as described in the tables below. The impact of these items
which are non-GAAP measures. See disclosure on
above.
See non-GAAP measure disclosures above.
There were no costs associated with the spin transaction recorded in the first fiscal quarter of 2018 as the project has been completed. During the quarter ended December 31, 2016, the Company recorded $1.3 in income in spin restructuring. On a project to date basis, the total costs incurred or allocated to Energizer for the spin were $197.6, inclusive of the costs of early debt retirement recorded in fiscal 2015. We do not expect any additional costs related to spin.
Segment Results
Operations for Energizer are currently managed via threetwo major geographic reportable segments: Americas (North America and Latin America), Europe, Middle East and Africa (“EMEA”), and Asia Pacific.
International. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, costs associated with restructuring initiatives, acquisition and integration activities, acquisition earn out, amortization costs, business realignment activities, research & development costs and other items determined to be corporate in nature. Financial items, such as interest income and expense and loss on extinguishment of debt, are managed on a global basis at the corporate level. The exclusion of substantially all acquisition integration, restructuring and realignmentintegration costs from segment results reflects management’s view on how it evaluates segment performance.
Energizer’s operating model includes a combination of standalone and shared business functions between the geographic segments, varying by country and region of the world. Shared functions include, but are not limited to, IT, procurement and finance. Energizer applies a fully allocated cost basis, in which shared business functions are allocated between segments. Such allocations are estimates, and do not represent the costs of such services if performed on a standalone basis. This structure is the basis for Energizer's reportable operating segments information, as included in the tables in Note 6,8, Segments, to the unaudited Consolidated Condensed(Condensed) Financial Statements for the quarterperiods ended December 31, 2017.
June 30, 2021 and 2020. Segment sales and profitabilitySegment profit analysis for the quarter and nine months ended December 31, 2017June 30, 2021 are presented below.
| | | | | | | | | | | | | | | | | | | | | | | |
| Quarter Ended June 30, 2021 | | Nine Months Ended June 30, 2021 |
| $ Change | | % Chg | | $ Change | | % Chg |
Americas | | | | | | | |
Net sales - FY '20 | $ | 491.9 | | | | | $ | 1,416.3 | | | |
Organic | 23.2 | | | 4.7 | % | | 153.1 | | | 10.8 | % |
Impact of FY 2021 Acquisitions | 3.6 | | | 0.7 | % | | 18.5 | | | 1.3 | % |
| | | | | | | |
| | | | | | | |
Change in Argentina | 1.9 | | | 0.4 | % | | 5.5 | | | 0.4 | % |
Impact of currency | 4.6 | | | 1.0 | % | | 0.4 | | | — | % |
Net sales - FY '21 | $ | 525.2 | | | 6.8 | % | | $ | 1,593.8 | | | 12.5 | % |
| | | | | | | |
International | | | | | | | |
Net sales - FY '20 | $ | 166.1 | | | | | $ | 565.5 | | | |
Organic | 15.1 | | | 9.1 | % | | 53.2 | | | 9.4 | % |
Impact of FY 2021 Acquisitions | 1.3 | | | 0.8 | % | | 6.7 | | | 1.2 | % |
| | | | | | | |
| | | | | | | |
Impact of currency | 14.1 | | | 8.5 | % | | 36.3 | | | 6.4 | % |
Net sales - FY '21 | $ | 196.6 | | | 18.4 | % | | $ | 661.7 | | | 17.0 | % |
| | | | | | | |
Total Net sales | | | | | | | |
Net sales - FY '20 | $ | 658.0 | | | | | $ | 1,981.8 | | | |
Organic | 38.3 | | | 5.8 | % | | 206.3 | | | 10.4 | % |
Impact of FY 2021 Acquisitions | 4.9 | | | 0.7 | % | | 25.2 | | | 1.3 | % |
| | | | | | | |
| | | | | | | |
Change in Argentina | 1.9 | | | 0.3 | % | | 5.5 | | | 0.3 | % |
Impact of currency | 18.7 | | | 2.9 | % | | 36.7 | | | 1.8 | % |
Net sales - FY '21 | $ | 721.8 | | | 9.7 | % | | $ | 2,255.5 | | | 13.8 | % |
Net Sales (In millions)
Quarter Ended December 31, 2017
|
| | | | | |
| Quarter Ended December 31, 2017 |
| $ Change | % Chg |
Americas | | |
Net sales - FY '17 | $ | 365.1 |
| |
Organic | 7.2 |
| 2.0 | % |
Impact of currency | 0.8 |
| 0.2 | % |
Net Sales - FY '18 | $ | 373.1 |
| 2.2 | % |
| | |
EMEA | | |
Net sales - FY '17 | $ | 114.7 |
| |
Organic | (3.0 | ) | (2.6 | )% |
Impact of currency | 5.9 |
| 5.1 | % |
Net Sales - FY '18 | $ | 117.6 |
| 2.5 | % |
| | |
Asia Pacific | | |
Net sales - FY '17 | $ | 79.8 |
| |
Organic | 1.7 |
| 2.1 | % |
Impact of currency | 1.1 |
| 1.4 | % |
Net Sales - FY '18 | $ | 82.6 |
| 3.5 | % |
| | |
Total Net Sales | | |
Net sales - FY '17 | $ | 559.6 |
| |
Organic | 5.9 |
| 1.1 | % |
Impact of currency | 7.8 |
| 1.3 | % |
Net Sales - FY '18 | $ | 573.3 |
| 2.4 | % |
Results for the Quarter Ended December 31, 2017June 30, 2021
Americas reported a netNet sales increase of 2.2% which was positively impacted by6.8% as compared to the prior year. Excluding favorable foreign currency impact of 0.8,$4.6, or 0.2%. Organic1.0%, and the favorable impact of the fiscal year 2021 acquisitions of 0.7% and Argentina operations of 0.4%, organic net sales increased 2.0% due primarily to price4.7% for the third fiscal quarter. The organic increase was driven by distribution gains in both the auto care and battery categories in North America and Latin America as well as strong auto replenishment. These increases and the favorable net impact of our portfolio optimization. These amounts were partially offset by a decline in North America battery sales compared to the retailer merchandising changes, lappingstrong COVID-19 related sales of storm volumethe prior year.
International reported a Net sales increase of 18.4% as compared to the prior year. Excluding the impact of favorable foreign currency movement of $14.1, or 8.5%, and the May 2017 divestitureimpact of the non-core promotional sales business acquired with the auto care acquisition.
EMEA reportedfiscal year 2021 acquisitions of 0.8%, organic net sales increased 2.5%9.1% for the quarter. The increase was driven by auto care distribution gains and elevated demand in both the battery and auto care categories.
Results for the Nine Months Ended June 30, 2021
Americas reported a Net sales increase of 12.5% as compared to the prior year. Excluding the impact of acquisitions, which positively impacted Net sales by $18.5, or 1.3%, the favorable impact of Argentina operations of $5.5, or 0.4%, and favorable foreign currency impact of 5.1%. Organic$0.4, organic net sales decreased by 2.6%increased 10.8% for the nine months ended June 30, 2021. The organic increase was driven by distribution gains across both product groups, strong replenishment partially due to the shiftnet impacts of COVID-19 demand and price increases.
