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What changed in ENERGIZER HOLDINGS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ENERGIZER HOLDINGS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+272 added−276 removedSource: 10-K (2023-11-14) vs 10-K (2022-11-15)

Top changes in ENERGIZER HOLDINGS, INC.'s 2023 10-K

272 paragraphs added · 276 removed · 219 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+4 added−21 removed169 unchanged
Biggest changeConsequently, we are subject to a number of risks associated with doing business in foreign countries, including: • changing macroeconomic conditions in our markets, including as a result of inflation, volatile commodity prices and increases in the cost of raw materials, labor, energy, and logistics, which could impact the manufacturing operations of the Company and our third-party manufacturers; • political or economic instability, labor disputes, government corruption and civil unrest, including political or economic instability in the countries of the Eurozone, Egypt, Russia, the Middle East and certain markets in Latin America; • potential disruption from wars and military conflicts, including the conflict in Ukraine; • price controls and related government actions; • the possibility of nationalization of business or industries, expropriation, confiscatory taxation or other similar government action; • the inability to repatriate foreign-based cash for strategic needs in the U.S., either at all or without incurring significant income tax and earnings consequences, as well as the heightened counterparty, internal control and country-specific risks associated with holding cash overseas; • the effect of foreign income taxes, value-added taxes and withholding taxes, including the inability to recover amounts owed to us by a government authority without extended proceedings or at all; • the effect of the U.S. tax treatment of foreign source income and losses, and other restrictions on the flow of capital between countries; • adverse changes in local investment, local employment, local training or exchange control regulations; • legal and regulatory constraints, including the imposition of tariffs, trade restrictions, price, profit or other government controls, labor laws, immigration restrictions, travel restrictions, including as a result of COVID-19 or other outbreaks of infectious diseases, import and export laws or other government actions generating a negative impact on our business, including changes in trade policies that may be implemented; • currency fluctuations, including the impact of hyper-inflationary conditions in certain economies, particularly where exchange controls limit or eliminate our ability to convert from local currency; • difficulties in hiring and retaining qualified employees; • employment litigation related to employees, contractors and suppliers, particularly in Latin America and Europe; • difficulties in obtaining or unavailability of raw materials; • difficulty in enforcing contractual and intellectual property rights; • continuing legal, political and economic uncertainty and disruption from the United Kingdom's exit from the European Union, including the long-term impact of the bilateral trade and cooperation deal governing the future relationship between the United Kingdom and the European Union; • lack of well-established or reliable, and impartial legal systems in certain countries where we operate; • challenges relating to enforcement of or compliance with local laws and regulations and with U.S. laws affecting operations outside of the U.S., including without limitation, the U.S.
Biggest changeConsequently, we are subject to a number of risks associated with doing business in foreign countries, including: • unfavorable and uncertain macroeconomic and geopolitical conditions and potential operational or supply chain disruptions as a result of these developments; • political or economic instability, labor disputes, government corruption and civil unrest, including political or economic instability in the countries of the Eurozone, Egypt, Russia, the Middle East and certain markets in Latin America; • potential disruption from wars and military conflicts; • price controls and related government actions; • the possibility of nationalization of business or industries, expropriation, confiscatory taxation or other similar government action; • the inability to repatriate foreign-based cash for strategic needs in the U.S., either at all or without incurring significant income tax and earnings consequences, as well as the heightened counterparty, internal control and country-specific risks associated with holding cash overseas; • the effect of foreign income taxes, value-added taxes and withholding taxes, including the inability to recover amounts owed to us by a government authority without extended proceedings or at all; • the effect of the U.S. tax treatment of foreign source income and losses, and other restrictions on the flow of capital between countries; • adverse changes in local investment, local employment, local training or exchange control regulations; • legal and regulatory constraints, including the imposition of tariffs, trade restrictions, price, profit or other government controls, labor laws, immigration restrictions, travel restrictions, including as a result of COVID-19 or other outbreaks of infectious diseases, import and export laws or other government actions generating a negative impact on our business, including changes in trade policies that may be implemented; • currency fluctuations, including the impact of hyper-inflationary conditions in certain economies, particularly where exchange controls limit or eliminate our ability to convert from local currency; • difficulties in hiring and retaining qualified employees; • employment litigation related to employees, contractors and suppliers, particularly in Latin America and Europe; • difficulties in obtaining or unavailability of raw materials; • difficulty in enforcing contractual and intellectual property rights; • continuing legal, political and economic uncertainty from the United Kingdom's exit from the European Union, including the long-term impact of the bilateral trade and cooperation deal governing the relationship between the United Kingdom and the European Union and the potential for increasing divergence between the European Union and United Kingdom legal regimes; • lack of well-established or reliable, and impartial legal systems in certain countries where we operate; • challenges relating to enforcement of or compliance with local laws and regulations and with U.S. laws affecting operations outside of the U.S., including without limitation, the U.S.
These competitors may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly and respond more effectively to changing business and economic conditions than we can. • Our competitors may have lower production, sales and distribution costs, and higher profit margins. • Our competitors have obtained, and may in the future be able to obtain, exclusivity or sole source at particular retailers or favorable in-store placement. • We may lose market share to certain retailers, including club stores, grocery, dollar stores, mass merchandisers and internet-based retailers, which may offer private label brands that are typically sold at lower prices and compete with our products in certain categories.
These competitors may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly and respond more effectively to changing business and economic conditions than we can. 10 • Our competitors may have lower production, sales and distribution costs, and higher profit margins. • Our competitors have obtained, and may in the future be able to obtain, exclusivity or sole source at particular retailers or favorable in-store placement. • We may lose market share to certain retailers, including club stores, grocery, dollar stores, mass merchandisers and internet-based retailers, which may offer private label brands that are typically sold at lower prices and compete with our products in certain categories.
In addition, we are, and may in the future become, the subject of, or party to, various pending or threatened legal actions, government investigations and proceedings relating to, among other things, advertising disputes with competitors, consumer class actions, including those related to advertising claims, labor claims, breach of contract claims, antitrust litigation, securities litigation, premises liability claims, data privacy and security disputes, employment litigation related to employees, 22 contractors and suppliers, including class action lawsuits, and litigation in foreign jurisdictions.
In addition, we are, and may in the future become, the subject of, or party to, various pending or threatened legal actions, government investigations and proceedings relating to, among other things, advertising disputes with competitors, consumer class actions, including those related to advertising claims, labor claims, breach of contract claims, antitrust litigation, securities litigation, premises liability claims, data privacy and security disputes, employment litigation related to employees, contractors and suppliers, including class action lawsuits, and litigation in foreign jurisdictions.
If adverse weather conditions during the first six months of the calendar year (our second and third fiscal quarters) when demand for auto care products typically peaks persist, our business, financial condition and results of operations could be materially and adversely affected. A failure of a key information technology system could adversely impact our ability to conduct business.
If adverse weather conditions during the first six months of the calendar year (our second and third fiscal quarters) when demand for auto care products typically peaks persist, our business, financial condition and results of operations could be materially and adversely affected. 16 A failure of a key information technology system could adversely impact our ability to conduct business.
Additionally, if claims made in our marketing campaigns subject us to claims and litigation alleging false advertising, which is common in some categories in our industry, such claims and litigation could damage our brand or cause us to alter our marketing plans in ways that may materially and adversely affect sales, or result in the imposition of significant damages against us.
Additionally, if claims made in our marketing 11 campaigns subject us to claims and litigation alleging false advertising, which is common in some categories in our industry, such claims and litigation could damage our brand or cause us to alter our marketing plans in ways that may materially and adversely affect sales, or result in the imposition of significant damages against us.
As new laws and regulations are introduced, we could become subject to additional environmental liabilities in the future that could have a material adverse effect on our results of operations or financial condition. 24 The resolution of our tax contingencies may result in additional tax liabilities, which could adversely impact our cash flows and results of operations.
As new laws and regulations are introduced, we could become subject to additional environmental liabilities in the future that could have a material adverse effect on our results of operations or financial condition. The resolution of our tax contingencies may result in additional tax liabilities, which could adversely impact our cash flows and results of operations.
In the US, many of the Company's products and product claims are regulated by the Consumer Product Safety Commission, the US Environmental Protection Agency (EPA), and the Federal Trade Commission, among other regulatory agencies. Additionally, the Company's and its suppliers' manufacturing and distribution operations are also subject to regulation by the Occupational Safety and Health Administration.
In the US, many of the Company's 20 products and product claims are regulated by the Consumer Product Safety Commission, the US Environmental Protection Agency (EPA), and the Federal Trade Commission, among other regulatory agencies. Additionally, the Company's and its suppliers' manufacturing and distribution operations are also subject to regulation by the Occupational Safety and Health Administration.
This has caused, and, in the future, could cause us to experience a reduction in sales, increased inventory levels and costs and could adversely affect relationships with existing and prospective customers. In some cases, we may have only one supplier for a product or service.
This has caused, and, in the future, could cause us to experience a reduction in sales, increased inventory levels and costs and could adversely affect relationships with existing 14 and prospective customers. In some cases, we may have only one supplier for a product or service.
Any resolution of a tax issue may require the use of cash in the year of resolution. Risks Specific to Our Common Stock We cannot guarantee the timing, amount or payment of dividends on our common stock. The timing, declaration, amount and payment of future dividends to shareholders will fall within the discretion of our Board of Directors.
Any resolution of a tax issue may require the use of cash in the year of resolution. Risks Specific to Our Common Stock We cannot guarantee the timing, amount or payment of dividends on our common stock. 22 The timing, declaration, amount and payment of future dividends to shareholders will fall within the discretion of our Board of Directors.
Our projections may not accurately predict the volume impact of price increases, which could adversely affect our business, financial condition and results of operations. 16 Our reliance on certain significant suppliers subjects us to numerous risks, including possible interruptions in supply, which could adversely affect our business.
Our projections may not accurately predict the volume impact of price increases, which could adversely affect our business, financial condition and results of operations. Our reliance on certain significant suppliers subjects us to numerous risks, including possible interruptions in supply, which could adversely affect our business.
Labor shortages, higher employee turnover rates and labor union organizing efforts could also lead to disruptions in our business. A failure to adequately manage human capital resources could have a material adverse effective on our business, prospects, reputation, financial condition and results of operations.
Labor shortages, higher employee turnover rates and labor union organizing efforts could also lead to disruptions in our business. 17 A failure to adequately manage human capital resources could have a material adverse effective on our business, prospects, reputation, financial condition and results of operations.
