UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 20172023
Or
☐
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                         to
Commission File Number: 001-36837

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ENERGIZER HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Missouri36-4802442
Missouri36-4802442
(State or other jurisdiction of(I. R. S. Employer
incorporation or organization)Identification No.)
533 Maryville University Drive
St. Louis, MissouriMissouri63141
(Address of principal executive offices)(Zip Code)
(314)985-2000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareENRNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x☒ No o☐


1


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”,filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerx☒Accelerated filero☐
Non-accelerated filero☐Smaller reporting companyo☐
(Do not check if smaller reporting company)   Emerging growth companyo☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o☐ No x☒

Indicate the number of shares of Energizer Holdings, Inc. common stock, $.01 par value, outstanding as of the close of business on January 29, 2018: 59,685,726.

February 2, 2024: 71,782,335.
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INDEX
Page
INDEX
Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Earnings and Comprehensive Income (Condensed) for the Quarters Ended December 31, 20172023 and 20162022
34
Consolidated Balance Sheets (Condensed) as of December 31, 20172023 and September 30, 20172023
45
Consolidated Statements of Cash Flows (Condensed) for the Three Months Ended December 31, 20172023 and 20162022
56
Consolidated Statements of Shareholders' Equity (Condensed) for the Three Months Ended December 31, 2023 and 2022
7

Notes to Consolidated (Condensed) Financial Statements
68
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2125
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3236
Item 4. Controls and Procedures
3338
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
3439
Item 1A. Risk Factors
3439
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
3639
Item 6. Exhibits
3739
SIGNATURESEXHIBIT INDEX
3840
EXHIBIT INDEXSIGNATURES
3941









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ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(Condensed)
(In millions, except per share data - Unaudited)  

For the Quarter Ended December 31,
2017 2016
Net sales$573.3
 $559.6
Net sales
Net sales
Cost of products sold
Cost of products sold
Cost of products sold295.0
 288.0
Gross profit278.3
 271.6
   
Gross profit
Gross profit
Selling, general and administrative expense
Selling, general and administrative expense
Selling, general and administrative expense99.2
 84.4
Advertising and sales promotion expense37.3
 34.3
Advertising and sales promotion expense
Advertising and sales promotion expense
Research and development expense
Research and development expense
Research and development expense5.3
 5.8
Amortization of intangible assets2.8
 2.6
Spin restructuring—
 (1.3)
Amortization of intangible assets
Amortization of intangible assets
Interest expense13.4
 13.3
Interest expense
Interest expense
Loss/(gain) on extinguishment of debt
Loss/(gain) on extinguishment of debt
Loss/(gain) on extinguishment of debt
Other items, net
Other items, net
Other items, net1.3
 (1.6)
Earnings before income taxes119.0
 134.1
Earnings before income taxes
Earnings before income taxes
Income tax provision
Income tax provision
Income tax provision58.6
 38.5
Net earnings$60.4
 $95.6
Net earnings
Net earnings
   
Basic net earnings per share$1.00
 $1.55
Diluted net earnings per share$0.98
 $1.52
Basic net earnings per common share
Basic net earnings per common share
Basic net earnings per common share
Diluted net earnings per common share
Diluted net earnings per common share
Diluted net earnings per common share
Weighted average shares of common stock - Basic
Weighted average shares of common stock - Basic
   
Weighted average shares of common stock - Basic60.2
 61.8
Weighted average shares of common stock - Diluted61.5
 62.9
Weighted average shares of common stock - Diluted
Weighted average shares of common stock - Diluted
Statements of Comprehensive Income:
Statements of Comprehensive Income:
   
Statements of Comprehensive Income:   
Net earnings$60.4
 $95.6
Other comprehensive income/(loss), net of tax expense/(benefit)   
Net earnings
Net earnings
Other comprehensive (loss)/income, net of tax (benefit)/expense
Other comprehensive (loss)/income, net of tax (benefit)/expense
Other comprehensive (loss)/income, net of tax (benefit)/expense
Foreign currency translation adjustments7.4
 (31.9)
Pension activity, net of tax of $0.5 and $0.6, respectively.1.2
 3.8
Deferred gain on hedging activity, net of tax of $1.1 and $3.7, respectively.2.5
 8.2
Total comprehensive income$71.5
 $75.7
Foreign currency translation adjustments
Foreign currency translation adjustments
Pension activity, net of tax of $0.2 and $1.2, respectively.
Pension activity, net of tax of $0.2 and $1.2, respectively.
Pension activity, net of tax of $0.2 and $1.2, respectively.
Deferred loss on hedging activity, net of tax of $(6.5) and $(4.7), respectively.
Deferred loss on hedging activity, net of tax of $(6.5) and $(4.7), respectively.
Deferred loss on hedging activity, net of tax of $(6.5) and $(4.7), respectively.
Total comprehensive (loss)/income
Total comprehensive (loss)/income
Total comprehensive (loss)/income


The above financial statements should be read in conjunction with the Notes Toto Consolidated (Condensed) Financial Statements (Unaudited).

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ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Condensed)
(In millions - Unaudited)
 
AssetsDecember 31,
2023		September 30,
2023
Current assets 
Cash and cash equivalents$241.7 $223.3 
Trade receivables, less allowance for doubtful accounts of $4.7 and $4.6, respectively376.4 511.6 
Inventories640.6 649.7 
Other current assets212.3 172.0 
Total current assets1,471.0 1,556.6 
Property, plant and equipment, net384.3 363.7 
Operating lease assets96.5 98.4 
Goodwill1,023.7 1,016.2 
Other intangible assets, net1,224.4 1,237.7 
Deferred tax assets92.2 88.4 
Other assets131.8 148.6 
Total assets$4,423.9 $4,509.6 
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt$12.0 $12.0 
Current portion of finance leases0.9 0.3 
Notes payable2.2 8.2 
Accounts payable374.6 370.8 
Current operating lease liabilities17.3 17.3 
Other current liabilities317.4 325.6 
Total current liabilities724.4 734.2 
Long-term debt3,303.3 3,332.1 
Operating lease liabilities81.9 84.7 
Deferred tax liabilities10.5 12.4 
Other liabilities133.2 135.5 
Total liabilities4,253.3 4,298.9 
Shareholders' equity
Common stock0.8 0.8 
Additional paid-in capital718.5 750.5 
Retained losses(164.3)(164.8)
Treasury stock(225.1)(238.1)
Accumulated other comprehensive loss(159.3)(137.7)
Total shareholders' equity170.6 210.7 
Total liabilities and shareholders' equity$4,423.9 $4,509.6 
AssetsDecember 31,
2017		 September 30,
2017
Current assets   
Cash and cash equivalents$454.3
 $378.0
Trade receivables, less allowance for doubtful accounts of $6.1 and $5.8, respectively214.8
 230.2
Inventories276.2
 317.1
Other current assets93.7
 94.9
Total current assets1,039.0
 1,020.2
Property, plant and equipment, net171.7
 176.5
Goodwill230.1
 230.0
Other intangible assets, net220.9
 223.8
Deferred tax asset34.1
 47.7
Other assets68.3
 125.4
Total assets$1,764.1
 $1,823.6
    
Liabilities and Shareholders' Equity   
Current liabilities   
Current maturities of long-term debt$4.0
 $4.0
Note payable110.5
 104.1
Accounts payable190.8
 219.3
Other current liabilities241.6
 254.6
Total current liabilities546.9
 582.0
Long-term debt977.9
 978.5
Other liabilities205.6
 178.0
Total liabilities1,730.4
 1,738.5
Shareholders' equity   
Common stock0.6
 0.6
Additional paid-in capital198.7
 196.7
Retained earnings180.4
 198.7
Treasury stock(118.3) (72.1)
Accumulated other comprehensive loss(227.7) (238.8)
Total shareholders' equity33.7
 85.1
Total liabilities and shareholders' equity$1,764.1
 $1,823.6


The above financial statements should be read in conjunction with the Notes Toto Consolidated (Condensed) Financial Statements (Unaudited).

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ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed)
(In millions - Unaudited)

 For the Three Months Ended December 31,
 20232022
Cash Flow from Operating Activities  
Net earnings$1.9 $49.0 
Adjustments to reconcile net earnings to net cash flow from operations:
Non-cash integration and restructuring charges2.4 — 
Depreciation and amortization30.0 32.1 
Deferred income taxes1.1 0.9 
Share-based compensation expense6.3 4.6 
Loss/(gain) on extinguishment of debt0.5 (2.9)
Non-cash items included in income, net6.3 4.4 
Exchange loss/(gain) included in income23.7 (1.0)
Other, net2.3 0.8 
Changes in current assets and liabilities used in operations103.6 73.1 
Net cash from operating activities178.1 161.0 
Cash Flow from Investing Activities
Capital expenditures(25.5)(9.5)
Proceeds from sale of assets— 0.7 
Acquisitions, net of cash acquired(11.6)— 
Net cash used by investing activities(37.1)(8.8)
  
Cash Flow from Financing Activities  
Payments on debt with maturities greater than 90 days(78.2)(49.8)
Net decrease in debt with original maturities of 90 days or less(5.2)(5.9)
Dividends paid on common stock(22.7)(21.8)
Taxes paid for withheld share-based payments(4.7)(1.9)
Net cash used by financing activities(110.8)(79.4)
Effect of exchange rate changes on cash(11.8)2.2 
Net increase in cash, cash equivalents, and restricted cash18.4 75.0 
Cash, cash equivalents, and restricted cash, beginning of period223.3 205.3 
Cash, cash equivalents, and restricted cash, end of period$241.7 $280.3 
 For the Three Months Ended December 31,
 2017 2016
Cash Flow from Operating Activities   
Net earnings$60.4
 $95.6
Depreciation and amortization12.0
 10.6
Deferred income taxes12.2
 4.8
Share-based compensation expense6.7
 5.2
Mandatory transition tax30.0
 —
Non-cash items included in income, net3.0
 (0.4)
Other, net0.1
 (2.1)
Changes in current assets and liabilities used in operations16.6
 (21.9)
Net cash from operating activities141.0
 91.8
   
Cash Flow from Investing Activities   
Capital expenditures(5.5) (4.9)
Proceeds from sale of assets—
 4.3
Net cash used by investing activities(5.5) (0.6)
    
Cash Flow from Financing Activities   
Payments on debt with maturities greater than 90 days(1.0) (1.0)
Net increase/(decrease) in debt with original maturities of 90 days or less6.5
 (27.9)
Dividends paid(17.6) (18.1)
Common stock purchased(50.0) (8.1)
Taxes paid for withheld share-based payments(1.8) (8.1)
Net cash used by financing activities(63.9) (63.2)
    
Effect of exchange rate changes on cash4.7
 (17.6)
    
Net increase in cash and cash equivalents76.3
 10.4
Cash and cash equivalents, beginning of period378.0
 287.3
Cash and cash equivalents, end of period$454.3
 $297.7


The above financial statements should be read in conjunction with the Notes Toto Consolidated (Condensed) Financial Statements (Unaudited).

6



ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Condensed)
(Amounts in millions, Shares in thousands - Unaudited)

Number of SharesAmount
Common StockCommon StockAdditional Paid-in CapitalRetained (Losses)/EarningsAccumulated Other Comprehensive (Loss)/IncomeTreasury StockTotal Shareholders' Equity
September 30, 202371,500 $0.8 $750.5 $(164.8)$(137.7)$(238.1)$210.7 
Net earnings— — — 1.9 — — 1.9 
Share-based payments— — 6.4 — — — 6.4 
Activity under stock plans277 — (16.3)(1.4)— 13.0 (4.7)
Dividends to common shareholders ($0.30 per share)— — (22.1)— — — (22.1)
Other comprehensive loss— — — — (21.6)— (21.6)
December 31, 202371,777 $0.8 $718.5 $(164.3)$(159.3)$(225.1)$170.6 

Number of SharesAmount
Common StockCommon StockAdditional Paid-in CapitalRetained (Losses)/EarningsAccumulated Other Comprehensive (Loss)/IncomeTreasury StockTotal Shareholders' Equity
September 30, 202271,270 $0.8 $828.7 $(304.7)$(145.3)$(248.9)$130.6 
Net earnings— — — 49.0 — — 49.0 
Share-based payments— — 4.6 — — — 4.6 
Activity under stock plans142 — (8.5)(0.3)— 6.9 (1.9)
Dividends to common shareholders ($0.30 per share)— — (21.9)— — — (21.9)
Other comprehensive loss— — — — (29.6)— (29.6)
December 31, 202271,412 $0.8 $802.9 $(256.0)$(174.9)$(242.0)$130.8 

The above financial statements should be read in conjunction with the Notes to Consolidated (Condensed) Financial Statement (Unaudited).
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ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)






(1) Description of Business and Basis of Presentation

Description of Business - Energizer Holdings, Inc. and its subsidiaries (Energizer or the Company) is a global manufacturer, marketer and distributerdistributor of householdprimary batteries, specialty batteries and portable lights, and auto care appearance, performance, refrigerants and fragrance products.

Batteries and lights are sold under the Energizer®, Eveready®, Rayovac® and Eveready®Varta® brand names. Energizer offers batteries using lithium, alkaline, carbon zinc, nickel metal hydride, zinc air and silver oxide constructions. On July 1, 2016, Energizer expanded its portfolio of brands with an acquisition of a leading designer

Automotive appearance, performance, refrigerants and marketer of automotive fragrance and appearance products (auto care acquisition). Withare sold under the auto care acquisition, the Company's brands includeArmor All®, STP®, A/C PRO® Refresh Your Car!®, California Scents®, Driven®, Bahama & Co.®, LEXOL® and Eagle One®. brands.


Basis of Presentation - The accompanying unaudited Consolidated Condensed(Condensed) Financial Statements include the accounts of Energizer and its subsidiaries. All significant intercompany transactions are eliminated. Energizer has no material equity method investments, variable interests or non-controlling interests.


The accompanying unaudited Consolidated Condensed(Condensed) Financial Statements have been prepared in accordance with Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The year-end condensedyear-ended September 30, 2023 Consolidated (Condensed) Balance Sheet was derived from the audited financial statements included in Energizer's Report on Form 10-K, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of our operations, financial position and cash flows
have been included. Certain reclassifications have been made to the prior year financial statements to conform to the current presentation. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the financial statements and notes thereto for Energizer for the year ended September 30, 20172023 included in the Annual Report on Form 10-K dated November 14, 2017.2023.


Recently Adopted Accounting Pronouncements - During– In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The new guidance requires qualitative and quantitative disclosure sufficient to enable users of the financial statements to understand the nature, activity during the period, changes from period to period and potential magnitude of such programs. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the required guidance in the first quarter endedof fiscal 2024.

The Company has a voluntary Supplier Financing Program (the program) in collaboration with certain financial institutions that offers participating suppliers access to a third-party service which allows them to view scheduled payments online and enables them the ability to request payment of their invoices from the financial institutions earlier than the negotiated terms with the Company. The Company is not a party to the negotiations or agreements reached between participating suppliers and third-party financial institutions. The Company's obligations, including the amounts due and payment terms, remain unaffected by our suppliers’ decision to participate in the program. The Company does not provide any form of guarantee or assume any liability in connection with the agreements between our suppliers and the third-party financial institutions involved in the program. As of December 31, 2017,2023 and September 30, 2023, the Company adoptedhad $55.4 and $60.9, respectively, of outstanding supplier obligations confirmed as valid under the program which are included within Accounts payable on the Consolidated (Condensed) Balance Sheets.