International reported Net sales increase of 17.0% as compared to the prior year. Excluding the impact of acquisitions, which positively impacted net sales by $6.7, or 1.2%, and the favorable foreign currency movement of $36.3, or 6.4%, organic net sales increased 9.4% driven by increased distribution and strong replenishment due to elevated COVID-19 demand levels and timing of activity between quarters as we lapped the prior year shifting of holiday orders from the first quarter of fiscal 2020 into the fourth quarter of fiscal 2017.2019.
Asia Pacific reported net sales increased by 3.5%, including the positive impact of foreign currency of 1.4%. Organic net sales increased 2.1% driven by price increases taken in several markets.
Segment Profit (In millions)
Quarter Ended December 31, 2017
|
| | | | | |
| Quarter Ended December 31, 2017 |
| $ Change | % Chg |
Americas | | |
Segment Profit - FY '17 | $ | 123.1 |
| |
Organic | (0.5 | ) | (0.4 | )% |
Impact of currency | 0.5 |
| 0.4 | % |
Segment Profit - FY '18 | $ | 123.1 |
| — | % |
| | |
EMEA | | |
Segment Profit - FY '17 | $ | 26.1 |
| |
Organic | (4.5 | ) | (17.2 | )% |
Impact of currency | 3.9 |
| 14.9 | % |
Segment Profit - FY '18 | $ | 25.5 |
| (2.3 | )% |
| | |
Asia Pacific | | |
Segment Profit - FY '17 | $ | 24.7 |
| |
Organic | (1.5 | ) | (6.1 | )% |
Impact of currency | 0.5 |
| 2.1 | % |
Segment Profit - FY '18 | $ | 23.7 |
| (4.0 | )% |
| | |
Total Segment Profit | | |
Segment Profit - FY '17 | $ | 173.9 |
| |
Organic | (6.5 | ) | (3.7 | )% |
Impact of currency | 4.9 |
| 2.8 | % |
Segment Profit - FY '18 | $ | 172.3 |
| (0.9 | )% |
| | | | | | | | | | | | | | | | | | | | | | | |
Segment Profit (In millions) | Quarter Ended June 30, 2021 | | Nine Months Ended June 30, 2021 |
| $ Change | | % Chg | | $ Change | | % Chg |
Americas | | | | | | | |
Segment profit - FY '20 | $ | 122.9 | | | | | $ | 353.9 | | | |
Organic | 3.2 | | | 2.6 | % | | 58.8 | | | 16.6 | % |
Impact of FY 2021 Acquisitions | 0.4 | | | 0.3 | % | | 3.0 | | | 0.8 | % |
| | | | | | | |
| | | | | | | |
Change in Argentina | 1.2 | | | 1.0 | % | | 4.3 | | | 1.2 | % |
Impact of currency | — | | | — | % | | (4.1) | | | (1.1) | % |
Segment profit - FY '21 | $ | 127.7 | | | 3.9 | % | | $ | 415.9 | | | 17.5 | % |
International | | | | | | | |
Segment profit - FY '20 | $ | 34.8 | | | | | $ | 127.4 | | | |
Organic | (5.2) | | | (14.9) | % | | (10.5) | | | (8.2) | % |
Impact of FY 2021 Acquisitions | (0.1) | | | (0.3) | % | | 0.4 | | | 0.3 | % |
| | | | | | | |
| | | | | | | |
Impact of currency | 6.3 | | | 18.1 | % | | 17.9 | | | 14.0 | % |
Segment profit - FY '21 | $ | 35.8 | | | 2.9 | % | | $ | 135.2 | | | 6.1 | % |
Total Segment profit | | | | | | | |
Segment profit - FY '20 | $ | 157.7 | | | | | $ | 481.3 | | | |
Organic | (2.0) | | | (1.3) | % | | 48.3 | | | 10.0 | % |
Impact of FY 2021 Acquisitions | 0.3 | | | 0.2 | % | | 3.4 | | | 0.7 | % |
| | | | | | | |
| | | | | | | |
Change in Argentina | 1.2 | | | 0.8 | % | | 4.3 | | | 0.9 | % |
Impact of currency | 6.3 | | | 4.0 | % | | 13.8 | | | 2.9 | % |
Segment profit - FY '21 | $ | 163.5 | | | 3.7 | % | | $ | 551.1 | | | 14.5 | % |
Refer to Note 6,8, Segments, in the unaudited Condensed Consolidated (Condensed) Financial Statements for a reconciliation from segment profit to earnings before income taxes.
Results for the Quarter Ended December 31, 2017June 30, 2021
Global reported segment profit declinedincreased 3.7% as compared to the prior year, driven by $1.6,favorable currency of 4.0%. Offsetting this increase was the organic decrease was $2.0, or 0.9%1.3%. ExcludingThe Company had strong top-line growth, but this was almost fully offset by increased operating costs including higher labor, tariffs and transportation costs, which unfavorably impacted gross margin. The Company also had synergies resulting in lower SG&A, but this was fully offset by the higher planned A&P investment in the quarter.
Americas reported segment profit increased by 3.9% as compared to the prior year. Organic segment profit increased by $3.2, or 2.6%, driven by top-line growth and realized synergies resulting in decreased SG&A. This was partially offset by higher operating costs, which unfavorably impacted gross margin as well as planned higher A&P spending.
International reported segment profit increased 2.9% as compared to the prior year. The favorable movement in foreign currencies of $4.9,$6.3, or 18.1%, was partially offset by the unfavorable organic segment profit decreased $6.5,decline of $5.2, or 3.7%14.9%. The organic decline was driven by increased labor, tariffs and transportation costs, and an unfavorable mix shift to our auto care products, which negatively impacted gross margin and mostly offset the organic revenue growth. The segment profit was further impacted by higher overhead spending and planned higher A&P spending in the period.
Results for the Nine Months Ended June 30, 2021
Global reported segment profit increased 14.5% as compared to the prior year. The organic increase of $48.3, or 10.0%, was driven by top-line organic growth and realized synergies in the current fiscal period. Top-lineyear. Slightly offsetting the organic growth in the quarter was more than offset by increases inwere operational costs related to COVID-19, unfavorable mix as well as increased operating costs that resulted from higher labor, tariffs and transportation costs, which negatively impacted gross margin, as well as slightly higher SG&A overhead due to our continuous improvement initiatives to simplifythe increased revenue and streamline our business processes to reduce costs andplanned higher A&P spending related to our portfolio optimization and holiday programs.investment.
Americas reported segment profit remained flatincreased by 17.5% as compared to the prior period inclusiveyear. The organic increase of the positive impact from foreign currency of $0.5. Organic$58.8, or 16.6%, was driven by strong top-line growth and synergy realization partially offset by operational costs related to COVID-19 and planned higher A&P spending.
International reported segment profit decreased by $0.5increased 6.1% as top-line growth was fullycompared to the prior year. The favorable movements in foreign currencies of $17.9, or 14.0%, were partially offset by the unfavorable organic segment profit decline of $10.5, or 8.2%. The organic decline was driven by operational costs related to COVID-19, unfavorable mix as well as increased operating costs that resulted from higher labor, tariffs and transportation costs, which negatively impacted gross margin. The segment profit was further impacted by higher overhead spending and planned higher A&P spending in support of portfolio initiatives and holiday programs.the period.