If we are unable to increase market share in existing product lines, develop product innovations, undertake sales, marketing and advertising initiatives that grow our product categories or develop, acquire 14 or successfully launch new products or brands, we may not achieve our sales growth objectives.
If we are unable to increase market share in existing product lines, develop product innovations, undertake sales, marketing and advertising initiatives that grow our product categories or develop, acquire or successfully launch new products or brands, we may not achieve our sales growth objectives.
The changes introduced by existing privacy and data protection laws and regulations and the introduction of similar laws and regulations in other jurisdictions, have subjected, and may continue in the future to subject, us 23 to additional costs and have required, and may in the future require, costly changes to our security systems, policies, procedures and practices.
The changes introduced by existing privacy and data protection laws and regulations and the introduction of similar laws and regulations in other jurisdictions, have subjected, and may continue in the future to subject, us to additional costs and have required, and may in the future require, costly changes to our security systems, policies, procedures and practices.
The discussion below addresses the material factors, of which we are currently aware, that could affect, and in certain cases have affected, our businesses, results of operations and financial condition and make an investment in the Company speculative or risky.
The discussion below addresses the material factors, of 9 which we are currently aware, that could affect, and in certain cases have affected, our businesses, results of operations and financial condition and make an investment in the Company speculative or risky.
Any such impairment charges could have a material adverse effect on our results of operations. Sales of certain of our products are seasonal and adverse weather conditions during our peak selling seasons for certain auto care products could have a material adverse effect. 18 Sales of certain of our auto care products tend to be seasonal.
Any such impairment charges could have a material adverse effect on our results of operations. Sales of certain of our products are seasonal and adverse weather conditions during our peak selling seasons for certain auto care products could have a material adverse effect. Sales of certain of our auto care products tend to be seasonal.
In addition, our products could face quality or safety issues, which could result in our withdrawing or recalling the product from the marketplace and may lead to decreased 13 demand for, and sales of, such products and harm the reputation of the related brands.
In addition, our products could face quality or safety issues, which could result in our withdrawing or recalling the product from the marketplace and may lead to decreased demand for, and sales of, such products and harm the reputation of the related brands.
A weakening of foreign currencies in which we generate sales relative to the U.S. dollar would decrease our net sales. Accordingly, our reported net earnings may be negatively affected by changes in foreign exchange rates.
A weakening of foreign currencies in which we 13 generate sales relative to the U.S. dollar would decrease our net sales. Accordingly, our reported net earnings may be negatively affected by changes in foreign exchange rates.
These factors include, but are not limited to, recent supply chain disruptions, labor shortages, wage pressures, rising inflation and potential economic slowdown or recession, as well as input costs including fuel and energy costs (for example, the price of gasoline), foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences.
These factors include, but are not limited to, recent supply chain disruptions, labor shortages, wage pressures, rising inflation and potential economic slowdown or growing recession risk, as well as input costs including fuel and energy costs (for example, the price of gasoline), foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences.
Operations of the manufacturing and packaging facilities worldwide and corporate offices of the Company and our suppliers, and the methods we and our suppliers use to obtain supplies and to distribute our products, may be subject to disruption for a variety of reasons, including work stoppages, cyber-attacks and other disruptions in information technology 17 systems, demonstrations, disease outbreaks or pandemics, acts of war or conflicts (including the ongoing conflict in Ukraine), terrorism, fire, earthquakes, flooding or other natural disasters, disruptions in logistics, loss or impairment of key manufacturing sites, supplier capacity constraints, raw material and product quality or safety issues, industrial accidents or other occupational health and safety issues, availability of raw materials, and other regulatory issues, trade disputes between countries in which we have operations, such as the U.S. and China.
Operations of the manufacturing and packaging facilities worldwide and corporate offices of the Company and our suppliers, and the methods we and our suppliers use to obtain supplies and to distribute our products, may be subject to disruption for a variety of reasons, including work stoppages, cyber-attacks and other disruptions in information technology systems, demonstrations, disease outbreaks or pandemics, acts of war or conflicts, terrorism, fire, earthquakes, flooding or other natural disasters, disruptions in logistics, loss or impairment of key manufacturing sites, supplier capacity constraints, raw material and product quality or safety issues, industrial accidents or other occupational health and safety issues, availability of raw materials, and other regulatory issues, trade disputes between countries in which we have operations, such as the U.S. and China.
However, these provisions will apply even if the offer may be considered beneficial by some shareholders and could deter or delay an acquisition that our Board of Directors determines is not in our best interests or the best interests of our shareholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors. 25 1B.
However, these provisions will apply even if the offer may be considered beneficial by some shareholders and could deter or delay an acquisition that our Board of Directors determines is not in our best interests or the best interests of our shareholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors. 23 1B.
Conversely, rapid increases in demand due to improving economic conditions could lead to supply chain challenges. Global markets continued to face threats and uncertainty during fiscal year 2022. Uncertain economic and financial market conditions may also adversely affect the financial condition of our customers, suppliers and other business partners.
Conversely, rapid increases in demand due to improving economic conditions could lead to supply chain challenges. Global markets continued to face threats and uncertainty during fiscal year 2023. Uncertain economic and financial market conditions may also adversely affect the financial condition of our customers, suppliers and other business partners.
We may not be able to attract, retain and develop key personnel, as well as effectively manage human capital resources. Our future performance depends significantly upon the continued service of our executive officers and other key personnel, as well as our continuing ability to attract, retain and develop highly qualified and diverse personnel, including future members of our management team.
We may not be able to attract, retain and develop key employees, as well as effectively manage human capital resources. Our future performance depends significantly upon the continued service of our executive officers and other key employees, as well as our continuing ability to attract, retain and develop highly qualified and diverse employees, including future members of our management team.
As climate change, land use, water use, deforestation, plastic waste, recyclability or recoverability of packaging, including single-use and other plastic packaging, and other sustainability concerns become more prevalent, governmental and non-governmental organizations, customers, consumers and investors are increasingly focusing on these issues.
As climate change, land use, water use, deforestation, plastic waste, recyclability or recoverability of packaging, including single-use and other plastic packaging, responsible sourcing, and other sustainability concerns become more prevalent, governmental and non-governmental organizations, customers, consumers and investors are increasingly focusing on these issues.
We currently conduct our business on a worldwide basis, with more than 40% of our sales in fiscal year 2022 arising from foreign countries, and a significant portion of our production capacity and cash is located overseas.
We currently conduct our business on a worldwide basis, with more than 40% of our sales in fiscal year 2023 arising from foreign countries, and a significant portion of our production capacity and cash is located overseas.
Any impairment charges could adversely affect the Company’s financial condition and results of operations. See Note 12, Goodwill and intangible assets for further information related to goodwill and intangible assets, and the impairment charges recorded in the year ended September 30, 2022.
Any impairment charges could adversely affect the Company’s financial condition and results of operations. See Note 11, Goodwill and intangible assets for further information related to goodwill and intangible assets, and the impairment charges recorded in the year ended September 30, 2022.
Additionally, the escalating costs of offering and administering health care, retirement and other benefits for employees could result in reduced profitability. Financial and Strategic Risks We have significant debt obligations that could adversely affect our business. As of September 30, 2022, our total aggregate outstanding indebtedness was approximately $3.6 billion.
Additionally, the escalating costs of offering and administering health care, retirement and other benefits for employees could result in reduced profitability. Financial and Strategic Risks We have significant debt obligations that could adversely affect our business. As of September 30, 2023, our total aggregate outstanding indebtedness was approximately $3.4 billion.
In addition, we may incur higher costs for transportation, workforce and distribution capability in order to maintain the surety of supplying product to our customers; ▪ Failure of third parties upon which we rely, including our suppliers, contract manufacturers, distributors, contractors and commercial banks, to meet their obligations to us in a timely manner, which may be caused by their own financial or operational difficulties and may adversely impact our operations, liquidity and financial results; and ▪ Significant changes in the political and regulatory landscape in the markets in which we manufacture, sell or distribute our products, which may include, but are not limited to, restrictions on international trade, governmental or regulatory actions, closures or other restrictions that limit or suspend our or our third-party partners' or customers' operating and/or manufacturing capabilities, including operations necessary for the production, distribution, sale, and support of our products, which could adversely impact our results.
In addition, we may incur higher costs for transportation, workforce and distribution capability in order to maintain the surety of supplying product to our customers; ▪ Failure of third parties upon which we rely, including our suppliers, contract manufacturers, distributors, contractors and commercial banks, to meet their obligations to us in a timely manner; and ▪ Significant changes in the political and regulatory landscape in the markets in which we manufacture, sell or distribute our products, which may include, but are not limited to, restrictions on international trade, governmental or regulatory actions, closures or other restrictions that limit or suspend our or our third-party partners' or customers' operating and/or manufacturing capabilities, including operations necessary for the production, distribution, sale, and support of our products, which could adversely impact our results.
Some of the areas where we face risks include: • Diversion of management time and focus from operating our business to challenges related to acquisitions and other strategic transactions; • Failure to successfully integrate and further develop the acquired business or technology; • Implementation or remediation of controls, procedures, and policies at the acquired company; 21 • Integration of the acquired company’s accounting, human resource, and other administrative systems, and coordination of research and development, commercial and marketing functions; • Transition of operations, users, and customers onto our existing platforms; • Failure to obtain required approvals on a timely basis, if at all, from governmental authorities, or conditions placed upon approval that could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of a transaction; • In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; • Cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire; • Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, data privacy and security issues, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and • Litigation or other claims in connection with the acquired company, including claims from terminated colleagues, customers, former shareholders, or other third parties.
Some of the areas where we face risks include: • Diversion of management time and focus from operating our business to challenges related to acquisitions and other strategic transactions; • Failure to successfully integrate and further develop the acquired business or technology; • Implementation or remediation of controls, procedures, and policies at the acquired company; • Integration of the acquired company’s accounting, human resource, and other administrative systems, and coordination of research and development, commercial and marketing functions; • Transition of operations, users, and customers onto our existing platforms; • Failure to obtain required approvals on a timely basis, if at all, from governmental authorities, or conditions placed upon approval that could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of a transaction; • In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; • Cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire; • Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, data privacy and security issues, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and • Litigation or other claims in connection with the acquired company, including claims from terminated colleagues, customers, former shareholders, or other third parties. 19 Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and other strategic transactions could cause us to fail to realize their anticipated benefits, incur unanticipated liabilities, and harm our business generally.
