
Supply Chain Realignment: Substantially completed realignment to restore margins, contributing to expected gross margin expansion of over 300 basis points from Q1 to Q2 and an additional 300-400 basis points by year-end.
Debt Reduction: Paid down over $100 million of debt, reinforcing financial stability.
Cash Flow and Shareholder Returns: Generated robust cash flow, returning nearly $28 million to shareholders through dividends and share repurchases.
APS to Energizer Brand Transition: Secured final customer decisions on this transition, expected to contribute over $30 million of organic growth in fiscal 2026, primarily in Q3 and Q4.
Capital Allocation Strategy: Focused on reducing debt, maintaining an attractive dividend, and executing share repurchases to maximize long-term shareholder value.
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Risk or Challenges
Tariffs Impact on Margins: Margins have been pressured by tariffs, which is a challenge the company is working to rebuild.
Supply Chain Realignment: The company has substantially completed supply chain realignment, which is central to restoring margins, indicating prior disruptions or inefficiencies.
Debt Levels: The company is prioritizing debt reduction, which suggests that high debt levels could be a financial risk.
Market Conditions for Share Repurchases: Share repurchases are dependent on market conditions, which could pose a challenge if conditions are unfavorable.
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Guidance & Outlook
Revenue Growth: The transition from APS to Energizer brand is expected to contribute over $30 million of organic growth in fiscal year 2026, primarily in the third and fourth quarters.
Gross Margin Expansion: The company anticipates over 300 basis points of gross margin expansion from Q1 to Q2, with an additional 300 to 400 basis points by year-end.
Earnings Growth: Meaningful earnings growth is expected in the back half of fiscal year 2026.
Capital Allocation Strategy: The company plans to prioritize reducing debt, maintaining an attractive dividend, and conducting share repurchases when market conditions are favorable.
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Shareholder Return Plan
Capital Returned to Shareholders: Nearly $28 million was returned to shareholders through dividends and share repurchases.
Dividend Policy: The company intends to maintain an attractive dividend, reflecting confidence in ongoing cash generation.
Share Repurchase Program: Share repurchases are planned when market conditions create attractive entry points.
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Key Q&A
Q:How is the company viewing the consumer backdrop and category trends one quarter into the year?
A:The company anticipated a transitional start to the year due to softening consumer trends in October and November, hurricane-driven demand from the previous year, and elevated tariff pressures. Despite these challenges, consumer demand has stabilized, with a strong rebound in December volumes in the U.S. The company has strengthened its in-store presence and repositioned its cost structure, expecting a strong acceleration of net sales and earnings in the back half of the year.
Q:What is the impact of the recent winter storm activity on the company's guidance?
A:The storm volume in the U.S. was a benefit to POS, with category value increasing by over 50%. However, it is too early to quantify the impact on the business as the company needs to work through replenishment orders, disrupted shipments, and retailer inventory levels. More details will be provided in the Q2 earnings call.
Q:What are the key drivers for the company's top-line growth in the back half of the year?
A:Key drivers include the transition of APS customers to Energizer branded products, contributing $30 million or 200 basis points of organic growth; increased distribution leveraging innovation and the full portfolio across brick-and-mortar and e-commerce, contributing 400 to 500 basis points of growth; and carryover pricing and targeted tactical pricing, contributing 50 to 100 basis points of growth.
Q:What are the company's expectations for gross margin improvement throughout the year?
A:The company expects a 300 basis point sequential improvement in gross margin in Q2, with continued expansion in Q3 and Q4. The plan is to return to low 40% gross margins by addressing transitional product cost impacts, leveraging targeted pricing, and optimizing production credits.
Q:How is the company addressing the volatile and uncertain environment in its guidance?
A:The company builds flexibility into its plans to deal with uncertainty and has developed the ability to read and react to situations, adjusting plans accordingly. Management is confident in delivering the financials laid out, even if the year evolves differently than forecasted.
Q:What factors contributed to the lower-than-expected gross profit despite strong battery performance?
A:The lower gross profit was due to higher tariffs (300 basis points impact), the APS transition (200 basis points drag), and transitional product cost impacts (100 basis points). These factors are expected to improve as the year progresses.
Q:What is the company's outlook for market share and distribution in calendar '26?
A:The company expects to increase its distribution footprint, both in breadth and quality, leveraging its full portfolio from value to premium. It has sold in innovation in Batteries and Auto Care, which will be visible in Q2 and Q3. The company has gained share in recent reporting periods and expects this trend to continue.