EMEA reported segment profit declined $0.6 inclusive of the positive impact from foreign currency of $3.9. Organic segment profit decreased by $4.5 driven by the decrease in sales due to the shift of holiday orders into the fourth quarter of fiscal 2017 as well as increased overhead spending due to current year investments in our continuous improvement initiatives. | | | | | | | | | | | | | | | | | | | | | | | |
General Corporate and Global Marketing Expenses | For the Quarter Ended June 30, | | For the Nine Months Ended June 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
General corporate and other expenses | $ | 21.5 | | | $ | 25.6 | | | $ | 71.3 | | | $ | 74.0 | |
Global marketing expense | 9.8 | | | 7.4 | | | 28.7 | | | 19.1 | |
General corporate and global marketing expense | $ | 31.3 | | | $ | 33.0 | | | $ | 100.0 | | | $ | 93.1 | |
% of Net Sales | 4.3 | % | | 5.0 | % | | 4.4 | % | | 4.7 | % |
Asia Pacific reported segment profit decreased $1.0. Excluding the favorable impact from foreign currency of $0.5, organic segment profit declined by $1.5 as top-line growth was more than offset by increased overhead spending due to current year investments in our continuous improvement initiatives.
General Corporate and Global Marketing Expenses
|
| | | | | | | |
| For the Quarter Ended December 31, |
| 2017 | | 2016 |
General corporate and other expenses | $ | 21.6 |
| | $ | 17.2 |
|
Global marketing expense | 3.2 |
| | 3.0 |
|
General corporate and global marketing expense | $ | 24.8 |
| | $ | 20.2 |
|
% of Net Sales | 4.3 | % | | 3.6 | % |
For the quarter ended December 31, 2017,June 30, 2021, general corporate and other expenses were $21.6, an increase$21.5, a decrease of $4.4$4.1 as compared to the prior year comparative period dueand for the nine months ended June 30, 2021 was $71.3, a decrease of $2.7 as compared to increased compensation costs and higherthe prior year comparative period. The current quarter decrease was primarily driven by lower mark to market expenseexpenses on our unfunded deferred compensation liability.plans as well as reduced stock compensation expense in the current year. The decrease for the nine month period was driven by synergy realization and reduced spending, due in part to travel restrictions imposed as a result of COVID-19, partially offset by higher legal and corporate development costs and mark to market expenses on our deferred compensation plans.
For the quarter and nine months ended December 31, 2017,June 30, 2021, global marketing expenses were $3.2$9.8 and $28.7, respectively, compared to $3.0$7.4 and $19.1, respectively, in the prior year comparative periods. The global marketing expense represents a center led approach to managing global marketing activities in support of our brands. The increase was primarily driven by planned incremental investment in our branded product portfolio.
Liquidity and Capital Resources
Energizer’s primary future cash needs will be centered on operating activities, working capital, strategic investments and strategic investments.debt reductions. We believe that our future cash from operations, together with our access to capital markets, will provide adequate resources to fund our operating and financing needs. Our access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) our financial condition and prospects, (ii) for debt, our credit rating, (ii)(iii) the liquidity of the overall capital markets and (iii)(iv) the current state of the economy. There can be no assurances that we will continue to have access to capital markets on terms acceptable to us. See the “Risk Factors” section of our Annual Report on Form 10-K for the year ended September 30, 20172020 filed with the Securities and Exchange Commission on November 14, 2017 as well as in Item 1A. Risk Factors of this Form 10-Q.17, 2020 for additional information.
Cash is managed centrally with net earnings reinvested locally and working capital requirements met from existing liquid funds. At December 31, 2017,June 30, 2021, Energizer had $454.3$207.7 of cash and cash equivalents, substantially allapproximately 90% of which was held outside of the U.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations.
TheOn December 22, 2020, the Company hasentered into a $350.0 senior securedCredit Agreement which provided for a 5-year $400.0 revolving credit facility (Revolving(2020 Revolving Facility) which maturesand a $1,200.0 Term Loan due December 2027. In December 2020, $550.0 was used to pay down the remaining balances on the Term Loan A facility due in 2020.2022, Term Loan B facility due in 2025 and the amounts outstanding on the existing 2018 Revolving Credit Facility. In January 2021, the remaining $650.0 of proceeds were utilized to fund the redemption of the Company’s $600.0 7.750% Senior Notes due in 2027 at a redemption price equal to 110.965% of the aggregate principal amount.
The borrowings under the Term Loan require quarterly principal payments at a rate of 0.25% of the original principal balance. Borrowings under the 2020 Revolving Facility will bear interest at a rate per annum equal to, at the option of the Company, LIBOR or the Base Rate (as defined) plus the applicable margin based on totalmargin. The Term Loan bears interest at a rate per annum equal to, at the option of the Company, leverage.LIBOR or Base Rate (as defined) plus the applicable margin.
The 2020 Revolving Facility replaced the previously outstanding 2018 Revolving Facility. The Company also amended certain covenants in its Credit Agreement, which are intended to create additional capacity and flexibility. As of December 31, 2017,June 30, 2021, the Company had $87.5$103.0 of outstanding borrowingsborrowing under the 2020 Revolving Facility and had $6.7$7.7 of outstanding letters of credit. Taking into account outstanding letters of credit, $255.8 remains$289.3 remained available as of December 31, 2017.June 30, 2021.
Subsequent to the quarter, on January 15, 2018, the Company entered into a definitive acquisition agreement with Spectrum Brands Holdings, Inc. to acquire its global battery, lighting, and portable power business for a purchase price of $2,000.0 in cash, subject to certain purchase price adjustments. Energizer intends to fund the acquisition through a combination of existing cash and committed debt facilities, expected to ultimately consist of a new term loan and senior notes. In addition, Energizer intends to maintain its existing senior notes, maturing in 2025. The closing of this transaction is subject to various conditions and regulatory approvals.
The Company is also committed to pay a $100.0 termination fee to Spectrum if the transaction does not close by July 15, 2019, and all conditions precedent to the Company’s obligation to consummate the acquisition have otherwise been satisfied except for one or more of the regulatory approval conditions specified in the acquisition agreement. Success fees are due to the financial adviser of $13.0, of which $2.0 was paid in January with the remainder to be paid subject to the closing of the transaction.
Operating Activities
Cash flow from operating activities from continuing operations was $141.0$17.5 in the threenine months ended December 31, 2017,June 30, 2021, as compared to $91.8$231.9 in the prior year comparative period. The increaseThis decrease of $214.4 was primarily driven by theworking capital changes year over year improvementof approximately $282, partially offset by the increase in cash earnings of approximately $72. The working capital change of $38.5. Accounts receivableapproximately $281 was primarily result of the main driverfollowing:
•Approximately $115 in increased inventory investment compared to the working capital improvementprior year as we have taken a proactive approach to invest in incremental safety stock given the strong operating performancecontinued volatility of the global supply network–including uncertainty around product sourcing, transportation challenges and labor availability;
•Approximately $71 due to changes in the last quarter of fiscal 2017, largelyaccounts payable and accrued interest driven by hurricane activity in the U.S., distribution gains in international markets and timing of holiday activity resultedpayments;
•Approximately $39 in accounts receivable due to higher collections in the first fiscal quarter of 2018 ascurrent year sales compared to 2017.prior year; and
•The prior year receipt of approximately $30 related to the agreement and final cash settlement from the Central Authority in Spain on a Spanish VAT refund payment.
Investing Activities
Net cash used by investing activities from continuing operations was $5.5$109.9 and $0.6 in three$47.4 for the nine months ended December 31, 2017June 30, 2021 and 2016,2020, respectively, and consisted of the following:
•Capital expenditures of $5.5$42.7 and $4.9$44.4 in the threenine months ended December 31, 2017June 30, 2021 and 2016,2020, respectively. These capital expenditures were funded by cash flow
•Proceeds from operations.
