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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
_______________________________

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2021
Or
TRANSITION 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
____________________________________________________________________________________________________________
enr-20211231_g1.jpg
ENERGIZER HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Missouri36-4802442
(State or other jurisdiction of(I. R. S. Employer
incorporation or organization)Identification No.)
 
533 Maryville University Drive 
St. Louis,Missouri63141
(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 No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  Yes No

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,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
    
Non-accelerated filerSmaller reporting company
    
 Emerging growth company

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.

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

Indicate the number of shares of Energizer Holdings, Inc. common stock, $.01 par value, outstanding as of the close of business on February 3, 2022: 71,250,127.
2


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, 2021 and 2020
Consolidated Balance Sheets (Condensed) as of December 31, 2021 and September 30, 2021
Consolidated Statements of Cash Flows (Condensed) for the Three Months Ended December 31, 2021 and 2020
Consolidated Statements of Shareholders' Equity (Condensed) for the Three Months Ended December 31, 2021 and 2020

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




3

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

 For the Quarters Ended December 31,
 20212020
Net sales$846.3 $848.6 
Cost of products sold534.7 510.7 
Gross profit311.6 337.9 
Selling, general and administrative expense122.1 124.1 
Advertising and sales promotion expense51.7 49.6 
Research and development expense8.9 7.6 
Amortization of intangible assets15.2 15.5 
Interest expense37.0 47.3 
Loss on extinguishment of debt 5.7 
Other items, net0.2 0.8 
Earnings before income taxes76.5 87.3 
Income tax provision16.5 20.2 
Net earnings60.0 67.1 
Mandatory preferred stock dividends(4.0)(4.0)
Net earnings attributable to common shareholders$56.0 $63.1 
Basic net earnings per common share$0.84 $0.92 
Diluted net earnings per common share$0.83 $0.91 
Weighted average shares of common stock - Basic66.8 68.5 
Weighted average shares of common stock - Diluted67.1 73.5 
Statements of Comprehensive Income: 
Net earnings$60.0 $67.1 
Other comprehensive income/(loss), net of tax (benefit)/expense
Foreign currency translation adjustments12.3 5.5 
Pension activity, net of tax of $(0.4) and $0.5, respectively.
1.2 (0.5)
Deferred gain/(loss) on hedging activity, net of tax of $0.2 and $(0.9), respectively.
5.2 (2.6)
Total comprehensive income$78.7 $69.5 
The above financial statements should be read in conjunction with the Notes to Consolidated (Condensed) Financial Statements (Unaudited).
4


ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Condensed)
(In millions - Unaudited)
 
AssetsDecember 31,
2021
September 30,
2021
Current assets 
Cash and cash equivalents$221.2 $238.9 
Trade receivables, less allowance for doubtful accounts of $2.6 and $2.9, respectively
370.3 292.9 
Inventories755.9 728.3 
Other current assets202.9 179.4 
Total current assets1,550.3 1,439.5 
Property, plant and equipment, net381.9 382.9 
Operating lease assets109.3 112.3 
Goodwill1,053.3 1,053.8 
Other intangible assets, net1,856.2 1,871.3 
Deferred tax asset23.5 21.7 
Other assets135.4 126.0 
Total assets$5,109.9 $5,007.5 
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt$12.0 $12.0 
Current portion of capital leases2.2 2.3 
Notes payable183.4 105.0 
Accounts payable420.0 454.8 
Current operating lease liabilities15.3 15.5 
Other current liabilities382.6 356.8 
Total current liabilities1,015.5 946.4 
Long-term debt3,318.3 3,333.4 
Operating lease liabilities99.3 102.3 
Deferred tax liability93.8 91.3 
Other liabilities173.6 178.4 
Total liabilities4,700.5 4,651.8 
Shareholders' equity
Common stock0.7 0.7 
Mandatory convertible preferred stock  
Additional paid-in capital840.0 832.0 
Retained earnings30.9 (5.0)
Treasury stock(250.5)(241.6)
Accumulated other comprehensive loss(211.7)(230.4)
Total shareholders' equity409.4 355.7 
Total liabilities and shareholders' equity$5,109.9 $5,007.5 

The above financial statements should be read in conjunction with the Notes to Consolidated (Condensed) Financial Statements (Unaudited).
5

ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed)
(In millions - Unaudited)
 For the Three Months Ended December 31,
 20212020
Cash Flow from Operating Activities  
Net earnings$60.0 $67.1 
Non-cash integration and restructuring charges3.0 1.9 
Depreciation and amortization29.4 29.8 
Deferred income taxes 7.7 
Share-based compensation expense1.3 4.0 
Loss on extinguishment of debt 5.7 
Non-cash items included in income, net5.5 5.6 
Other, net(0.3)(0.7)
Changes in current assets and liabilities used in operations(153.5)(44.8)
Net cash (used by)/from operating activities(54.6)76.3 
Cash Flow from Investing Activities
Capital expenditures(24.4)(8.4)
Acquisitions, net of cash acquired and working capital settlements0.4 (66.4)
Net cash used by investing activities(24.0)(74.8)
  
Cash Flow from Financing Activities  
Cash proceeds from issuance of debt with original maturities greater than 90 days 550.0 
Payments on debt with maturities greater than 90 days(3.6)(1,383.3)
Net increase in debt with original maturities of 90 days or less94.2 1.2 
Premiums paid on extinguishment of debt (55.9)
Debt issuance costs(2.5)(12.5)
Dividends paid on common stock(20.5)(22.7)
Dividends paid on mandatory convertible preferred stock(4.0)(4.0)
Common stock purchased (21.3)
Taxes paid for withheld share-based payments(2.2)(6.7)
Net cash from/(used by) financing activities61.4 (955.2)
Effect of exchange rate changes on cash(0.5)9.5 
Net decrease in cash, cash equivalents, and restricted cash(17.7)(944.2)
Cash, cash equivalents, and restricted cash, beginning of period238.9 1,249.8 
Cash, cash equivalents, and restricted cash, end of period$221.2 $305.6 

The above financial statements should be read in conjunction with the Notes to 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
Preferred StockCommon StockPreferred StockCommon StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)/IncomeTreasury StockTotal Shareholders' Equity
September 30, 20212,156 66,864 $ $0.7 $832.0 $(5.0)$(230.4)$(241.6)$355.7 
Net earnings— — — — — 60.0 — — 60.0 
Share-based payments— — — — 1.3 — — — 1.3 
Common stock purchased— (451)— — 15.0 — — (15.0) 
Activity under stock plans— 133 — — (8.3) — 6.1 (2.2)
Dividends to common shareholders ($0.30 per share)
— — — — — (20.1)— — (20.1)
Dividends to preferred shareholders ($1.875 per share)
— — — — — (4.0)— — (4.0)
Other comprehensive income— — — — — — 18.7 — 18.7 
December 31, 20212,156 66,546 $ $0.7 $840.0 $30.9 $(211.7)$(250.5)$409.4 

Number of SharesAmount
Preferred StockCommon StockPreferred StockCommon StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)/IncomeTreasury StockTotal Shareholders' Equity
September 30, 20202,156 68,518 $ $0.7 $859.2 $(66.2)$(307.7)$(176.9)$309.1 
Net earnings— — — — — 67.1 — — 67.1 
Share-based payments— — — — 4.0 — — — 4.0 
Common stock purchased— (500)— — — — — (21.3)(21.3)
Activity under stock plans— 314 — — (20.6)(0.9)— 14.8 (6.7)
Deferred compensation plan— 22 — — (1.0)— — 1.0  
Dividends to common shareholders ($0.30 per share)
— — — — — (21.0)— — (21.0)
Dividends to preferred shareholders ($1.875 per share)
— — — — — (4.0)— — (4.0)
Other comprehensive income— — — — — — 2.4 — 2.4 
December 31, 20202,156 68,354 $ $0.7 $841.6 $(25.0)$(305.3)$(182.4)$329.6 

The above financial statements should be read in conjunction with the Notes to Consolidated (Condensed) Financial Statement (Unaudited).
7

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 distributor of primary batteries, portable lights, and auto care appearance, performance, refrigerants and fragrance products.

Batteries and lights are sold under the Energizer®, Eveready®, Rayovac® and Varta® brand names following the 2019 acquisition of Spectrum Holdings, Inc.'s (Spectrum) global battery, lighting, and portable power business (Battery Acquisition). Energizer offers batteries using lithium, alkaline, carbon zinc, nickel metal hydride, zinc air and silver oxide constructions.

Automotive appearance, performance, refrigerants and fragrance products are sold under the Refresh Your Car!®, California Scents®, Driven®, Bahama & Co.®, LEXOL®, Eagle One®, Armor All®, STP®, and A/C PRO® brands following the 2019 acquisition of Spectrum's global auto care business (Auto Care Acquisition).