If we raise additional funds by issuing debt, we may be subject to limitations on our operations and ability to pay dividends due to restrictive covenants. Generally, to the extent that we incur additional indebtedness, all of the risks described above in connection with our debt obligations could increase.
If we raise additional funds by issuing debt, we may be subject to limitations on our operations and ability to pay dividends due to restrictive covenants. Generally, to the extent that we incur additional indebtedness, all of the risks described above in connection with our debt obligations could increase. Our credit ratings are important to our cost of capital.
Competition for such personnel is intense, and there can be no assurance that we can retain and motivate our key employees or attract and retain other highly qualified personnel in the future. 19 In addition, competition for labor remains strong and labor costs for manufacturing in the US and Singapore, among other countries, are rising.
Competition for such employees is intense, and there can be no assurance that we can retain and motivate our key employees or attract and retain other highly qualified employees in the future. In addition, competition for labor remains strong and labor costs for manufacturing in the US and Singapore, among other countries, continue to rise.
Changes in the retail environment and consumer preferences could adversely affect our business, financial condition and results of operations. Our sales have historically been largely concentrated in the traditional retail grocery, mass retail outlet, warehouse club and dollar store channels. We cannot, however, predict how the retail environment will evolve.
Changes in the retail environment and consumer preferences could adversely affect our business, financial condition and results of operations. Our sales have historically been largely concentrated in the traditional retail grocery, mass retail outlet, warehouse club and dollar store channels.
As a result of this seasonality, our inventory and working capital needs fluctuate significantly throughout the year. Orders from retailers are often made late in the period preceding the applicable peak season, making forecasting of production schedules and inventory purchases difficult.
In addition, sales of certain of our products tend to be seasonal. As a result of this seasonality, our inventory and working capital needs fluctuate significantly throughout the year. Orders from retailers are often made late in the period preceding the applicable peak season, making forecasting of production schedules and inventory purchases difficult.
We had $492.0 million of additional capacity available under a senior secured revolving credit facility, inclusive of issued and outstanding letters of credit totaling approximately $8.0 million.
We had $492.9 million of additional capacity available under a senior secured revolving credit facility, inclusive of issued and outstanding letters of credit totaling approximately $7.1 million.
Effective January 1, 2014, the pension benefit earned to date by active participants under the legacy U.S. pension plan was frozen and future retirement service benefits are no longer accrued under this retirement program; however, our pension plan obligations remain significant.
We assumed pension plan liabilities related to our current and former employees in connection with the separation. Effective January 1, 2014, the pension benefit earned to date by active participants under the legacy U.S. pension plan was frozen and future retirement service benefits are no longer accrued under this retirement program; however, our pension plan obligations remain significant.
We are also exposed to foreign currency exchange rate risks with respect to our net sales, net earnings and cash flow driven by movements of the U.S. dollar relative to other currencies.
FCPA; and • risks related to natural disasters, terrorism, social unrest and other events beyond our control. We are also exposed to foreign currency exchange rate risks with respect to our net sales, net earnings and cash flow driven by movements of the U.S. dollar relative to other currencies.
There can be no assurance that any credit ratings we receive will remain in effect for any given period of time or that a rating will not be lowered, suspended or withdrawn entirely by the applicable rating agencies if, in such rating agency’s judgments, circumstances so warrant.
There can be no assurance that any credit ratings we receive will remain in effect for any given period of time or that a rating will not be lowered, suspended or withdrawn entirely by the applicable rating agencies if, in such rating agency’s judgments, circumstances so warrant. 18 We may experience losses or be subject to increased funding and expenses related to our pension plans.
The fear of exposure to or actual effects of a disease outbreak or similar widespread public health concern, such as COVID-19, negatively impacted portions of our business in fiscal 2022, and could continue to negatively impact our overall business, financial position and financial results.
The fear of exposure to or actual effects of a disease outbreak or similar widespread public health concern, could negatively impact our overall business, financial position and financial results.
These credit ratings are limited in scope, and do not address all material risks related to investment in Energizer, but rather reflect only the view of each rating agency at the time the rating is issued.
We expect that the major credit rating agencies will continue to evaluate our creditworthiness and give us specified credit ratings. These credit ratings are limited in scope, and do not address all material risks related to investment in Energizer, but rather reflect only the view of each rating agency at the time the rating is issued.
Our raw materials and component parts are also susceptible to currency fluctuations and price fluctuations due to supply and demand, transportation, government regulations, price controls, tariffs, economic climate, or other unforeseen circumstances. We have experienced some shortages and allocations of component parts due to COVID-19, mainly related to our auto care operations.
Our raw materials and component parts are also susceptible to currency fluctuations and price fluctuations due to supply and demand, transportation, government regulations, price controls, tariffs, economic climate, or other unforeseen circumstances.
If we overestimate demand, we may experience underutilized capacity and excess inventory levels. If we underestimate demand, we may miss delivery deadlines and sales opportunities and incur additional costs for labor overtime, equipment overuse and logistical complexities. In addition, sales of certain of our products tend to be seasonal.
We must accurately predict both the demand for our products and the lead times required to obtain the necessary components and materials. If we overestimate demand, we may experience underutilized capacity and excess inventory levels. If we underestimate demand, we may miss delivery deadlines and sales opportunities and incur additional costs for labor overtime, equipment overuse and logistical complexities.
To operate more efficiently and control costs, we have entered into, and may in the future enter into, restructuring and cost reduction plans. Our ability to achieve the anticipated cost savings and other benefits from these initiatives within the expected time frame is subject to many estimates and assumptions and other factors that we may not be able to control.
Our ability to achieve the anticipated cost savings and other benefits from these initiatives within the expected time frame is subject to many estimates and assumptions and other factors that we may not be able to control. We may also incur significant charges related to restructuring plans, which would reduce our profitability in the periods such charges are incurred.
Additionally, loss of or failure to obtain necessary permits and registrations, particularly with respect to our global auto care business, could delay or prevent us from meeting current product demand, introducing new products, building new facilities or acquiring new businesses and could adversely affect our financial condition and results of operations.
Additionally, loss of or failure to obtain necessary permits and registrations, particularly with respect to our global auto care business, could delay or prevent us from meeting current product demand, introducing new products, building new facilities or acquiring new businesses and could adversely affect our financial condition and results of operations. 21 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 .
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 efforts. The Company's financial results depend on the successful execution of its business operating plans.
We maintain business interruption insurance to potentially mitigate the impact of business interruption, but such coverage may not be sufficient to offset the financial or reputational impact of an interruption. 15 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 efforts.
We continue to qualify additional sources to ensure continued supply of these items. A reduction or interruption in supplies or a significant increase in the price of one or more supplies could have a material adverse effect on our business, financial condition and results of operations.
A reduction or interruption in supplies or a significant increase in the price of one or more supplies could have a material adverse effect on our business, financial condition and results of operations. A reduction or disruption in our production capacity or our supplies could delay products and the fulfillment of orders and otherwise negatively impact our business and reputation.
We have implemented price increases in the past, including those announced during fiscal 2022, and may implement price increases in the future, which may slow sales growth or create volume declines in the short term as customers and consumers adjust to these price increases.
We may not be able to increase our prices in response to production cost increases, which would decrease our profit margins and negatively impact our business and financial results. 12 We have implemented price increases in the past and may implement price increases in the future, which may slow sales growth or create volume declines in the short term as customers and consumers adjust to these price increases.
We must successfully manage the demand, supply, and operational challenges brought about by the ongoing COVID-19 pandemic and any other disease outbreak, including epidemics, pandemics, or similar widespread public health concerns. 12 Our operations are impacted by consumer spending levels, impulse purchases, the availability of our products to retailers and our ability to manufacture, store and distribute products to our customers and consumers in an effective and efficient manner.
Our operations are impacted by consumer spending levels, impulse purchases, the availability of our products to retailers and our ability to manufacture, store and distribute products to our customers and consumers in an effective and efficient manner.
Finally, our ability to maintain favorable margins on our products requires us to manage our manufacturing and other production costs relative to our prices. We may not be able to increase our prices in response to production cost increases, which would decrease our profit margins and negatively impact our business and financial results.
Finally, our ability to maintain favorable margins on our products requires us to manage our manufacturing and other production costs relative to our prices.
If a major disruption were to occur, it could result in delays in shipments of products to customers or suspension of operations. We maintain business interruption insurance to potentially mitigate the impact of business interruption, but such coverage may not be sufficient to offset the financial or reputational impact of an interruption.
If a major disruption were to occur, it could result in delays in shipments of products to customers or suspension of operations.
Economic, Competitive and Industry Risks Global economic and financial market conditions, including the conditions resulting from the COVID-19 pandemic, and actions taken by our customers, suppliers, other business partners and governments in markets in which we compete might materially and negatively impact us. General economic factors beyond our control could adversely affect our business and results of operations.
Investors should not interpret the disclosure of a risk to imply that the risk has not already materialized. Economic, Competitive and Industry Risks Global economic and financial market conditions beyond our control might materially and negatively impact us. General economic factors beyond our control could adversely affect our business and results of operations.
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Some of these risks include: • Global economic and financial market conditions, including the conditions resulting from the COVID-19 pandemic, and actions taken by our customers, suppliers, other business partners and governments in markets in which we compete 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 about by the COVID-19 pandemic and any other 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. 10 • 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 scenarios where the Company generates fewer productivity improvements than estimated. • 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 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.
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In addition, the COVID-19 pandemic, geopolitical instability, including the conflict in Ukraine, as well as other global events have significantly increased global macroeconomic uncertainty and volatility.
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Investors should not interpret the disclosure of a risk to imply that the risk has not already materialized.
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We must successfully manage the demand, supply, and operational challenges brought about by any disease outbreak, including epidemics, pandemics, or similar widespread public health concerns.
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The COVID-19 pandemic has caused considerable volatility to global economic conditions and the economies in regions in which we conduct business. While we experienced reduced demand for certain of our consumer products as a result of the pandemic, demand increased for other products.
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These impacts may include, but are not limited to: ▪ Significant reductions, shifts or fluctuations in demand for one or more of our products; ▪ Inability to meet our customers’ needs due to disruptions in our manufacturing and supply chain arrangements caused by the loss or disruption of essential manufacturing and supply chain elements.
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In the future, our business might be adversely affected in a material way by lower consumer demand due to recessionary economic conditions, including after the direct impact of the COVID-19 11 pandemic has subsided.