The prior year expenditures were partially offset by proceeds from the sale of assets of $4.3 related$1.5 in the nine months ended June 30, 2020.
•Acquisitions, net of cash acquired was $67.2 in the nine months ended June 30, 2021 for the fiscal year 2021 acquisitions.
•Acquisitions, net of cash acquired was $4.5 in the nine months ended June 30, 2020. The majority of this payment was due to the salefinalization of two previously closed facilities.working capital adjustments with Spectrum for the Auto Care Acquisition while $0.9 was utilized to complete the CAE acquisition.
Investing cash outflows of approximately $30 to $35$37 are anticipated for the full fiscal year 20182021 for capital expenditures relating to maintenance, product development and cost reduction initiatives. Totalinvestments. Additional investing cash outflows of approximately $40 to $48 are anticipated in full fiscal year 2021 for integration related capital expenditures are expectedexpenditures. The Company will also weigh market conditions and other capital needs, the potential impact of COVID-19 and other factors deemed relevant, in the decisions to be financed with funds generated from operations.prioritize or delay funding and may adjust these projected amounts if necessary.
Financing Activities
Net cash used by financing activities from continuing operations was $63.9$957.5 for the threenine months ended December 31, 2017June 30, 2021 as compared to $63.2$115.4 in the prior fiscal year comparative period. For threethe nine months ended December 31, 2017,June 30, 2021, cash flow used by financing activities from continuing operations consists of the following:
•Cash proceeds from the issuance of debt with original maturities greater than 90 days of $1,982.6 relating to the Term Loan funded in December 2020 and January 2021, and the June 2021 issuance of €650.0 Senior Notes due in 2029 (2029 EUR Notes);
•Payments of debt with maturities greater than 90 days of $2,770.2, primarily related to the October 2020 repayment of the $750.0 Senior Notes due in 2026 (2026 Notes), the $319.4 repayment of the Term Loan A and $313.5 Term Loan B in December 2020, the January 2021 repayment of the $600.0 Senior Notes due in 2027 (2027 Notes), and the June 2021 repayment of the €650.0 Senior Notes due in 2026 (2026 EUR Notes).
•Net increase in debt with original maturities of 90 days or less of $6.5;$106.6 primarily related to borrowing under our 2020 Revolving Facility;
•Premiums paid on extinguishment of debt of $141.1 funded the October 2020 redemption of the 2026 Notes, the January 2021 redemption of the 2027 Notes, and the June 2021 repayment of the 2026 EUR Notes;
•Debt issuance costs of $27.6 relating to the funding of the Term Loan in December 2020 and January 2021 and the 2029 EUR Notes in June 2021;
•Payment of contingent consideration of $3.9 related to the achievement of a CAE acquisition earn out threshold;
•Dividends paid on common stock of $17.6$63.8 (see below);
•Dividends paid on mandatory convertible preferred stock (MCPS) of $12.1 (see below);
•Common stock repurchases of $50.0$21.3 at an average price of $44.41$42.61 per share (see below); and
•Taxes paid for withheld share-based payments of $1.8;$6.7.
For the nine months ended June 30, 2020, cash from financing activities from continuing operations consisted of the following:
•Cash proceeds from the issuance of debt with original maturities greater than 90 days of $620.6 relating to the add on offering of $250.0 of our 2026 Notes and the refinancing of the 2018 Term Loans in December 2019;
•Payments of debt with maturities greater than 90 days of $1.0.
For$770.3, related to the three months endedTerm Loan refinancing in December 31, 2016, cash used by financing activities consisted2019, the repayment of $345.8 of debt from the proceeds of the following:Varta divestiture as well as incremental payments on the 2018 Term Loan A and 2018 Term Loan B;
•Net decreaseincrease in debt with original maturities of 90 days or less of $27.9,$171.5, primarily related to the repayment of
borrowings on the 2018 Revolving Credit Facility;
•Debt issuance costs of $6.1 relating to the add on offering of $250.0 of our Revolving Facility;2026 Notes and the Term Loan refinancing;
•Dividends paid on common stock of $18.1;$64.3;
•Dividends paid on MCPS of $12.1;
•Common stock repurchases of $8.1$45.0 at an average price of $44.43$45.93 per share; and
•Taxes paid for withheld share-based payments of $8.1; and$9.7.
Payments of debt with maturities greater than 90 days of $1.0.
Dividends
On November 13, 2017,12, 2020, the Board of Directors declared a cash dividend for the first quarter of fiscal 20182021 of $0.29$0.30 per share of common stock. The dividend was paidstock, payable on December 14, 2017 to shareholders on record as of November 30, 2017 and totaled $17.3. The incremental dividend payments of $0.3 made in the first three months of 2018 were related to restricted stock awards that vested during November 2017.
Subsequent to the fiscal quarter end, on January 29, 2018,18, 2020. On February 1, 2021, the Board of Directors declared a cash dividend for the second quarter of 20182021 of $0.29$0.30 per share of common stock, payable on March 13, 201811, 2021. On May 3, 2021, the Board of Directors declared a cash dividend for the third quarter of fiscal 2021 of $0.30 per share of common stock, payable on June 15, 2021.
The Company also paid a cash dividend of $1.875 per share of MCPS on October 15, 2020 which had been declared in fiscal 2020. On November 12, 2020, the Board of Directors declared a cash dividend of $1.875 per share of MCPS, which was paid on January 15, 2021. On February 1, 2021, the Board of Directors declared a cash dividend of $1.875 per share of MCPS, which was paid on April 15, 2021. On May 3, 2021, the Board of Directors declared a cash dividend of $1.875 per share of MCPS, payable on July 15, 2021, to all shareholders of record as of the close of business February 20, 2018.on July 1, 2021. This dividend was accrued at June 30, 2021.
Subsequent to the end of the fiscal quarter, on August 2, 2021, the Board of Directors declared a cash dividend for the fourth quarter of fiscal 2021 of $0.30 per share of common stock, payable on September 14, 2021, to all shareholders of record as of the close of business on August 24, 2021.
Subsequent to the end of the fiscal quarter, on August 2, 2021, the Board of Directors declared a cash dividend of $1.875 per share of MCPS, payable on October 15, 2021, to all shareholders of record as of the close of business on October 1, 2021.
Share Repurchases
In July 2015,November 2020, the Company's Board of Directors approved anput in place a new authorization for the Company to acquire up to 7.5 million shares of its common stock. During the threenine months ended December 31, 2017,June 30, 2021, the Company repurchased 1,126,379500,000 shares for $21.3, at an average price of $44.41$42.61 per share, or $50.0, under this authorization.
The Company intends to enter into a $75.0 accelerated share repurchase (ASR) program in the fourth quarter of fiscal 2021, which, based on the August 6, 2021 closing price of the Company's common stock, equates to approximately 1.8 million shares and represents approximately 2.5% of the Company's fully diluted outstanding stock. The Company expects to fund these repurchases using available cash on hand and revolver borrowings, and anticipates that the ASR program will be completed before the end of the calendar year 2021.
Future share repurchase,repurchases, if any, will be determined by the Company based on its evaluation of the market conditions, capital allocation objectives, legal and regulatory requirements and other factors.
