Energizer Holdings, Inc. Q4 FY2022 Earnings Call

Good morning. My name is MJ and I will be your conference operator today. At this time, I would like to welcome everyone to Energizer's Fourth Quarter and Fiscal Year 2022 Conference Call. As a reminder, this call is being recorded. I would now like to turn the conference back over to Jackie Burwitz, Vice President of Investor Relations. You may begin your conference.

Good morning, and welcome to Energizer's fourth quarter and fiscal 2022 conference call. Joining me today are Mark LaVigne, President and Chief Executive Officer; and John Drabik, Chief Financial Officer. A replay of this call will be available on the Investor Relations section of our website. In addition, a slide deck providing detailed financial results for the quarter is also posted on our website. During the call, we will make forward-looking statements about the company's future business and financial performance, among other matters. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these statements. We do not undertake to update these forward-looking statements. Other factors that could cause actual results to differ materially from these statements are included in reports we filed with the SEC. We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed on this call relates to the categories where we compete and is based on Energizer's internal data, data from industry analysis and estimates we believe to be reasonable. The battery category information includes both brick-and-mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year and all comparisons to prior year relate to the same period in fiscal 2021. With that, I'd like to turn the call over to Mark.

Thank you, and good morning, everyone. We finished the year strong and delivered our outlook despite an incredibly challenging environment. I want to thank the Energizer team for their commitment to excellence and their continued dedication to serving our consumers and customers across the globe. Before turning it over to John for a more detailed discussion, let me start with a few headlines. First, we delivered a solid fiscal 2022 but more importantly, laid the foundation for significant value creation in 2023 and beyond. Second, we have launched a series of internal initiatives under a program called Project Momentum, which is expected to generate $80 million to $100 million in savings over the next two years. Third, the vast majority of our portfolio has proven to be resilient, and that strength, when combined with the benefits of Project Momentum, is expected to drive double-digit constant currency EPS and EBITDA growth, while generating 10% to 12% free cash flow for the full fiscal year. A few more details on each of these. Despite significant headwinds from persistent inflation on our input costs, an appreciating U.S. dollar and our exit from the Russian market, we delivered on the outlook we provided last November. Just as important, we returned to generating strong free cash flow with $95 million in the fourth quarter, and we deployed a significant portion of this cash to begin paying down debt. In addition to returning to our historical free cash flow generation, another focus for the organization has been to restore the earnings power of our businesses. As you may recall, early in fiscal 2022, we implemented a series of initiatives designed to offset the inflationary headwinds we were experiencing. As part of that undertaking, we identified a substantial pipeline of incremental initiatives that are expected to further rebuild gross margins, improve working capital efficiency and support long-term growth. Based on the scope, timing and investment level, we consolidated these initiatives into a standalone program called Project Momentum. Project Momentum is designed to improve margins across each of our businesses and is expected to ultimately generate incremental savings of $80 million to $100 million over the next two fiscal years. These savings are independent of any changes to the inflationary environment and are coming from a broad range of projects, including operational and distribution network efficiencies, procurement savings and SG&A reduction. We have learned a great deal over the past 2.5 years, and those lessons have helped us identify more effective and efficient ways to operate our businesses. We're confident these efforts will not only help restore our margins over the long term but also provide us the flexibility to navigate a dynamic environment with excellence. Beyond the improvement in our earnings, Project Momentum will help optimize our balance sheet to drive more than $100 million in working capital improvement. A more efficient balance sheet, combined with expanded operating margins, will reestablish Energizer as a leading cash flow generator. The success we have had in 2022 and the benefits of Project Momentum make us very confident heading into 2023. Our categories are meaningfully larger than pre-pandemic levels. Batteries are considered essential products to consumers, and we continue our work to serve our consumers when and where they need us. Consumers are using 15% more batteries than they were pre-pandemic. We expect this demand to be resilient even as economic conditions impact consumers. Against this backdrop, we expect to drive low single-digit organic top line growth across both of our businesses in fiscal '23. This growth, combined with sequentially improving gross margins from targeted pricing and cost savings initiatives, is expected to deliver double-digit currency-neutral growth in both EBITDA and EPS. Furthermore, we expect to generate 10% to 12% free cash flow for the fiscal year, allowing ongoing debt reduction and deleveraging, driving an important part of the equity return story for our shareholders. Fiscal '22 was a solid year and one that we are proud of. As we look ahead, the environment in which we are operating remains challenging. By enhancing our long-term algorithm with projects like Project Momentum, we have positioned ourselves for success not only this year but in future years as well. Now let me turn the call over to John to provide additional details about our financial performance, Project Momentum and our 2023 outlook.