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The Company's financial results depend on the successful execution of its business operating plans. To operate more efficiently and control costs, we have entered into, and may in the future enter into, restructuring and cost reduction plans (including Project Momentum, our previously announced profit recovery program).
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These trends have been magnified due to the COVID-19 pandemic in many of our geographies.
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These impacts may include, but are not limited to: ▪ Significant reductions, shifts or fluctuations in demand for one or more of our products, which may be caused by, among other things: – a decrease in consumer traffic in brick-and-mortar stores across all our major markets; – the temporary inability of our consumers to purchase our products due to illness, quarantine, other travel restrictions, or financial hardship; – shifts in demand away from one or more of our premium products to lower priced value or private label products and lower demand in our discretionary product categories; – stockpiling or similar “pantry-loading” activity by consumers, which may cause volatility in our quarterly results and, if prolonged, further increase the complexity of our operations planning and financial forecasting and adversely impact our results of operations; – significant reductions in the availability of one or more of our products as a result of retailers, common carriers or other shippers modifying restocking, fulfillment and shipping practices; or – shifts, fluctuations, or cancellation of orders due to the impact on customers’ operations, including the possibility of temporary or permanent closure. ▪ Inability to meet our customers’ needs due to disruptions in our manufacturing and supply chain arrangements caused by the loss or disruption of essential manufacturing and supply chain elements, such as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capability.
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We also cannot predict the impact that the ongoing pandemic will have on our customers, suppliers, vendors and other business partners, and their respective financial conditions.
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Even after the pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of the virus’s global economic impact, including the availability of credit, adverse impacts on our liquidity and the impacts of any future economic downturn.
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FCPA; and • risks related to natural disasters, terrorism, social unrest and other events beyond our control. For example, Russia’s invasion of Ukraine could lead to disruption, instability and volatility in global markets and industries that could negatively impact our business, financial condition or results of operations.
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The United States and certain other countries have imposed sanctions on Russia and could impose further sanctions that could disrupt international commerce and the global economy. Given these recent sanctions and export restrictions imposed by the United States and foreign government bodies, in March 2022 we exited the Russian market.
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The impact of these government measures and our exit of our operations in Russia, as well as any further retaliatory actions taken by Russia, the United States, and other foreign governments, is currently unknown and they could adversely affect our business, results of operations, supply chain, intellectual property, customers or employees and may expose us to adverse legal proceedings in Russia in the future.
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Potential impacts related to the conflict could include, without limitation, additional unilateral or multilateral export control and sanctions measures, supply chain and logistics disruptions, adverse global economic conditions resulting from escalating geopolitical tensions and the exclusion of Russian financial institutions from the global banking system, volatility and fluctuations in foreign 15 currency exchange rates and interest rates, volatility and inflationary pressures on raw materials, and heightened cybersecurity threats, which could adversely impact our business, financial condition or results of operations.
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A reduction or disruption in our production capacity or our supplies could delay products and the fulfillment of orders and otherwise negatively impact our business and reputation. We must accurately predict both the demand for our products and the lead times required to obtain the necessary components and materials.
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We may also incur significant charges related to restructuring plans, which would reduce our profitability in the periods such charges are incurred.
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In addition, the London Interbank Offered Rate, or LIBOR, the interest rate benchmark used as a reference rate for borrowings under our revolving credit facility and certain derivative instruments, is expected to be phased out in calendar year 2023.
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A reference rate based on the Secured Overnight Financing Rate, or another alternative benchmark rate, is expected to be 20 established to replace LIBOR.
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Once the relevant administrator announces that LIBOR has ceased or will cease to be available, or the required lenders elect to opt-in early to a new reference rate, the Company and the lenders under the revolving credit facility will be required to mutually select a substitute reference rate, and if such substitute reference rate, or the replacement reference rate for our derivative instruments, is higher than LIBOR, our interest expense related to such borrowings may increase.
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Our credit ratings are important to our cost of capital. We expect that the major credit rating agencies will continue to evaluate our creditworthiness and give us specified credit ratings.
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We may experience losses or be subject to increased funding and expenses related to our pension plans. We assumed pension plan liabilities related to our current and former employees in connection with the separation.
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Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and other strategic transactions could cause us to fail to realize their anticipated benefits, incur unanticipated liabilities, and harm our business generally.
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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 .

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeAmericas Asheboro, NC (an owned manufacturing plant and an owned packaging facility) Garrettsville, OH (an owned manufacturing plant) Marietta, OH (an owned manufacturing plant) Westlake, OH (an owned research facility) Dayton, OH (a leased manufacturing and distribution facility) Fennimore, WI (an owned manufacturing facility) Portage, WI (an owned manufacturing facility) Franklin, IN (a leased distribution and packaging facility) International Bekasi, Indonesia (an owned manufacturing facility) Cimanggis, Indonesia (an owned manufacturing facility on leased land) Jurong, Singapore (an owned manufacturing facility on leased land) Alexandria, Egypt (an owned manufacturing facility) Washington, UK (a leased manufacturing facility) Rassau, UK (a leased manufacturing facility) Jaboatao, Brazil (an owned manufacturing facility) In addition to the properties identified above, Energizer and its subsidiaries own or operate sales offices, regional offices, storage facilities, distribution centers and terminals and related properties.
Biggest changeNorth America Asheboro, NC (an owned Battery & Lights manufacturing plant and packaging facility) Garrettsville, OH (an owned Battery & Lights manufacturing plant) Marietta, OH (an owned Battery & Lights manufacturing plant) Westlake, OH (an owned research facility for both Battery & Lights and Auto Care) Dayton, OH (a leased Auto Care manufacturing and distribution facility) Fennimore, WI (an owned Battery & Lights manufacturing facility) Portage, WI (an owned Battery & Lights manufacturing facility) Franklin, IN (a leased Battery & Lights distribution and packaging facility) International Bekasi, Indonesia (an owned Battery & Lights manufacturing facility) Cimanggis, Indonesia (an owned Battery & Lights manufacturing facility on leased land) Jurong, Singapore (an owned Battery & Lights manufacturing facility on leased land) Alexandria, Egypt (an owned Battery & Lights manufacturing facility) Washington, UK (a leased Battery & Lights manufacturing facility) Rassau, UK (a leased Auto Care manufacturing facility) Jaboatao, Brazil (an owned Battery & Lights manufacturing facility) In addition to the properties identified above, Energizer and its subsidiaries own or operate sales offices, regional offices, storage facilities, distribution centers and terminals and related properties.
Item 2. Properties Our principal executive office is in St. Louis, Missouri. Below is a list of Energizer's principal plants and facilities as of the date of filing. Management believes that the Company's production facilities are adequate to support the business and the properties and equipment have been well maintained.
Item 2. Properties Our principal executive office is in St. Louis, Missouri. Below is a list of Energizer's principal plants and facilities, as well as the product segment they support. Management believes that the Company's production facilities are adequate to support the business and the properties and equipment have been well maintained.
Through our global supply chain and global manufacturing footprint, we strive to meet diverse consumer demands within each of the markets we serve. Our portfolio of household and specialty batteries, and portable lights, automotive fragrance and appearance products is distributed through a global sales force and global distributor model.
Through our global supply chain and global manufacturing footprint, we strive to meet diverse consumer demands within each of the markets we serve. Our portfolio of household and specialty batteries, portable lights, and auto care products is distributed through a global sales force and global distributor model.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed2 unchanged
Biggest changeThey are not intended to forecast possible future performance of the Common Stock. 9/30/17 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22 Energizer Holdings, Inc. 100.00 130.12 99.40 91.54 93.91 62.68 S&P Midcap 400 100.00 114.21 111.36 108.96 156.55 132.68 S&P Household Products 100.00 97.19 136.11 155.72 155.51 142.60 29
Biggest changeThey are not intended to forecast possible future performance of the Common Stock. 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22 9/30/23 Energizer Holdings, Inc. 100.00 76.39 70.35 72.17 48.17 63.55 S&P Midcap 400 100.00 97.51 95.40 137.07 116.17 134.20 S&P SmallCap 600 100.00 90.66 83.14 131.07 106.39 117.11 S&P 500 Household Products 100.00 140.05 160.23 160.01 146.73 170.06 27
See Item 1A - Risk Factors - Risks Related to Our Common Stock - We cannot guarantee the timing, amount or payment of dividends on our common stock. Issuer Purchases of Equity Securities. The following table reports purchases of equity securities during the fourth quarter of fiscal 2022 by Energizer and any affiliated purchasers pursuant to SEC rules.
See Item 1A - Risk Factors - Risks Related to Our Common Stock - We cannot guarantee the timing, amount or payment of dividends on our common stock. Issuer Purchases of Equity Securities. The following table reports purchases of equity securities during the fourth quarter of fiscal 2023 by Energizer and any affiliated purchasers pursuant to SEC rules.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number That May Yet Be Purchased Under the Plans or Programs July 1, 2022 - July 31, 2022 — $ — — 5,041,940 August 1, 2022 - August 31, 2022 — $ — — 5,041,940 September 1, 2022 - September 30, 2022 — $ — — 5,041,940 Total — $ — — 5,041,940 28 The graph below matches Energizer Holdings, Inc.'s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the S&P Midcap 400 index and the S&P Household Products index.
Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number That May Yet Be Purchased Under the Plans or Programs July 1, 2023 - July 31, 2023 — $ — — 5,041,940 August 1, 2023 - August 31, 2023 — $ — — 5,041,940 September 1, 2023 - September 30, 2023 — $ — — 5,041,940 Total — $ — — 5,041,940 26 The graph below matches Energizer Holdings, Inc.'s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the S&P Midcap 400 index, the S&P SmallCap 600 index, and the S&P 500 Household Products index.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company's Common Stock is listed on the New York Stock Exchange (NYSE). As of September 30, 2022, there were approxima tely 5,010 shareholders of record of the Company's Common Stock under the symbol "ENR".
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company's Common Stock is listed on the New York Stock Exchange (NYSE). As of September 30, 2023, there were approxima tely 4,780 shareholders of record of the Company's Common Stock under the symbol "ENR".
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 9/30/2017 to 9/30/2022.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 9/30/2018 to 9/30/2023.