Basis of Presentation - The accompanying Consolidated (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 Consolidated (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 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, including the recast of our segment related disclosures to align with our new reportable segments as of October 1, 2021. Refer to Note 6, Segments, for additional information. 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, 2021 included in the Annual Report on Form 10-K dated November 16, 2021.

Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendment simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020. The Company adopted this standard as of October 1, 2021 and the adoption of this standard did not have a material impact on the Company's consolidated (condensed) financial statements.

(2) Revenue Recognition

The Company, through its operating subsidiaries, is one of the world’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 a customer or customer’s carrier, depending on contract terms.

North America sales are generally through large retailers with nationally or regionally recognized brands.
8

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



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.

As discussed in Note 6, Segments, following the completion of the Battery and Auto Care Acquisition integrations in fiscal 2022, the Company has changed its reportable segments to better reflect what the chief operating decision maker is reviewing to make organizational decisions and resource allocations. Therefore, the Company has recast the product and market information for the quarter ended December 31, 2020 by recasting the Battery and Auto Care licensing and other sales within each product category, and Latin America within the respective Modern, Developing and Distributors markets as appropriate.

Supplemental product and market information is presented below for revenues from external customers for the quarters ended December 31, 2021 and 2020:
 For the Quarters Ended December 31,
Net Sales by products20212020
Batteries$701.7 $708.7 
Auto Care106.1 104.7 
Lights38.5 35.2 
Total Net Sales$846.3 $848.6 

 For the Quarters Ended December 31,
 20212020
Net Sales by markets 
North America$508.9 $516.9 
Modern Markets165.3 174.5 
Developing Markets115.4 108.3 
Distributors Markets56.7 48.9 
 Total Net Sales$846.3 $848.6 

(3) Acquisitions

Formulations Acquisition - During the first quarter of fiscal 2021, the Company entered into an agreement with Green Global Holdings, LLC to acquire a North Carolina-based company that specializes in developing formulations for cleaning tasks (Formulations Acquisition). On December 1, 2020, the Formulations Acquisition was completed for a cash purchase price of $51.2. During the first quarter of fiscal 2022, the working capital settlement was finalized, reducing the purchase price by $1.0, of which $0.4 was paid to the Company in December. The remaining amount will be settled in the second quarter of fiscal 2022. The product formulations acquired are both sold to customers directly and licensed to manufacturers. This acquisition is expected to bring significant innovation capabilities in formulations to the Company.

The acquisition is being accounted for as a business combination using the acquisition method of accounting which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The fair value of proprietary technology acquired and customer relationships were determined by applying the multi-period excess earnings method under the income approach.

9

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


The following table outlines the purchase price allocation:
Trade receivables$1.3 
Inventories0.1 
Goodwill28.7 
Other intangible assets, net20.5 
Operating lease assets0.5 
Accounts payable(0.2)
Current operating lease liabilities(0.2)
Other current liabilities(0.2)
Operating lease liabilities(0.3)
Net assets acquired$50.2 

The table below identifies the purchased intangible assets of $20.5:
TotalWeighted Average Useful Lives
Proprietary technology$19.5 7
Customer relationships1.0 15
Total Other intangible assets, net$20.5 

The Company finalized their purchase price accounting in the first quarter of fiscal 2022. The goodwill acquired in this acquisition is attributable to the value the Company expects to achieve from the significant innovation capabilities in formulations that the acquired company will bring to our organization, as well as the workforce acquired. The goodwill was allocated to the Americas segment prior to the Company's reorganization of our reportable segments on October 1, 2021. Refer to Note 7, Goodwill and intangible assets, for additional details. The goodwill is deductible for tax purposes.

In conjunction with the acquisition, the Company entered into incentive compensation agreements with certain key personnel. These agreements allow for potential earn out payments of up to $35.0 based on the achievement of a combination of financial and product development and commercialization performance targets and continued employment with the Company. These agreements are not considered a component of the acquisition purchase price but rather as employee compensation arrangements. The Company has recognized $4.5 for the earn out achieved at December 31, 2021. During the first quarter of fiscal 2022, $1.1 of this earn-out was recorded on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income in Selling, general and administrative expense and in Other current liabilities on the Consolidated (Condensed) Balance Sheet. This portion of the potential earn out agreement will be paid in the second quarter of fiscal 2022.

