Energizer Holdings, Inc. (NYSE:ENR) Q1 2023 Earnings Call Transcript

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Mark LaVigne: Yes, Kevin, I’ll probably risk repeating something I’ve said earlier, but I’ll kind of kick it off and then John can maybe get into specifics as we’ve walked through the outlook. But certainly the tone from our perspective is intended to be that we’re off to a great start. I mean categories are performing better than we anticipated through Q1. We did have the inventory issue with retailers that we’re working our way through and we’re already starting to see that reverse as we get into Q2. Margins trended ahead of our plans with great work on pricing, but also the project momentum which is off to a fast start. We’ve been able to really advance that program and have great line of sight to $80 million to $100 million of savings.

Working capital is off to a great start with $21 million and we’re going to have $100 million of improvement over the course of the program. All of that, I think, gives us great confidence as we head into the rest of year, but then it also lays the foundation for a great €˜24 as well. So I think we feel great about the start — to the year, certainly a lot of work to do. The only unanticipated development like I said was in the retail inventory space, but we’re working our way through that this quarter. John, anything and certain specifics in the outlook?

John Drabik: The only thing I would add, Mark, so Kevin, you hit on the FX and so a slight benefit from what we originally had in our outlook. I’d also say if you look at the way we’re calling gross margin for the full-year, there’s a little bit of headwinds going into the back half and what we’re seeing is some of our raw material costs are a little bit higher, as well as some of the energy surcharges that we’re seeing. So we’re still calling for 100 basis points to 150 basis points up, but probably not as much push here as we had, if it was just the FX and that’s not a little bit headwind.

Kevin Grundy: Okay. That’s helpful. One follow-up, and I would also agree with Lauren’s point earlier, I think some of that around transactional FX, I think is probably driving some of the disappointment. But sitting on the side, just tying together some of the commentary around the Nielsen data and then the retailer commentary in destocking? Should we expect now given your commentary that you feel comfortable, it was sort of a seasonal sort of dynamic that your U.S. business should start tracking much more closely to what we see in the Nielsen, because obviously the gap was very, very wide. So I’m just trying to connect your commentary with you seeing reasonably comfortable with where they are now. So is that to say that investors should be relying much more closely again on sort of what we see in terms of retail takeaway and the Nielsen going forward, then I’ll pass it on. Thank you.

John Drabik: Yes, Kevin, it’s a great question. I mean, I think certainly as inventory levels would recover, you would expect Nielsen, as well as our financial results to track more closely together. But I caution a little bit, because there are other things which impact our business. Both positively and negatively times and one is the on-track channels that we’ve mentioned. And the other piece is the international part of our business, which is frequently not captured in that scanner data. So I would say, yes, as inventory levels, sort of, recover that there will become closer alignment, how closely is remains to be seen both given, sort of, the ordering patterns of the quarters, but then also the other untracked pieces of our business, which impact the overall financials.

Kevin Grundy: Okay. Understood. Thanks for the time and good luck.

John Drabik: Thanks, Kevin.

Operator: And the next question is from Rob Ottenstein with Evercore. Please go ahead.

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