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Energizer was moved from the S&P MidCap 400 index to the S&P SmallCap 600 index this year, and accordingly, the Company has elected to replace S&P MidCap 400 index with the S&P SmallCap 600 index in the graph below. In this transition year, we have included both indexes in the graph below.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

148 edited+45 added−36 removed105 unchanged
Biggest changeSee disclosure under Non-GAAP Financial Measures above. 36 For the Twelve Months Ended September 30, 2022 2021 2020 Net (loss)/earnings attributable to common shareholders $ (235.5) $ 144.7 $ (109.5) Mandatory preferred stock dividends (4.0) (16.2) (16.2) Net (loss)/earnings (231.5) 160.9 (93.3) Net loss from discontinued operations, net of tax — — (140.1) Net (loss)/earnings from continuing operations $ (231.5) $ 160.9 $ 46.8 Pre-tax adjustments Acquisition and integration (1) 16.5 68.9 68.0 Acquisition earn out (2) 1.1 3.4 — Impairment of goodwill & intangible assets 541.9 — — Loss on extinguishment of debt — 103.3 94.9 Project Momentum Restructuring costs (3) 0.9 — — Exit of Russian market (4) 14.6 — — Gain on finance lease termination (5) (4.5) — — Brazil flood damage, net of insurance proceeds (6) 9.7 — — Total adjustments, pre-tax $ 580.2 $ 175.6 $ 162.9 Total adjustments, after tax (7) $ 452.6 $ 94.5 $ 130.0 Adjusted net earnings from continuing operations $ 221.1 $ 255.4 $ 176.8 For the Twelve Months Ended September 30, 2022 2021 2020 Diluted net (loss)/earnings per common share - continuing operations $ (3.37) $ 2.11 $ 0.44 Adjustments Acquisition and integration 0.17 0.79 0.79 Acquisition earn out — 0.03 — Impairment of goodwill & intangible assets 5.86 — — Loss on extinguishment of debt — 1.11 1.05 Project Momentum Restructuring related costs 0.01 — — Exit of Russian market 0.17 — — Gain on finance lease termination (0.05) — — Brazil flood damage, net of insurance proceeds 0.14 — — Tax structuring (8) — (0.56) — One-time impact of the CARES Act — — 0.03 Impact for diluted share calculation (9) 0.14 — — Adjusted diluted net earnings per diluted share - continuing operations $ 3.08 $ 3.48 $ 2.31 Weighted average shares of common stock - Diluted 69.9 68.7 69.5 Adjusted weighted average shares of common stock - Diluted (9) 71.7 68.7 69.5 37 (1) Acquisition and integration costs were included in the following lines in the Consolidated Statement of Earnings and Comprehensive Income: Twelve Months Ended September 30, 2022 2021 2020 Cost of products sold (COGS) $ 6.0 $ 33.7 $ 32.0 Selling, general and administrative expense (SG&A) 9.4 40 38.8 Research and development expense 1.1 1.1 1.3 Other items, net — (5.9) (4.1) Total acquisition and integration costs $ 16.5 $ 68.9 $ 68.0 (2) This represents the estimated earn out achieved through September 30, 2022 and 2021 under the incentive agreements entered into with the Formulations Acquisition and is recorded in SG&A on the Consolidated Statement of Earnings and Comprehensive Income.
Biggest changeSee disclosure under Non-GAAP Financial Measures above. 34 For the Twelve Months Ended September 30, 2023 2022 2021 Net earnings/(loss) attributable to common shareholders $ 140.5 $ (235.5) $ 144.7 Mandatory preferred stock dividends — (4.0) (16.2) Net earnings/(loss) 140.5 (231.5) 160.9 Pre-tax adjustments Project Momentum Restructuring and related costs (1) 59.7 0.9 — Acquisition and integration (2) — 16.5 68.9 Acquisition earn out (3) — 1.1 3.4 Impairment of goodwill & intangible assets — 541.9 — (Gain)/loss on extinguishment of debt (1.5) — 103.3 Settlement loss on U.S. pension annuity buy out (4) 50.2 — — Exit of Russian market (5) — 14.6 — Gain on finance lease termination (6) — (4.5) — Brazil flood damage, net of insurance proceeds (7) — 9.7 — Total adjustments, pre-tax $ 108.4 $ 580.2 $ 175.6 Total adjustments, after tax (8) $ 83.5 $ 452.6 $ 94.5 Adjusted net earnings $ 224.0 $ 221.1 $ 255.4 For the Twelve Months Ended September 30, 2023 2022 2021 Diluted net earnings/(loss) per common share $ 1.94 $ (3.37) $ 2.11 Adjustments Project Momentum Restructuring and related costs 0.64 0.01 — Acquisition and integration — 0.17 0.79 Acquisition earn out — 0.01 0.03 Impairment of goodwill & intangible assets — 5.86 — (Gain)/loss on extinguishment of debt (0.02) — 1.11 Settlement loss on U.S. pension annuity buy out 0.53 — — Exit of Russian market — 0.17 — Gain on finance lease termination — (0.05) — Brazil flood damage, net of insurance proceeds — 0.14 — Tax structuring (9) — — (0.56) Impact for diluted share calculation (10) — 0.14 — Adjusted diluted net earnings per diluted share $ 3.09 $ 3.08 $ 3.48 Weighted average shares of common stock - Diluted 72.4 69.9 68.7 Adjusted weighted average shares of common stock - Diluted (10) 72.4 71.7 68.7 Currency, excluding hyperinflationary markets, had an adverse impact to fiscal 2023 compared to fiscal 2022.
Loss on extinguishment of debt The Loss on the extinguishment of debt was $103.3 for fiscal year 2021 and relates to the Company's refinancing of its €650.0 Senior Notes due in 2026 in June 2021, the redemption of the $600.0 Senior Notes due in 2027 in January 2021 and the term loan refinancing in December 2020.
The loss on the extinguishment of debt was $103.3 for fiscal year 2021 and relates to the Company's refinancing of its €650.0 Senior Notes due in 2026 in June 2021, the redemption of the $600.0 Senior Notes due in 2027 in January 2021 and the term loan refinancing in December 2020.
On December 22, 2020, the Company entered into a Credit Agreement (2020 Credit Agreement) which provided for a 5-year $400.0 revolving credit facility (2020 Revolving Facility) and a $1,200.0 Term Loan due December 2027. On December 31, 2021 the Company amended the Credit Agreement to increase the 2020 Revolving Facility to $500.0.
On December 22, 2020, the Company entered into a Credit Agreement (Credit Agreement) which provided for a 5-year $400.0 revolving credit facility (2020 Revolving Facility) and a $1,200.0 Term Loan due December 2027. On December 31, 2021 the Company amended the Credit Agreement to increase the 2020 Revolving Facility to $500.0.
For Armor All and STP, the non-cash impairments were primarily due to declines in their respective Auto Care category projections late in the fourth quarter of fiscal 2022, significant increases in input costs, and a higher discount rate.
For Armor All and STP, the non-cash impairments were primarily due to declines in their respective Auto Care category projections late in the fourth quarter of fiscal 2022, significant increases in input costs, and a higher discount rate.
The termination of this lease resulted in a gain of $4.5 recognized in Other items, net during fiscal 2022. 33 In the fourth fiscal quarter of 2020, the Company initiated a new restructuring program with a primary focus on reorganizing our global end-to-end supply chain network and ensuring accountability by category.
The termination of this lease resulted in a gain of $4.5 recognized in Other items, net during fiscal 2022. In the fourth fiscal quarter of 2020, the Company initiated a new restructuring program with a primary focus on reorganizing our global end-to-end supply chain network and ensuring accountability by category.
Total segment profit in fiscal 2022 was $600.1, a decrease of 7.9% versus the prior fiscal year. The decline was driven by organic segment profit decrease of 5.2%, unfavorable movement in foreign currency of $23.8, or 3.6% and the change in Russian operating profit of $4.0 from exiting the Russian market.
Total segment profit in fiscal 2022 was $600.1, a decrease of 7.9% versus the prior fiscal year. The decline was driven by organic segment profit decrease of 5.2%, unfavorable movement in foreign currency of $23.8, or 3.6% and the 42 change in Russian operating profit of $4.0 from exiting the Russian market.
Additionally, Energizer offers programs directly to consumers to promote the sale of its products. Energizer continually assesses the adequacy of accruals for customer and consumer promotional program costs not yet 50 paid. To the extent total program payments differ from estimates, adjustments may be necessary. Historically, these adjustments have not been material.
Additionally, Energizer offers programs directly to consumers to promote the sale of its products. Energizer continually assesses the adequacy of accruals for customer and consumer promotional program costs not yet paid. To the extent total program payments differ from estimates, adjustments may be necessary. Historically, these adjustments have not been material.
The Company assesses the appropriateness of an indefinite life being assigned to certain intangible assets as a part of this annual impairment analysis. The useful life of a determinable- 51 lived intangible asset would be reassessed if a triggering event was identified that indicated a potential change in the value or use of our determinable-lived assets.
The Company assesses the appropriateness of an indefinite life being assigned to certain intangible assets as a part of this annual impairment analysis. The useful life of a determinable-lived intangible asset would be reassessed if a triggering event was identified that indicated a potential change in the value or use of our determinable-lived assets.
Shipping and handling activities are accounted for as contract fulfillment costs and recorded in Cost of products sold. • Pension Plans - The determination of the Company’s obligation and expense for pension benefits is dependent on certain assumptions developed by the Company and used by actuaries in calculating such amounts.
Shipping and handling activities are accounted for as contract fulfillment costs and recorded in Cost of products sold. 48 • Pension Plans - The determination of the Company’s obligation and expense for pension benefits is dependent on certain assumptions developed by the Company and used by actuaries in calculating such amounts.
This involves estimating taxable earnings, specific taxable and deductible items, the likelihood of generating sufficient future taxable income to utilize deferred tax assets, the portion of the income of foreign subsidiaries that is expected to be remitted to the U.S. and be taxable and possible exposures related to future tax audits.
This involves estimating taxable earnings, specific taxable and deductible items, the likelihood of generating sufficient future taxable income to utilize deferred tax assets, the portion of the income of foreign subsidiaries that is expected to 51 be remitted to the U.S. and be taxable and possible exposures related to future tax audits.
Organic. This is the non-GAAP financial measurement of the change in revenue or segment profit that excludes or otherwise adjusts for the impact of acquisitions, change in Russia and Argentina operations and the impact of currency from the changes in foreign currency exchange rates as defined below: Impact of acquisitions.
Organic. This is the non-GAAP financial measurement of the change in revenue or segment profit that excludes or otherwise adjusts for the change in Russia and Argentina operations and the impact of currency from the changes in foreign currency exchange rates as defined below: Change in Russia Operations.