Recently Issued Accounting Pronouncements - In November 2023, the FASB issued ASU 2017-07, ImprovingNo. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures. This guidance requires disclosure of incremental segment information on an annual and interim basis. This amendment is effective for our fiscal year ending September 30, 2025 and our interim periods within the Presentationfiscal year ending September 30, 2026. We are currently assessing the impact of Net Periodic Pension Costthis guidance on our disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures. This guidance requires consistent categories and Net Periodic Postretirement Benefit Cost. This update requires the service componentgreater disaggregation of the net periodic pension cost to be reportedinformation in the samerate reconciliation and disclosures of income statement line item as similar compensation costs, while all other pension cost components should be reported separately fromtaxes paid by jurisdiction. This amendment is effective for our fiscal year ending September 30, 2026. We are currently assessing the service cost component on the income statement. The adoptionimpact of this update resulted in $1.7 of non-compensation related pension benefit in Other items, net in the quarter ended December 31, 2017 and a reclassification of $3.1 of pension benefit out of Selling, general and administrative expense and into Other items, net for the quarter ended December 31, 2016. All non-compensation related pension costs will be recorded in Other items, net going forward.guidance on our disclosures.


During the quarter ended December 31, 2017, the Company adopted ASU 2015-11, Inventory (Topic 330), which aligns the measurement of inventory under GAAP more closely with International Financial Reporting Standards. Under the new guidance, an entity that measures inventory using the first-in, first-out or average cost should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The impact of adoption was immaterial.

8
During the quarter ended December 31, 2017, the Company early adopted ASU 2016-16, Intra-entity Transfers of Assets Other Than Inventory. This update requires tax expense to be recognized from the sale of intra-entity assets, other than inventory, when the transfer occurs, even though the effects of the transaction are eliminated in consolidation. Under the previous guidance, the tax effects of transfers would have been deferred until the transferred asset was sold or otherwise recovered through use. Upon adoption, any deferred charge previously established upon the intra-company transfer is recorded as a cumulative effect adjustment to retained earnings. During the quarter ended December 31, 2017, a deferred charge of $59.2 was removed from Other assets and recorded as an adjustment to retained earnings. Any future tax impacts will be recognized as incurred.

During the quarter ended December 31, 2017, the Company early adopted ASU 2017-01, Clarifying the Definition of a Business. This update creates a more practical definition and guidelines to determine whether a set of assets and activities is a business. This simplifies the decision making process of determining whether a purchase constitutes a business combination or an acquisition of assets and the Company will apply this definition for future acquisitions.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)




(2) Revenue Recognition
During
The Company, through its operating subsidiaries, is one of the quarterworld’s largest manufacturers, marketers and distributors of household batteries, specialty batteries and lighting products, and is a leading designer and marketer of automotive fragrance, appearance, performance and air conditioning recharge products. The Company distributes its products to consumers through numerous retail locations worldwide, including mass merchandisers and warehouse clubs, food, drug and convenience stores, electronics specialty stores and department stores, hardware and automotive centers, e-commerce and military stores. The Company sells to its customers through a combination of a direct sales force and exclusive and non-exclusive third-party distributors and wholesalers.

The Company’s revenue is primarily generated from the sale of finished product to customers. Sales predominantly contain a single delivery element, or performance obligation, and revenue is recognized at a single point in time when title, ownership and risk of loss pass to the customer. This typically occurs when finished goods are delivered to the customer or when finished goods are picked up by the carrier at origin or the customer, depending on contract terms.

North America sales are generally through large retailers with nationally or regionally recognized brands.

Our International sales, which includes Latin America, are comprised of modern trade, developing and distributor market groups. Modern trade, which is most prevalent in Western Europe and more developed economies throughout the world, generally refers to sales through large retailers with nationally or regionally recognized brands. Developing markets generally include sales by wholesalers or small retailers who may not have a national or regional presence. Distributors are utilized in other markets where the Company does not have a direct sales force. Each market's determination is based on the predominant customer type or sales strategy utilized in the market.

Supplemental product and market information is presented below for revenues from external customers for the quarters ended December 31, 2017,2023 and 2022:
 For the Quarters Ended December 31,
Net Sales by products20232022
Batteries$591.4 $639.5 
Auto Care98.8 93.5 
Lights26.4 32.1 
Total Net Sales$716.6 $765.1 

 For the Quarters Ended December 31,
 20232022
Net Sales by markets 
North America$416.3 $456.3 
Modern Markets155.0 153.6 
Developing Markets106.0 108.5 
Distributors Markets39.3 46.7 
 Total Net Sales$716.6 $765.1 

(3) Acquisitions

Belgium Acquisition - On October 27, 2023, the Company early adopted ASU 2017-04, Simplifying the Testacquired certain battery manufacturing assets in Belgium from Advanced Power Solutions Belgium NV (APS) for Goodwill Impairmenta contractual purchase price of EUR3.5 (Belgium Acquisition). This update eliminates the need to assign the fair value of a reporting unit to each of its assets and liabilities when quantifying an impairment charge. The impairment charge is now determined basedCompany also acquired certain raw materials from APS, procured by APS on the comparisonCompany's behalf to facilitate the transition, for a total acquisition purchase price of $11.6 (including value added taxes). The Company assumed a building lease as part of the fair value ofacquisition and acquired these assets to provide a reporting unit to its carrying amount. The Company will apply the new guidance when completing its goodwill testing proceduresbattery manufacturing location in the current year.
Recently Issued Accounting Pronouncements- On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. On August 12, 2015, the FASB issued a one-year deferral of the effective date. This update is effective for Energizer beginning October 1, 2018. The Company is currently assessing the new guidance against its current accounting policies and procedures, through activities that include analysis of standard sales transactions and terms, coordination and discussion with our commercial teams and reviewing contracts with customers. The Company plans to adopt this update on a modified retrospective basis at the effective date. While the Company’s assessment is not yet complete, the new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.Europe. The Company is still assessingfinalizing the overall impact on the Company’s disclosures.
On February 25, 2016, the FASB issued ASU 2016-02, Leases. This update aligns the measurementvaluation of leases under GAAP more closely with International Financial Reporting Standards by recognizing leasethese assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments inrelated income tax considerations, but initially no goodwill has been recognized with this update will be effective for Energizer beginning October 1, 2019 with early adoption permitted. Energizer is in the process of evaluating the impact the revised guidance will have on its financial statements.acquisition.
On August 26, 2016, the FASB issued ASU 2016-15, Statement of Cash Flows- Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statements of cash flows. This update will be effective for Energizer beginning October 1, 2018. The Company is currently assessing the impact the revised guidance will have on our current classification on the Statement of Cash Flows.
On August 28, 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. This update intends to simplify hedge accounting and decrease complexity for both the preparation and understanding of hedging disclosures in the financial statements. This update is effective for the Company beginning October 1, 2019. The Company is currently assessing the impact the revised guidance will have on its accounting practices and financial statements.
9
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)




(2) Spin Costs

On July 1, 2015, Energizer completed its legal separation from Edgewell Personal Care Company (Edgewell) via a tax free spin-off (the spin-off or spin). The Company incurredrecorded $2.6 of acquisition and integration costs associated with the evaluation, planning and execution of the spin transaction. ForBelgium Acquisition during the three months ended December 31, 2017,2023. The costs included $2.9 of operating costs recorded in Costs of good sold as the Company was awaiting the receipt of the raw materials procured on the Company's behalf by APS. These costs were offset by $1.0 of income recorded in Other items, net from producing inventory for APS under a transaction services agreement (TSA) entered into at the closing of the transaction. No further income is expected from this TSA. The Company also recorded $0.7 of legal and diligence fees associated with the closing of this acquisition recorded in Selling, general and administrative expenses.

There were no activity related to spin. Duringacquisition and integration costs during the quarterthree months ended December 31, 2016,2022.

(4) Restructuring

Project Momentum Restructuring - In November 2022, the Board of Directors approved a profit recovery program, Project Momentum, which includes an enterprise-wide restructuring focused on recovering operating margins, optimizing our manufacturing, distribution and global supply chain networks, and enhancing our organizational efficiency throughout the Company. In July 2023, the Company's Board of Directors approved an expansion to the Project Momentum profit recovery program and delegated authority to the Company's management to determine the final actions with respect to the plan. The expansion of this program included an additional year, which will allow for additional optimization of our battery manufacturing, distribution and global supply chain networks, further review of our global real estate footprint and the implementation of IT systems that will allow us to streamline our organization and fully execute the program.

Following the Belgium Acquisition in the first quarter of fiscal 2024, the Company sold a facility in North Americais expanding the Project Momentum program and increasing the savings and cost expectations, partially due to the impact the expanded manufacturing capacity will have on the Company's battery network. It is estimated that was previously closed as partthe Company will incur total pre-tax exit-related cash operating costs associated with the program of approximately $140 to $150, non-cash costs of approximately $20, and capital expenditures of $75 to $85 through the spin and recorded a gainend of $1.3 in spin restructuring. On a projectfiscal 2025.

The pre-tax expense for charges related to date basis, the total costs incurred or allocated to Energizerrestructuring 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.

The following table represents the spin restructuring accrual activity and ending accrual balance as of December 31, 2016 on the Consolidated Condensed Balance Sheet. At December 31, 2016, $2.2 of the liability was recorded in Other current liabilities and the remaining $2.1 was recorded in Other liabilities. There were no liabilities outstanding at September 30, 2017 or December 31, 2017.
      Utilized  
  October 1, 2016 Charge to Income Cash Non-Cash December, 2016
Severance and termination related costs $2.8
 $—
 $(1.8) $—
 $1.0
Contract termination costs 3.6
 —
 (0.3) —
 3.3
Net gain on asset sales —

(1.3)
1.3

—

—
Total $6.4
 $(1.3) $(0.8) $—
 $4.3


(3) Income Taxes    

The three month effective tax rate was 49.2% as compared to 28.7% for the prior year comparative period. On December 22, 2017, H.R. 1, formally known as the Tax Cuts and Jobs Act (the Act) was enacted into law. The Act provides for numerous significant tax law changes and modifications with varying effective dates, which include reducing the corporate income tax rate from 35% to 21%, creating a territorial tax system (with a mandatory transition tax on previously deferred foreign earnings) and allowing for immediate capital expensing of certain qualified property. As a fiscal year end taxpayer, certain provisions of the Act will begin to impact us in our fiscal first quarterquarters ended December 31, 2017, while2023 and 2022 are noted in the table below, and were reflected in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income:

For the Quarters Ended December 31,
20232022
Project Momentum Restructuring Program
Costs of products sold
Severance and related benefit costs$0.5 $— 
Accelerated depreciation & asset write-offs1.3 — 
Other restructuring related costs(1)
11.0 0.3 
Selling, general and administrate expense
Severance and related benefit costs1.8 0.5 
Accelerated depreciation & asset write-offs0.5 — 
Other restructuring related costs(2)
3.4 5.8 
Momentum Restructuring Cost Total$18.5 $6.6 
     IT enablement(3)
3.9 — 
Total restructuring and related costs$22.4 $6.6 
(1) Includes charges primarily related to consulting, relocation, decommissioning, and other provisions will impact us beginning in fiscal year 2019. The corporate tax rate reduction is effectivefacility exit costs.
(2) Primarily includes consulting, real estate rationalization costs, and legal fees for Energizer as of January 1, 2018the restructuring program.
(3) Relates to operating expenses for new IT systems, primarily the organizational design and accordingly, will reduce our current fiscal year federal statutory ratechange management costs, which are enabling the Company to a blended rate of approximately 24.5% for fiscal year 2018.

The changescomplete restructuring initiatives. Costs are included in the Act are broad and complex. The final transition impacts of the Act may differ from our current estimates, possibly materially, due to, among other things, changes in interpretations of the Act, any legislative action to address questions that arise because of the Act, any changes in accounting standards for income taxes or related interpretations in response to the Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Act to finalize the recording of the related tax impacts.

As a result of the reduction of the Federal corporate income tax rate, we have remeasured certain deferred tax assets and liabilities at the rate which they are expected to reverseSG&A in the future. WeConsolidated (Condensed) Statement of Earnings and Comprehensive Income.

10
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


Although the Company's restructuring costs are still analyzing certain aspectsrecorded outside of segment profit, if allocated to our reportable segments, the Act, including the future impacts of the Global Intangible Low-Taxed Income provision,pre-tax restructuring and refining our calculations, which could potentially affect the remeasurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of our deferred tax balance was tax expense of approximately $1.
The mandatory transition tax is based on our total post-1986 earnings and profits (E&P) that we previously deferred from U.S. income taxes. We recorded a provisional amount for our mandatory transition tax liability, resulting in an increase in income tax expense of approximately $30. We have not yet completed our calculation of the total


post-1986 E&P for these foreign subsidiaries. Further, the mandatory transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S federal taxation and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the mandatory transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations.
(4) Share-Based Payments

Total compensation cost charged against income for Energizer’s share-based compensation arrangements was $6.7costs for the quarter ended December 31, 20172023 would be incurred within the Battery & Lights segment in the amounts of $20.8 and $5.2 forthe Auto Care segment in the amount of $1.6. For the quarter ended December 31, 20162022, the pre-tax restructuring and wasrelated costs would have been incurred within the Battery & Lights segment in the amount of $5.8 and the Auto Care segment in the amount of $0.8.

The following table summarizes the restructuring and related costs reserve activity related to the Project Momentum restructuring program for the quarters ended December 31, 2022 and 2023:
Utilized
September 30, 2022 (1)
Charge to IncomeCashNon-Cash
December 31, 2022 (1)
Severance & termination related costs$— $0.5 $0.2 $— $0.3 
Other restructuring related costs0.9 6.1 3.8 — 3.2 
    Total restructuring and related costs$0.9 $6.6 $4.0 $— $3.5 
Utilized
September 30, 2023 (1)
Charge to IncomeCashNon-Cash
December 31, 2023 (1)
Severance & termination related costs$15.4 $2.3 $3.9 $— $13.8 
Accelerated depreciation & asset write-offs— 1.8 — 1.8 — 
Other restructuring related costs3.3 14.4 15.4 0.1 2.2 
IT enablement0.9 3.93.8 0.1 0.9 
    Total restructuring and related costs$19.6 $22.4 $23.1 $2.0 $16.9 
(1) The restructuring and related costs reserve is recorded on the Consolidated (Condensed) Balance Sheet in Other current liabilities and Other long term liabilities. Refer to Note 13, Supplemental Financial Statement Information for additional details.


11
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


(5) Segments

Operations for Energizer are managed via two product segments: Batteries & Lights and Auto Care. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses (including share-based compensation costs), amortization of intangibles, acquisition and integration activities, restructuring and related costs, and other items determined to be corporate in nature. Financial items, such as interest income and expense and the (loss)/gain on extinguishment of debt are managed on a global basis at the corporate level. The exclusion of restructuring costs and acquisition and integration 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 product segments, varying by country and region of the world. Shared functions include the sales and marketing functions, as well as human resources, IT and finance shared service costs. Energizer applies a fully allocated cost basis, in which shared business functions are allocated between segments. Such allocations are estimates, and may not represent the costs of such services if performed on a standalone basis.