From July 2015 and Share repurchases may be effected through the date of this filing, a total of 3.3 million shares were repurchased on the open market at an average pricepurchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of $42.17 underRule 10b5-1 of the current shareSecurities Exchange Act of 1934.
The timing, declaration, amount and payment of future dividends to shareholders or repurchases of the Company’s Common stock will fall within the discretion of our Board of Directors. The Board’s decisions regarding the payment of dividends or repurchase authorization. At January 31, 2018, the date of this filing, 4.2 million shares remain available for repurchase.
will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, covenants associated with certain of our debt service obligations, industry practice, legal requirements, regulatory constraints and other factors that our Board of Directors deems relevant.
Other Matters
Environmental Matters
Accrued environmental costs at December 31, 2017June 30, 2021 were $5.2.$9.2. It is difficult to quantify with certainty the cost of environmental matters, particularly remediation and future capital expenditures for environmental control equipment. Total environmental capital expenditures and operating expenses are not expected to have a material effect on our total capital and operating expenditures, earnings or competitive position. However, current environmental spending estimates could be modified as a result of changes in our plans or our understanding of underlying facts, changes in legal requirements, including any requirements related to global climate change, or other factors.
Contractual Obligations
A summary of Energizer's significant contractual obligations at December 31, 2017June 30, 2021 is showshown below: |
| | | | | | | | | | | | | | | |
| Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years |
Long term debt, including current maturities | $ | 991.0 |
| $ | 4.0 |
| $ | 8.0 |
| $ | 379.0 |
| $ | 600.0 |
|
Interest on long-term debt (1) | 310.3 |
| 27.2 |
| 94.0 |
| 90.1 |
| 99.0 |
|
Notes payable | 110.5 |
| 110.5 |
| — |
| — |
| — |
|
Operating leases | 55.0 |
| 9.4 |
| 20.4 |
| 8.1 |
| 17.1 |
|
Pension plans (2) | 7.7 |
| 7.7 |
| — |
| — |
| — |
|
Purchase obligations and other (3) | 98.2 |
| 48.6 |
| 49.6 |
| — |
| — |
|
Mandatory transition tax | 30.0 |
| 2.6 |
| 4.7 |
| 9.2 |
| 13.5 |
|
Total | $ | 1,602.7 |
| $ | 210.0 |
| $ | 176.7 |
| $ | 486.4 |
| $ | 729.6 |
|
| | | | | | | | | | | | | | | | | |
| Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years |
Long-term debt, including current maturities | $ | 3,367.8 | | $ | 12.0 | | $ | 24.0 | | $ | 24.0 | | $ | 3,307.8 | |
| | | | | |
Interest on long-term debt (1) | 919.8 | | 126.3 | | 251.7 | | 249.5 | | 292.3 | |
Notes payable | 103.4 | | 103.4 | | — | | — | | |
Operating leases (2) | 174.5 | | 19.6 | | 34.5 | | 31.5 | | 88.9 | |
Capital leases (3) | 85.4 | | 5.0 | | 9.9 | | 10.0 | | 60.5 | |
Pension plans (4) | 1.1 | | 1.1 | | — | | — | | — | |
Purchase obligations and other (5) | 34.0 | | 12.8 | | 14.2 | | 6.2 | | 0.8 | |
Mandatory transition tax | 16.7 | | — | | — | | 9.4 | | 7.3 | |
Total | $ | 4,702.7 | | $ | 280.2 | | $ | 334.3 | | $ | 330.6 | | $ | 3,757.6 | |
(1) The above table is based upon the debt balance and LIBOR rate as of December 31, 2017. In March 2017,June 30, 2021. Energizer entered intohas an interest rate swap agreement with one major financial institution that fixed the variable benchmark component (LIBOR) on $200$700 of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%0.95%.
(2) Operating lease payments include the net present value of the lease obligation of $121.0 as well as the imputed interest included in the payment of $53.5.
(3) Capital lease payments include the full capital leases obligation of $44.9 as well as the interest included in the payment of $40.5.
(4) Globally, total expected pension contributions for the Company for fiscal year 20182021 are estimated to be $8.9.$4.4. The Company has made payments of $1.2$3.3 year to date. The projected payments beyond fiscal year 20182021 are not currently estimable.
(3)(5) Included in the table above are future purchase commitments for goods and services which are legally binding and that specify all significant terms including price and/or quantity.
Energizer is also party to various service and supply contracts that generally extend approximately one to three months. These arrangements are primarily individual, short-term purchase orders for routine goods and services at
market prices, which are part of our normal operations and are reflected in historical operating cash flow trends. These contracts can generally be canceled at our option at any time. We do not believe such arrangements will adversely affect our liquidity position.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Sensitive Instruments and Positions
The market risk inherent in the Company's financial instruments’ positions represents the potential loss arising from adverse changes in currency rates, commodity prices and interest rates. The following risk management discussion and the estimated amounts generated from the sensitivity analysis are forward-looking statements of market risk assuming certain adverse market conditions occur. The Company's derivatives are used only for identifiable exposures, and we have not entered into hedges for trading purposes where the sole objective is to generate profits.
Derivatives Designated as Cash Flow Hedging Relationships
A significant share of Energizer's product cost is more closely tied to the U.S. dollar than to the local currencies in which the product is sold. As such, a weakening of currencies relative to the U.S. dollar results in margin declines unless mitigated through pricing actions, which are not always available due to the economic or competitive environment. Conversely, strengthening of currencies relative to the U.S. dollar can improve reported results. The primary currencies to which Energizer is exposed include the Euro, the British pound, the Canadian dollar and the Australian dollar. However, the Company also has significant exposures in many other currencies which, in the aggregate, may have a material impact on the Company's operations.
The Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of forecasted payment of inventory purchases due to short term currency fluctuations. Energizer’s foreign affiliates, which have the largest exposure to U.S. dollar purchases, have the Euro, the British pound, the Canadian dollar and the Australian dollar as their local currencies. These foreign currencies represent a significant portion of Energizer's foreign currency exposure. At December 31, 2017June 30, 2021 and September 30, 2017,2020, Energizer had an unrealized pre-tax loss of $4.2$1.6 and $5.8,$4.9, respectively, on these forward currency contracts accounted for as cash flow hedges, included in Accumulated other comprehensive loss on the Unaudited Condensed Consolidated (Condensed) Balance Sheets. Assuming foreign exchange rates versus the U.S. dollar remain at December 31, 2017June 30, 2021 levels over the next twelve months, $4.1$1.8 of the pre-tax loss included in Accumulated other comprehensive loss at December 31, 2017,June 30, 2021 is expected to be includedrecognized in earnings. Contract maturities for these hedges extend into fiscal year 2019.2022.
Derivatives Not Designated as Cash Flow Hedging Relationships
Energizer's foreign subsidiaries enter into internal and external transactions that create nonfunctional currency balance sheet positions at the foreign subsidiary level. These exposures are generally the result of intercompany purchases, intercompany loans and to a lesser extent, external purchases, and are revalued in the foreign subsidiary’s local currency at the end of each period. Changes in the value of the non-functional currency balance sheet positions in relation to the foreign subsidiary’s local currency results in an exchange gain or loss recorded in Other items, net on the Consolidated (Condensed) Statements of Earnings and Comprehensive Income. The primary currency to which Energizer’s foreign subsidiaries are exposed is the U.S. dollar.