This was partially offset by the expected decline in battery demand compared to the elevated COVID-19 related sales in the prior year period (approximately 4.5%). • Auto Care net sales improved 0.7% versus the prior fiscal year.
This was partially offset by the expected decline in battery demand compared to the elevated COVID-19 related sales in the prior year period (approximately 4.5%). 41 • Auto Care net sales improved 0.7% versus the prior fiscal year.
The Company performed an assessment of goodwill at October 1, 2021 before the change in segments, noting no impairments identified. Goodwill was reallocated to the new reporting units based on the relative fair value of each reporting unit on October 1, 2021.
The Company performed an assessment of goodwill at October 1, 2021 before the change in segments, noting no impairments identified. Goodwill was reallocated to the reporting units based on the relative fair value of each reporting unit on October 1, 2021.
However, the Company can elect not to perform the qualitative assessment, and is then required to perform a quantitative impairment test that involves a comparison of the estimated fair value of the intangible asset with its carrying value.
However, the Company can elect not to perform the 49 qualitative assessment, and is then required to perform a quantitative impairment test that involves a comparison of the estimated fair value of the intangible asset with its carrying value.
(8) Represents the impact of a reduction to deferred tax liabilities due to tax structuring activities. (9) During the year ended September 30, 2022, the mandatory convertible preferred shares were converted to approximately 4.7 million common stock. The full conversion was dilutive and the mandatory preferred stock dividends are excluded from net earnings in the Adjusted dilution calculation.
(9) Represents the impact of a reduction to deferred tax liabilities due to tax structuring activities. (10) During the year ended September 30, 2022, the mandatory convertible preferred shares were converted to approximately 4.7 million common stock. The full conversion was dilutive and the mandatory preferred stock dividends are excluded from net earnings in the Adjusted dilution calculation.
The discount rates used in the trade name fair value estimates ranged between 9.5% and 10.0%, and are based on a weighted-average cost of capital utilizing industry market data of similar companies. The new carrying values for Armor All, STP, and Rayovac trade names are $228.5, $76.4, and $422.2, respectively.
The discount rates used in the trade name fair value estimates ranged between 9.5% and 10.0%, and were based on a weighted-average cost of capital utilizing industry market data of similar companies. The new carrying values for Armor All, STP, and Rayovac trade names were $228.5, $76.4, and $422.2, respectively.
No provision has been provided for taxes that would result upon repatriation of our foreign investments to the United States. We intend to reinvest these earnings indefinitely in our foreign subsidiaries to fund local operations, fund strategic growth objectives, and fund capital projects. See Note 7, Income Taxes, of the Notes to Consolidated Financial Statements for further discussion.
No provision has been provided for taxes that would result upon repatriation of our foreign investments to the United States. We intend to reinvest these earnings indefinitely in our foreign subsidiaries to fund local operations, fund strategic growth objectives, and fund capital projects. See Note 6, Income Taxes, of the Notes to Consolidated Financial Statements for further discussion.
The projections for the Armor All, STP and Rayovac fair value models are generated using the Company’s three-year strategic plan, the Company's annual budget plan for fiscal 2023, and long-term category projections, to determine forecasted cash flows and operating data. Specifically, revenue growth assumptions are based on historical trends and management’s expectations for future growth by brand and category.
The projections for the Armor All, STP and Rayovac fair value models were generated using the Company’s three-year strategic plan, the Company's annual budget plan for fiscal 2023, and long-term category projections, to determine forecasted cash flows and operating data. Specifically, revenue growth assumptions were based on historical trends and management’s expectations for future growth by brand and category.
Gross margin as a percent of net sales for fiscal 2022 was 36.7% versus 38.4% in the prior year. Excluding the current and prior year acquisition and integration costs, and the current year impact of costs from the flooding of our Brazilian manufacturing facility and exiting the Russian market, gross margin was 37.3%, down 230 basis points from prior year.
Gross margin as a percent of Net sales for fiscal 2022 was 36.7% versus 38.4% in fiscal 2021. Excluding the fiscal 2022 and 2021 acquisition and integration costs, and the fiscal 2022 impact of costs from the flooding of our Brazilian manufacturing facility and exiting the Russian market, gross margin was 37.3%, down 230 basis points from prior year.
The Company’s contracts with customers do not have significant financing components or non-cash consideration and the Company does not have unbilled revenue or significant amounts of prepayments from customers. Revenue is recorded net of the taxes we collect on behalf of governmental authorities which are generally included in the price to the customer.
The Company’s agreements with customers do not have significant financing components or non-cash consideration and the Company does not have unbilled revenue or significant amounts of prepayments from customers. Revenue is recorded net of the taxes we collect on behalf of governmental authorities which are generally included in the price to the customer.
The Rayovac non-cash impairment was primarily caused by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which are expected to continue into fiscal 2023 and are included within the cash flow models, a decrease in the branded sales forecast, increases in input costs, and a higher discount rate.
The Rayovac non-cash impairment was primarily caused by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which were expected to continue into fiscal 2023 and were included within the cash flow models, a decrease in the branded sales forecast, increases in input costs, and a higher discount rate.
After the evaluation of all available positive and negative evidence, the conclusion was that it is more likely than not that the Company will generate enough future taxable income to realize the U.S. net deferred tax asset on its balance sheet as of September 30, 2022.
After the evaluation of all available positive and negative evidence, the conclusion was that it is more likely than not that the Company will generate enough future taxable income to realize the U.S. net deferred tax asset on its balance sheet as of September 30, 2023.
This non-cash impairment was primarily driven by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which are expected to continue into fiscal 2023 and are included within the cash flow models, declines in the Auto Care category projections late in the fourth quarter of fiscal 2022, and an increased discount rate.
This non-cash impairment was primarily driven by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which were expected to continue into fiscal 2023 and were included within the cash flow models, declines in the Auto Care category projections late in the fourth quarter of fiscal 2022, and an increased discount rate.
STP is within the fuel and oil additives category and due to the current expectation for an increased percentage of electric vehicles in the car parc over the long term, the Company has converted the STP trade name into a definite-life intangible asset with a 25 year useful life.
STP is within the fuel and oil additives category and due to the expectation for an increased percentage of electric vehicles in the car parc over the long term, the Company converted the STP trade name into a definite-life intangible asset with a 25 year useful life.
The Company uses the three-year strategic plan, the annual budget plan for fiscal 2023, and long-term category projections, to determine forecasted cash flows and operating data for the discounted cash flow model. Specifically, revenue growth assumptions are based on historical trends and management’s expectations for future growth by category.
The Company uses the three-year strategic plan, the annual budget plan for the following fiscal year, and long-term category projections, to determine forecasted cash flows and operating data for the discounted cash flow model. Specifically, revenue growth assumptions are based on historical trends and management’s expectations for future growth by category.
The Company will continue to regularly assess the 53 potential for realization of net deferred tax assets in future periods.
The Company will continue to regularly assess the potential for realization of net deferred tax assets in future periods.
(5) This represents the termination of finance lease in fiscal 2022 associated with a facility that was exited as part of the Company's 2019 Restructuring program. The gain was recorded in Other items, net in the Consolidated Statement of Earnings and Comprehensive Income.
(6) This represents the termination of finance lease in fiscal 2022 associated with a facility that was exited as part of the Company's 2019 Restructuring program. The gain was recorded in Other items, net in the Consolidated Statement of Earnings and Comprehensive Income.
In fiscal 2022, SG&A excluding acquisition and integration costs, the earn out, costs from exiting the Russian market and Project Momentum costs was $467.3 or 15.3%, compared to fiscal 2021 of $443.8 or 14.7%.
In fiscal 2022, SG&A excluding acquisition and integration costs, the earn out, costs from exiting the Russian market and Project Momentum restructuring and related costs was $467.3 or 15.3%, compared to fiscal 2021 of $443.8 or 14.7%.
The decrease in the rate versus prior year is primarily due to the release of reserves from statute limitations and settlements with tax authorities. For fiscal 2021, the effective tax rate was a benefit of 4.3%.
The decrease in the rate versus prior year is primarily due to the release of reserves from statute limitations and settlements with tax authorities. For fiscal 2021, the effective tax rate was 4.3%.
Financial items, such as interest income and expense, gain on finance lease termination and loss on extinguishment of debt are managed on a global basis at the corporate level. The exclusion of acquisition and integration and restructuring costs from segment results reflects management’s view on how it evaluates segment performance.
Financial items, such as interest income and expense, gain on finance lease termination and (gain)/loss on extinguishment of debt are managed on a global basis at the corporate level. The exclusion of acquisition and integration and Project Momentum restructuring and related costs from segment results reflects management’s view on how it evaluates segment performance.
Gross margin rate assumptions are based on historical trends and management's cost cutting strategies. Operating expenses are based on historical trends and management's annual budget plan for fiscal 2023, as well as long-term operating and advertising strategies.
Gross margin rate assumptions were based on historical trends and management's cost cutting strategies. Operating expenses were based on historical trends and management's annual budget plan for fiscal 2023, as well as long-term operating and advertising strategies.
Pre-tax acquisition and integration costs recorded in SG&A were $9.4, $40.0 and $38.8 for the twelve months ended September 30, 2022, 2021 and 2020, respectively. In fiscal 2022 the SG&A expenses primarily related to the integration of acquired information technology systems, consulting costs, and retention-related compensation costs.
Pre-tax acquisition and integration costs recorded in SG&A were $9.4 and $40.0 for the twelve months ended September 30, 2022 and 2021, respectively. In fiscal 2022, the SG&A expenses primarily related to the integration of acquired information technology systems, consulting costs, and retention-related compensation costs.
Under the terms of the agreement, approximately 1.5 million shares were delivered in fiscal 2021 48 and an additional 0.5 million were delivered upon termination of the agreement on November 18, 2021. The Company acquired in total approximately 2.0 million shares at an average weighted price of $38.30 under the ASR. No additional shares were repurchased in fiscal 2022.
Under the terms of the agreement, approximately 1.5 million shares were delivered in fiscal 2021 and an additional 0.5 million were delivered upon termination of the agreement on November 18, 2021. The Company acquired in total approximately 2.0 million shares at an average weighted price of $38.30 under the ASR. No additional shares were repurchased in fiscal 2022 or 2023.
Excluding the current and prior year acquisition and integration costs of $6.0 and $33.7, respectively, and the current year impact of costs from the flooding of our Brazilian manufacturing facility of $9.7 and exiting the Russian market of $1.3, gross profit dollars were $1,136.5 in fiscal 2022 versus $1,195.1 in fiscal 2021.