Segment sales and profitability for the quarters ended December 31, 2023 and 2022 are presented below:
 For the Quarters Ended December 31,
20232022
Net Sales 
Batteries & Lights$617.8 $671.6 
Auto Care98.8 93.5 
Total Net Sales$716.6 $765.1 
Segment Profit 
Batteries & Lights$132.4 $138.3 
Auto Care6.9 10.6 
Total segment profit$139.3 $148.9 
    General corporate and other expenses (1)(29.2)(25.4)
    Amortization of intangible assets(14.5)(16.0)
Project Momentum restructuring and related costs (2)(22.4)(6.6)
    Acquisition and integration costs (3)(2.6)— 
Interest expense(40.7)(42.9)
(Loss)/gain on extinguishment of debt(0.5)2.9 
December 2023 Argentina Economic Reform (4)(21.0)— 
Other items - Adjusted1.0 1.4 
Total earnings before income taxes$9.4 $62.3 
Depreciation and amortization
Batteries & Lights$13.0 $13.4 
Auto Care2.5 2.7 
Total segment depreciation and amortization$15.5 $16.1 
Amortization of intangible assets14.5 16.0 
         Total depreciation and amortization$30.0 $32.1 

(1) Included in SG&A in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income.

(2) Restructuring and related costs were included in the following lines in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income:
12
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


For the Quarters Ended December 31,
Restructuring and related costs20232022
Cost of products sold$12.8 $0.3 
SG&A - Restructuring costs5.7 6.3 
SG&A - IT Enablement3.9 — 
Total Restructuring and related costs$22.4 $6.6 

(3) Acquisition and integration costs included $2.9 recorded in Cost of products sold, $0.7 recorded in SG&A expense.and income of $1.0 recorded in Other items, net. Refer to Note 3, Acquisitions, for further information.


Restricted Stock Equivalents (RSE)—((4) During December 2023, a new president was inauguratedin whole dollarsArgentina bringing significant economic reform to the country including devaluing the Argentine Peso by 50% in the month of December (December 2023 Argentina Reform). In addition, new regulations were implemented reducing restrictions around foreign currency purchases. As a result of this reform and total shares)
In November 2017,devaluation, the Company granted RSE awards to a grouprecorded $21.0 of key employees of approximately 100,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 68,000 shares that vestexchange losses in Other items, net on the third anniversaryConsolidated (Condensed) Statement of Earnings.

Corporate assets shown in the datefollowing table include cash, all financial instruments, pension assets, amounts indemnified by others per the purchase agreements and tax asset balances that are managed outside of grant. In addition, the Company granted approximately 238,000 performance shares to a group of key employees and key executives that will vest subject to meeting target amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in determining the final share award with the maximum award payout of approximately 476,000 shares. The closing stock price on the date of the grant used to determine the award fair value was $44.20.operating segments.


In November 2016, the Company granted RSE awards to a group of key employees of approximately 92,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 73,000 shares that vest on the third anniversary of the date of the grant. In addition, the Company granted approximately 249,000 performance shares to a group of key employees and key executives that will vest subject to meeting targeted amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in determining the final share award. These performance measures are equally weighted in determining the final share award with the maximum award payout of approximately 498,000 shares. The closing stock price on the date of the grant used to determine the award fair value was $43.84.
Total AssetsDecember 31, 2023September 30, 2023
Batteries & Lights$1,300.2 $1,362.0 
Auto Care380.2 423.5 
Total segment assets$1,680.4 $1,785.5 
Corporate495.4 470.2 
Goodwill and other intangible assets2,248.1 2,253.9 
Total assets$4,423.9 $4,509.6 


In November 2015, the Company granted RSE awards to a group of key employees of approximately 106,000 shares that vest ratably over four years and granted RSE awards to a group of key executives of approximately 87,000 shares that vest on the third anniversary of the date of the grant. In addition, the Company granted approximately 290,000 performance shares to a group of key employees and key executives that will vest subject to meeting targeted amounts for both cumulative adjusted earnings per share and cumulative free cash flow as a percentage of sales over the three year performance period. These performance measures are equally weighted in determining the final share award. These performance measures are equally weighted in determining the final share award with the maximum award payout of approximately 580,000 shares. The closing stock price on the date of the grant used to determine the award fair value was $37.34.



(5) (6)Earnings per share


Basic earnings per share is based on the average number of common shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of restricted stock equivalents andunit (RSU) awards, performance share awards.awards and deferred compensation equity plans.


The following table sets forth the computation of basic and diluted earnings per share for the quarters ended December 31, 20172023 and 2016:2022:
(in millions, except per share data)For the Quarters Ended December 31,
Basic net earnings per share20232022
Net earnings$1.9 $49.0 
Weighted average common shares outstanding - Basic71.7 71.4 
Basic net earnings per common share$0.03 $0.69 
Diluted net earnings per share
Weighted average common shares outstanding - Basic71.7 71.4 
Dilutive effect of RSU0.4 0.2 
Dilutive effect of performance shares0.5 0.5 
Dilutive effect of stock based deferred compensation plan— 0.1 
Weighted average common shares outstanding - Diluted72.6 72.2 
Diluted net earnings per common share$0.03 $0.68 

13
(in millions, except per share data)   
 For the Quarter
Ended December 31,
 2017 2016
Net earnings$60.4
 $95.6
Basic average shares outstanding60.2
 61.8
Effect of dilutive restricted stock equivalents0.4
 0.6
Effect of dilutive performance shares0.9
 0.5
Diluted average shares outstanding61.5
 62.9
Basic earnings per common share$1.00
 $1.55
Diluted earnings per common share$0.98
 $1.52

For the quarters ended December 31, 2017 and December 31, 2016, all restricted stock equivalents and performance shares were dilutive and included in the diluted net earnings per share calculations.

(6) Segments

Operations for Energizer are managed via three major geographic reportable segments: Americas (North America and Latin America), Europe, Middle East and Africa (EMEA), and Asia Pacific.

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, 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, are managed on a global basis at the corporate level. The exclusion of substantially all acquisition, integration, restructuring and realignment 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.

ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)




Segment sales and profitability forFor the quarterquarters ended December 31, 20172023 and 2016,2022, there were 0.5 million and 0.2 million antidilutive RSU shares, respectively, are presented below:
 For the Quarter Ended December 31,
 2017 2016
Net Sales   
Americas$373.1
 $365.1
EMEA117.6
 114.7
Asia Pacific82.6
 79.8
Total net sales$573.3
 $559.6
Segment Profit   
Americas$123.1
 $123.1
EMEA25.5
 26.1
Asia Pacific23.7
 24.7
Total segment profit172.3
 173.9
    General corporate and other expenses (1) (2)(21.6) (17.2)
    Global marketing expense (1)(3.2) (3.0)
    Research and development expense(5.3) (5.8)
    Amortization of intangible assets(2.8) (2.6)
    Acquisition and integration costs (1)(5.7) (0.8)
Spin restructuring—
 1.3
Interest expense(13.4) (13.3)
Other items, net (2)(1.3) 1.6
Total earnings before income taxes$119.0
 $134.1
(1) Included in SG&Anot included in the unaudited Consolidated Condensed Statementdiluted net earnings per share calculation.

Performance based RSU shares of Earnings and Comprehensive Income.
(2) As a result of the adoption of ASU 2017-07 in the current quarter, a $3.1 benefit was reclassified from SG&A to Other items, net1.3 million were excluded for the quarterboth quarters ended December 31, 2016.2023 and 2022 as the performance targets for those awards have not been achieved as of the end of the applicable periods.


Supplemental product information is presented below for revenues from external customers:
 For the Quarter Ended December 31,
Net Sales2017 2016
Batteries$524.5
 $503.1
Other48.8
 56.5
Total net sales$573.3
 $559.6

Corporate assets shown in the following table include all financial instruments, deferred tax assets and deferred charges that are managed outside of operating segments. Total assets by segment are presented below:
 December 31, 2017 September 30, 2017
Americas$510.0
 $533.9
EMEA246.3
 240.3
Asia Pacific489.8
 457.9
Total segment assets$1,246.1
 $1,232.1
Corporate67.0
 137.7
Goodwill and other intangible assets451.0
 453.8
Total assets$1,764.1
 $1,823.6



(7) Income Taxes    

The effective tax rate for the three months ended December 31, 2023 was 79.8% as compared to 21.3% for the prior year comparative period. The current year rate is higher than prior year as the exchange rate loss of $21.0 from the December 2023 Argentina Reform was not deductible for tax purposes and did not result in a statutory tax benefit.

(8) Goodwill and intangible assets


Goodwill and intangible assets deemed to have an indefinite life are not amortized, but are evaluated annually for impairment as part of our annual business planning cycle in the fourth fiscal quarter, or when indicators of a potential impairment are present.


The following table sets forth goodwill by segment as of October 1, 20172023 and December 31, 2017:
2023:
 Americas EMEA Asia Pacific Total
Balance at October 1, 2017$213.8
 $5.5
 $10.7
 $230.0
Cumulative translation adjustment(0.2) 0.1
 0.2
 0.1
Balance at December 31, 2017$213.6
 $5.6
 $10.9
 $230.1


Batteries & LightsAuto CareTotal
Balance at October 1, 2023$882.0 $134.2 $1,016.2 
Cumulative translation adjustment7.5 — 7.5 
Balance at December 31, 2023$889.5 $134.2 $1,023.7 

Energizer had indefinite-lived intangible assets of $78.2$763.7 at December 31, 20172023 and $78.3$762.8 at September 30, 2017. Changes in indefinite-lived intangible assets are due to changes in foreign2023. The difference between the periods is driven by currency translation.

Total amortizable intangible assets at December 31, 2017 are as follows:adjustments.
14
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trademarks$40.1
 $4.0
 $36.1
Customer relationships84.4
 8.8
 75.6
Patents34.5
 3.8
 30.7
Non-compete0.5
 0.2
 0.3
Total intangible assets at December 31, 2017$159.5
 $16.8
 $142.7

Total amortizable intangible assets at September 30, 2017 were as follows:
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Trademarks$40.1
 $3.4
 $36.7
Customer relationships84.4
 7.3
 77.1
Patents34.5
 3.2
 31.3
Non-compete0.5
 0.1
 0.4
Total intangible assets at September 30, 2017$159.5
 $14.0
 $145.5

ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)





(8)Total intangible assets at December 31, 2023 are as follows:
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Trademarks and trade names$142.7 $(31.5)$111.2 
Customer relationships394.5 (146.6)247.9 
Patents34.2 (19.5)14.7 
Proprietary technology172.5 (104.5)68.0 
Proprietary formulas29.2 (10.3)18.9 
    Total Amortizable intangible assets773.1 (312.4)460.7 
Trademarks and trade names - indefinite lived763.7 — 763.7 
     Total Other intangible assets, net$1,536.8 $(312.4)$1,224.4 

Total intangible assets at September 30, 2023 were as follows:
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Trademarks and trade names$142.4 $(29.4)$113.0 
Customer relationships394.2 (139.7)254.5 
Patents33.9 (18.2)15.7 
Proprietary technology172.5 (100.0)72.5 
Proprietary formulas29.2 (10.0)19.2 
    Total Amortizable intangible assets772.2 (297.3)474.9 
Trademarks and trade names - indefinite lived762.8 — 762.8 
    Total Other intangible assets, net$1,535.0 $(297.3)$1,237.7 


(9) Debt


The detail of long-term debt was as follows:
December 31, 2023September 30, 2023
Senior Secured Term Loan Facility due 2027$904.0 $982.0 
6.500% Senior Notes due 2027300.0 300.0 
4.750% Senior Notes due 2028583.7 583.7 
4.375% Senior Notes due 2029791.3 791.3 
3.50% Senior Notes due 2029 (Euro Notes of €650.0)(1)
717.4 687.2 
Finance lease obligations(2)
49.7 32.0 
Total long-term debt, including current maturities$3,346.1 $3,376.2 
Less current portion(12.9)(12.3)
Less unamortized debt premium and debt issuance fees(29.9)(31.8)
Total long-term debt$3,303.3 $3,332.1 
 December 31, 2017 September 30, 2017
Senior Secured Term Loan B Facility, net of discount due 2022$391.0
 $392.0
5.50% Senior Notes due 2025600.0
 600.0
Total long-term debt, including current maturities991.0
 992.0
Less current portion(4.0) (4.0)
Less unamortized debt discount and debt issuance fees(9.1) (9.5)
Total long-term debt$977.9
 $978.5

The Company's $600.0(1) Changes in the USD balance of 5.50%the Euro denominated 3.50% Senior Notes due 2025 (Senior Notes) were soldin 2029 is due to qualified institutional buyers and will not be registered under federal or applicable state securities laws. Interestmovements in the currency rate year-over-year.
(2) The increase in finance lease obligations is payable semi-annually ondue to the acquisition of a finance lease associated with the Belgium Acquisition.

Credit Agreement - During the first quarter of fiscal 2024, the Company pre-paid $75.0 of the Senior NotesSecured Term Loan due in December and June. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by each2027. During the first quarter of fiscal 2023, the Company pre-paid $25.0 of the Company's domestic restricted subsidiaries that isSenior Term Loan. The Company wrote off $0.5 and $0.2 of deferred financing fees as a borrower or guarantorresult of these early payments in fiscal 2024 and fiscal 2023, respectively. Subsequent to December 31, 2023, the Company pre-paid an additional $55.0 of the Term Loan.

15
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


Borrowings under the Revolving Facility and Term Loan.

The Company hasLoan require quarterly principal payments at a credit agreement which provides for a five-year $350.0 senior secured revolving credit facility (Revolving Facility) which matures in June 2020 and a seven-year $400.0 senior secured term loan B facility (Term Loan) which is due in June 2022.rate of 0.25% of the original principal balance, or $3.0. Borrowings under the Revolving Facility will bear interest at LIBORa rate per annum equal to, at the option of the Company, Secured Overnight Finance Rate (SOFR) or the Base Rate (as defined) plus the applicable margin basedmargin. The Term Loan bears interest at a rate per annum equal to SOFR plus the applicable margin. The Credit Agreement also contains customary affirmative and restrictive covenants.

The Company has an interest rate swap that fixes the variable benchmark component (SOFR) at an interest rate of 1.042% on total Company leverage. variable rate debt of $700.0. The notional value of the swap will stay at this value through December 22, 2024 and then will decrease by $100.0 on December 22, 2024 and by $100.0 each year thereafter until its termination date on December 22, 2027. Refer to Note 11, Financial Instruments and Risk Management, for additional information on the Company's interest rate swap transactions.

As of December 31, 2017,2023 and 2022, the Company had $87.5 ofno outstanding borrowings under the Revolving Facility and had $6.7$7.6 of outstanding letters of credit. Taking into account outstanding letters of credit, $255.8 remains$492.4 remained available under the Revolving Facility as of December 31, 2017. As of2023. At both December 31, 2017, our2023 and September 30, 2023, the Company's weighted average interest rate on short-term borrowings was 3.19%7.7%.