Good morning, everyone. I will provide a more detailed summary of the quarter and full fiscal year before turning to our 2023 outlook and a brief financial overview of Project Momentum. For the quarter, reported revenue grew 3.2% with organic revenue up 7.4%. Top line benefited from pricing, partially offset by lower volumes due to broader inflationary pressures and the lapping of elevated volumes in the prior year. Adjusted gross margin decreased 150 basis points to 36.2% due to higher operating costs, including transportation, material and labor costs as well as unfavorable currency impacts. The positive impact of price increases in both battery and auto care partially offset the negative impact on margins. Adjusted SG&A as a percent of net sales was 15.1% versus 14.3% in the prior year. The absolute dollar increase of $9.8 million was primarily driven by increased recycling fees, IT spending related to our investment in digital transformation and compensation expenses. A&P as a percent of sales was 3.5%, down 190 basis points. The decrease in the current year is the result of a reduction in nonworking spending as well as a lighter investment in the fourth quarter, as we were past the peak auto season and transitioning into the holiday season for batteries. We elected to move more of our spending for batteries into the coming first quarter closer to the holiday season. Interest expense increased $5.2 million due to a combination of higher average debt and rising rates. We delivered adjusted EBITDA and adjusted earnings per share of $146 million and $0.82 per share, respectively, in spite of currency headwinds of $9.7 million or $0.11 per share. We also generated $95 million of free cash flow in the quarter, returning to the top end of our long-term algorithm of 10% to 12% of net sales. We paid down $60 million of debt and retired another $25 million subsequent to the end of the quarter. As noted in our press release this morning, we recorded a one-time noncash $542 million impairment charge on certain intangible assets, including trademarks and goodwill associated with the acquisition of Spectrum's Battery and Auto Care businesses. This accounting charge reflects the negative impact on the cash flows associated with these assets, which, as we have previously noted, have been adversely affected by rapidly increasing input costs and more recently, currency headwinds and interest rate increases. We continue to view these assets as vital components of our portfolio, and this noncash accounting charge does not have an impact on our outlook for these businesses. As Mark mentioned, we delivered our full year 2022 outlook for revenue, adjusted EBITDA and adjusted EPS. Organic revenues increased 3.1%, marking our seventh consecutive year of organic growth, as pricing actions and new distribution across both our segments were partially offset by volume declines. Adjusted gross margin was down 230 basis points, as higher input costs were partially offset by pricing actions, synergies and the reduction of COVID-related costs incurred in 2021. Adjusted EBITDA of $568 million and earnings per share of $3.08 were within our original outlook provided at the beginning of the year despite currency headwinds of $26 million or $0.29 per share, respectively. For our fiscal 2023, we expect organic revenues to increase low single digits, as the benefits of carryover pricing and additional targeted pricing are partially offset by category volume declines across both the Battery and Auto Care segments. Reported revenues are expected to be negatively impacted by approximately $90 million of currency headwinds, resulting in a low single-digit decline. We expect gross margins to improve between 100 basis points and 150 basis points year-over-year. Carryover pricing, new pricing in the year and improvement in freight costs are net positives while input costs and currency continue to be headwinds. In addition, Project Momentum is expected to generate approximately 100 basis points of margin recovery. We are actively managing costs in the remainder of our P&L, keeping most flat with the prior year. However, we do plan to increase investments in A&P back to the 5% to 6% range in the coming year. All of these factors result in an outlook for adjusted EBITDA in the range of $585 million to $615 million and earnings per share in the range of $3 to $3.30. These results reflect negative currency headwinds on earnings of approximately $27 million or $0.30 per share. On a currency-neutral basis, adjusted EBITDA is expected to grow 10% and earnings per share is expected to grow 12% versus prior year, both at the midpoint of our outlook. I would like to also give additional color on the first quarter and rest of year trends. First, we are still comping elevated volumes in the prior year and expect organic sales to be down low single digits in the first quarter and then improve as we move through the year. Our cost of goods in the first two quarters will also reflect the impact of production at peak inflationary costs; and, to a lesser extent, the cost of operational inefficiencies as we produce lower volumes while actively managing down inventories at the end of last year. Gross margin should start the year roughly in a range of 37% to 38% and improve each quarter thereafter. Also, based on current rates, year-over-year currency impacts are expected to be most pronounced during the first half of the year, with the first quarter seeing currency headwinds of roughly $40 million on sales and $10 million on operating earnings. Finally, rising interest rates are expected to add $10 million to $15 million to full year interest expense, again, weighted towards the first half of the year. Project Momentum is expected to benefit 2023 by $30 million to $40 million more weighted to the back half and has been included in the outlook ranges we provided today. Over the next two fiscal years, we expect Project Momentum to generate $80 million to $100 million in total savings with roughly 80% of those benefits impacting gross margin and the remainder recognized throughout the rest of the P&L. We also expect to improve net working capital by $100 million, which will allow us to fund the projected one-time cash operating expenses related to the program of $40 million to $50 million and generate free cash flow in line with our long-term algorithm of 10% to 12% of net sales. We are planning for capital related to the program to be largely incorporated in our annual budget expectations of 2% of net sales. And finally, a few comments on our debt capital structure and capital allocation priorities. Our debt is currently 86% fixed at an average interest rate of 4.6%, with no meaningful maturities until 2027. We paid down $85 million of debt in September and October, making good progress towards our deleveraging plans. Looking ahead, debt paydown and deleveraging is our primary capital allocation priority. We will continue to invest in our business and brands for the long term while returning cash to shareholders through our quarterly dividend.