Excluding the fiscal 2022 and fiscal 2021 acquisition and integration costs of $6.0 and $33.7, respectively, and the fiscal 2022 impact of costs from the flooding of our Brazilian manufacturing facility of $9.7 and exiting the Russian market of $1.3, gross profit dollars were $1,136.5 in fiscal 2022 versus $1,195.1 in fiscal 2021.
The goodwill non-cash impairment was primarily driven by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which are expected to continue into fiscal 2023, declines in the Auto Care category projections late in the fourth quarter of fiscal 2022, and an increased discount rate.
The goodwill non-cash impairment was primarily driven by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which were expected to, and did, continue into fiscal 2023, declines in the Auto Care category projections late in the fourth quarter of fiscal 2022, and an increased discount rate.
Net sales reflect the transaction prices for contracts, which include units shipped at selling list prices reduced by variable consideration as determined by the terms of each individual contract. Discounts are offered to customers for early payment and an estimate of the discount is recorded as a reduction of net sales in the same period as the sale.
Net sales reflect the transaction prices for agreements, which include units shipped at selling list prices reduced by variable consideration as determined by the terms of each individual agreement. Discounts are offered to customers for early payment and an estimate of the discount is recorded as a reduction of net sales in the same period as the sale.
Refer to Note 6 Restructuring for further detail. 34 Overview General Energizer, through its operating subsidiaries, is one of the world’s largest manufacturers, marketers and distributors of household batteries, specialty batteries and lighting products, and a leading designer and marketer of automotive appearance, performance, refrigerant, and freshener products.
Refer to Note 5 Restructuring for further detail. 32 Overview General Energizer, through its operating subsidiaries, is one of the world’s largest manufacturers, marketers and distributors of household batteries, specialty batteries and lighting products, and a leading designer and marketer of automotive appearance, performance, refrigerant, and freshener products.
Contractual Obligations and Commitments The 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 $3,519.1 based on the defined terms of our debt agreements.
Contractual Obligations and Commitments The 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 $3,344.2 based on the defined terms of our debt agreements.
The impact of these items on reported net (loss)/earnings from continuing operations and reported diluted net (loss)/earnings from continuing operations per common share are provided below as a reconciliation to arrive at respective non-GAAP measures.
The impact of these items on reported net earnings/(loss) and reported diluted net earnings/(loss) per common share are provided below as a reconciliation to arrive at respective non-GAAP measures.
The Rayovac non-cash impairment was primarily caused by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which are expected to continue into fiscal 2023, a decrease in the 40 branded sales forecast, increases in input costs, and a higher discount rate.
The Rayovac non-cash impairment was primarily caused by significant sustained currency headwinds in the fourth quarter of fiscal 2022, which were expected to, and did, continue into fiscal 2023, a decrease in the branded sales forecast, increases in input costs, and a higher discount rate.
There is no remaining goodwill allocated to this reporting unit after the non-cash impairment. The Battery & Lights reporting units estimated fair value exceeded their carrying values by more than 100%. The estimated fair value of the Auto Care North America reporting unit, which has a total of $134.2 of goodwill, exceeded its carrying value by 12%.
There was no remaining goodwill allocated to this reporting unit after the non-cash impairment. In fiscal 2022, the Battery & Lights reporting units estimated fair value exceeded their carrying values by more than 100%. The estimated fair value of the Auto Care North America reporting unit, which has a total of $134.2 of goodwill, exceeded its carrying value by 12%.
Brazil Manufacturing Plant Flood In May 2022, the Company's Jaboatao, Brazil battery manufacturing facility had severe flooding due to historic levels of rain in the area. The plant was not operational for the month of June, however some production began again in July and the majority is now back on line.
Brazil Manufacturing Plant Flood In May 2022, the Company's Jaboatao, Brazil battery manufacturing facility had severe flooding due to historic levels of rain in the area. The plant was not operational for the month of June, however some production began again in July and was back on line in fiscal 2023.
These consisted of charges for employee severance, retention, related benefit costs, accelerated depreciation, asset write-offs, relocation, environmental investigatory and mitigation costs, consulting costs and other exit costs, offset by a gain on finance lease termination in fiscal 2022.
These consisted of charges for employee severance, retention, related benefit costs, accelerated depreciation, asset write-offs, relocation and decommissioning costs, environmental investigatory and mitigation costs, consulting costs and other exit costs, offset by a gain on finance lease termination in fiscal 2022 and a gain on sale of fixed assets in fiscal 2021.
Taking into account outstanding letters of credit, $492.0 remained available as of September 30, 2022. 45 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.
Taking into account outstanding letters of credit, $492.9 remained available as of September 30, 2023. 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.
Based on plan assets at September 30, 2022, a 100 basis point decrease or increase in expected asset returns would increase or decrease the Company’s U.S. pre-tax pension expense by $4.1. In addition, poor asset performance may increase and accelerate the rate of required pension contributions in the future.
Based on plan assets at September 30, 2023, a 100 basis point decrease or increase in expected asset returns would increase or decrease the Company’s U.S. pre-tax pension expense by $2.6. In addition, poor asset performance may increase and accelerate the rate of required pension contributions in the future.
For further discussion regarding net sales in each of our reportable product segments, including a summary of reported versus organic changes, please see the section titled “Segment Results” provided below. Gross Profit Gross profit dollars were $1,119.5 in fiscal 2022 versus $1,161.4 in fiscal 2021.
For further discussion regarding net sales in each of our reportable product segments, including a summary of reported versus organic changes, please see the section titled “Segment Results” provided below. Gross Profit Gross profit dollars were $1,124.0 in fiscal 2023 versus $1,119.5 in fiscal 2022.
The total pre-tax expense related to these restructuring plans for the twelve months ended September 30, 2022, 2021 and 2020 were $1.7, $36.8, and $30.3, respectively.
The total pre-tax expense related to these restructuring plans for the twelve months ended September 30, 2023, 2022 and 2021 were $59.7, $1.7, and $36.8, respectively.
Pre-tax costs recorded in Costs of products sold were $6.0, $33.7, and $32.0 for the twelve months ended September 30, 2022, 2021, and 2020, respectively, which primarily related to the integration restructuring costs of $5.2, $31.9 and $29.3 as discussed in Note 6, Restructuring.
Pre-tax costs recorded in Costs of products sold were $6.0 and $33.7 for the twelve months ended September 30, 2022, and 2021, respectively, which primarily related to facility exit and integration restructuring costs of $5.2 and $31.9 as discussed in Note 5, Restructuring.
Excluding the impact of our non-GAAP adjustments, the year to date adjusted effective tax rate was 22.6% as compared to 23.3% in the prior year. The decrease in the rate versus prior year is due to the favorable return to provision adjustments and decreases in certain limited expenses. 41 For fiscal 2020, the effective tax rate was 30.9%.
Excluding the impact of our non-GAAP adjustments, the year to date adjusted effective tax rate was 22.6% as compared to 23.3% in the prior year. The decrease in the rate versus prior year is due to the favorable return to provision adjustments and decreases in certain limited expenses.
GENERAL CORPORATE For the Years Ended September 30, 2022 2021 2020 General corporate and other expenses $ 101.6 $ 96.0 $ 103.8 % of net sales 3.3 % 3.2 % 3.8 % For fiscal 2022, general corporate expenses were $101.6, an increase of $5.6 compared to fiscal 2021 expense of $96.0.
GENERAL CORPORATE For the Years Ended September 30, 2023 2022 2021 General corporate and other expenses $ 107.2 $ 101.6 $ 96.0 % of net sales 3.6 % 3.3 % 3.2 % For fiscal 2023, general corporate expenses were $107.2, an increase of $5.6 compared to fiscal 2022 expense of $101.6.
As of September 30, 2022, the Company was in compliance with the provisions and covenants associated with its debt agreements, and expects to remain in compliance for the next 12 months. Operating Activities Cash flow from operating activities from continuing operations is the primary funding source for operating needs and capital investments.
As of September 30, 2023, the Company was in compliance with the provisions and covenants associated with its debt agreements, and expects to remain in compliance for at least the next 12 months. Operating Activities Cash flow from operating activities is the primary funding source for operating needs and capital investments.
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.
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, and are used for management incentive compensation.
Segment Results As of October 1, 2021, the Company 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.
Segment Results During fiscal year 2022, the Company changed its reportable and 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.
In fiscal 2021 and 2020 these expenses primarily related to consulting fees for the 2020 restructuring program, success incentives, and costs of integrating the information technology systems of the Battery and Auto Care Acquisition businesses. For the twelve months ended September 30, 2022, 2021 and 2020 the Company recorded $1.1, $1.1 and $1.3 in Research and development, respectively.
In fiscal 2021, the SG&A expenses 30 primarily related to consulting fees for the 2020 restructuring program, success incentives, and costs of integrating the information technology systems of the Battery and Auto Care Acquisition businesses. For the twelve months ended September 30, 2022 and 2021 the Company recorded $1.1 each year in Research and development.
(6) These are the costs associated with the May 2022 flooding of our Brazilian manufacturing facility, which were recorded in COGS. The majority is related to damaged inventory.
(7) These are the costs associated with the May 2022 flooding of our Brazilian manufacturing facility, net of insurance proceeds, which were recorded in COGS. The majority is related to damaged inventory.
At September 30, 2022, Energizer had $205.3 of cash and cash equivalents, approximately 74% of which was outside of the U.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies.
At September 30, 2023, Energizer had $223.3 of cash and cash equivalents, approximately 84% of which was outside of the U.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies.
It may also be required to share in the cost of cleanup with respect to state-designated sites or other sites outside of the U.S. Accrued environmental costs at September 30, 2022 were $15.4, of which approximately $5.3 is expected to be spent during fiscal 2023.
It may also be required to share in the cost of cleanup with respect to state-designated sites or other sites outside of the U.S. Accrued environmental costs at September 30, 2023 were $14.0, of which approximately $3.9 is expected to be spent during fiscal 2024.
For the years ended September 30, 2021 and 2020, the Company completed the annual assessments and no impairments were identified. • Income Taxes - The Company's annual effective income tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes.
For the year ended September 30, 2021, the Company completed a qualitative annual impairment assessment and no impairments were identified. • Income Taxes - The Company's annual effective income tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes.