Senior Notes - During the first quarter of fiscal 2023, the Company retired $16.3 of the 4.750% Senior Notes due in 2028 and $8.7 of the 4.375% Senior Notes due in 2029 for a cash cost of $21.6. The Company wrote off $0.3 of deferred financing fees as a result of these transactions.

The $400.0 Term Loan was issued at a $1.0 discount which is amortized with a corresponding charge to interest expense over the remaining life of the loan. The original interest rate was LIBOR subject to a 75 basis points floor, plus 250 basis points. On March 13, 2017, the Company completed the repricing of its Term Loan reducing the interest to LIBOR plus 200 basis points and eliminating the 75 basis points floor. The loans and commitments under the Term Loan require quarterly principal payments at a rate of 0.25%, or $1.0, of the original principal balance.

Obligations under the Revolving Facility and Term Loan are jointly and severally guaranteed by certain of its existing and future direct and indirectly wholly-owned U.S. subsidiaries. There is a first priority perfected lien on substantially all of the assets and property of the Company and guarantors and proceeds therefrom excluding certain excluded assets. No other terms were changed as resultprepayment of the Term Loan repricing.

In March 2017,during the Company entered into an interest rate swap agreement with one major financial institution that fixed the variable benchmark component (LIBOR)first quarter of fiscal 2024 resulted in a net Loss on $200.0extinguishment of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%.

Forfor the quarter ended December 31, 2017, our weighted average interest rate2023 of $0.5 recorded on variable rate debt, inclusivethe Consolidated (Condensed) Statement of Earnings and Comprehensive Income. The transactions associated with both the retirement of Senior Notes and prepayment of the interest rate swap, was 3.42%.Term Loan during the first quarter of fiscal 2023 resulted in a net Gain on extinguishment of debt of $2.9 for the quarter ended December 31, 2022.


Notes payable -The notesCompany had $2.2 in Notes payable balance was $110.5 at December 31, 20172023 and $104.1$8.2 at September 30, 2017.2023. The December 31, 2017 balance wasbalances are comprised of $87.5 outstanding borrowings on the Revolving Facility as well as $23.0 of other borrowings, including those from foreign affiliates. TheAt December 31, 2023 and September 30, 2017 balance was comprised of $95.02023, the Company had no outstanding borrowings on the Revolving facility as well as $9.1 of other borrowings, including those from foreign affiliates.Facility.


Debt Covenants

- The agreements governing the Company's debt contain certain customary representations and warranties, affirmative, negative and financial covenants and provisions relating to events of default. If the Company fails to comply with these covenants or with other requirements of these debt agreements, the lenders may have the right to accelerate the maturity of the debt. Acceleration under one of these facilitiesdebt agreements would trigger cross defaults to other
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


borrowings. As of December 31, 2017,2023, the Company was and expects to remain, in compliance with the provisions and covenants associated with its debt agreements.

Aggregate maturities of long-term debt, including current maturities, at December 31, 2017 were as follows: $4.0 in one year, $4.0 in two years, $4.0 in three years, $4.0 in four years, $375.0 in five years and $600.0 thereafter.


The counterparties to long-term committed borrowings consist of a number of major financial institutions. The Company consistently monitors positions with, and credit ratings of, counterparties both internally and by using outside ratings agencies.


Debt Maturities - Aggregate maturities of long-term debt as of December 31, 2023 are as follows:
(9)
Long-term debt
One year$12.0 
Two year12.0 
Three year12.0 
Four year1,168.0 
Five year583.7 
Thereafter1,508.7 
Total long-term debt payments due$3,296.4 

16
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


(10) Pension Plans


The Company has several defined benefit pension plans covering many of its employees in the U.S. and certain employees in other countries. The plans provide retirement benefits based on various factors including years of service and in certain circumstances, earnings. The U.S. plan wasMost plans are now frozen in fiscal year 2015.to new entrants and for additional service.
The Company’s net periodic pension (benefit)/cost for these plans are as follows:
For the Quarters Ended December 31,
U.S.International
2023202220232022
Service cost$— $— $0.1 $0.1 
Interest cost3.6 5.1 0.8 0.8 
Expected return on plan assets(3.3)(5.2)(0.8)(0.7)
Amortization of unrecognized net losses0.5 0.6 0.2 0.1 
Net periodic cost$0.8 $0.5 $0.3 $0.3 
 For the Quarter Ended December 31,
 U.S. International
 2017 2016 2017 2016
Service Cost$—
 $—
 $0.2
 $0.4
Interest Cost4.7
 4.5
 1.1
 0.9
Expected return on plan assets(7.5) (8.6) (1.6) (2.0)
Amortization of unrecognized net losses1.0
 1.2
 0.5
 0.9
Settlement charge0.1
 —
 —
 —
Net periodic (benefit)/cost$(1.7) $(2.9) $0.2
 $0.2

The Company adopted ASU 2017-07 in the current quarter. The service cost component of the net periodic (benefit)/cost above is recorded in Selling, general and administrative expense on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income, while the remaining components are recorded to Other items, net. The prior year amounts have been reclassified to provide comparable presentation in line with the guidance.


The Company also sponsors or participates in a number of other non-U.S. pension arrangements, including various retirement and termination benefit plans, some of which are required by local law or coordinated with government-sponsored plans, which are not significant in the aggregate and, therefore, are not included in the information presented above.


(10) Shareholder's Equity

In July 2015, the Company's Board of Directors approved an authorization for the Company to acquire up to 7.5 million shares of its common stock. During the three months ended December 31, 2017, the Company repurchased 1,126,379 shares for $50.0, at an average price of $44.41 per share, under this authorization. Future share 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.

On November 13, 2017, the Board of Directors declared a dividend for the first quarter of fiscal 2018 of $0.29 per share of common stock. The dividend was paid on December 14, 2017 to all shareholders of record as of November 30, 2017 and totaled $17.3. The incremental dividend payments of $0.3 made in fiscal 2018 were related to restricted stock awards that vested during November 2017.

Subsequent to the fiscal quarter end, on January 29, 2018, the Board of Directors declared a dividend for the second quarter of 2018 of $0.29 per share of common stock, payable on March 13, 2018, to all shareholders of record as of the close of business February 20, 2018.
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


(11) Financial Instruments and Risk Management


The market risk inherent in the Company's operations creates potential earnings volatility arising from changes in currency rates, interest rates and commodity prices. The Company's policy allows derivatives to be used only for identifiable exposures and, therefore, the Company does not enter into hedges for trading or speculative purposes where the sole objective is to generate profits.


Concentration of Credit Risk—The counterparties to derivative contracts consist of a number of major financial institutions and are generally institutions with which the Company maintains lines of credit. The Company does not enter into derivative contracts through brokers nor does it trade derivative contracts on any other exchange or over-the-counter markets. Risk of currency positions and mark-to-market valuation of positions are strictly monitored.monitored at all times.


The Company continually monitors positions with, and credit ratings of, counterparties both internally and by using outside rating agencies. While nonperformance by these counterparties exposes Energizer to potential credit losses, such losses are not anticipated.


In the ordinary course of business, the Company may enter into contractual arrangements (derivatives) to reduce its exposure to commodity price and foreign currency risks. The section below outlines the types of derivatives that existed at December 31, 20172023 and September 30, 2017,2023, as well as the Company's objectives and strategies for holding these derivative instruments.


Commodity Price Risk—EnergizerThe 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 materials and commodities. At December 31, 2017 and September 30, 2017, there were no open derivative or hedging instruments for future purchases of raw materials or commodities.


Foreign Currency Risk—A significant portion 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, a strengthening inof currencies relative to the U.S. dollar can improve margins. The primary currencies to which Energizer is exposed include the Euro, the British pound, the Canadian dollar and the Australian dollar. However, the
17
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


Company also has significant exposures in many other currencies which, in the aggregate, may have a material impact on the Company's operations.


Additionally, 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 a transaction gain or loss recorded in Other items, net on the Consolidated Statements(Condensed) Statement of Earnings and Comprehensive Income. The primary currency to which Energizer’s foreign subsidiaries are exposed is the U.S. dollar.


Interest Rate Risk—EnergizerThe Company has interest rate risk with respect to interest expense on variable rate debt. At December 31, 2017, Energizer2023, the Company had variable rate debt outstanding with an original principal balance of $400.0$904.0 under the Term Loan. In March 2017, the

The Company entered intohas an interest rate swap agreement with one major financial institution that fixedfixes the variable benchmark component (LIBOR) on $200.0 of Energizer's variable rate debt through June 2022(SOFR) at an interest rate of 2.03%.

This hedging instruments is considered a cash flow hedge for accounting purposes. At1.042% on variable rate debt of $700.0. The notional value of the swap will stay at this value through December 22, 2024 and then will decrease by $100.0 on December 22, 2024 and by $100.0 each year thereafter until its termination date on December 22, 2027. The notional value of the swap was $700.0 at December 31, 2017 the swap had an unrecognized pre-tax gain of $0.7 and at September 30, 2017 the swap had an unrecognized pre-tax loss of $1.3, both of which were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet.2023.


ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


Derivatives Designated as Cash Flow Hedges - Hedging Relationships—The Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of the 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, 20172023 and September 30, 2017,2023, Energizer had an unrealized pre-tax loss of $4.2$3.7 and $5.8,an unrealized pre-tax gain of $3.3, 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, 20172023 levels, over the next 12 months $4.1$3.3 of the pre-tax loss included in Accumulated other comprehensive loss is expected to be recognized in earnings. Contract maturities for these hedges extend into fiscal year 2019.2025. There were 6468 open foreign currency contracts at December 31, 2017,2023, with a total notional value of approximately $134.$160.


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 maturities for these hedges extend into fiscal 2025. There were 18 open contracts at December 31, 2023, with a total notional value of approximately $34. The Company had an unrealized pre-tax gain of $0.7 and an unrealized pre-tax loss of $0.7 on these hedges at December 31, 2023 and September 30, 2023, respectively, and was included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheet.

At December 31, 2023 and September 30, 2023, Energizer recorded an unrealized pre-tax gain of $59.2 and $79.8, respectively, on the Interest rate swap agreement, both of which were included in Accumulated other comprehensive loss on the Consolidated (Condensed) Balance Sheet.

Derivatives not Designated in Hedging Relationships - —Energizer enters into foreign currency derivative contracts, which are not designated as cash flow hedges for accounting purposes, to hedge existing balance sheet exposures. Any gains or losses on these contracts are expected to be offset by corresponding exchange losses or gains on the underlying exposures;exposures, and as such are not subject to significant market risk. There were 10eight open foreign currency derivative contracts which are not designated as cash flow hedges at December 31, 2017,2023, with a total notional value of approximately $85.$151.

18
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


The following table provides the Company's estimated fair values as of December 31, 20172023 and September 30, 2017,2023, and the amounts of gains and losses on derivative instruments classified as cash flow hedges for the quartersthree months ended December 31, 20172023 and 2016,2022, respectively:

 At December 31, 2017 For the Quarter Ended December 31, 2017
At December 31, 2023
At December 31, 2023
At December 31, 2023
Derivatives designated as Cash Flow Hedging Relationships
Derivatives designated as Cash Flow Hedging Relationships
Derivatives designated as Cash Flow Hedging Relationships 
Estimated Fair Value
 (Liability)/Asset
 (1) (2)
 (Loss)/Gain Recognized in OCI (3) 
Loss Reclassified From OCI into Income
(Effective Portion) (4) (5)
Foreign currency contracts $(4.2) $(0.8) $(2.4)
Interest rate contracts 0.7
 1.5
 (0.5)
Foreign currency contracts
Foreign currency contracts
Interest rate swap
Interest rate swap
Interest rate swap
Zinc contracts
Zinc contracts
Zinc contracts
Total
Total
Total $(3.5) $0.7
 $(2.9)
      
At September 30, 2023
 At September 30, 2017 For the Quarter Ended December 31, 2016
At September 30, 2023
At September 30, 2023
Derivatives designated as Cash Flow Hedging Relationships
Derivatives designated as Cash Flow Hedging Relationships
Derivatives designated as Cash Flow Hedging Relationships 
Estimated Fair Value
Liability (1) (2)
 Gain Recognized in OCI (3) 
Gain/(Loss) Reclassified From OCI into Income
(Effective Portion) (4) (5)
Foreign currency contracts $(5.8) $5.2
 $0.5
Interest rate contracts (1.3) 6.5
 (0.7)
Foreign currency contracts
Foreign currency contracts
Interest rate swap
Interest rate swap
Interest rate swap
Zinc contracts
Zinc contracts
Zinc contracts
Total $(7.1) $11.7
 $(0.2)
Total
Total
(1) All derivative assets are presented in Other current assets or Other assets.
(2) All derivative liabilities are presented in Other current liabilities or Other liabilities.
(3)(2) OCI is defined as other comprehensive income.
(4)(3) Gain/(loss)(Loss) reclassified to Income was recorded as follows: Foreign currency contracts in other items, net andCost of products sold, interest rate contracts in interest expense.Interest expense, and commodity contracts in Cost of products sold.
(5)(4) Each of these hedging relationships has derivative instruments with a high correlation to the underlying exposure being hedged and has been deemed highly effective in offsetting the underlying risk.


The following table provides estimated fair values as of December 31, 2023 and September 30, 2023 and the gains and losses on derivative instruments not classified as cash flow hedges for the three months ended December 31, 2023 and 2022, respectively:
At December 31, 2023For the Quarter Ended December 31, 2023
Estimated Fair Value Asset (1)Gain Recognized in Income (2)
Foreign currency contracts$2.1 $3.2 
 At September 30, 2023For the Quarter Ended December 31, 2022
Estimated Fair Value Liability (1)Gain Recognized in Income (2)
Foreign currency contracts$(1.3)$0.5 
(1) All derivative assets and liabilities are presented in Other current assets or Other assets and Other current liabilities or Other liabilities, respectively.
(2) Gain / (Loss) recognized in Income was recorded as foreign currency in Other items, net.


19
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)




The following table provides estimated fair values as of December 31, 2017 and September 30, 2017 and the gains and losses on derivative instruments not classified as cash flow hedges for the quarter ended December 31, 2017 and 2016, respectively:
  At December 31, 2017 For the Quarter Ended December 31, 2017
  Estimated Fair Value Asset Gain Recognized in Income (1)
Foreign currency contracts $0.5
 $0.3
     
  At September 30, 2017 For the Quarter Ended December 31, 2016
  Estimated Fair Value Asset Loss Recognized in Income (1)
Foreign currency contracts $0.9
 $(1.9)
(1) Gain/(loss) recognized in Income was recorded as foreign currency in Other items, net.

Energizer has the following recognized financial assets resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting.