Thanks, John. Our investments and the team's work and dedication are evident in our fiscal year results. Looking ahead, we are well positioned to drive growth in the years ahead. I want to echo John's congratulations to Jackie on a tremendous career with Energizer. Thank you for everything, Jackie. We wish you the best. With that, I will open the call for questions.

Today's first question comes from Lauren Lieberman with Barclays.

First, Jackie, I'm jumping on the bandwagon. So congratulations and enjoy and also thank you for everything. Now on to my question. So first, I just wanted to clarify. I think there's been some confusion this morning just around the guidance. And so I just wanted to be clear that the ranges in the release are in fact inclusive of the currency headwind. So that's just sort of part one and kind of a cleanup question. And then the second thing was I wanted to talk a little about gross margins this quarter. I think we're a little bit below expectations. I know the total P&L came in line, but kind of what was the negative surprise on gross margins and just as you gave us some guidance as to how to think about the slope of recovery into '23? But I was curious kind of what's kind of pulled it down a bit as the starting point is a little bit different than we'd expected?

Yes, the outlook that we gave is inclusive of currency impact. So that $585 million to $615 million for EBITDA and $3 to $3.30 for EPS include all the currency impacts that we've talked about. In the quarter, we came in at about 36.2% adjusted. And as we talked about going into the back half of the year, we were looking at about 37% to 38%. In the third quarter, it spiked a bit, fourth quarter came in at that 36%. We were actually in range with what we were expecting. But as much as we've built inventory, we've seen some movement. We've also seen, as we kind of finished out the quarter, we had been actively working down those inventory levels. So you're seeing that production volumes were a bit lower. That's impacting the fourth quarter. It will continue to impact us a little bit in the first quarter. And as you talk about, we're looking at a 37% to 38% starting point in the first quarter and then growing sequentially as we go through the year.

Okay. And then I guess the follow-up question to that would be, and we've seen this from some other companies that are coming into the new year with elevated inventory and high-cost inventory at that. So I guess, how sensitive is the outlook? And how much wiggle room is there? Should volumes be lower than what you'd have expected? If the rate of volume decline is greater, it would take more time to work through that inventory and then therefore, you take longer to work through gross margin? So can you just maybe share a little bit about the volume outlook in particular relative to elasticity? And that's what I'm asking in terms of the gross margin progression.

Yes. I think we managed our inventory effectively last quarter. It decreased by over $100 million, and we anticipate it will take us the first and second quarters to fully address these inventory levels. That's our current outlook, and we don’t foresee any changes. I’ll pass it over to Mark, who can provide more detail on how elasticity has performed.