The Company enters into foreign currency derivative contracts which are not designated as cash flow hedges for accounting purposes to hedge balance sheet exposures. Any gains or losses on these contracts are expected to be offset by exchange gains or losses on the underlying exposures, thus they are not subject to significant market risk. The change in estimated fair value of the foreign currency contracts for the quarterquarters ended December 31, 2017June 30, 2021 and 2020 resulted in incomea loss of $0.3 and expense$0.6, respectively, and a loss of $1.9$0.9 and $2.2 for the quarternine months ended December 31, 2016June 30, 2021 and 2020, respectively, and was recorded in Other items, net on the unaudited Consolidated (Condensed) Statements of Earnings and Comprehensive Income (Condensed).Income.
Commodity Price Exposure
The Company uses raw materials that are subject to price volatility. TheAt times, the Company has used, and may in the future use,uses hedging instruments to reduce exposure to variability in cash flows associated with future purchases of certain raw materials and commodities. At December 31, 2017, there
The Company has entered into hedging contracts on future zinc purchases to reduce exposure to variability in cash flows associated with price volatility. The contracts are determined to be cash flow hedges and qualify for hedge accounting. The contract maturity for these hedges extend into 2022. There were no12 open derivative or hedging instruments for future purchasescontracts at June 30, 2021, with a total notional value of raw materials or commodities.approximately $18. The pre-tax gain recognized on the zinc contracts was $7.3 at June 30, 2021 and $4.4 at September 30, 2020, and was included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheet.
Interest Rate Exposure
The Company has interest rate risk with respect to interest expense on variable rate debt. At December 31, 2017,June 30, 2021, Energizer had variable rate debt outstanding with an original principal balance of $400.0$1,300.0 under the 2020 Term Loan. Loan and the 2020 Revolving Facility.
In March 2017,December 2020, the Company also entered into ana new interest rate swap agreement(2020 Interest rate swap) with one major financial institutionan effective date of December 22, 2020, that fixed the variable benchmark component (LIBOR) on $200.0 of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%.0.95% on variable rate debt of $550.0. The notional value increased to $700.0 on January 22, 2021, and will stay at that value through December 22, 2024. The notional value will decrease by $100.0 on December 22, 2024 and by $100.0 each year thereafter until its termination date on December 22, 2027.
At June 30, 2021, Energizer recorded a unrealized pre-tax gain of $9.8 on the 2020 Interest rate swap, and at September 30, 2020, the Company recorded an unrealized pre-tax net loss of $7.3 on the 2017 and 2018 interest rate swaps. For the quarter ended December 31, 2017,June 30, 2021, our weighted average interest rate on variable rate debt, inclusive of the interest rate swap, was 3.42%2.96%.
Argentina Currency Exposure and Hyperinflation
Effective July 1, 2018, the financial statements for our Argentina subsidiary were consolidated under the rules governing the translation of financial information in a highly inflationary economy. Under U.S. GAAP, an economy is considered highly inflationary if the cumulative inflation rate for a three year period meets or exceeds 100 percent. The Argentina economy exceeded the three year cumulative inflation rate of 100 percent as of June 2018. If a subsidiary is considered to be in a highly inflationary economy, the financial statements of the subsidiary must be remeasured into the Company’s reporting currency (U.S. dollar) and future exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than exclusively in the equity section of the balance sheet, until such time as the economy is no longer considered highly inflationary. It is difficult to determine what continuing impact the use of highly inflationary accounting for Argentina may have on our consolidated financial statements as such impact is dependent upon movements in the applicable exchange rates between the local currency and the U.S. dollar and the amount of monetary assets and liabilities included in our affiliates' balance sheet.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a comprehensive set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to Energizer's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Based on that evaluation performed, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31, 2017,June 30, 2021, to provide reasonable assurance of the achievement of these objectives. Notwithstanding the foregoing, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in the Company's reports.
They
The Chief Executive Officer and Chief Financial Officer have also determined in their evaluation that there was no change in the Company's internal control over financial reporting during the quarter ended December 31, 2017June 30, 2021 that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its affiliates are subject to a number of legal proceedings in various jurisdictions arising out of its operations. Many of these legal matters are in preliminary stages and involve complex issues of law and fact, and may proceed for protracted periods of time. The amount of liability, if any, from these proceedings cannot be determined with certainty. We are a party to legal proceedings and claims that arise during the ordinary course of business. We review our legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. We do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. Based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims which are likely to be asserted, is not reasonably likely to be material to the Company's financial position, results of operations, or cash flows, when taking into account established accruals for estimated liabilities.
Item 1A. Risk Factors
Our Annual Report on Form 10-K for the year ended September 30, 2017,2020, which was filed with the Securities and Exchange Commission on November 14, 2017,17, 2020, contains a detailed discussion of risk factors that could materially adversely affect our business, our operating results or our financial condition. There have been no material changes to the risk factors included in our Annual Report on Form 10-K for the year ended September 30, 2017, except for the addition of the following:10-K.
Risks Related to the Acquisition of the Global Battery, Lighting, and Portable Power Business of Spectrum Brands Holdings, Inc. (the “Acquisition”)
The pending Acquisition is subject to the satisfaction of certain conditions, including obtaining required regulatory approvals, and may not be consummated, and if not consummated under certain circumstances, we may be subject to monetary or other damages under the acquisition agreement.
On January 16, 2018, we announced that we had entered into a definitive acquisition agreement to acquire the global battery, lighting, and portable power business (the “Business”) of Spectrum Brands Holdings, Inc. (“Spectrum”). The consummation of the Acquisition is subject to certain customary conditions, including, among other things, (i) the absence of a material adverse effect on the Business, (ii) the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (iii) the receipt of certain other antitrust approvals in certain specified foreign jurisdictions (the conditions contained in (ii) and (iii) together, the “Antitrust Conditions”), (iv) the accuracy of the representations and warranties of the parties (generally subject to a customary material adverse effect standard (as described in the acquisition agreement) or other customary materiality qualifications), (v) the absence of governmental restrictions on the consummation of the Acquisition in certain jurisdictions, and (vi) material compliance by the parties with their respective covenants and agreements under the acquisition agreement.
Many of the closing conditions are not within our control, and there can be no assurance that the closing conditions for the Acquisition will be satisfied in a timely manner, or at all. Any delay could cause us not to realize some or all of the cost savings, synergies and other benefits that we expect to achieve if the Acquisition were to be successfully completed within its expected time frame. If any of these conditions are not satisfied or waived prior to July 15, 2019 (the “Termination Date”), it is possible that the acquisition agreement may be terminated. Further, if the Acquisition has not been consummated by the Termination Date and all conditions precedent to the Company’s obligation to consummate the Acquisition have otherwise been satisfied except for one or more of the Antitrust Conditions, then the Company would be required to pay Spectrum a termination fee of $100 million.
We may be unable to obtain the regulatory clearances required to complete the Acquisition or, in order to do so, we or Spectrum may be required to comply with material restrictions or satisfy material conditions.