Offsetting of derivative assets
At December 31, 2023At September 30, 2023
DescriptionBalance Sheet locationGross amounts of recognized assetsGross amounts offset in the Balance SheetNet amounts of assets presented in the Balance SheetGross amounts of recognized assetsGross amounts offset in the Balance SheetNet amounts of assets presented in the Balance Sheet
Foreign Currency ContractsOther Current Assets, Other Assets$2.4 $(0.3)$2.1 $4.4 $(1.0)$3.4 
Offsetting of derivative liabilities
At December 31, 2023At September 30, 2023
DescriptionBalance Sheet locationGross amounts of recognized liabilitiesGross amounts offset in the Balance SheetNet amounts of liabilities presented in the Balance SheetGross amounts of recognized liabilitiesGross amounts offset in the Balance SheetNet amounts of liabilities presented in the Balance Sheet
Foreign Currency ContractsOther Current Liabilities, Other Liabilities$(4.0)$0.3 $(3.7)$(2.4)$1.0 $(1.4)

Offsetting of derivative assets
    At December 31, 2017 At September 30, 2017
Description Balance Sheet location Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet
Foreign Currency Contracts Other Current Assets, Other Assets $1.0
 $—
 $1.0
 $1.1
 $—
 $1.1
               
Offsetting of derivative liabilities
    At December 31, 2017 At September 30, 2017
Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet
Foreign Currency Contracts Other Current Liabilities, Other Liabilities $(4.9) $0.2
 $(4.7) $(6.4) $0.4
 $(6.0)

Fair Value Hierarchy—Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified in one of the following three categories:


Level 1: Quoted market prices in active markets for identical assets or liabilities.


Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.


Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)



Under the fair value accounting guidance hierarchy, an entity is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The following table sets forth the Company's financial assets and liabilities, which are carried at fair value, as of December 31, 20172023 and September 30, 20172023 that are measured on a recurring basis during the period, segregated by level within the fair value hierarchy:
 Level 2
(Liabilities)/Assets at estimated fair value:December 31,
2023		September 30,
2023
Deferred compensation$(22.7)$(21.0)
Derivatives - Foreign Currency contracts(3.7)3.3 
Derivatives - Foreign Currency contracts (non-hedge)2.1 (1.3)
Derivatives - Interest Rate Swap59.2 79.8 
Derivatives - Zinc contracts0.7 (0.7)
Net Assets at estimated fair value$35.6 $60.1 
 Level 2
Liabilities at estimated fair value:December 31,
2017		 September 30,
2017
Deferred Compensation$(41.8) $(41.0)
Derivatives - Foreign Currency Contracts(3.7) (4.9)
Derivatives - Interest Rate Swap0.7
 (1.3)
Exit lease liability—
 (0.3)
Net Liabilities at estimated fair value$(44.8) $(47.5)


Energizer had no Level 1 financial assets or liabilities, other than pension plan assets, and no Level 3 financial assets or liabilities at December 31, 20172023 and at September 30, 2017.2023. The Company does measure certain assets and liabilities, such as Goodwill and Other intangibles, at fair value on a non-recurring basis using Level 3 inputs. There were no Level 3 fair value measurement gains or losses recognized during the quarters ended December 31, 2023 or 2022.


20
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


Due to the nature of cash and cash equivalents, carrying amounts on the balance sheets approximate estimated fair value. The estimated fair value of cash was determined based on Level 1 inputs and cash equivalents has beenand restricted cash are determined based on level 1 and levelLevel 2 inputs, respectively.inputs.


At December 31, 2017,2023, the estimated fair value of the Company's unfunded deferred compensation liability is determined based upon the quoted market prices of investment options that are offered under the plan. The estimated fair value of foreign currency contracts, and interest rate swap and zinc contracts, as described above, is the amount that the Company would receive or pay to terminate the contracts, considering first, quoted market prices of comparable agreements, or in the absence of quoted market prices, such factors as interest rates, currency exchange rates and remaining maturities. The estimated fair value of the exit lease liability was determined based on the discounted cash flows of the remaining lease rentals reduced by estimated sublease rentals that could be reasonably obtained for the property.


At December 31, 2017 and September 30, 2017,2023, the fair market value of fixed rate long-term debt was $610.3 and $615.7, respectively$2,172.2 compared to its carrying value of $600.0.$2,392.4, and at September 30, 2023, the fair market value of fixed rate long-term debt was $2,000.9 compared to its carrying value of $2,362.2. The estimated fair value of the long-term debt is estimated using yields obtained from independent pricing sources for similar types of borrowing arrangements. The estimated fair value of fixed rate long-term debt has been determined based on Level 2 inputs.


(12) Accumulated Other Comprehensive (Loss)/Income


The following table presents the changes in accumulated other comprehensive (loss)/income (AOCI), net of tax by component:
Foreign Currency Translation AdjustmentsPension ActivityZinc ContractsForeign Currency ContractsInterest Rate ContractsTotal
Balance at September 30, 2023$(89.7)$(110.3)$(0.5)$2.1 $60.7 $(137.7)
OCI before reclassifications(1.1)(1.5)(1.3)(4.6)(9.4)(17.9)
Reclassifications to earnings— 0.6 2.4 (0.6)(6.1)(3.7)
Balance at December 31, 2023$(90.8)$(111.2)$0.6 $(3.1)$45.2 $(159.3)

The following table presents the reclassifications out of AOCI to earnings:
For the Quarters Ended December 31,
20232022
Details of AOCI ComponentsAmount Reclassified
from AOCI (1)		Affected Line Item in the Combined Statements of Earnings
Gains and losses on cash flow hedges
Foreign currency contracts$(0.9)$(6.5)Cost of products sold
Interest rate contracts(8.0)(4.9)Interest expense
Zinc contracts3.2 (1.1)Cost of products sold
(5.7)(12.5)Earnings before income taxes
1.4 3.2 Income tax expense
$(4.3)$(9.3)Net earnings
Amortization of defined benefit pension items
Actuarial loss0.7 0.7 (2)
(0.1)(0.1)Income tax benefit
$0.6 $0.6 Net loss
Total reclassifications to earnings$(3.7)$(8.7)Net earnings
(1) Amounts in parentheses indicate credits to Consolidated (Condensed) Statement of Earnings and Comprehensive Income.
(2) This AOCI component is included in the computation of net periodic pension benefit/(cost) (see Note 10, Pension Plans, for further details).

21
 Foreign Currency Translation Adjustments Pension Activity Hedging Activity Interest Rate Swap Total
Balance at September 30, 2017$(93.1) $(139.4) $(4.5) $(1.8) $(238.8)
OCI before reclassifications7.4
 —
 (0.7) 0.9
 7.6
Reclassifications to earnings—
 1.2
 1.9
 0.4
 3.5
Balance at December 31, 2017$(85.7) $(138.2) $(3.3) $(0.5) $(227.7)

ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)





(13) Supplemental Financial Statement Information

The following table presentscomponents of certain income statement accounts are as follows:
For the Quarters Ended December 31,
20232022
Other items, net
       Interest income$(5.6)$(0.2)
Foreign currency exchange loss/(gain) (1)23.7 (1.0)
Pension cost other than service costs1.0 0.7 
Transition services agreement income(1.0)— 
       Other0.9 (0.9)
Total Other items, net$19.0 $(1.4)

(1) Foreign currency exchange loss includes the reclassifications outcurrency impact from the December 2023 Argentina economic reform. During December 2023, a new president was inaugurated in Argentina bringing significant economic reform to the country including devaluing the Argentine Peso by 50% in the month of AOCI:
 For the Quarter Ended December 31, 
 2017 2016 
Details of AOCI Components
Amount Reclassified
from AOCI (1)
Affected Line Item in the Combined Statements of Earnings
Gains and losses on cash flow hedges  
Foreign exchange contracts$(2.4) $0.5
Other items, net
Interest rate swap(0.5) (0.7)Interest expense
 (2.9) (0.2)Total before tax
 0.6
 0.2
Tax benefit
 $(2.3) $—
Net of tax
Amortization of defined benefit pension items 
Actuarial loss(1.5) (2.0)(2)
Settlement loss(0.1) —
(2)
 (1.6) (2.0)Total before tax
 0.4
 0.6
Tax benefit
 $(1.2) $(1.4)Net of tax
Total reclassifications for the period$(3.5) $(1.4)Net of tax
(1) AmountsDecember. As a result of this reform and devaluation, the Company recorded $21.0 of exchange losses in parentheses indicate debits toOther items, net on the Consolidated (Condensed) Statement of Earnings.
(2) This AOCI component is included in the computation of net periodic pension (benefit)/cost (see Note 9, Pension Plans, for further details).
22
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)





(13) Supplemental Financial Statement InformationThe components of certain balance sheet accounts are as follows:

December 31, 2023September 30, 2023
Inventories  
Raw materials and supplies$140.6 $113.5 
Work in process201.1 258.5 
Finished products298.9 277.7 
Total inventories$640.6 $649.7 
Other Current Assets  
Miscellaneous receivables$23.6 $20.8 
Prepaid expenses117.0 83.6 
Value added tax collectible from customers38.1 30.6 
Other33.6 37.0 
Total other current assets$212.3 $172.0 
Property, Plant and Equipment  
Land$13.0 $12.9 
Buildings137.9 135.2 
Machinery and equipment832.8 832.9 
Construction in progress80.3 69.7 
Finance Leases55.8 39.2 
Total gross property1,119.8 1,089.9 
Accumulated depreciation(735.5)(726.2)
Total property, plant and equipment, net$384.3 $363.7 
Other Current Liabilities  
Accrued advertising, sales promotion and allowances$19.1 $12.9 
Accrued trade allowances42.3 52.7 
Accrued freight and warehousing32.0 35.1 
Accrued salaries, vacations and incentive compensation33.7 57.9 
Accrued interest expense11.4 20.5 
Restructuring and related cost reserve15.3 17.1 
Income taxes payable52.9 36.9 
Other110.7 92.5 
Total other current liabilities$317.4 $325.6 
Other Liabilities  
Pensions and other retirement benefits$55.8 $55.0 
Deferred compensation17.6 17.4 
Mandatory transition tax12.8 12.8 
Restructuring and related cost reserve1.6 2.5 
Other non-current liabilities45.4 47.8 
Total other liabilities$133.2 $135.5 

 December 31, 2017 September 30, 2017
Inventories   
Raw materials and supplies$42.9
 $36.6
Work in process72.8
 84.8
Finished products160.5
 195.7
Total inventories$276.2
 $317.1
Other Current Assets   
Miscellaneous receivables$11.1
 $13.7
Prepaid expenses47.7
 52.7
Value added tax collectible from customers30.6
 23.4
Other4.3
 5.1
Total other current assets$93.7
 $94.9
Property, Plant and Equipment   
Land$4.6
 $4.6
Buildings123.1
 122.4
Machinery and equipment693.9
 697.9
Construction in progress24.1
 19.4
Total gross property845.7
 844.3
Accumulated depreciation(674.0) (667.8)
Total property, plant and equipment, net$171.7
 $176.5
Other Current Liabilities   
Accrued advertising, sales promotion and allowances$23.2
 $21.8
Accrued trade allowances50.8
 51.1
Accrued salaries, vacations and incentive compensation24.1
 54.4
Income taxes payable29.3
 21.6
Other114.2
 105.7
Total other current liabilities$241.6
 $254.6
Other Liabilities   
Pensions and other retirement benefits$83.9
 $87.7
Deferred compensation41.8
 41.0
Mandatory transition tax27.6
 —
Other non-current liabilities52.3
 49.3
Total other liabilities$205.6
 $178.0

ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)



(14) Legal proceedings/contingencies and other obligations


Legal proceedings/contingencies - 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
23
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED (CONDENSED) FINANCIAL STATEMENTS
(In millions - Unaudited)


determined with certainty. WeThe Company and its affiliates are a party to legal proceedings and claims that arise during the ordinary course of business. We reviewThe Company reviews our legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and followfollows appropriate accounting guidance when making accrual and disclosure decisions. We establishThe Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclosediscloses 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 doThe Company does 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.


Other obligations - In the ordinary course of business, the Company also enters into supply and service contracts. These contracts can include either volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations. At December 31, 2017,2023, the Company had approximately $98$7.4 of purchase obligations.obligations under these contracts.


24
(15) Subsequent Event

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.

The Company incurred $5.7 in acquisition costs recorded in SG&A expense on the Consolidated Statement of Earnings in the first quarter of 2018 related to this transaction.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations


The following discussion is meant to provide investors with information that management believes is helpful in reviewing Energizer’s historical-basis results of operations, operating segment results, and liquidity and capital resources. Statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) that are not historical may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should read the following MD&A in conjunction with the Consolidated (Condensed) Financial Statements (unaudited) and corresponding notes included herein. This MD&A contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those projected or implied in the forward-looking statements. Please see “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017 for a discussion of the uncertainties, risks and assumptions associated with these statements as well as in Item 1A. Risk Factors of this Form 10-Q.
.



All amounts discussed are in millions of U.S. dollars, unless otherwise indicated.


Forward-Looking Statements

This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future sales, gross margins, costs, earnings, cash flows, tax rates and performance of the Company. These statements generally can be identified by the use of forward-looking words or phrases such as "believe," "expect," "expectation," "anticipate," "may," "could," "will," "intend," "belief," "estimate," "plan," "target," "predict," "likely," "should," "forecast," "outlook," or other similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:
•Global economic and financial market conditions beyond our control might materially and negatively impact us.
•Competition in our product categories might hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers.
•Changes in the retail environment and consumer preferences could adversely affect our business, financial condition and results of operations.
•We must successfully manage the demand, supply, and operational challenges brought on by any disease outbreak, including epidemics, pandemics, or similar widespread public health concerns.
•Loss or impairment of the reputation of our Company or our leading brands or failure of our marketing plans could have an adverse effect on our business.
•Loss of any of our principal customers could significantly decrease our sales and profitability.
•Our ability to meet our growth targets depends on successful product, marketing and operations innovation and successful responses to competitive innovation and changing consumer habits.
•We are subject to risks related to our international operations, including currency fluctuations, which could adversely affect our results of operations.
•If we fail to protect our intellectual property rights, competitors may manufacture and market similar products, which could adversely affect our market share and results of operations.
•Changes in production costs, including raw material prices and transportation costs, from inflation or otherwise, have adversely affected, and in the future could erode, our profit margins and negatively impact operating results.
•Our reliance on certain significant suppliers subjects us to numerous risks, including possible interruptions in supply, which could adversely affect our business.
•Our business is vulnerable to the availability of raw materials, our ability to forecast customer demand and our ability to manage production capacity.
•The manufacturing facilities, supply channels or other business operations of the Company and our suppliers may be subject to disruption from events beyond our control.
•The Company's future results may be affected by its operational execution, including its ability to achieve cost savings as a result of any current or future restructuring events.
•If our goodwill and indefinite-lived intangible assets become impaired, we will be required to record impairment charges, which may be significant.
•A failure of a key information technology system could adversely impact our ability to conduct business.
•We rely significantly on information technology and any inadequacy, interruption, theft or loss of data, malicious attack, integration failure, failure to maintain the security, confidentiality or privacy of sensitive data residing on our systems or
25
other security failure of that technology could harm our ability to effectively operate our business and damage the reputation of our brands.
•We have significant debt obligations that could adversely affect our business and our ability to meet our obligations.
•If we pursue strategic acquisitions, divestitures or joint ventures, we might experience operating difficulties, dilution, and other consequences that may harm our business, financial condition, and operating results, and we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses.
•Our business involves the potential for product liability claims, labeling claims, commercial claims and other legal claims against us, which could affect our results of operations and financial condition and result in product recalls or withdrawals.
•Our business is subject to increasing government regulations in both the U.S. and abroad that could impose material costs.
•Increased focus by governmental and non-governmental organizations, customers, consumers and shareholders on environmental, social and governance (ESG) issues, including those related to sustainability and climate change, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
•We are subject to environmental laws and regulations that may expose us to significant liabilities and have a material adverse effect on our results of operations and financial condition.