FDK Indonesia Acquisition - During the fourth quarter of fiscal 2020, the Company entered into an agreement with FDK Corporation to acquire its subsidiary PT FDK Indonesia, a battery manufacturing facility (FDK Indonesia Acquisition). On October 1, 2020, the Company completed the acquisition for a contractual purchase price of $18.2. After contractual and working capital adjustments, the Company initially paid cash of $16.9 and had a working capital adjustment of $0.7 in fiscal 2021. The acquisition of the FDK Indonesia facility increased the Company's alkaline battery production capacity and allows for the avoidance of future planned capital expenditures. The Company finalized their purchase price accounting in the fourth fiscal quarter of 2021.

Pro Forma Financial Information- Pro forma results for the Formulations Acquisition and FDK Indonesia Acquisition were not considered material and, as such, are not included.

Acquisition and Integration Costs- Acquisition and integration costs incurred during fiscal year 2022 and 2021 relate to the FDK Indonesia Acquisition, Formulations Acquisition, and the Battery and Auto Care Acquisitions which occurred in fiscal year 2019. The Company incurred pre-tax acquisition and integration costs of $16.5 in the three months ended December 31, 2021 and $18.3 in the three months ended December 31, 2020.

10

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


Pre-tax costs recorded in Costs of products sold were $6.0 and $7.7 for the three months ended December 31, 2021 and 2020, respectively, primarily related to the facility exit and restructuring related costs, discussed in Note 4, Restructuring.

Pre-tax acquisition and integration costs recorded in Selling, general and administrative expense (SG&A) were $9.4 and $10.4 for the three months ended December 31, 2021 and 2020, respectively. The SG&A expenses incurred during the three months ended December 31, 2021 primarily related to the integration of the acquired information technology systems, consulting costs, and retention-related compensation costs. The SG&A expenses incurred during the three months ended December 30, 2020 primarily related to the integration of the Battery and Auto Care acquisitions, including costs of integrating the auto care information technology systems of the businesses, and legal fees incurred for the fiscal year 2021 acquisitions.

For the three months ended December 31, 2021 and 2020, the Company recorded $1.1 and $0.1, respectively, of pre-tax acquisition and integration related costs in research and development. The fiscal 2022 costs primarily related to severance and R&D asset write-offs.

For the three months ended December 31, 2020, the Company recorded $0.1 of pre-tax acquisition and integration related Other items, net.

(4) Restructuring

In the fourth fiscal quarter of 2019, the Company began implementing restructuring related integration plans for our manufacturing and distribution networks. These plans include the closure and combination of distribution and manufacturing facilities in order to reduce complexity and realize greater efficiencies in our manufacturing, packaging and distribution processes. All activities within these plans have been substantially completed by December 31, 2021, and the Company does not expect to incur additional material charges associated with these plans.

In the fourth fiscal quarter of 2020, the Company initiated a new restructuring program with a primary focus on reorganizing its global end-to-end supply chain network and ensuring accountability by category. This program included streamlining the Company’s end-to-end supply chain model to enable rapid response to category specific demands and enhancing our ability to better serve our customers. Planning and execution of this program began in fiscal year 2021 and this program was substantially complete by December 31, 2021. The Company does not expect to incur additional material charges associated with this program.
11

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


The pre-tax expense for charges related to the restructuring plans for the quarters ended December 31, 2021 and 2020 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,
20212020
2019 Restructuring Program
Costs of products sold
Severance and related benefit costs$(0.1)$0.1 
Accelerated depreciation & asset write-offs1.2 1.4 
Other exit costs(1)
2.8 5.1 
2019 Restructuring Total$3.9 $6.6 
2020 Restructuring Program
Costs of products sold
Severance and related benefit costs$0.2 $ 
Other restructuring related costs(2)
1.1 0.8 
Selling, general and administrate expense
Severance and related benefit costs0.1 0.3 
Other restructuring related costs(2)
 2.9 
2020 Restructuring Total$1.4 $4.0 
Total restructuring related expense$5.3 $10.6 
(1) Includes charges primarily related to consulting, relocation, environmental investigatory and mitigation costs, and other facility exit costs.
(2) Primarily includes consulting fees for the restructuring program.

Although the Company's restructuring costs are recorded outside of segment profit, if allocated to our reportable segments, the restructuring costs noted above for the quarter ended December 31, 2021 would be incurred within the Battery & Lights segment in the amounts of $5.1 and the Auto Care segment in the amount of $0.2. All $10.6 of the restructuring costs in the quarter ended December 31, 2020 would have been incurred within the Battery & Lights segment.


