Energizer Holdings Inc. reported affected results at the end of last year, with expectations that the impact will continue into 2026. Consumer demand has stabilized, with a strong rebound in December volumes in the U.S. The company is focused on restoring growth, margins, and free cash flow. Specific details on battery consumption trends and impact from recent winter storms were discussed.
Mitigation efforts, including production capacity relocation and sourcing diversification, are underway to address higher rates. The company expects a benefit of roughly 50% above last year from increased tax credits. Plans are in place for a strong acceleration of net sales and earnings in the second half of the year. The first half reflected short-term factors, but the underlying trajectory is improving.
The company anticipates a stable category for the balance of the year, with plans to transition APS customers to Energizer branded products. Distribution footprint is expected to increase with broader and higher-quality distribution across brick-and-mortar and e-commerce channels. Innovation in batteries and Auto Care is set for launch in Q2 and Q3.
Elevated tariff rates impacted the company’s gross margins, with a 300 basis point impact in the first quarter. Zinc input costs have increased, but the company is over 90% fixed for 2026. Targeted pricing and credits are being implemented to address cost impacts. The company expects pressure on input costs to continue into 2027.
The company is focused on debt pay down to achieve a leverage target of five or below by the end of the year. M&A opportunities will be considered, but any deals will be leverage-neutral. The impact of winter storms on the business was significant, with a benefit to POS in the U.S. The company is monitoring replenishment orders and inventory levels at retail.
Sequential improvement in gross margins is expected, with a 300 basis point improvement from Q1 to Q2, and an additional 300 to 400 basis points between Q3 and Q4. The company is prepared to manage uncertainties in the market and adjust plans accordingly. The outlook provided is confident and aims to deliver the financials as laid out.
Read more at Yahoo Finance: Energizer (ENR) Q1 2026 Earnings Call Transcript