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. Please note that all this time, all lines are in testimony mode and following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please start with zero for the operator. This event is being recorded Tuesday, August 4th, 2026. I would now turn the conference call over to Mr. John Paul Dan, Vice President, Global Finance Treasurer in Investor Relations. Please go ahead.

Good morning and welcome to Energizer's third quarter fiscal 2026 conference. Joining me today are Mark Levine, President and Chief Executive Officer, and John Gravick, 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 the replay of this call will be available on the investor relations section of our website energizer holdings dot in addition please note that our earnings release prepared remarks and a slide deck are 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 risk and uncertainties which may cause actual results to differ materially from these statements we do not undertake to update these forward looking statements the different materially from these statements are included in reports we filed with the SEC our presentations and non-GAAP financial measures reconciliation of non-GAAP financial measures to comparable GAP measures is shown in our press release issued earlier today which is available on our website concerning our categories and that's the major 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 2025. With that, I would like to turn the call over to Mark.

And thanks for joining us today. As in prior quarters, we posted prepared remarks on our website that provide a detailed review of our third quarter performance and our outlook. But I wanted to begin with a few brief comments. As we move through fiscal 2026, our priorities remain centered on strengthening the earnings power of the business, generating strong free cash flow, and continuing to improve our balance sheet. In the third quarter, we delivered organic growth across both batteries and lights and auto care, while sustaining the margin recovery achieved since the beginning of the year. These results reflect the actions we've taken over multiple years to strengthen our brand, improve execution, streamline our cost structure, and build a more resilient organization. While consumer demand moderated in the quarter, our business continues to benefit from the progress across key strategic initiatives, enabling Energizer to meaningfully outperform the battery category. We expanded distribution, advanced innovation, and made further progress on the transition of APS sales into the Energizer-branded portfolio. At the same time, Project Momentum has improved our operational flexibility and positioned us to navigate a range of operating environments while maintaining a focus on profitability and cash generation. Looking ahead, we remain confident in our strategy and the actions already underway across the business. We expect strong fourth quarter earnings growth to be supported by productivity initiatives, supply chain optimization, and the work we have done throughout the year to strengthen the profitability of the business. We believe these actions position us well to continue creating value through strong free cash flow generation and disciplined capital allocation. Thank you for your continued interest in Energizer. And with that, let's open the call for questions.

Thank you. ladies and gentlemen we'll now begin the question and answer session should you have a question please press the star followed by the one on your touch phone phone you will hear a prompt that your hand has been raised did you wish to decline from the polling process please press the star followed by the two if you are using a speakerphone please lift the handset before correcting any keys one moment please for your first question your first question comes from Lauren Lieberman from Barclays, please go ahead.

Great, thanks so much. I wanted to start by just kind of getting more detail on the change in guidance. So, you know, one quarter left and you moved to the lower end of the range after an inline delivery this quarter. So, I just wanted to better understand the drivers of that change.

Good morning, Lauren. When we spoke in May, our expectation at that time was that the back half of the year would deliver around 4% organic growth. Today, we expect the back half to be roughly flat to up 1%. So clearly, there's been a change in the demand outlook. The primary driver behind this is in the battery category. At the time of the Q2 call, we expected the category to be roughly flat through the balance of the year. Since then, consumers have remained more cautious than we anticipated, and the battery category trends have softened by roughly 200 to 300 basis points relative to those expectations. And those items have been reflected in the outlook we provided today. This is more of a category adjustment than it is really an energizer adjustment. The business is actually performing well within the environment that we're seeing. We continue to gain share. We're expanding distribution. We're launching innovation, and we're outperforming the category. So, while we're taking a more prudent view on our top-line demand, our confidence in the business has not changed at all. The actions we've been taking are working for improving the quality of the portfolio, rebuilding margins and strengthening the earnings power, and increasing financial flexibility. I would also point out the earnings and cash flow story remains very much intact. Gross margin has improved more than 430 basis points from first-quarter levels. We expect fourth quarter gross margin to be north of 40%, and we expect 25% adjusted ETS growth at the midpoint in Q4. And at the same time, we expect strong free cash flow generation and meaningful debt reduction. So all in, that's kind of the way we were thinking about the balance of the year and wanted to provide that outlook for Q4 as well as finishing up 26.