The Acquisition is subject to review by the U.S. Department of Justice and the Federal Trade Commission under the HSR Act, and other regulatory agencies. The closing of the Acquisition is subject to the condition that the applicable waiting period, and any applicable extensions thereof, under the HSR Act have expired or been duly terminated, and that certain other antitrust approvals in specified foreign jurisdictions have been received. We cannot provide any assurance that all required antitrust clearances will be obtained. There can be no assurance as to the cost, scope or impact of the actions that may be required to obtain antitrust approval. In addition, the acquisition agreement provides that we are required to commit to dispositions of assets up to a certain amount in order to obtain regulatory clearance. If we are required to or otherwise decide to take such actions in order to close the Acquisition, it could be detrimental to the combined organization following the consummation of the Acquisition. Furthermore, these actions could have the effect of delaying or preventing completion of the proposed Acquisition or imposing additional costs on or limiting the revenues or cash of the combined organization following the consummation of the Acquisition. However, if certain antitrust clearances are not obtained and the acquisition agreement is terminated under specified circumstances, we could be liable to Spectrum for a termination fee of $100 million.
Even if the parties receive early termination of the statutory waiting period under the HSR Act or the waiting period required expires, the U.S. Department of Justice, the Federal Trade Commission, or other regulatory authorities could take action under the antitrust laws to prevent or rescind the Acquisition, require the divestiture of assets or seek other remedies. Additionally, state attorneys general could seek to block or challenge the Acquisition as they deem necessary or desirable in the public interest at any time, including after completion of the transaction. In addition, in some circumstances, a third party could initiate a private action under antitrust laws challenging or seeking to enjoin the merger, before or after it is completed. We may not prevail and may incur significant costs in defending or settling any action under the antitrust laws.
Our indebtedness following the completion of the Acquisition will be significant and could adversely affect our business and our ability to meet our obligations, and if sufficient financing on favorable terms or other sources of capital are not available, we may be subject to significant monetary or other damages under the Acquisition Agreement.
We currently expect to incur indebtedness in excess of $2 billion to finance the Acquisition. Interest costs related to this debt or other debt we may incur in connection with the Acquisition will be significant. Our new indebtedness may contain negative or financial covenants that would limit our operational flexibility. Our increased level of indebtedness could reduce funds available for additional acquisitions or other business purposes, restrict our financial and operating flexibility, or create competitive disadvantages compared to other companies with lower debt levels. This in turn may reduce our flexibility in responding to changes in our businesses and in our industry.
Additionally, although we have obtained financing commitments with respect to the Acquisition in an amount which we believe would be sufficient to allow us to complete the transaction, the consummation of the financing pursuant to these commitments is subject to conditions that may not be satisfied. Our ability to obtain any financing to fund a portion of the purchase price is not a condition to closing under the acquisition agreement. However, if we are unable to obtain sufficient financing on favorable terms or experience a significant diminution of our existing cash and cash equivalents or other sources of capital, and as a result we do not have sufficient funds to complete the Acquisition, we may be subject to monetary or other damages under the acquisition agreement as a result of our failure to complete the Acquisition.
We may be unable to integrate the Business successfully and realize the anticipated benefits of the Acquisition.
The pending Acquisition involves the combination of two companies that have operated independently. We will be required to devote significant management attention and resources to integrating business practices, cultures and operations of each business. Potential difficulties we may encounter as part of the integration process include the following:
the inability to successfully combine our respective businesses in a manner that permits us to achieve the cost savings, synergies and other anticipated benefits from the Acquisition;
the challenge of integrating complex systems, operating procedures, compliance programs, technology, networks and other assets of the Business in a manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;
difficulties in retaining key management and other key employees;
the challenge of managing the expanded operations of a significantly larger and more complex company and coordinating geographically separate organizations; and
potential unknown liabilities, liabilities that are significantly larger than we currently anticipate, and unforeseen increased expenses or delays associated with the Acquisition, including cash costs to integrate the two businesses that may exceed the cash costs that we currently anticipate.
Any one of these factors could result in increased costs, decreases in the amount of anticipated benefits and diversion of management’s attention, which could materially impact our business, financial condition and results of operations. In addition, even if we are able to integrate the Business successfully, the anticipated benefits of the pending Acquisition may not be realized fully, or at all, or may take longer to realize than expected.
Failure to complete the Acquisition could impact our stock price and our future business and financial results.
If the Acquisition is not completed, our ongoing business and financial results may be adversely affected and we will be subject to a number of risks, including the following: depending on the reasons for the failure to complete the Acquisition, we could be liable to Spectrum for monetary or other damages in connection with the termination or breach of the acquisition agreement, including a termination fee of $100 million; we have dedicated significant time and resources, financial and otherwise, in planning for the Acquisition and the associated integration, of which we would lose the benefit if the Acquisition is not completed; we are responsible for certain transaction costs relating to the Acquisition, whether or not the Acquisition is completed; while the acquisition agreement is in force, we are subject to certain restrictions on the conduct of our business, including our ability to make any other significant acquisition which would reasonably be expected to delay, hinder or otherwise obstruct the consummation of the Acquisition, which restrictions may adversely affect our ability to execute certain of our business strategies; and matters relating to the Acquisition (including integration planning) may require substantial commitments of time and resources by our management, whether or not the Acquisition is completed, which could otherwise have been devoted to other opportunities that may have been beneficial to us.
In addition, if the Acquisition is not completed, we may experience negative reactions from the financial markets and from our customers and employees. We also may be subject to litigation related to any failure to complete the Acquisition or to enforcement proceedings commenced against us to perform our obligations under the acquisition agreement. If the Acquisition is not completed, these risks may materialize and may adversely affect our business, financial results and financial condition, as well as the price of our common stock.
While the Acquisition is pending, we and Spectrum will be subject to business uncertainties that could adversely affect our respective businesses.
Our success following the Acquisition will depend in part upon the ability of us and Spectrum to maintain our respective business relationships. Uncertainty about the effect of the Acquisition on customers, suppliers, employees and other constituencies may have a material adverse effect on us and the Business. Customers, suppliers and others who deal with us or Spectrum may delay or defer business decisions, decide to terminate, modify or renegotiate their relationships or take other actions as a result of the Acquisition that could negatively affect the revenues, earnings and cash flows of the Company or the Business. If we are unable to maintain these business and operational relationships, our financial position, results of operations or cash flows could be materially affected.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table reports purchases of equity securities during the firstthird quarter of fiscal 20182021 by Energizer and any affiliated purchasers pursuant to SEC rules, including any treasury shares withheld to satisfy employee withholding obligations upon vesting of restricted stock and the execution of net exercises.
| | | | | | | | | | | | | | |
Issuer Purchases of Equity Securities |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number That May Yet Be Purchased Under the Plans or Programs (2) |
April 1 - April 30 | — | | — | | — | | 7,000,000 | |
May 1 - May 31 | — | | $ | — | | — | | 7,000,000 | |
June 1 - June 30 | 150 | | $ | 42.20 | | — | | 7,000,000 | |
Total | 150 | | $ | 42.20 | | — | | 7,000,000 | |
|
| | | | | | | | | |
Issuer Purchases of Equity Securities |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number That May Yet Be Purchased Under the Plans or Programs (2) |
October 1 - October 31 | — |
| $ | — |
| — |
| 5,278,002 |
|
November 1 - November 30 | 1,167,170 |
| $ | 44.38 |
| 1,126,379 |
| 4,151,623 |
|
December 1 - December 31 | — |
| — |
| — |
| 4,151,623 |
|
Total | 1,167,170 |
| $ | 44.38 |
| 1,126,379 |
| |
(1) 40,791150 shares purchased during the quarter relate to the surrender to the Company of shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock or execution of net exercises.