Q:How is the company managing pricing and private label competition in the battery category?
A:The company is leveraging its full portfolio to meet consumer needs, including value and premium brands. While private label has grown at certain retailers, the company gained share over the holiday period and is implementing plans to compete effectively with private label offerings.
Q:What is the company's leverage target for the end of the year?
A:The company aims to achieve a leverage ratio of 5 or slightly below by the end of the year, prioritizing debt paydown with a target of $150 million to $200 million.
Q:Is the company considering M&A opportunities while focusing on deleveraging?
A:The company is open to M&A opportunities but will only consider deals that are leverage neutral and do not impact its debt paydown trajectory. Any deals would likely be on the smaller side.
Q:What is the difference in impact between winter storms and summer hurricanes on the company's business?
A:Winter storms tend to have a broader impact across the country, while hurricanes are more isolated. The response and business impact differ, but the company ensures it can deliver products when consumers need them.
Q:What is the impact of elevated tariff rates on the company's EBITDA and gross margins?
A:Elevated tariff rates had a 300 basis point impact on gross margins in Q1. The company expects this impact to decrease as the year progresses, with pricing and tax credits offsetting some of the effects.
Q:What is the company's outlook on input costs and pricing adjustments?
A:Input costs, particularly for zinc, lithium, silver, and refrigerant gases, are slightly negative. The company has over 90% of zinc costs fixed for '26 and has taken targeted pricing actions, especially in Auto Care, to address cost impacts. The trends are manageable for '26 but may require further adjustments in '27.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the exact impact of the recent winter storm activity on the company's guidance, stating it was too early to quantify the effects. Additionally, there was some lack of clarity on the precise tariff impact on Q1 EBITDA, with a promise to follow up with exact numbers later.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Battery category
Conference Instructions
Conference today
Instructions reminder
LaVigne President
Officer Executive
Officer moment
President Investor
President Treasurer
Relations Treasurer
Relations statement
Treasurer Conference
Treasurer Investor
addition release
comment question
comparison relate
conference Vice
deck website
estimate Battery
moment opening
name conference
opening comment
question replay
relate period
release remark
remark slide
reminder conference
result Vice
today Conference
today LaVigne
ENR Transcript
Energizer Holdings, Inc. (ENR) Q1 2026 Earnings Call Transcript
Positive2-5
The earnings call reveals several positive aspects, such as expected double-digit EPS growth, strong innovation pipeline, and operational efficiency improvements. Despite some transitional challenges, the company anticipates a strong acceleration in sales and earnings later in the year. The Q&A section highlights positive drivers like APS customer transition and gross margin improvement. While there are concerns about tariffs and input costs, management is confident in its strategies. With the absence of major negative factors and a focus on growth and efficiency, the sentiment leans positive.
Energizer Holdings, Inc. (ENR) Q4 2025 Earnings Call Transcript
Unknown11-18
The earnings call presents a mixed picture: while there are positive elements like increased EPS, strategic acquisitions, and shareholder returns, there are also significant concerns such as softened consumer demand, economic uncertainty, and transitional costs. The Q&A section reveals management's cautious optimism but lacks detailed strategies to counter softening demand. The company's strategic moves, like the acquisition and tariff mitigation, are positive, but the economic headwinds and lack of strong guidance temper the overall sentiment. With no clear market cap, the stock price is likely to remain neutral in the short term.
Energizer Holdings, Inc. (ENR) Q3 2025 Earnings Call Transcript
Positive8-4
The company demonstrated strong organic growth, improved margins, and earnings growth, with optimistic guidance for future EPS and EBITDA growth. Strategic acquisitions and production credits further support their growth strategy. Shareholder returns through dividends and share repurchases are positive. Although Q3 sales are expected to be flat to down slightly, the overall outlook is positive, especially with the successful launch of the Podium Series and acquisitions. The Q&A did not reveal significant concerns, and the production credits and strategic initiatives are likely to boost stock performance in the short term.
Earnings call transcript: Energizer’s Q2 2025 earnings remain steady, stock dips
Unknown5-6
The earnings call reveals mixed signals: slight positive in financial performance with strong EPS and margin improvement, but offset by weak net sales and declining free cash flow. Market strategy and shareholder returns lack clear initiatives, while the Q&A highlights uncertainties around tariffs and competitive pressures. Despite some positive elements like debt paydown and cost management, concerns about consumer sentiment, economic factors, and supply chain challenges weigh on the outlook. Overall, the sentiment is neutral due to balanced positive and negative factors.
ENR Slides
ENR Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
