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EH

ENERGIZER HOLDINGS, INC. (ENR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered organic net sales growth of 1.4% with adjusted gross margin expansion to 40.8%, but GAAP diluted EPS ($0.39) and adjusted EPS ($0.67) were down year over year as SG&A investment stepped up .
  • Versus S&P Global consensus, revenue missed ($662.9M vs $669.6M*) and adjusted EPS was fractionally below ($0.67 vs $0.68*), while adjusted EBITDA beat modestly ($140.3M vs $137.5M*) .
  • Management tempered FY25 guidance (organic: flat to +2%, adj. EPS: $3.30–$3.50, adj. EBITDA: $610–$630M) citing weaker consumer sentiment and tariff uncertainty; Q3 guidance calls for net sales flat to -2% and adj. EPS $0.55–$0.65 .
  • Key catalysts: tariff mitigation execution (line-of-sight to neutralize over ~12 months), Podium Series momentum in Auto Care, APS (Europe) integration and brand transition, and debt paydown/free cash flow trajectory .

What Went Well and What Went Wrong

What Went Well

  • Battery & Lights grew ~3% organically; distribution wins across U.S. and international boosted category performance .
  • Adjusted gross margin improved 30 bps YoY to 40.8%, with ~$16M Project Momentum savings offsetting freight/warehousing and network transition inefficiencies; quote: “Project Momentum… delivered savings of approximately $16 million in the quarter” .
  • Capital structure enhanced: revolving credit facility extended to March 2030 and Term Loan B to March 2032 at roughly the same rates; quote: “extending the maturities… by more than 4 years” .

What Went Wrong

  • Revenue (-0.1% reported) was pressured by currency (-1.7%) and Auto Care timing shift (refrigerant moved to Q3), with adjusted EPS down to $0.67 vs $0.72 YoY and adjusted EBITDA slightly lower YoY .
  • Adjusted SG&A rose to 18.8% of sales ($124.5M) on planned spend in digital transformation and growth initiatives and higher legal fees, outweighing margin gains; analyst concern: operating expense discipline vs growth investments .
  • Management lowered FY25 outlook on weaker consumer and tariff uncertainty (organic flat to +2%, adj. EPS $3.30–$3.50, adj. EBITDA $610–$630M), introducing near-term top-line and FCF headwinds (now 6–8% of net sales) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$663.3 $731.7 $662.9
Gross Margin (Reported %)38.2% 36.8% 39.1%
Gross Margin (Adjusted %)40.5% 40.0% 40.8%
Diluted EPS (GAAP, $)$0.45 $0.30 $0.39
Adjusted EPS ($)$0.72 $0.67 $0.67
Adjusted EBITDA ($USD Millions)$142.5 $140.7 $140.3
SG&A (Adjusted % of Sales)17.2% 16.3% 18.8%
A&P (% of Sales)3.2% 7.3% 3.1%
SegmentQ2 2024 Net Sales ($M)Q2 2025 Net Sales ($M)YoYQ2 2024 Segment Profit ($M)Q2 2025 Segment Profit ($M)YoY
Batteries & Lights$481.0 $488.0 +1.5% $113.5 $112.3 -1.1%
Auto Care$182.3 $174.9 -4.1% $40.4 $35.2 -12.9%
Total$663.3 $662.9 -0.1% $153.9 $147.5 -4.2%
KPIsQ2 2025Notes
Operating Cash Flow (6M YTD, $M)$64.2 Inventory investments to support plastic-free packaging and tariff mitigation
Free Cash Flow (6M YTD, $M)$8.6 0.6% of net sales
Net Debt ($M)$3,023.9 Cash $139.3M
Net Leverage (LTM)4.9x Down from 5.2x YoY
Dividend per Share$0.30 (declared Apr 28, 2025) Paid ~$22M in Q2
Debt Maturity ProfileRCF to Mar 2030; TLB to Mar 2032 Rates roughly unchanged

Results vs S&P Global Consensus (Q2 2025)

MetricActualConsensusSurprise
Revenue ($M)$662.9 $669.6*-$6.7 (-1.0%)
Adjusted EPS ($)$0.67 $0.68*-$0.01 (-1.3%)
Adjusted EBITDA ($M)$140.3 $137.5*+$2.8 (+2.0%)