Yes, Lauren, I think when you think through, we took multiple price increases in both battery and auto in '22. Really pleased with how demand held up, particularly when you consider a lot of the macro factors. We have additional sort of carryover pricing that's built into the '23 outlook. We do anticipate taking some targeted pricing in '23 as well, not broad portfolio pricing, but I would just call them more micro-targeted pricing. Elasticities have really held in there for us. They're at or better than what we expected. In recent periods, you've seen them worsen a little bit, as macro factors compounded some of the price increases with general inflation. You're also looking from a volume standpoint, still working through some of the elevated COVID demand in batteries and auto. So that's going to be a little bit of a drag on volumes. We factored all of that into the outlook as well as from an impact on gross margin as well. So I think we feel really confident in the outlook we're providing today and do have some flexibility, as things may evolve over the course of the year, just like they did last year.

Next question comes from Bill Chappell with Truist Securities.

And also, Jackie, congratulations. I can't believe we have worked together for 20 years. A couple of things. First, regarding Project Momentum, can you share the reasoning behind this initiative? You've clearly had a successful year, and many of the margin challenges have been related to macroeconomic factors that have impacted other companies. I'm curious about why this is being addressed now and where the most significant opportunities for margin improvement lie.

Sure, Bill. The name of the project was intentionally chosen. Reflecting on the efforts the organization made in 2022, they did an excellent job getting us back on track to manage the business effectively amidst various macro factors. It truly marked a turning point for us. We were able to meet the forecast we provided last November, even with unexpected challenges throughout the year, which highlights that effort. As we looked ahead to 2023, we aimed to build on that progress. This program has $30 million to $40 million in savings planned for 2023, with additional savings expected to be realized in 2024. We have several key areas of focus, incorporating lessons learned from the past couple of years. We're exploring changes in our operational distribution network, product sourcing, footprint optimization, automation, value engineering, and procurement. We will conduct sourcing events and evaluate partnerships, considering various sourcing locations. Additionally, in SG&A, we will examine indirect spending to optimize our model and improve collaboration. This program has the potential to positively impact our P&L and enhance our balance sheet through better working capital efficiency, contributing to debt reduction. More importantly, it will transform our operations for the long term. We are genuinely excited about the financial benefits and operational improvements this program will deliver going forward.

Can you provide more detailed questions regarding both the fourth quarter and the first quarter? Was there any impact from Hurricane Ian in the fourth quarter or the first quarter? Did we implement an additional price increase in October, or is this just carryover pricing? Also, do you believe we are in a better position for holiday sales in 2022 compared to 2021, or is it about the same or worse?

Yes, hey, Bill, let me take you through the first quarter a little bit. So the hurricane did occur in the fourth quarter, we probably saw about $3 million of incremental sales. Looking at the total first quarter, we do want to kind of get this rightsized for everyone. We're comping elevated demand coming in the quarter. So we expect organic low single-digit top line. Gross margin year-over-year should be roughly flat. We are going to reinvest back into A&P. So as we talked about, it was a little bit light in the fourth quarter. We're pushing that into the holiday. So that should be up a bit. And then this is the quarter where the currency impact will be most severe. So on a year-over-year basis, top line is going to be impacted by about $40 million and operating performance is going to be impacted by about $10 million. And one other thing I wanted to call out, I don't think I was specific in the full year. Interest is a headwind of about $10 million to $15 million full year. In the quarter, it's probably $5 million or $6 million. And so all in, there are a fair amount of headwinds going into the quarter. We expect all of those to improve, though, as we kind of go sequentially throughout the year.

And Bill, on your last question about holiday sets, I would say we're in as equally beneficial position this year as we were last year for holiday. So we feel really good about where we're headed.

The next question comes from Andrea Teixeira with JPMorgan.

This is Shabana on for Andrea. You did mention that the batteries usage is about 15% higher and I think the categories are definitely larger than pre-pandemic. But I was wondering like since the Q4 ended in the last, let's say, five, six weeks since then, can you please comment on the current consumer trends you're seeing as it relates to, let's say, like either trading down or private label? And also, are you also seeing any retailer inventory management? And if so, how long do you expect it to be a headwind?