Okay. Great. And just one, you know, given the slowdown in category growth that you're calling, I was just curious about your read on retailer inventory levels. I know inventory, you know, there's been some retailer inventory dynamics in the first half of the fiscal year, but with the incremental flowing in the category, is that something we should watch out for further from here?

Yeah, thanks, Lauren. It is something we watch. You know, we went through this, it occurred earlier this year, and there's actually a slide in the slides we – there's a reference in one of the slides we posted this morning where we referenced that in the first half. It was really the first part of this year where we dealt with some inventory and de-stocking. We did not expect it to be an additional meaningful headwind, and really it's embedded in the revised numbers that we provided today.

Okay. Thanks so much. I'm going to pass you on.

Thanks, Lauren.

Thank you. And your next question comes from Andrea Texeria from J.P. Morgan. Please go ahead.

Thanks, Operator, and good morning, everyone. I was just hoping to see if you can comment a little bit on that decline of 200 to 300 basis points. From a volume perspective, from a pricing perspective, it seems like it's both that consumers are also down trading not only like volume-wise, but on trading from a value perspective. So can you elaborate on that and also speak to not only the U.S. but internationally?

Let me get started. I think it's important to separate near-term consumer environment from long-term health of the overall category. Consumers are being more selective today. They're looking for value. They're shopping across channels and back sizes and managing overall basket spend more carefully. That can pressure dollars and mix in the short term. Energizer is winning in this environment. In the U.S., our value grew 1.8%. Volume grew 5%, while the category declined. We also gained volume and value share globally as well. You know, I think on the promotional front, we have no interest in buying share. I think for our business, the category is more promotional today because consumers are seeking that value that I mentioned. But the improvement we're seeing on our business is broader than just price. We're benefiting from better distribution, stronger execution, innovation, and the breadth of our portfolio. The actions we're taking are resonating distribution gains and the strength of our brands and the breadth of our portfolio allow us to meet consumers across both premium and value. So we're not assuming that the consumer improves from here, but we are managing the business to win with consumers where they are today. I think you're seeing that play out. I would say in Q3, you are seeing a bit of a pricing headwind in Q3. We would expect that to be neutral in Q4. So, I would not extrapolate the trends you're seeing in Q3 and in Q4.

And then, can you comment on the cost side, how we should be thinking of your outlook now with oil prices? You've got less impact because your cargo is value-added, but just thinking of how to think about the commodity cost pressure also on the raw material side.

Sure.

Andrea, you know, we've done a good job getting costs out of the system. We've seen improvement in gross margins from the beginning of the year to where we are now. As Mark mentioned, we're expecting four-quarter gross margin to be in the low 40s, and that's really a clean number for the first time this year. Am I clean? I mean, we've had a lot of these in and outs. You know, for instance, there won't be any IEPA credits in our fourth quarter number. So we think that reflects, you know, a lot of the hard work that we've done, and we're in much better shape. There's still a number of moving parts, and we've been talking about it for the last couple of quarters, commodities, tariffs, FX, logistics. We're going to be disciplined, you know, about providing a full view to that when we're ready. That should be next quarter. What I would say is we have a lot of levers that are available to us, including productivity, sourcing, network flexibility, operating efficiencies, and pricing where appropriate. So, our goal as we go forward is going to be to maintain the margins we've worked to recover as well as the overall earnings profile of the business. I would say the other area where I think we're seeing as we move forward some, you know, important factors that I think will bolster our free cash flow, which is really important to the story. So first, you know, we're finishing up Project Momentum this year. So we expect related cash costs, you know, to execute that program, which we're spending really for digital transformation and some of that supply chain transformation. That's been elevated in recent years in coordination with the Momentum program. We expect that to be down pretty much. The cash flow should be a strong.