Values with asterisk are retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported Net Sales GrowthFY25Up 1%–2% Flat to +2% Lowered
Organic Net Sales GrowthFY25+2%–3% Flat to +2% Lowered
Adjusted EBITDA ($M)FY25$625–$645 $610–$630 Lowered
Adjusted EPS ($)FY25$3.45–$3.65 $3.30–$3.50 Lowered
Free Cash Flow (% Net Sales)FY258%–10% 6%–8% Lowered
Adjusted Gross Margin (YoY)FY25+50 bps +50 bps Maintained
Q3 Reported/Organic Net SalesQ3 2025N/AFlat to -2% New
Q3 Adjusted Gross MarginQ3 2025N/A~Flat New
Q3 Adjusted EPS ($)Q3 2025N/A$0.55–$0.65 New
DividendOngoing$0.30/share (Jan, Apr declares) $0.30/share (Apr) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Supply chain resiliency (Project Momentum)FY24: adj. GM +190 bps; ~$59M savings; network transition underway . Q1: ~$16M savings; digital transformation increased depreciation .~$16M savings in quarter; in-region, for-region production; redesigned network optionality .Strengthening resiliency; savings ongoing
Tariffs and macro uncertaintyLimited mention previously .FY25 direct impact limited; gross unmitigated exposure ~$150M; line-of-sight to offset within ~12 months via sourcing shifts, pricing, and network rebalance .Rising risk; mitigation plans active
Auto Care product momentumFY24 steady; Q1 organic growth 0.5% .Appearance business +5.5% organic; Podium Series launch across 15,000 stores; Q3 expected low single-digit increases; refrigerant timing shift to Q3 .Improving mix; near-term uplift in Q3
Consumer sentiment and retail inventoryNot highlighted in prior quarter .Weaker consumer and slight retailer inventory uptick; destocking moderation expected; guidance tempered accordingly .Softer demand; cautious outlook
Digital transformation investmentsQ1: SG&A up partly due to digital transformation .SG&A elevated for digital and growth initiatives; continued investment .Persistent spend to enable strategy
Capital structure and leverageFY24 net leverage 4.9x; debt paydown $200M; cash flow strong . Q1: net leverage 4.7x; debt paydown ~$25M .Refi extended maturities; aiming for ~$100M debt paydown FY25; target leverage “4x and below” longer-term .Improving maturity profile; deleveraging goal
APS acquisition (Europe)N/A.Closed May 2; manufacturing in Poland; brand transition from Panasonic to Energizer over ~8 months; neutral to FY25 EPS, modestly dilutive GM .Strategic scale/optionality in Europe

Management Commentary

  • CEO: “We delivered organic Net sales growth for the fourth consecutive quarter, expanded Gross margins, and achieved Adjusted Earnings per share at the high end of our guided range… we are tempering our outlook to reflect a more cautious consumer” .
  • CFO: “Adjusted gross margin increased 30 basis points to 40.8%, primarily driven by an incremental $16 million of Project Momentum savings… refinanced our $500 million revolving credit facility… and extended the maturity of our Term Loan B” .
  • CEO on tariffs: “Imports from China to the U.S. typically represent less than 5% of our consolidated cost of goods… we remain focused on managing those items that are directly within our control” .
  • CFO on FY25/26 tariff mitigation: “Gross total headwind of roughly $150 million… we can reduce… China-sourced product by close to half… over the next 12 months” .
  • Auto Care positioning: “Podium series is a super premium offering… consumers tend to be more immune to pricing impact” .

Q&A Highlights

  • Tariff mitigation roadmap: Management detailed $150M gross exposure, with concrete actions to reduce China sourcing from ~5% of COGS to ~2–3% and rebalance other sourcing; expects to offset most if not all within ~12 months; FY25 P&L impact neutralized .
  • Consumer and device demand: Outlook assumes worsening consumer due to higher device prices; guidance reflects this caution .
  • Retail inventory: Slight inventory build at retailers from softer POS; expected to normalize as replenishment moderates; embedded in H2 forecast .
  • Auto Care trajectory: Q3 expected low single-digit increases driven by Podium and refrigerant timing; Auto more resilient via DIY mix shift .
  • Capital allocation: Free cash flow guidance reduced to 6–8% of net sales; targeting ~$100M debt paydown and longer-term net leverage “4x and below” .

Estimates Context

  • Q2 2025 print vs S&P Global consensus: revenue miss (~1.0%), adjusted EPS marginal miss (~1.3%), adjusted EBITDA modest beat (~2.0%) .
  • Forward estimates (illustrative): Street sees Q4 2025 EPS ~$1.16*, revenue ~$828.0M*, EBITDA ~$178.9M*; FY25 guidance reset suggests downside bias to earlier estimates for revenue/FCF and mid-point EPS shift toward $3.40 .

Values with asterisk are retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term top-line headwinds from softer consumer and retailer inventory normalization; expect pressure in battery volumes offset partly by Auto Care Q3 seasonal strength and Podium launch .
  • Margin durability underpinned by Project Momentum savings and in-region manufacturing; watch Q3 adjusted gross margin (~flat) amid sustained A&P investment .
  • Tariff risk is being actively mitigated; execution on sourcing shifts and pricing is a key driver of H2 and FY26 setup; monitor cadence of China exposure reduction and commercial actions .
  • Balance sheet risk managed via maturity extension and targeted deleveraging ($~100M paydown); FCF guide lowered to 6–8% of sales—improvement in H2 contingent on inventory unwinding and tariff mitigation .
  • APS acquisition adds European scale and optionality; near-term EPS neutral and GM dilutive—focus on brand transition and network optimization synergies in CY2025 .
  • Trading implications: The lowered FY25 guide and consumer caution are likely to cap near-term multiple expansion; upside catalysts include Q3 Auto Care outperformance, visible tariff mitigation milestones, and H2 pricing actions flowing through margins .
  • Medium-term thesis: Earnings algorithm intact if supply chain optionality and digital investments sustain margin gains; deleveraging to ≤4x would support equity rerating despite macro volatility .