In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those discussed herein and detailed from time to time in our other publicly filed documents, including those described under the heading “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on November 14, 2023.

Non-GAAP Financial Measures

The Company reports its financial results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). However, management believes that certain non-GAAP financial measures provide users with additional meaningful comparisons to the corresponding historical or future period.period, and are used for management incentive compensation. These non-GAAP financial measures exclude items that are not reflective of the Company's on-going operating performance, such as restructuring and related costs, acquisition and integration costs, costs related to the spin,loss/(gain) on extinguishment of debt and the one-time impact of the new U.S. tax legislation.December 2023 Argentina Economic Reform. In addition, these measures help investors to seeanalyze year over year comparability when excluding currency fluctuations acquisition activity as well as other companyCompany initiatives that are not on-going. We believe these non-GAAP financial measures are an enhancement to assist investors in understanding our business and in performing analysis consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or superior to, the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in methodmethods and in the items being adjusted.


We provide the following non-GAAP measures and calculations, as well as the corresponding reconciliation to the closest GAAP measure:


Segment Profit. This amount represents the operations of our three geographictwo reportable segments including allocations for shared support functions. General corporate and other expenses, Global marketing expenses, R&D expenses,Intangible amortization expense, interestInterest expense, otherLoss/(gain) on extinguishment of debt, Other items, net, restructuring and related costs, and the charges related to acquisition and integration and the spin-offcosts have all been excluded from segment profit.


Adjusted Earnings Before Income Taxes, Adjusted Net Earnings and Adjusted Diluted Net Earnings Per Common Share (EPS). These measures exclude the impact of the costs related to restructuring activities, acquisition and integration, the spin-off, and the one-timeLoss/(gain) on extinguishment of debt and the December 2023 Argentina Economic Reform.

Non-GAAP Tax Rate. This is the tax rate when excluding the pre-tax impact of restructuring activities, acquisition and integration, and the new U.S. incomeloss/(gain) on extinguishment of debt and the December 2023 Argentina Economic Reform, as well as the related tax legislation.impact for these items, calculated utilizing the statutory rate for where the impact was incurred.


Organic. This is the non-GAAP financial measurement of the change in revenue, segment profit or other margins that excludes or otherwise adjusts for the change in Argentina Operations and impact of currency from the changes in foreign currency exchange rates as defined below:


Change in Argentina Operations. The Company is presenting separately all changes in sales and segment profit from our Argentina affiliate due to the designation of the economy as highly inflationary as of July 1, 2018.
26
Impact of currency. The Company evaluates the operating performance of our Company on a currency neutral basis. The impactImpact of currencyCurrency is the difference betweenchange in foreign currency exchange rates year-over-year on reported results, which is calculated by comparing the value of current year foreign operations at the current period ending USD exchange rate compared toversus the value of the current year foreign operations at the prior period ending USD exchange rate. The impact of currency also includes gains/(losses) of currency hedging programs, and it excludes hyper-inflationary markets.
Adjusted Selling, General & Administrative Expense (SG&A) and Gross Margin as a percent of sales. Detail for adjustedAdjusted Gross margin and Adjusted SG&A as a percent of sales are also supplemental non-GAAP measures. These measures exclude the impact of costs related to restructuring activities, and acquisition and integration.


Forward-Looking StatementsMacroeconomic Environment


This document contains both historicalWe continue to operate in an inflationary environment where macro-economic pressures and forward-looking statements. Forward-looking statementsgeopolitical instability are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future sales, gross margins, costs, earnings, cash flows, tax rates and performance of Energizer. These statements generally can be identified by the use of forward-looking words or phrases such as "believe," "expect," "expectation," "anticipate," "may," "could," "intend," "belief," "estimate," "plan," "target," "predict," "likely," "will," "should," "forecast," "outlook," or other similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:

market and economic conditions;

market trends in the categories in which we compete;
the success of new products and the ability to continually develop and market new products;
our ability to attract, retain and improve distribution with key customers;
our abilityexpected to continue planned advertising and other promotional spending;
our ability to timely execute strategic initiatives, including restructurings, and international go-to-market changes in a manner that will positively impact our financial condition and results of operations and doesfiscal year 2024. While we did not disrupt our business operations;
the impact of strategic initiatives, including restructurings, on our relationships with employees, customers and vendors;
our ability to maintain and improve market share in the categories in which we operate despite heightened competitive pressure;
our ability to close the proposed acquisition of the global battery, lighting, and portable power business (the “Business”) of Spectrum Brands Holdings, Inc. (the “Acquisition”), which may be delayed or may not close at all due to the failure to obtain required regulatory approvals, or satisfy other closing conditions;
our ability to obtain financing for the Acquisition on favorable terms;
our ability to acquire and integrate businesses, and to realize the projected results of acquisitions, including our ability to promptly and effectively integrate the Business after the Acquisition has closed, and our ability to obtain expected cost savings, synergies and other anticipated benefits of the Acquisition within the expected timeframe;
the impact of the pending Acquisition on the respective business operations;
our ability to improve operations and realize cost savings;
the impact of foreign currency exchange rates and currency controls, as well as offsetting hedges, including the impact of the United Kingdom's referendum vote and announced intention to exit the European Union;
the impact of raw materials and other commodity costs;
the impact of legislative changes or regulatory determinations or changes by federal, state and local, and foreign authorities, as well as the impact of potential changes to tax laws, policies and regulations;
costs and reputational damage associated with cyber-attacks or information security breaches or other events;
the impact of advertising and product liability claims and other litigation; and
compliance with debt covenants and maintenance of credit ratings as well as the impact of interest and principal repayment of our existing and any future debt.

In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those detailed from time to timeexperience significant disruptions in our publicly filed documents, including those described under the heading “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on November 14, 2017 as well as in Item 1A. Risk Factors of this Form 10-Q.

Acquisition

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, but is expected by the end of calendar 2018.

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.

The Company incurred $5.7 in acquisition costs recorded in SG&A expense on the Consolidated Statement of Earningsoperations in the first quarter of 2018fiscal year 2024, the risks of future negative impacts due to transportation, including recent transportation issues in the Red Sea, logistical or supply constraints and higher commodity costs for certain raw materials remain present, and the Company could continue to experience corresponding incremental costs and gross margin pressures.

Argentina Economic Reform

In November 2023, a new president was elected in Argentina who is implementing significant economic reform. Upon his inauguration in December 2023, the government devalued the Argentine Peso (ARS) approximately 50% over night. The Company's net sales and operating profit in Argentina were not significantly impacted based on the timing of the devaluation within the quarter. The Company had net sales of $12.3 and $13.2 and operating profit of $5.1 and $4.1 in the three months ended December 31, 2023 and December 31, 2022, respectively. The Company anticipates that Argentina's operating costs may rise quicker than the Company is able to implement future price increases to offset rising costs, which may result in a near term decline to operating profit during fiscal 2024.

This devaluation and economic reform resulted in $21.0 of currency losses recognized in Other items, net in the three months ended December 31, 2023. This included exchange losses of $14.7 from the remeasurement of the Company's Argentina monetary assets and liabilities and $6.3 of transactional currency exchange losses on the ARS which are discussed further in Item 3. Quantitative and Qualitative Disclosures About Market Risk.

It is difficult to determine what continuing impact the new president and his economic reform or 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, as well as any additional reforms that may be issued by the new Argentine Administration.

Belgium Acquisition

On October 27, 2023, the Company acquired certain battery manufacturing assets in Belgium from Advanced Power Solutions Belgium NV (APS) for a contractual purchase price of EUR3.5 (Belgium Acquisition). The Company also acquired certain raw materials from APS, procured by APS on the Company's behalf to facilitate the transition, for a total acquisition purchase price of $11.6 (including value added taxes). The Company assumed a building lease as part of the acquisition and acquired these assets to provide a battery manufacturing location in Europe. The Company is still finalizing the valuation of these assets and related income tax considerations, but initially no goodwill has been recognized with this acquisition.

The Company recorded $2.6 of acquisition and integration costs associated with the Belgium Acquisition during the three months ended December 31, 2023. The costs included $2.9 of operating costs recorded in Costs of good sold as the Company was awaiting the receipt of the raw materials procured on the Company's behalf by APS. These costs were offset by $1.0 of income recorded in Other items, net from producing inventory for APS under a transaction services agreement (TSA) entered into at the closing of the transaction. No further income is expected from this TSA. The Company also recorded $0.7 of legal and diligence fees associated with the closing of this acquisition recorded in Selling, general and administrative expenses.

Project Momentum Restructuring Program

In November 2022, the Board of Directors approved a profit recovery program, Project Momentum, which includes an enterprise-wide restructuring focused on recovering operating margins, optimizing our manufacturing, distribution and global supply chain networks, and enhancing our organizational efficiency across the Company. In July 2023, the Company's Board of
27
Directors approved an expansion of this program to this transaction.include an additional year, which will allow for additional optimization of our battery manufacturing, distribution and global supply chain networks, further review of our global real estate footprint and the implementation of IT systems that will allow us to streamline our organization and fully execute the program.



Following the Belgium Acquisition in the first quarter of fiscal 2024, the Company is expanding the Project Momentum program and increasing the savings and cost expectations, partially due to the impact the expanded manufacturing capacity will have on the Company's battery network. The restructuring component of the program is now expected to generate $145 to $160 of annual pre-tax savings, and the Company estimates that it will incur one-time cash operating costs of $140 to $150, non-cash costs of approximately $20, and capital expenditures of $75 to $85 over the three year program. Additionally, along side the restructuring component of the program, Project Momentum includes continuous improvement and working capital initiatives that are designed to strengthen our balance sheet, focus on cash flow, and generate P&L savings of approximately $15 to $20 annually. Total expected pre-tax savings of Project Momentum are between $160 and $180 by the end of fiscal year 2025, with approximately $55 to $65 of those savings to be recognized in fiscal year 2024.


As of December 31, 2023, the Company has realized approximately $76 of these savings from Project Momentum, with approximately $22 in fiscal year 2024. The savings were primarily within Cost of products sold and SG&A on the Consolidated (Condensed) Statements of Earnings and Comprehensive Income.

In the quarters ended December 31, 2023 and 2022, the total Project Momentum restructuring and related pre-tax costs were $22.4 and $6.6, respectively. The expenses primarily consisted of severance and other benefit related costs, accelerated depreciation, asset write-offs, consulting costs, IT enablement, decommissioning, relocation, and other exit related costs. These costs were reflected within Cost of products sold, SG&A and Other items, net on the Consolidated (Condensed) Statements of Earnings and Comprehensive Income.

Although the Company's Project Momentum restructuring costs are recorded outside of segment profit, if allocated to our reportable segments, the restructuring and related costs for the quarter ended December 31, 2023 would be incurred within the Battery & Lights segment in the amount of $20.8 and the Auto Care segment in the amount of $1.6. The Company's Project Momentum restructuring costs for the quarter ended December 31, 2022 would be incurred within the Battery & Lights segment in the amount of $5.8 and the Auto Care segment in the amount of $0.8.

Project Momentum restructuring and related costs since inception are $83.0. Refer to Note 4, Restructuring, to the Consolidated (Condensed) Financial Statements for additional discussion on the Company's restructuring costs.

Highlights / Operating Results


Financial Results (in millions, except per share data)


Energizer reported first fiscal quarter netNet earnings of $60.4,$1.9, or $0.98$0.03 per diluted share. This comparescommon share, compared to netNet earnings of $95.6,$49.0, or $1.52$0.68 per diluted common share, in the prior year first fiscal quarter. Adjusted Diluted net earnings per dilutedcommon share were $1.55was $0.59 for the first fiscal quarter as compared to $1.51$0.72 in the prior year quarter, an increase of 2.6%.quarter.
Earnings before income taxes, Net earnings and Diluted EPSnet earnings per common share for the time periods presented were impacted by certain items related to spin restructuring and related costs, acquisition and integration costs, the Loss/(gain) on extinguishment of debt and the one-time impact of the new U.S. tax legislationDecember 2023 Argentina Economic Reform as described in the tables below. The impact of these items areis provided below as a reconciliation of Earning before income taxes, Net earnings and Diluted EPSnet earnings per common share to adjusted Earnings before income taxes, adjustedAdjusted Net earnings and adjustedAdjusted Diluted EPS,net earnings per common share, which are non-GAAP measures. See disclosure on non-GAAP measuresNon-GAAP Financial Measures above.
  For the Quarters Ended December 31,
(in millions, except per share data) Earnings Before Income Taxes Net Earnings Diluted EPS
  2017 2016 2017 2016 2017 2016
Reported - GAAP $119.0
 $134.1
 $60.4
 $95.6
 $0.98
 $1.52
Impacts: Expense (Income)            
  Spin restructuring —
 (1.3) —
 (1.0) —
 (0.02)
  Acquisition and integration costs (1) 5.7
 0.8
 4.1
 0.5
 0.07
 0.01
  One-time impact of the new U.S. tax legislation —
 —
 31.0
 —
 0.50
 —
     Adjusted - Non-GAAP (2) $124.7
 $133.6
 $95.5
 $95.1
 $1.55
 $1.51
Weighted average shares - Diluted 

 

 

 
 61.5
 62.9
28
For the Quarters Ended December 31,
20232022
Net earnings$1.9$49.0 
Pre-tax adjustments
Restructuring and related costs (1)22.46.6 
Acquisition and integration (2)2.6— 
Loss/(gain) on extinguishment of debt0.5(2.9)
December 2023 Argentina Economic Reform (3)21.0— 
Total adjustments, pre-tax$46.5$3.7 
Total adjustments, after tax$40.6$2.8 
Adjusted Net earnings (4)$42.5$51.8 
Diluted net earnings per common share$0.03$0.68 
Adjustments (per common share)
Restructuring and related costs (1)0.230.07 
Acquisition and integration (2)0.03— 
Loss/(gain) on extinguishment of debt0.01(0.03)
December 2023 Argentina Economic Reform (3)0.29— 
Adjusted Diluted net earnings per diluted common share$0.59$0.72 
Weighted average shares of common stock - Diluted72.672.2 
Currency, excluding hyperinflationary markets, benefited the quarter ended December 31, 2023 by $5.6 in Earnings before income taxes, or $0.06 per share, compared to the prior year quarter.