There are many questions to address. I'll do my best to cover them all, but please let me know if I overlook anything. First, regarding inventory, it is slightly elevated at the moment, which is not unusual for the holiday season. This increase is largely due to holiday shipments, as retailers aim to begin their holiday preparations early, anticipating a longer holiday buying period. Therefore, we are not concerned about inventory levels, which are slightly elevated yet still normal for this time of year. Now, addressing the macro questions about consumers, they are currently feeling pressure in the environment. There is a clear focus on essentials, particularly in grocery, utilities, and fuel. Most of our portfolio falls under the essentials category, with batteries being a key product. Consumers are prioritizing value, which varies based on individual preferences such as pack size or purchase frequency. Looking at the fundamentals of our categories, especially in batteries, they remain very strong. Device ownership has increased by 6% compared to pre-pandemic levels, and households are using 15% more batteries year-over-year relative to pre-pandemic statistics. Now, regarding private label, consumers are still leaning towards recognized brands. Quality is a significant factor in their purchasing decisions, with long-lasting and trusted brands influencing choices. This trend is reflected in scanner data, where private label has dropped by 2 share points globally, and by 3.2 share points in the U.S., while Energizer has seen a gain of 2.5 share points globally. Therefore, brand loyalty remains strong, demand is stable, and we're not observing substantial trading down.

The next question comes from Robert Ottenstein with Evercore.

A few connected questions. Can you just give us your best sense now on what normalized battery demand looks like? On one hand, you talk about 6% more devices, batteries up 15% versus pre-pandemic, but you also talk about elevated. So just as kind of the initial question, are we 5% over-normalized, do you think? Or where would you assess that?

Well, what I would say is as you look at the outlook we provided for '23, we are calling for organic growth in batteries. And that is driven primarily by pricing. You are going to see some volume declines in the first part of the year as you work your way through the year. So I would say from a volumetric standpoint, you still have to work through the elasticity impact, I would say the COVID impact as well as just the general inflation impacts. But we are showing organic growth in both batteries and auto care. So from a value standpoint, I would say you're at the new base in terms of the business. I think volume has a little bit of work to come back to as we get through '23. But I would say you're establishing that new base now, both when you compare it to a value and volume basis.

And on the volume side, maybe 5% or 3% or just kind of rough order of magnitude?

If you look at the latest 13 weeks in the battery category, you see a slight increase in value while volume has decreased by 12%. During that period, pricing increased by 20% or more across the board in this category. This indicates that value is currently leading in the battery category. However, I expect volume to rise as we progress through the quarter. So, while we are down 12% on a category basis, that figure is likely to improve as we move through the year. John, do you have anything to add?

No. I think full year, it's a high single-digit decline. So to Mark's point, it improves as we go throughout the year.

Okay. And then just in terms of the productivity program, and the rationale for that. Is that designed to restore margin or gross profit dollars? And I guess the question is, is given that the category is stronger, if it was just dollars, why wouldn't pricing alone given the health of the category offset it? Or do you need it because of what's happened with currency? Just trying to understand the structural drivers here.

Why don't I start and turn it over to John for additional insights. I would say we are addressing margin recovery from multiple perspectives, including pricing. We placed significant emphasis on pricing during fiscal '22. As we navigate a more challenging economic environment, our strategy remains focused. We will tackle costs that have accumulated over the past couple of years and ensure they are eliminated. The savings we discuss are independent of the inflationary conditions. Our goal is to take proactive steps and enhance profitability by controlling what we can. However, pricing and trade investment will remain priorities to ensure that when we allocate funds, we achieve the best possible returns.

No, no. And that's all great. So could we expect perhaps that as we come out of this, you'll have higher margins than in the past? Is that something that you can aspire to?

I think when you look at our gross margin improvement, we're expecting to improve gross margin over the course of fiscal '23 from 100 basis points to 150 basis points within that first year of the program.

Robert, I would describe this as a recovery program aimed at restoring our previous position. Therefore, I wouldn’t expect any projections for higher outcomes since we cannot anticipate that far into the future. However, I believe this initiative will provide us with the best opportunity to enhance our margins as we move forward.

The next question comes from Kevin Grundy with Jefferies.