Thank you.

Thank you. And just as a reminder, if you do have a question, please press star 1. And your next question comes from Rob Idensen from Evercore. Please go ahead.

Thank you very much. Bruce, just wanted to follow up on the category slowdown. You know, is this something that increased or stable? Just kind of a little bit of would that have been – and then my second question is, you know, we get the Sercana data, And in that, your main competitor, pretty dramatic, declines in volume in the period. I was wondering if you can give any color around that. It looks like, you know, a lost customer and, you know, any color in terms of if that's the fact, timing around that, and, you know, circumstances, whether that's something that will likely benefit you going forward.

Good morning, Robert. I never like to speak on behalf of our competitors, so I think I would just direct questions that way. We see the scanner data just like you do. Rest assured, we are in the market competing and trying to win distribution and do it the right way. And it all plays out in the scanner data that you receive. I think in your first question around the dynamic and the battery category, I think we referenced it in our last quarter where we were seeing a bit of pressure on the consumer. And I think as we worked our way through the quarter, we saw it accelerate a bit. We're not anticipating that it snaps back and improves in a meaningful way over the balance of the year, which led to the 200 to 300 basis call down that we made this morning. I do think that's a near-term dynamic, and I don't think it impacts our longer-term view of the category. Devices still continue to be healthy. Usage continues to be healthy. Change of frequency is healthy. So all the fundamentals behind category demand are in place. And what you are seeing, though, is consumers reacting to them in a more near-term environment where they're making choices. They're making choices about frequency of their spend. They're stretching dollars further. And as a result, they're seeking value and they're more cautious. and you're seeing that play out in the battery category, which results in our making a call for the Q4 that we did this morning.

And, again, is this weakness split equally between volume and value and price, or is it biased in one direction?

Well, so what you saw in the quarter, there's a little bit of promotional activity, and there's a little bit of volume erosion in the quarter. I think going forward, you're going to see that split be, you know, it's going to be split a little bit between both. And so I think it's just our job to manage, continuing to connect with consumers, invest in promotion where it makes sense, drive the appropriate volume dynamics, keep margin, you know, keep the margin that we've worked hard to preserve intact so that we can go into 27 with a stable margin, which allows the rest of our investment thesis to hold.

So, yeah, I think our fourth-party call, specifically for us, is that pricing would be neutral, but slightly positive.

Great. Thank you very much.

Thank you, Robert.

Thank you. And your next question comes from Brian McNara from Genical Regenuity. Please go ahead. Hi, this is Madison Callinan. I'm on for Brian. Thanks for taking your questions. And not to be a dead horse, but can you comment on, like, the battery category struggles there? Is there something structural going on, whether it's a switch towards battery-free technologies or something else? Is it pantry de-stopping? Thanks for all that you guys can give.

Yeah, sure. Appreciate the question. No, there's nothing structural going on. The foundational health of the battery category is intact. Again, I mentioned devices continue to be stable in the household, usage, frequency. If anything, you're seeing a little bit of increased frequency because the power that these devices require is greater than it used to be. So, structurally battery category is healthy. I think what you are seeing play out in the standard data numbers is simply a reflection of consumer caution, value-seeking behavior, and the dynamic nature with which they shop. And they're changing channels, they're changing path sizes, all of that plays out in the scanner data. But no, we feel as positive about the battery category today as we do.

Great. And then are there any nuances to holiday shipment timing that we should be mindful of for Q4 and Q1 of fiscal 27? Thank you.

Holiday timing? Anything that we're aware of was built into our call today. And, you know, again, our back half is right now between Q3 and Q4 will be flat, the plus one. And that's built into any sort of pacing and phasing we had relative to the holiday.

Thank you.

Thank you.

Thank you. And there are no further questions at this time. Mark, you may please proceed.

Thanks for joining us today and your interest in Energizer. Hope everyone has a great rest of the day.

Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day.