Energizer Holdings, Inc.

Good morning. My name is Chad, and I will be your conference operator today. At this time, I would like to welcome everyone to Energizer's first quarter fiscal year 2023 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star, then two. As a reminder, this call is being recorded. I would now like to turn the conference over to John Polden, Vice President, Treasurer, and Investor Relations. You may begin your conference.

Good morning, and welcome to Energizer's first quarter fiscal 2023 conference call. Joining me today are Mark Levine, President and Chief Executive Officer, and John Drabek, Chief Financial Officer. A replay of this call will be available on the investor relations section of our website, energizerholdings.com. During the call, we will make forward-looking statements about the company's future business and financial performance, among other matters. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these statements. We do not undertake to update these forward-looking statements. Other factors that could cause actual results to differ materially from these statements are included in reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed in this call relates to the categories where we compete and is based on Energizer's internal data data from industry analysis, and estimates we believe to be reasonable. The battery category information includes both brick and mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year, and all comparisons to prior year relate to the same period in fiscal 2022. With that, I would like to turn the call over to Mark.

Good morning, everyone. Before we talk about the results of the quarter, I want to introduce John Poldan, who has been with the organization for 13 years. He is Energizer's Vice President and Treasurer, and he will lead our investor relations efforts going forward. Now on to the results. Our fiscal year is off to a strong start. During our call last November, we highlighted how the restoration of margins, free cash flow generation, and debt reduction were key focus areas as we commenced the new fiscal year. Our first quarter results demonstrate significant progress across all of these areas. Let me walk through how we've been able to get off to this great start. It all starts with our categories. In batteries, the category remains resilient despite the economic environment, as it is an essential category for consumers. On a three-year stack, U.S. category value is up over 20% in the 13 weeks ended November, with volume up over 4% during the same period. In the quarter, global category value was up almost 6%, with volumes down roughly 3%. And consumers prefer our brand, with Energizer outpacing the category. Our value share was up 1.2 points globally versus prior year, behind a strong performance in the U.S. Now turning to auto care. Category-leading indicators remain strong. and each of our four subcategories has experienced double-digit value growth since pre-pandemic levels. Year over year, the category value grew over 3%, with the benefit of pricing more than offsetting volume impact. While this is the smallest quarter of the year for auto care, both Armorall and STP grew share, including in the important appearance subcategory, which represents nearly half of our total auto care portfolio. As John will explain in a moment, our first quarter sales did not track with syndicated data across our categories. We mentioned last quarter that retailers entered the quarter with slightly elevated inventory levels, particularly in batteries, which partially contributed to that disconnect. As the quarter progressed, retailers also began to more aggressively manage inventory levels despite the strong consumer demand. After a strong holiday season, many of our customers were either below or at the low end of their historical inventory levels. While this impacted our net sales in the quarter, the strength of our categories, our performance at shelf, and lower retail inventory gives us the confidence in delivering our full year outlook. Against the backdrop of those strong category fundamentals, our focus on restoring gross margins has begun to pay dividends. First, let's cover pricing. As we discussed in previous quarters, we have taken multiple rounds of broad-based pricing across both battery and auto care to offset the inflationary headwinds we were experiencing. And we expect to continue to benefit from favorable cons in the first two quarters of the fiscal year. Looking ahead, any additional pricing actions are expected to be more targeted in nature. In addition to pricing, savings from the initiatives under Project Momentum have driven gross margin improvement year over year as benefits from reengineering our products, consolidating suppliers, and improving labor efficiency are beginning to flow through. The auto care business has been a point of emphasis as gross margins were impacted significantly by inflation and is one where we are already making great progress. Our considered efforts around pricing, combined with the benefits of Project Momentum, contributed to a significant improvement in segment profit in the quarter. Project Momentum is not just improving gross margins, It is also driving much improved working capital deficiency, which John will provide more detail on later in the call. The combination of our expanded margins and leaner balance sheet helped to generate over $150 million of free cash flow in the quarter, which we used to pay down over $100 million of debt in the first four months of the year. As we look ahead, debt paydown continues to be our primary capital allocation priority. Now let me turn the call over to John to provide additional details about our financial performance.