Q3 2026 Energizer Holdings Inc Earnings Call Transcript
Key Points
- Energizer Holdings Inc (ENR) delivered organic growth across both Batteries & Lights and Auto Care in Q3, outperforming the battery category.
- The company gained volume and value share globally, with US value growing 1.8% and volume up 5% despite a category decline.
- Gross margin improved by more than 430 basis points from Q1 levels, with Q4 gross margin expected to be north of 40%.
- Project Momentum has improved operational flexibility and is expected to significantly reduce cash costs, boosting free cash flow.
- The company expects strong Q4 adjusted EPS growth of 25% at the midpoint, supported by productivity initiatives and supply chain optimization.
- Energizer Holdings Inc (ENR) has collected $11 million of IEEPA tariffs and expects the remaining $53 million to provide meaningful cash generation.
- CapEx is expected to decline significantly to about 1% of net sales, enhancing free cash flow generation.
- Energizer Holdings Inc (ENR) lowered its full-year guidance due to a softer-than-expected battery category, with back-half organic growth now expected to be flat to up 1% versus prior 4%.
- Consumer demand moderated in Q3, with consumers becoming more cautious and value-seeking, pressuring category dollars and mix.
- The battery category trends softened by 200 to 300 basis points relative to expectations, driven by consumer caution and promotional activity.
- Q3 experienced a pricing headwind, though the company expects pricing to be neutral in Q4.
- The company faces ongoing cost pressures from commodities, tariffs, FX, and logistics, which could impact margins.
- Retailer inventory dynamics and potential destocking remain a watch item, though not expected to be a meaningful headwind.
- The company is not assuming an improvement in consumer demand, indicating continued near-term softness.
Good morning. My name is Kelsey, and I'll be your conference operator for today's call. At this time, I would like to welcome everyone to the Energizer's third fiscal year 2026 conference call. (Operator Instructions) This event is being recorded Tuesday, August 4, 2026.
I would now like to turn the conference call over to Mr. Jon Poldan, Vice President, Global Finance, Treasurer and Investor Relations.
Good morning, and welcome to Energizer's third-quarter fiscal 2026 conference call. Joining me today are Mark LaVigne, President and Chief Executive Officer; and John Drabik, Executive Vice President and Chief Financial Officer. In just a moment, Mark will share a few opening comments, and then we'll take your questions. A replay of this call will be available on the Investor Relations section of our website, energizerholdings.com. In addition, please note that our earnings release, prepared remarks, and a slide deck are also posted on our website.
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