(2) On July 1, 2015,November 12, 2020, the Board of Directors approved a new share repurchase authorization for the repurchase of up to 7.5 million shares. 1,126,379 shares were repurchased onThis replaced the open market during the quarter under this share repurchase authorization.prior authorization that was outstanding.
Item 6. Exhibits
See the Exhibit Index hereto.
52
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| | | |
| | ENERGIZER HOLDINGS, INC. |
| | | |
| | Registrant |
| | | |
| | By: | /s/ Timothy W. Gorman |
| | | Timothy W. Gorman |
| | | Executive Vice President and Chief Financial Officer |
| | | |
| | | |
| | | |
Date: | January 31, 2018 | | |
EXHIBIT INDEX
The exhibits below are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
|
| | | | | | | | | |
Exhibit No. | | Description of Exhibit | | |
| | Separation and Distribution Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed June 29, 2015). | | |
| | | | |
| | Tax Matters Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 26, 2015 (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed June 29, 2015). | | |
| | | | |
| | Employee Matters Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K filed June 29, 2015). | | |
| | | | |
| | Transition Services Agreement by and between Energizer Holdings, Inc. (f/k/a Energizer SpinCo, Inc.) and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated as of June 25, 2015 (incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed June 29, 2015). | | |
| | | | |
| | Contribution Agreement by and between the Company and Edgewell Personal Care Company (f/k/a Energizer Holdings, Inc.) dated June 30, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed June 30, 2015). | | |
| | | | |
| | Agreement and Plan of Merger, dated as of May 24, 2016, by and among the Company, Energizer Reliance, Inc., Trivest Partners V, L.P., and HandStands Holding Corporation (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed May 27, 2016). | | |
| | | | |
| | Acquisition Agreement, dated as of January 15, 2018, by and among the Company and Spectrum Brands Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed January 16, 2018). | | |
| | | | |
| | Amended and Restated Acquisition Agreement, dated as of November 15, 2018, by and between Energizer Holdings, Inc. and Spectrum Brands Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed November 15, 2018). | | |
| | | | |
| | Acquisition Agreement, dated as of November 15, 2018, by and between Energizer Holdings, Inc. and Spectrum Brands Holdings, Inc. (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed November 15, 2018). | | |
| | | | |
| | Acquisition Agreement, dated May 29, 2019, between Energizer Holdings, Inc. and VARTA Aktiengesellschaft (Disclosure Letter and certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of the omitted Disclosure Letter and certain schedules and exhibits upon request) (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on May 29, 2019). | | |
| | | | |
| | Third Amended and Restated Articles of Incorporation of Energizer Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed January 29, 2018). | | |
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| | ThirdFourth Amended and Restated Bylaws of Energizer Holdings, Inc. (incorporated by reference to Exhibit 3.23.1 to the Company's Current Report on Form 8-K filed November 17, 2020). | | |
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| | Certificate of Designations of the 7.50% Series A Mandatory Convertible Preferred Stock of Energizer Holdings, Inc., filed with the Secretary of State of the State of Missouri and effective January 17, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed January 29, 2018)18, 2019). | | |
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| | Commitment Letter,Indenture, dated January 15, 2018,July 1, 2020, by and among Energizer Holdings, Inc, the Guarantors party thereto from time to time and The Bank Of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed July 1, 2020).
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| | Form of 4.750% Senior Notes due 2028 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed July 1, 2020). | | |
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| | Supplemental Indenture, dated June 30, 2020, to the Indenture dated June 1, 2015, by and among Energizer Holdings, Inc., the Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed July 1, 2020). | | |
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| | Indenture dated September 30, 2020 by and among Energizer Holdings, Inc., the Guarantor party thereto from time to time and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed October 1, 2020.) | | |
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| | Form of 4.375% Senior Notes due 2029 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed October 1, 2020) | | |
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| | Indenture, dated as of June 23, 2021, by and among Energizer Gamma Acquisition B.V., the Guarantors party thereto from time to time, The Bank of New York Mellon Trust Company, N.A., as Trustee and Registrar, and The Bank of New York Mellon, London Branch, as Paying Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed June 23, 2021). | | |
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| | Form of 3.500% Senior Notes due 2029 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed June 23, 2021). | | |
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| | Amendment No. 3 dated as of April 24, 2020, to the Credit Agreement dated as of December 17, 2018, as amended, among the Company, Barclays Bank PLCthe Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed May 7, 2020). | | |
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| | Retirement Transition Agreement dated November 20, 2020 between Energizer Brands, LLC and Alan R. Hoskins (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K/A filed November 20, 2020.) | | |
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| | Amendment and Restatement Agreement dated December 22, 2020 by and among Energizer Holdings, Inc., certain of its subsidiaries, as guarantors, JPMorgan Chase Bank, N.A. as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed December 22, 2020.) | | |
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| | Amended and Restated Credit Agreement dated December 22, 2020, by and among Energizer Holdings, Inc., JPMorgan Chase Bank, N.A. as administrative agent and lender parties thereto (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed December 22, 2020.) | | |
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| | Incremental Term Loan Amendment No. 1 dated January 7, 2021, by and among Energizer Holdings, Inc., certain of its subsidiaries, as guarantors, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed January 16, 2018).8, 2021) | | |
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| | Retirement Transition Agreement, dated as of June 29, 2021, by and between Timothy W. Gorman and Energizer Brands, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 2, 2021) | | |
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| | Certification of periodic financial report by the Chief Executive Officer of Energizer Holdings, Inc. pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | |
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| | Certification of periodic financial report by the Chief Financial Officer of Energizer Holdings, Inc. pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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| | Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Executive Officer of Energizer Holdings, Inc. | | |
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| | Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Financial Officer of Energizer Holdings, Inc. | | |
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101101.INS* | | AttachedInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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101.SCH* | | Inline XBRL Taxonomy Extension Schema Document. | | |
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101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | | |
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101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document. | | |
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101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase Document. | | |
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101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | | |
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104 | | Cover Page Interactive Data File (formatted as Exhibit 101 to this Quarterly Report on Form 10-Q are the following documents formatted in eXtensible Business Reporting Language (XBRL): (i) the unaudited Consolidated Statements of EarningsInline XBRL and Comprehensive Income, (ii) the unaudited Consolidated Balance Sheets, (iii) the unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements (Condensed). The financial information contained in the XBRL-related documents is “unaudited” and “unreviewed.”Exhibit 101). | | |
*Filed herewith.
** The Company undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the Securities and Exchange Commission.
*** Denotes† These exhibits referenced herewith were filed to provide investors with information regarding their terms. They are not intended to provide any other factual information about the Company, the counterparties or the related businesses contemplated thereby. In particular, the assertions embodied in the representations and warranties in the agreements were made as of a management contractspecified date, are modified or compensatory planqualified by information in a confidential disclosure letter prepared in connection with the execution and delivery of the agreements, may be subject to a contractual standard of materiality different from what might be viewed as material to shareholders, or arrangement.
may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the agreements are not necessarily characterizations of the actual state of facts about the Company, the counterparty(ies), or the related business contemplated thereby at the time they were made or otherwise and should only be read in conjunction with the other information that the Company makes publicly available in reports, statements and other documents filed with the SEC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | ENERGIZER HOLDINGS, INC. |
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| | Registrant |
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| | By: | /s/ Timothy W. Gorman |
| | | Timothy W. Gorman |
| | | Executive Vice President and Chief Financial Officer |
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Date: | August 9, 2021 | | |