(1) AmountsRestructuring and related costs were incurred as follows:
For the Quarters Ended December 31,
20232022
Cost of products sold$12.8 $0.3 
SG&A - Restructuring costs5.7 6.3 
SG&A - IT Enablement3.9 — 
Total Restructuring and related costs$22.4 $6.6 
(2) Acquisition and integration costs of $2.6 included costs of $2.9 recorded in Costs of goods sold and $0.7 recorded in SG&A, partially offset by TSA income of $1.0 recorded in Other items, net on the Consolidated (Condensed) Statement of Earnings.
(3) During December 2023, a new president was inaugurated in Argentina bringing significant economic reform to the country including devaluing the Argentine Peso by 50% in the unauditedmonth of December. As a result of this reform and devaluation, the Company recorded $21.0 of exchange losses in Other items, net on the Consolidated Condensed(Condensed) Statement of Earnings and Comprehensive Income..
(2)(4) The effective tax rate for the Adjusted Net earnings and Adjusted Diluted EPS for the quarters ended December 31, 20172023 and 2016 for the Adjusted - Non-GAAP Net Earnings2022 was 24.0% and Diluted EPS was 23.4% and 28.8%21.5%, respectively, as calculated utilizing the statutory rate for where the costs were incurred. The net tax impact associated with the non-GAAP adjustments highlighted in the table was a benefit of $29.4 and zero, respectively, for the quarters ended December 31, 2017 and 2016.



29



Highlights
Total Net Sales (In millions - Unaudited)
Quarter Ended December 31, 2017
Total Net Sales Q1 % Chg
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%
Total Net salesFor the Quarter Ended December 31, 2023
$ Change% Chg
Net sales - prior year$765.1 
Organic(56.3)(7.4)%
Change in Argentina Operations(0.9)(0.1)%
Impact of currency8.7 1.2 %
Net Sales - current year$716.6 (6.3)%
See non-GAAP measure disclosures above.


Net sales were $573.3$716.6 for the first fiscal quarter of 2018, an increase2024, a decrease of $13.7$48.5 as compared to the prior year quarterquarter. Organic Net sales decreased 7.4%, primarily driven by the following items:


Organic net sales were up 1.1%•The battery business experienced volume declines of approximately 7% primarily due to earlier holiday orders compared to the prior year, which benefited the fourth quarter of 2023, and weaker performance at non-tracked channels; and

•Pricing was relatively flat in the first fiscal quarter dueperiod resulting in a net decrease to the following items:organic sales of 0.4%.

◦Favorable pricing across several markets increased net sales by 3%;

◦Investments made for our portfolio realignment in the back half of fiscal 2017 benefited our top-line in the first fiscal quarter of 2018 accounting for 0.5% of the organic sales increase; and

◦Partially offsetting the above increases in organic net sales were retailer merchandising changes in the U.S. that negatively impacted net sales by 1.3%, lapping of storm volume from prior year of 0.6% and the May 2017 divestiture of the non-core promotional sales business acquired with the auto care acquisition that negatively impacted net sales by 0.5%.


Favorable currency impacts were $7.8, or 1.3%.

Gross margin percentageon a reported basis for the first fiscal quarter of 20182024 was 48.5%37.3%, compared to 39.0% in the prior year. Excluding restructuring costs in the current and was flat to prior year of $12.8 and $0.3, respectively, and integration costs of $2.9 in the current year, Adjusted Gross margin was 39.5% compared to 39.0% in the prior year, an increase of 50 basis points.
For the Quarter Ended December 31, 2023
Gross margin - FY'23 Reported and Adjusted39.0 %
Project Momentum continuous improvement initiatives2.0 %
Product mix impact(0.6)%
Product cost impacts(0.5)%
Pricing(0.4)%
Gross margin - FY'24 Adjusted39.5 %
Current year impact of restructuring and integration costs(2.2)%
Gross margin - FY'24 Reported37.3 %

Adjusted Gross margin improvement was largely driven by improved pricing andProject Momentum which delivered savings of approximately $16 in the favorable impact of foreign currency. These items were primarilyquarter. This benefit was partially offset by less favorable overhead absorption versusmix impacts, modestly increased product costs, and to a lesser extent, lower pricing.

SG&A was $128.1 in the first fiscal quarter of 2024, or 17.9% of Net sales, as compared to $120.4, or 15.7% of Net sales, in the prior year period. Included in SG&A during the first fiscal quarter of 2024 were acquisition and investments madeintegration costs of $0.7, and included in continuous improvement initiatives.both the first fiscal quarter of 2024 and 2023 were restructuring and related costs of $9.6 and $6.3, respectively. Excluding these restructuring and related costs and acquisition and integration costs, adjusted SG&A was $117.8, or 16.4% of Net sales in the first fiscal quarter of 2024, as compared to $114.1, or 14.9% of Net sales in the prior year period. The year-over-year increase was primarily driven by higher labor and benefit costs, factoring fees and an environmental expense due to a charge related to a legacy facility that has been sold by the Company. This increase was partially offset by Project Momentum savings of approximately $6 in the quarter.

Advertising and sales promotion expense (A&P) was $37.3$47.0, or 6.6% of net sales, in the first fiscal quarter of 2018, or 6.5% of net sales,2024, as compared to $34.3,$53.4, or 6.1%7.0% of netNet sales, in the prior period primarily in support of portfolio initiatives and holiday programs.
Selling, general, and administrative expense (SG&A) was $99.2 in the first fiscal quarter of 2018,2023.
R&D was $7.8, or 17.3%1.1% of net sales, as compared to $84.4, or 15.1% of net sales, in the prior period. Included in the first fiscal quarter results were costs of $5.7 related to acquisition and integration costs. Included in the prior year quarter results were costs of $0.8 related to acquisition and integration costs. Excluding acquisition and integration costs in both years, SG&A was $93.5, an increase of $9.9 over the prior year due to our current year investments in our continuous improvement initiatives to simplify and streamline our business processes to reduce costs. SG&A, excluding acquisition and integration costs, was 16.3% of net sales as compared to 14.9% in the prior year.
Research and Development (R&D) decreased to $5.3, or 0.9% of netNet sales, for the quarter ended December 31, 2017,2023, as compared to $5.8,$7.6, or 1.0% of netNet sales, in the prior year comparative period.

30
Interest expense was $13.4$40.7 for the first fiscal quarter of 2018,2024 compared to $13.3 for the prior year comparative period.
Other items, net was expense of $1.3 for the first fiscal quarter of 2018 compared to income of $1.6 for the prior year first quarter. The current year expense primarily reflects net revaluation losses on nonfunctional currency balance sheet exposures and translational hedge losses offset by the impact of interest income, non-compensation related pension benefit and transactional hedge gains. The prior fiscal quarter income of $1.6 reflects the net impact of interest income, non-compensation related pension benefit and hedging contract gains offset by revaluation losses on nonfunctional currency balance sheet exposures.  

The effective tax rate was 49.2% in the first three months of the current fiscal year as compared to 28.7%$42.9 for the prior year comparative period. The lower interest expense was due to a lower average outstanding debt balance in the current year rate includesdue to the Company's initiatives to pay down debt.
Loss/(gain) on extinguishment of debt was a $31.0 chargeloss of $0.5 for the one-timefirst fiscal quarter of 2024, and relates to the Company's early repayment of $75.0 outstanding on the term loan. The gain on extinguishment of debt of $2.9 for the first fiscal quarter of 2023 related to the Company's retirement of $25.0 of outstanding Senior Notes at a discount and the early repayment of $25.0 outstanding on the term loan.
Other items, net was expense of $19.0 and a benefit of $1.4 for the first fiscal quarters of 2024 and 2023, respectively.
For the Quarters Ended December 31,
20232022
Other items, net
Interest income$(5.6)$(0.2)
Foreign currency exchange loss/(gain) (1)23.7 (1.0)
Pension cost other than service costs1.0 0.7 
Acquisition and integration - TSA income(1.0)— 
Other0.9 (0.9)
Total Other items, net$19.0 $(1.4)
(1) Foreign currency exchange loss includes the currency impact from the December 2023 Argentina economic reform. During December 2023, a new president was inaugurated in Argentina bringing significant economic reform to the country including devaluing the Argentine Peso by 50% in the month of December. As a result of this reform and devaluation, the new U.S.Company recorded $21.0 of exchange losses in Other items, net on the Consolidated (Condensed) Statement of Earnings.

The effective tax legislation passed in December 2017. Excluding the impact of our non-GAAP adjustments, therate on a year to date tax ratebasis was 23.4%79.8% as compared to 28.8%,21.3% in the prior year. The decrease in thecurrent year rate is driven by the U.S.charges from the December 2023 Argentina Reform which did not result in a statutory tax legislationbenefit. Excluding the impact of restructuring and takes into accountrelated costs, acquisition and integration costs, the new statutory U.S.Loss/(gain) on extinguishment in debt and the December 2023 Argentina Economic Reform, the year to date adjusted effective tax rate that is now effective for fiscal year 2018.

Spin Costs

There were no costs associated with the spin transaction recordedwas 24.0% as compared to 21.5% in the first fiscal quarter of 2018 asprior year. The higher current year rate is driven by the project has been completed. Duringhigher foreign rate differential compared to 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.prior year.


Segment Results


Operations for Energizer are managed via three major geographic reportabletwo product segments: Americas (North AmericaBatteries & Lights and Latin America), Europe, Middle East and Africa (“EMEA”), and Asia Pacific.

Auto Care. Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses (including share-based compensation costs, costs associated with restructuring initiatives,costs), amortization of intangibles, acquisition and integration activities, amortization costs, business realignment activities, research & developmentrestructuring and related costs, and other items determined to be corporate in nature. Financial items, such as interest income and expense and the (loss)/gain on extinguishment of debt, are managed on a global basis at the corporate level. The exclusion of substantially all acquisition, integration, restructuring and realignmentrelated costs and acquisition and integration 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 geographicproduct segments, varying by country and region of the world. Shared functions include but are not limited to,the sales and marketing functions, as well as human resources, IT procurement and finance.finance shared service costs. Energizer applies a fully allocated cost basis, in which shared business functions are allocated between segments. Such allocations are estimates, and domay 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, Segments, to the unaudited Consolidated Condensed Financial Statements for the quarter ended December 31, 2017.


Segment sales and profitability analysis for the quarter ended December
31 2017 are presented below.


Net Sales (In millions)
Quarter Ended December 31, 2017
 Quarter Ended December 31, 2017
 $ Change% Chg
Americas  
Net sales - FY '17$365.1
 
Organic7.2
2.0 %
Impact of currency0.8
0.2 %
Net Sales - FY '18$373.1
2.2 %
   
EMEA  
Net sales - FY '17$114.7
 
Organic(3.0)(2.6)%
Impact of currency5.9
5.1 %
Net Sales - FY '18$117.6
2.5 %
   
Asia Pacific  
Net sales - FY '17$79.8
 
Organic1.7
2.1 %
Impact of currency1.1
1.4 %
Net Sales - FY '18$82.6
3.5 %
   
Total Net Sales  
Net sales - FY '17$559.6
 
Organic5.9
1.1 %
Impact of currency7.8
1.3 %
Net Sales - FY '18$573.3
2.4 %
Segment Net SalesQuarter Ended December 31, 2023
$ Change% Chg
Batteries & Lights
Net sales - prior year$671.6 
Organic(60.8)(9.1)%
Change in Argentina Operations(0.7)(0.1)%
Impact of currency7.7 1.2 %
Net sales - current year$617.8 (8.0)%
Auto Care
Net sales - prior year$93.5 
Organic4.5 4.8 %
Change in Argentina Operations(0.2)(0.2)%
Impact of currency1.0 1.1 %
Net sales - current year$98.8 5.7 %
Total Net Sales
Net sales - prior year$765.1 
Organic(56.3)(7.4)%
Change in Argentina Operations(0.9)(0.1)%
Impact of currency8.7 1.2 %
Net sales - current year$716.6 (6.3)%


Results for the Quarter Ended December 31, 20172023


AmericasBattery & Lights reported a net sales increase of 2.2% which was positively impacted by foreign currency of 0.8, or 0.2%. Organic net sales increased 2.0% due primarilyNet Sales decreased 8.0% as compared to price increases and the favorable net impact of our portfolio optimization. These amounts were partially offset by the retailer merchandising changes, lapping of storm volume and the May 2017 divestiture of the non-core promotional sales business acquired with the auto care acquisition.

EMEA reported net sales increased 2.5% positively impacted by foreign currency of 5.1%.prior year period. Organic net sales decreased by 2.6% driven by$60.8, or 9.1%, for the shift offirst fiscal quarter. The organic decrease was due to earlier holiday orders intocompared to the prior year, which benefited the fourth quarter of fiscal 2017.2023 and weaker performance at non-tracked channels (approximately 8.0%), slight impact in pricing (approximately 0.8%) and lost distribution in international markets (approximately 0.3%).


Asia PacificAuto Care reported Net Sales increase of 5.7% as compared to the prior year period, driven by an organic net sales increased by 3.5%, including the positive impactincrease of foreign currency of 1.4%$4.5, or 4.8%. Organic net sales increased 2.1%The increase was driven by price increases taken in several markets.the continued benefits of global pricing actions (approximately 2.4%), increased volumes from timing of refrigerant sales (approximately 1.4%) and increased distribution internationally (approximately 1.0%).

32
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 currency0.5
0.4 %
Segment Profit - FY '18$123.1
— %
   
EMEA  
Segment Profit - FY '17$26.1
 
Organic(4.5)(17.2)%
Impact of currency3.9
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 currency0.5
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 currency4.9
2.8 %
Segment Profit - FY '18$172.3
(0.9)%

Segment ProfitQuarter Ended December 31, 2023
$ Change% Chg
Batteries & Lights
Segment profit - prior year$138.3 
Organic(6.8)(4.9)%
Change in Argentina Operations1.0 0.7 %
Impact of currency(0.1)(0.1)%
Segment profit - current year$132.4 (4.3)%
Auto Care
Segment profit - prior year10.6 
Organic(4.6)(43.4)%
Change in Argentina Operations— — %
Impact of currency0.9 8.5 %
Segment profit - current year$6.9 (34.9)%
Total Segment Profit
Segment profit - prior year148.9 
Organic(11.4)(7.7)%
Change in Argentina Operations1.0 0.7 %
Impact of currency0.8 0.6 %
Segment profit - current year$139.3 (6.4)%

Refer to Note 6,5, 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, 20172023


Global reported segment profit declined by $1.6, or 0.9%. Excluding the favorable movement in foreign currencies of $4.9, organic segment profit decreased $6.5, or 3.7%, in the current fiscal period. Top-line growth in the quarter was more than offset by increases in SG&A due to our continuous improvement initiatives to simplify and streamline our business processes to reduce costs and higher A&P spending related to our portfolio optimization and holiday programs.

Americas reported segment profit remained flat6.4% as compared to the prior period inclusive ofyear. Organic profit decrease was $11.4, or 7.7%. The organic decrease was driven by the positive impact from foreign currency of $0.5.organic net sales decline discussed above partially offset by reduced SG&A and A&P spending compared to the prior year.
Battery & Lights reported segment profit decreased by 4.3% as compared to the prior year. Organic segment profit decreased by $0.5 as top-line growth was fully$6.8, or 4.9%, due to the organic net sales decline discussed above, partially offset by increasedimproved gross margin from Project Momentum savings and reduced SG&A and A&P spending in support of portfolio initiatives and holiday programs.compared to the prior year.