12

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


The following table summarizes the activity related to the 2019 restructuring program for the quarters ended December 31, 2020 and 2021:
Utilized
September 30, 2020Charge to IncomeCashNon-Cash
December 31, 2020 1
Severance & termination related costs$5.3 $0.1 $3.4 $ $2.0 
Accelerated depreciation & asset write-offs 1.4  1.4  
Other exit costs2.9 5.1 5.3  2.7 
    Total$8.2 $6.6 $8.7 $1.4 $4.7 
September 30, 2021Charge to IncomeCashNon-Cash
December 31, 2021 1
Severance & termination related costs$1.4 $(0.1)$1.0 $ $0.3 
Accelerated depreciation & asset write-offs 1.2  1.2  
Other exit costs2.2 2.8 4.5  0.5 
Net gain on sale of fixed assets0.5  0.5   
   Total$4.1 $3.9 $6.0 $1.2 $0.8 

(1) At December 31, 2020 and 2021, the restructuring reserve is recorded on the Consolidated (Condensed) Balance Sheet in Other current liabilities.

The following table summarizes the activity related to the 2020 restructuring program for the quarters ended December 31, 2020 and 2021:
Utilized
September 30, 2020Charge to IncomeCashNon-Cash
December 31, 2020 1
Severance & termination related costs$0.4 $0.3 $ $ $0.7 
Other restructuring related costs0.8 3.7 3.3  1.2 
Total$1.2 $4.0 $3.3 $ $1.9 
September 30, 2021Charge to IncomeCashNon-Cash
December 31, 2021 1
Severance & termination related costs$0.9 $0.3 $0.2 $ $1.0 
Other restructuring related costs0.7 1.1 1.4  0.4 
   Total$1.6 $1.4 $1.6 $ $1.4 

(1) At December 31, 2020 and 2021, the restructuring reserve is recorded on the Consolidated (Condensed) Balance Sheet in Other current liabilities.
13

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


(5) 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 equivalent (RSE) awards, performance share awards and deferred compensation equity plans. Common shares issuable upon conversion of the Mandatory convertible preferred stock (MCPS) are included in the calculation of diluted earnings per share using the if-converted method and are only included if the conversion would be further dilutive to the calculation.

The following table sets forth the computation of basic and diluted earnings per share for the quarters ended December 31, 2021 and 2020:

(in millions, except per share data)For the Quarters Ended December 31,
Basic net earnings per share20212020
Net earnings$60.0 $67.1 
Mandatory preferred stock dividends(4.0)(4.0)
Net earnings attributable to common shareholders$56.0 $63.1 
Weighted average common shares outstanding - Basic66.8 68.5 
Basic net earnings per common share$0.84 $0.92 
Diluted net earnings per share
Weighted average common shares outstanding - Basic66.8 68.5 
Dilutive effect of RSE0.2 0.1 
Dilutive effect of performance shares 0.1 
Dilutive effect of stock based deferred compensation plan0.1 0.1 
Dilutive effect of MCPS 4.7 
Weighted average common shares outstanding - Diluted67.1 73.5 
Diluted net earnings per common share$0.83 $0.91 

For the quarters ended December 31, 2021 and 2020, 0.1 million and 0.5 million RSEs, respectively, were anti-dilutive and not included in the diluted net earnings per share calculation.

Performance based RSE shares of 1.8 million and 1.5 million were excluded for the quarters ended December 31, 2021 and 2020, respectively, as the performance targets for those awards have not been achieved as of the end of the applicable period.

For the quarter ended December 31, 2021, the conversion of the MCPS was not dilutive and the mandatory preferred stock dividends are included in the dilution calculation. For the quarter ended December 31, 2020, the diluted net earnings per common share is assuming the conversion of the MCPS to 4.7 million of common stock, and excluding the mandatory preferred stock dividends from net earnings.

14

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


(6) Segments

As of October 1, 2021, the Company has changed its reportable operating segments from two geographical segments, previously Americas and International, to two product groupings, Battery & Lights and Auto Care. This change came with the completion of the Battery and Auto Care Acquisition integrations in fiscal 2022. The Company changed its reporting structure to better reflect what the chief operating decision maker is reviewing to make organizational decisions and resource allocations. The Company has recast the information for the quarter ended December 31, 2020 to align with this presentation

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, including restructuring charges, acquisition earn out and other items determined to be corporate in nature. Financial items, such as interest income and expense and loss on extinguishment of debt are managed on a global basis at the corporate level. The exclusion of 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 do not represent the costs of such services if performed on a standalone basis.