I apologize for the background noise. I'm traveling. And I also wanted to echo congratulations to Jackie as well. It's been a pleasure, well-deserved retirement. A couple of cleanups for me, probably with John, just first to follow up, I guess, on Lauren's line of questioning around FX. I think the market was probably a bit surprised by the impact on profit, which relative to the top line, not quite as dire as it's been historically for Energizer's business. And then relatedly, John, I guess, I think folks are probably also a little bit surprised that the top line impact was not more dire given what the dollar has done relative to sort of your preliminary guidance with fiscal 3Q. Can you help on those two fronts? And then I have a follow-up.

Yes. The impact on profitability for next year, including hedges, is important to consider as it affects how quickly these changes occur. The hedges are mitigating some of that impact, leading us to estimate around $30 million compared to the $90 million in revenue. This falls within our typical range. Additionally, we experienced a significant impact last quarter going into the fourth quarter, which has already been factored in, along with the year-over-year change. Overall, it has presented a substantial challenge for us.

I understand. I can discuss this further offline. Regarding the impairment charge, I recognize that it is a noncash item, but I want to understand how it relates to the variability in terminal value and asset valuation. I'm trying to connect this with the short-term cost pressures mentioned by Mark, alongside his more positive outlook on the battery category for the long term. Can you clarify this for me?

Yes. Most of the write-offs were related to the auto care segment. Two main factors influenced this situation as we concluded the quarter: the significant impact of currency fluctuations on our international earnings and the rapidly increasing interest rates, which affected our cost of capital. Therefore, when assessing those models, the changes were not primarily due to organic cash flows but rather the effects of currency and cost of capital.

The next question comes from Hale Holden with Barclays.

I understand that there was some manufacturing deleverage in the first half of '23 as you worked through your inventory backlog. Can you clarify what the headwind was?

Well, we didn't give the exact number. But I mean, what we're saying is that we'll start out the first quarter sort of at 37%, 38%, which is flat year-over-year, and it's a bit of a sequential improvement from the fourth quarter. And then as you go through, it will improve a little bit. But most of that deleveraging of inventory that's really impacting our production volumes, that will be absorbed in the first quarter.

Great. And then for '23, I was wondering if you could walk through what your inflation expectations were.

We expect organic top line growth in the low single digits, but currency impacts will likely lead to a low single-digit decline. We anticipate a modest decrease in volumes due to the elasticity effects that Mark mentioned. Gross margins are projected to improve despite ongoing elevated material costs and currency challenges we've discussed. We are also observing some benefits in freight, which will contribute positively in the latter half of the year. Our investments in advertising and promotion will increase year-over-year. Additionally, it's worth noting that interest rates have risen significantly, which, even with over 85% of our debt fixed, presents a $10 million to $15 million headwind compared to last year. The currency effects I mentioned are expected to impact our top line by about $90 million and our bottom line by approximately $30 million, translating to a $0.30 impact per share. These are the main challenges we anticipate facing in 2023.

The next question comes from William Reuter with Bank of America.

I just have two. So the first is it seems like you paid down your ABL balance during the fourth quarter. You repaid another $25 million of debt in the first quarter. Was that the term loan that you repaid? Or was that bonds?

It was a term loan.

Okay. And then the second question in terms of where you see your leverage ending the year based upon expectations for how much inventory you take out of the system, do you have a sense for where you're seeing that net leverage end of fiscal year '23?

Paying down debt is our top priority. We have the opportunity to reduce it by around half a turn, give or take, and that will be our focus throughout the year.

The next question comes from Carla Casella with JPMorgan.

I would like some clarification on the margin. You mentioned recycling costs this quarter, which is the first time I've heard you discuss that market. How does that impact your forecast?

Recycling is something that we've consistently implemented in several markets. There are some new programs, with Australia being one of the larger ones, which contributed to an increase for us this year.

And going forward, that will continue to be a...

That should be in our base. We'll continue to manage it as an ongoing cost of running the business.

Okay. And then I might have missed it. Did you give the amount of pull forward holiday sales? You find some of the holiday sales were pulled into this quarter from next?

No, we didn't specify an amount. It tends to fluctuate from year to year. However, as we consider the fourth quarter, I would highlight that we are forecasting organic declines of low single digits for this quarter.

This concludes our question-and-answer session. I would now like to turn the conference back over to Mark LaVigne for any closing remarks.

Thanks, everyone, for joining the call and your ongoing interest in Energizer. I hope everyone has a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.