EMEAAuto Care 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 due34.9% as compared 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.

Asia Pacific reported segment profit decreased $1.0. Excluding the favorable impact from foreign currency of $0.5, organicprior year. Organic segment profit declined by $1.5 as top-line growth$4.6, or 43.4%. The decline was more thandriven by lower gross margin due to increased product cost, overall product mix and higher SG&A. This was partially offset by increased overheadhigher organic net sales and reduced A&P spending due to current year investments in our continuous improvement initiatives.over the prior year.



General CorporateFor the Quarters Ended December 31,
20232022
    General corporate and other expenses$29.2 $25.4 
% of Net Sales4.1 %3.3 %
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 expense3.2
 3.0
General corporate and global marketing expense$24.8
 $20.2
% of Net Sales4.3% 3.6%


For the quarter ended December 31, 2017,2023, general corporate and other expenses were $21.6,$29.2, an increase of $4.4$3.8 as compared to the prior year comparative period due to increased compensation costs andperiod. The increase was primarily driven by higher mark to market expenseexpenses on our unfunded deferred compensation liability.

For the quarter ended December 31, 2017, global marketing expenses were $3.2 compared to $3.0plans as well as increased stock compensation in the prior year comparative periods. The global marketing expense represents a center led approach to managing global marketing activities in support our brands.current year.


33
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, 20172023 filed with the Securities and Exchange Commission on November 14, 2017 as well as in Item 1A. Risk Factors of this Form 10-Q.2023 for additional information.

Cash is managed centrally with net earnings reinvested locally and working capital requirements met from existing liquid funds. At December 31, 2017,2023, Energizer had $454.3$241.7 of cash and cash equivalents, substantially allapproximately 84% 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.


TheIn December 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 matures in 2020. and a $1,200.0 Term Loan due December 2027. In December 2021, the Company amended the Credit Agreement to increase the 2020 Revolving Facility to $500.0.

Borrowings under the Term Loan require quarterly principal payments at a rate of 0.25% of the original principal balance, or $3.0. Borrowings under the 2020 Revolving Facility will bear interest at LIBORa rate per annum equal to, at the option of the Company, SOFR or the Base Rate (as defined) plus the applicable margin basedmargin. The Term Loan bears interest at a rate per annum equal to SOFR plus the applicable margin.

During the quarter ended December 31, 2023 the company pre-paid $75.0 of the Term Loan. The write-off of associated deferred financing fees resulted in a Loss on totalextinguishment of debt during the quarter of $0.5. Subsequent to the quarter, the Company leverage. pre-paid an additional $55.0 of the Term Loan.

As of December 31, 2017,2023, the Company had $87.5 ofno outstanding borrowings under the 2020 Revolving Facility and had $6.7$7.6 of outstanding letters of credit. Taking into account outstanding letters of credit, $255.8 remains$492.4 remained available under the 2020 Revolving Facility as of December 31, 2017.

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.

2023. 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 Januarycompliance with the remainderprovisions and covenants associated with its debt agreements, and expects to be paid subject toremain in compliance throughout the closing of the transaction.next twelve months.



Operating Activities


Cash flow from operating activities was $141.0$178.1 in the three months ended December 31, 2017,2023, as compared to $91.8$161.0 in the prior year comparative period. The increaseThis change in cash flows of $17.1 was primarily driven by theworking capital changes, year over year, improvementof approximately $31, partially offset by the decline in Net earnings. The working capital change of $38.5. Accountsapproximately $31 was primarily a result of the increased accounts receivable collections, net of trade spend, year over year, of approximately $64. This was the main driver in the working capital improvement as the strong operating performance in the last quarterpartially offset by increased inventory, year over year, of fiscal 2017, largely driven by hurricane activity in the U.S., distribution gains in international marketsapproximately $19 and decreased accounts payable, year over year, of approximately $16 due to timing of holiday activity resulted in higher collections in the first fiscal quarter of 2018 as compared to 2017.payments.


Investing Activities


Net cash used by investing activities was $5.5$37.1 and $0.6 in$8.8 for the three months ended December 31, 20172023 and 2016,2022, respectively, and consisted of the following:


•Capital expenditures of $5.5$25.5 and $4.9$9.5 in the three months ended December 31, 20172023 and 2016, respectively. These capital expenditures2022, respectively;

•Proceeds from assets sales were funded by$0.7 in the three months ended December 31, 2022;

•Acquisitions, net of cash flow from operations.

The prior year expenditures were partially offset by proceedsacquired, was an outflow of $11.6 from the salepurchase of battery manufacturing assets of $4.3 related toin Belgium in the sale of two previously closed facilities.quarter ended December 31, 2023.


34
Investing cash outflows of approximately $30$95 to $35$105 are anticipated for the fullin fiscal year 20182024 for capital expenditures relating toexpenditures. This includes normal maintenance, product development and cost reduction initiatives. Total capital expenditures are expectedinvestments, as well as approximately $35 to be financed with funds generated$45 of investment from operations.Project Momentum initiatives including IT systems.


Financing Activities


Net cash used by financing activities was $63.9$110.8 for the three months ended December 31, 20172023 as compared to $63.2$79.4 in the prior fiscal year comparative period. For the three months ended December 31, 2017,2023, cash flow used by financing activities consists of the following:


Net increase in debt with original maturities of 90 days or less of $6.5;

Dividends paid of $17.6 (see below);

Common stock repurchases of $50.0 at an average price of $44.41 per share (see below);

Taxes paid for withheld share-based payments of $1.8; and

•Payments of debt with maturities greater than 90 days of $1.0.
$78.2, primarily related to term loan principal payments of $78.0;


For the three months ended December 31, 2016, cash used by financing activities consisted of the following:

•Net decrease in debt with original maturities of 90 days or less of $27.9,$5.2 primarily related to the repayment ofinternational borrowings;
borrowings on our Revolving Facility;

•Dividends paid on common stock of $18.1;$22.7 (see below); and


Common stock repurchases of $8.1 at an average price of $44.43 per share;

•Taxes paid for withheld share-based payments of $8.1; and$4.7.


For the three months ended December 31, 2022, cash used by financing activities consisted of the following:

•Payments of debt with maturities greater than 90 days of $1.0.$49.8, primarily related to the early retirement of Senior notes of $21.6 and the term loan principal payments of $28.0;



•Net decrease in debt with original maturities of 90 days or less of $5.9 primarily related to repayment of international borrowings;

•Dividends paid on common stock of $21.8; and

•Taxes paid for withheld share-based payments of $1.9.

Dividends


On November 13, 2017,6, 2023, the Board of Directors declared a cash dividend for the first quarter of fiscal 20182024 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.

2023. Subsequent to the end of the fiscal quarter, end, on January 29, 2018,2024, the Board of Directors declared a cash dividend for the second quarter of 20182024 of $0.29$0.30 per share of common stock, payable on March 13, 201814, 2024, to all shareholders of record as of the close of business on February 20, 2018.21, 2024.


Share Repurchases


In July 2015,November 2020, the Company's Board of Directors approvedput in place an authorization for the Company to acquire up to 7.5 million shares of its common stock. During the three months ended December 31, 2017, theThe Company repurchased 1,126,379has 5.0 million shares at an average price of $44.41 per share, or $50.0,remaining under this authorization.

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.

35
Other Matters


Environmental Matters


Accrued environmental costs at December 31, 20172023 were $5.2.$14.7. 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 summaryThe Company believes it has sufficient liquidity to fund its operations and meet its short-term and long-term obligations. The Company's material future obligations include the contractual and purchase commitments described below.

The Company has a contractual commitment to repay its long-term debt of Energizer's significant contractual obligations$3,296.4 based on the defined terms of our debt agreements. Within the next twelve months, the Company is obligated to pay $12.0 of this total debt. Our interest commitments based on the current debt balance and SOFR rate on drawn debt at December 31, 20172023 is show below:
 TotalLess than 1 year1 - 3 years3 - 5 yearsMore 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 payable110.5
110.5
—
—
—
Operating leases55.0
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 tax30.0
2.6
4.7
9.2
13.5
Total$1,602.7
$210.0
$176.7
$486.4
$729.6

(1)$705.2, with $145.2 expected within the next twelve months. The above table is based upon the debt balance and LIBOR rate as of December 31, 2017. In March 2017, EnergizerCompany has entered into an interest rate swap agreement with one major financial institution that fixed the variable benchmark component (LIBOR)(SOFR) on $200$700.0 of Energizer's variable rate debt through June 2022 at an interest rate of 2.03%.debt. Refer to Note 9, Debt, for further details.
(2) Globally, total expected pension contributions for the Company for fiscal year 2018 are estimated to be $8.9.
The Company has made paymentsan obligation to pay a mandatory transition tax of $1.2 year to date.$16.7 over the next three years. The projected payments beyond fiscal year 2018 are not currently estimable.
(3) Includedfirst payment of $3.9 is due in the table above aresecond quarter of fiscal 2024.

Additionally, Energizer has material future purchase commitments for goods and services which are legally binding and that specify all significant terms including price and/or quantity. Total future commitments for these obligations over the next 5 years is $7.4. Of this amount, $4.0 is due within the next twelve months. Refer to Note 14, Legal proceeding/contingencies and other obligations, for additional details.



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.

Finally, Energizer has operating and financing leases for real estate, equipment, and other assets that include future minimum payments with initial terms of one year or more. Total future operating and finance lease payments at December 31, 2023 are $142.7 and $92.7, respectively. Within the next twelve months, operating and finance lease payments are expected to be $20.3 and $4.0, respectively.

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.


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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, 20172023 and September 30, 2017,2023, Energizer had an unrealized pre-tax loss of $4.2$3.7 and $5.8,an unrealized gain of $3.3, 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, 20172023 levels over the next twelve months, $4.1$3.3 of the pre-tax loss included in Accumulated other comprehensive loss at December 31, 2017,2023 is expected to be includedrecognized in earnings. Contract maturities for these hedges extend into fiscal year 2019.2025.


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 quarter ended December 31, 20172023 and 2022, resulted in incomea gain of $0.3$3.2 and expense of $1.9 for the quarter ended December 31, 2016$0.5, respectively. These gains and waslosses were 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

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 fiscal 2025. There were 18 open contracts at December 31, 2017, there were no open derivative or hedging instruments2023, with a total notional value of approximately $34. The Company had an unrealized pre-tax gain of $0.7 and an unrealized pre-tax loss of $0.7 on these hedges for future purchases of raw materials or commodities.the quarter ended December 31, 2023 and September 30, 2023, respectively, 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, 2017,2023, Energizer had variable rate debt outstanding with an original principal balance of $400.0$904.0 under the 2020 Term Loan. In March 2017, the

The Company also entered intohas an interest rate swap agreement with one major financial institution that fixedfixes the variable benchmark component (LIBOR) on $200.0 of Energizer's variable rate debt through June 2022(SOFR) at an interest rate of 2.03%.1.042% on variable rate debt of $700.0. The notional value of the swap will stay at this value through December 22, 2024 and then will decrease by $100.0 on December 22, 2024 and by $100.0 each year thereafter until its termination date on December 22, 2027. The notional value of the swap was $700.0 at December 31, 2023.
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At December 31, 2023 and September 30, 2023, Energizer recorded a unrealized pre-tax gain of $59.2 and $79.8 on the 2020 Interest rate swap, respectively. For the quarter ended December 31, 2017,2023, our weighted average interest rate on variable rate debt, inclusive of the interest rate swap, was 3.42%4.30%.


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 and remains highly inflationary as of December 31, 2023. 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 or USD) 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.

In November 2023, a new president was elected in Argentina who is implementing significant economic reform. Upon his inauguration in December 2023, the government devalued the Argentine Peso (ARS) approximately 50%. On December 13th, the ARS exchange rate moved from 367:1 to 800:1 with the USD. The rate remained around this level throughout the month, ending December 31, 2023 at a rate of 808:1. This devaluation had a significant impact on the remeasurement of the Company's monetary assets and liabilities at December 31, 2023.

As of September 30, 2023, the Company's assets and liabilities on the Argentina legal subsidiary balance sheet translated to USD was $40.1 and $14.7, respectively. The translated asset and liability balances declined to $25.8 and $14.6, respectively, at December 31, 2023, and resulted in an exchange loss of $14.7 in Other items, net during the month of December. The Company does not manufacture in Argentina and is an importer primarily of batteries in this region. As a result, the liability balances included USD denominated debt of $10.3 and $8.8 at December 31 and September 30, 2023, respectively. In addition to the revaluation, the Company also recorded $6.3 of transactional currency exchange losses in Other items, net during December 2023.

It is difficult to determine what continuing impact the new president and his economic reforms or 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 USD and the amount of monetary assets and liabilities included in our affiliates' balance sheet, as well as any additional reforms that may be issued by the new Argentine Administration.

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, 2017,2023, 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.


TheyThe 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, 20172023 that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.



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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, 2017,2023, which was filed with the Securities and Exchange Commission on November 14, 2017,2023, 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 first quarter of fiscal 20182024 by Energizer and any affiliated purchasers pursuant to SEC rules, including any treasury shares withheld to satisfy employee withholding obligations upon vestingrules.

Issuer Purchases of Equity Securities
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number That May Yet Be Purchased Under the Plans or Programs
October 1 - October 31— — — 5,041,940 
November 1 - November 30— — — 5,041,940 
December 1 - December 31— — — 5,041,940 
Total— — — 5,041,940 

Item 5. Other Information

During the three months ended December 31, 2023, no director or officer of restricted stock and the execution of net exercises.

Issuer Purchases of Equity Securities
PeriodTotal Number of Shares Purchased (1)Average Price Paid Per ShareTotal 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 301,167,170
$44.38
1,126,379
4,151,623
December 1 - December 31—
—
—
4,151,623
Total1,167,170
$44.38
1,126,379
 
(1) 40,791 shares purchased during the quarter relate to the surrender to the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock or execution of net exercises.Regulation S-K.
(2) On July 1, 2015, the Board of Directors approved a share repurchase authorization for the repurchase of up to 7.5 million shares. 1,126,379 shares were repurchased on the open market during the quarter under this share repurchase authorization.
Item 6. Exhibits


See the Exhibit Index hereto.

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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).
2.2**
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).
2.3**
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).
2.4**
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).
2.5
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).
2.6**
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).
2.7**
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).
3.1
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).
ThirdFifth 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 January 29, 2018)November 9, 2023).
Commitment Letter, dated January 15, 2018, by and among the Company, Barclays Bank PLC and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed January 16, 2018).

31(i)*
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.
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.

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.
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.
101.INS*Inline 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.
101.SCH*Inline XBRL Taxonomy Extension Schema Document.
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Filed herewith.
40

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
101
Attached 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 Earnings
By: /s/ John J. Drabik
John J. Drabik
Executive Vice President and Comprehensive Income, (ii) the unaudited Consolidated Balance Sheets, (iii) the unaudited Consolidated Statements of Cash Flows, and (iv) Notes to ConsolidatedChief Financial Statements (Condensed). The financial information contained in the XBRL-related documents is “unaudited” and “unreviewed.”Officer
Date:February 6, 2024
*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 a management contract or compensatory plan or arrangement.


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