Segment sales and profitability for the quarters ended December 31, 2021 and 2020 are presented below:
 For the Quarters Ended December 31,
20212020
Net Sales 
Batteries & Lights$740.2 $743.9 
Auto Care106.1 104.7 
Total net sales$846.3 $848.6 
Segment Profit 
Batteries & Lights$168.4 $180.5 
Auto Care(0.2)18.3 
Total segment profit168.2 198.8 
    General corporate and other expenses (1) (21.7)(24.0)
    Amortization of intangible assets(15.2)(15.5)
    Acquisition and integration costs (2)(16.5)(18.3)
    Acquisition earn out (3)(1.1) 
Interest expense(37.0)(47.3)
Loss on extinguishment of debt (5.7)
Other items, net - Adjusted (4)(0.2)(0.7)
Total earnings before income taxes$76.5 $87.3 
Depreciation and amortization
Batteries & Lights$12.2 $12.0 
Auto Care2.0 2.3 
Total segment depreciation and amortization$14.2 $14.3 
Amortization of intangible assets15.2 15.5 
         Total depreciation and amortization$29.4 $29.8 
(1) Included in SG&A in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income.
(2) Acquisition and integration costs were included in the following lines in the Consolidated (Condensed) Statement of Earnings and Comprehensive Income:
15

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


For the Quarters Ended December 31,
Acquisition and integration costs20212020
Cost of products sold$6.0 $7.7 
Selling, general and administrative expense9.4 10.4 
Research and development expense1.1 0.1 
Other items, net 0.1 
        Total acquisition and integration costs$16.5 $18.3 
(3) This represents the earn out achieved through December 31, 2021 under the incentive agreements entered into with the Formulations Acquisition and is recorded in SG&A on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income.
(4) Other items, net for the quarter ended December 31, 2020 on the Consolidated (Condensed) Statement of Earnings and Comprehensive Income included acquisition related costs of $0.1, which have been reclassified for the acquisition and integration costs reconciliation above.

Corporate assets shown in the following table include cash, all financial instruments, pension assets, amounts indemnified by Spectrum per the purchase agreements and tax asset balances that are managed outside of operating segments. The asset balances as of September 30, 2021 have been recast to align with our new reportable segments.

Total AssetsDecember 31, 2021September 30, 2021
Batteries & Lights$1,399.4 $1,302.7 
Auto Care386.9 367.8 
Total segment assets$1,786.3 $1,670.5 
Corporate414.1 411.9 
Goodwill and other intangible assets2,909.5 2,925.1 
Total assets$5,109.9 $5,007.5 

(7) 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, 2021 and December 31, 2021. The balances at October 1, 2021 have been recast to align with our new reportable segments:

Batteries & LightsAuto CareTotal
Balance at October 1, 2021$900.3 $153.5 $1,053.8 
Formulations Acquisition working capital finalization (1.0)(1.0)
Cumulative translation adjustment0.4 0.1 0.5 
Balance at December 31, 2021$900.7 $152.6 $1,053.3 

Energizer had indefinite-lived intangible assets of $1,365.6 at December 31, 2021 and $1,365.7 at September 30, 2021. The difference between the periods is driven by currency adjustments.
16

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



Total intangible assets at December 31, 2021 are as follows:

Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Trademarks and trade names$59.5 $(18.8)$40.7 
Customer relationships395.2 (93.7)301.5 
Patents34.5 (14.2)20.3 
Proprietary technology172.5 (65.0)107.5 
Proprietary formulas21.9 (3.8)18.1 
Vendor relationships8.0 (5.5)2.5 
    Total Amortizable intangible assets691.6 (201.0)490.6 
Trademarks and trade names - indefinite lived1,365.6 — 1,365.6 
     Total Other intangible assets, net$2,057.2 $(201.0)$1,856.2 

Total intangible assets at September 30, 2021 were as follows:

Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Trademarks and trade names$59.5 $(17.8)$41.7 
Customer relationships395.0 (87.1)307.9 
Patents34.5 (13.5)21.0 
Proprietary technology172.5 (59.6)112.9 
Proprietary formulas21.9 (3.0)18.9 
Vendor relationships8.0 (4.8)3.2 
    Total Amortizable intangible assets691.4 (185.8)505.6 
Trademarks and trade names - indefinite lived1,365.7 — 1,365.7 
    Total Other intangible assets, net$2,057.1 $(185.8)$1,871.3 

(8) Debt

The detail of long-term debt was as follows:
December 31, 2021September 30, 2021
Senior Secured Term Loan Facility due 2027$1,191.0 $1,194.0 
4.750% Senior Notes due 2028600.0