Net (loss)/earnings from continuing operations and diluted net (loss)/earnings from continuing operations per common share for the time periods presented were impacted by certain items related to impairment of goodwill and intangible assets, costs related to acquisition and integration, restructuring costs, an acquisition earn out, the costs of the flooding of our manufacturing facility in Brazil, the costs of exiting the Russian market, the gain on finance lease termination, the loss on extinguishment of debt and the one-time impact of Tax structuring and the CARES Act as described in the tables below.
Net earnings/(loss) and diluted net earnings/(loss) per common share for the time periods presented were impacted by certain items related to Project Momentum restructuring and related costs, costs related to acquisition and integration, an acquisition earn out, impairment of goodwill and intangible assets, the (gain)/loss on extinguishment of debt, the settlement loss on U.S. pension annuity buy out, the costs of exiting the Russian market, the gain on finance lease termination, the costs of the flooding of our manufacturing facility in Brazil, and the one-time impact of Tax structuring as described in the tables below.
Included in Other items, net was pre-tax income of $5.9 and $4.1 in the twelve months ended September 30, 2021 and 2020, respectively. The pre-tax income recorded in fiscal 2021 was primarily driven by the gain on a sale of assets of $3.3, which was part of the integration restructuring discussed in Note 6.
Included in Other items, net was pre-tax income of $5.9 in the twelve months ended September 30, 2021. The pre-tax income was primarily driven by the gain on a sale of assets of $3.3, which was part of the integration restructuring discussed in Note 5, Restructuring.
A lthough the Company's restructuring costs are recorded outside of segment profit, if allocated to our new reportable segments, the restructuring costs noted above fiscal 2022 would have been included in our Batteries & Lights and Auto Care segments in the amount of $1.3 and $0.4, respectively.
A lthough the Company's restructuring costs are recorded outside of segment profit, if allocated to our reportable segments, the restructuring costs noted above fiscal 2023 would have been included in our Batteries & Lights and Auto Care segments in the amount of $52.7 and $7.0, respectively.
Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses (including share-based compensation costs), amortization of intangibles, impairment of goodwill and intangible assets, acquisition and integration activities, including restructuring charges, acquisition earn out, the costs of the flooding of our manufacturing facility in Brazil, the costs of exiting the Russian market, and other items determined to be corporate in nature.
Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses (including share-based compensation costs), amortization of intangibles, impairment of goodwill and intangible assets, acquisition and integration activities, Project Momentum restructuring and related costs, acquisition earn out, the costs of the flooding of our manufacturing facility in Brazil, the costs of exiting the Russian market, the settlement loss on U.S. pension annuity buy out and other items determined to be corporate in nature.
Energizer estimates that total project savings were approximately $55 to $60. The primary impact of the savings were reflected in Cost of products sold. Savings related to the restructuring programs have been fully realized as of September 30, 2022. We do not expect to incur additional material charges for these programs.
The primary impact of the savings were reflected in Cost of products sold. Savings related to the restructuring programs have been fully realized as of September 30, 2022. We do not expect to incur additional material charges for these programs.
This is the tax rate when excluding the pre-tax impact of impairment of goodwill and intangible assets, acquisition and integration costs, restructuring costs, an acquisition earn out, the costs of the flooding of our manufacturing facility in Brazil, the costs of exiting the Russian market, the gain on finance lease termination and the loss on extinguishment of debt, as well as the related tax impact for these items, calculated utilizing the statutory rate for where the impact was incurred, as well as the one-time impact of Tax structuring and the CARES Act.
This is the tax rate when excluding the pre-tax impact of Project Momentum restructuring and related costs, acquisition and integration costs, an acquisition earn out, an impairment of goodwill and intangible assets, the (gain)/loss on extinguishment of debt, the settlement loss on U.S. pension annuity buyout, the gain on finance lease termination, the costs of exiting the Russian market and the costs of the flooding of our Brazilian manufacturing facility, as well as the related tax impact for these items, calculated utilizing the statutory rate for where the impact was incurred, as well as the one-time impact of Tax structuring.
For fiscal 2021, cash flow from financing activities from continuing operations consists of the following: • Cash proceeds from issuance of debt with original maturities greater than 90 days of $1,982.6 relating to the Term Loan funded in December 2020 and January 2021, and the June 2021 issuance of €650.0 Senior Notes due in 2029 (2029 EUR Notes); • Payments on debt with maturities greater than 90 days of $2,773.8, primarily related to the October 2020 repayment of the $750.0 Senior Notes due in 2026 (2026 Notes), the $319.4 repayment of the Term Loan A and $313.5 Term Loan B in December 2020, the January 2021 repayment of the $600.0 Senior Notes due in 2027 (2027 Notes), and the June 2021 repayment of the €650.0 Senior Notes due in 2026 (2026 EUR Notes); • Net increase in debt with original maturities of 90 days or less of $102.1, primarily related to borrowings under our 2020 Revolving Facility; • Debt issuance costs of $29.0 relating to the funding of the Term Loan in December 2020 and January 2021 and the 2029 EUR Notes in June 2021; • Premiums paid on extinguishment of debt of $141.1 funded the October 2020 redemption of the 2026 Notes, the January 2021 redemption of the 2027 Notes, and the June 2021 repayment of the 2026 EUR Notes; 47 • Dividends paid on common stock of $83.9 during fiscal 2021; • Dividends paid on Mandatory Convertible Preferred Stock (MCPS) of $16.2 during fiscal 2021; • Purchase of treasury stock of $96.3 representing the cash paid for stock repurchases including the $75.0 Accelerated Share Repurchase program; • Payment of contingent consideration of $6.8 related to the achievement of a CAE acquisition earn out threshold; and • Taxes paid for withheld share-based payments of $6.7.
For fiscal 2022, cash flow from financing activities consists of the following: • Cash proceeds from issuance of debt with original maturities greater than 90 days of $300.0 relating to the new Senior Notes due in 2027 issuance in the second quarter of fiscal 2022; • Payments on debt with maturities greater than 90 days of $13.7, primarily related to the quarterly principal payments on the Term Loan; • Net decrease in debt with original maturities of 90 days or less of $99.0, primarily related to repayments of borrowings under our 2020 Revolving Facility; • Debt issuance costs of $7.6 relating to the amendment of the Credit Agreement in December 2021 and the issuance of the $300.0 Senior Notes due in 2027; • Payments to terminate finance lease obligations of $5.1 related to the termination of our Dixon IL packaging facility lease; • Dividends paid on common stock of $84.9 during fiscal 2022; • Dividends paid on Mandatory Convertible Preferred Stock (MCPS) of $8.1 during fiscal 2022; and • Taxes paid for withheld share-based payments of $2.5. 45 For fiscal 2021, cash flow used by financing activities consists of the following: • Cash proceeds from issuance of debt with original maturities greater than 90 days of $1,982.6 relating to the Term Loan funded in December 2020 and January 2021, and the June 2021 issuance of €650.0 Senior Notes due in 2029 (2029 EUR Notes); • Payments on debt with maturities greater than 90 days of $2,773.8, primarily related to the October 2020 repayment of the $750.0 Senior Notes due in 2026 (2026 Notes), the $319.4 repayment of the Term Loan A and $313.5 Term Loan B in December 2020, the January 2021 repayment of the $600.0 Senior Notes due in 2027 (2027 Notes), and the June 2021 repayment of the €650.0 Senior Notes due in 2026 (2026 EUR Notes); • Net increase in debt with original maturities of 90 days or less of $102.1, primarily related to borrowings under our 2020 Revolving Facility; • Debt issuance costs of $29.0 relating to the funding of the Term Loan in December 2020 and January 2021 and the 2029 EUR Notes in June 2021; • Premiums paid on extinguishment of debt of $141.1 funded the October 2020 redemption of the 2026 Notes, the January 2021 redemption of the 2027 Notes, and the June 2021 repayment of the 2026 EUR Notes; • Dividends paid on common stock of $83.9 during fiscal 2021; • Dividends paid on MCPS of $16.2 during fiscal 2021; • Purchase of treasury stock of $96.3 representing the cash paid for stock repurchases including the $75.0 Accelerated Share Repurchase program; • Payment of contingent consideration of $6.8 related to the achievement of a CAE acquisition earn out threshold; and • Taxes paid for withheld share-based payments of $6.7.
Subsequent to the fiscal year end, on November 7, 2022, the Board of Directors declared a dividend for the first quarter of fiscal 2023 of $0.30 per share of common stock, payable on December 16, 2022, to all shareholders of record as of the close of business on November 28, 2022.
Subsequent to the fiscal year end, on November 6, 2023, the Board of Directors declared a dividend for the first quarter of fiscal 2024 of $0.30 per share of common stock, payable on December 14, 2023, to all shareholders of record as of the close of business on November 29, 2023.
Total pre-tax charges relating to the 2019 restructuring program since inception were $60.6. Total pre-tax charges relating to the 2020 restructuring program since inception are $19.4. Fiscal 2022 marks the conclusion of the 2019 and 2020 Restructuring programs. The full amount of savings are now included within our run-rate cost structure.
Total pre-tax charges relating to the 2020 restructuring program since inception are $19.4. Fiscal 2022 marked the conclusion of the 2019 and 2020 Restructuring programs. The full amount of savings are now included within our run-rate cost structure. Energizer estimates that total project savings were approximately $55 to $60.
This included a non-cash impairment on the Armor All trade name of $370.4, STP trade name of $26.3, Rayovac trade name of $127.8 and a non-cash impairment related to the Auto Care International reporting unit goodwill of $17.4.
Impairment of goodwill and intangible assets for fiscal 2022 was $541.9. This included a non-cash impairment on the Armor All trade name of $370.4, STP trade name of $26.3, Rayovac trade name of $127.8 and a non-cash impairment related to the Auto Care International reporting unit goodwill of $17.4.
Cash flow from operating activities was $1.0 in fiscal 2022, $179.7 in fiscal 2021, and $389.3 in fiscal 2020. Cash flow from operating activities from continuing operations was $1.0 in fiscal 2022 as compared to $179.7 in the prior fiscal year. This decrease of $178.7 was primarily driven by working capital changes year over year of approximately $165.
Cash flow from operating activities was $1.0 in fiscal 2022 as compared to $179.7 in fiscal 2021. This decrease of $178.7 was primarily driven by working capital changes year over year of approximately $165.
Acquisition and Integration Costs The Company incurred pre-tax acquisition and integration costs related to the above acquisitions of $16.5, $68.9 and $68.0 in the twelve months ended September 30, 2022, 2021, and 2020, respectively.
Acquisition and Integration Costs The Company incurred pre-tax acquisition and integration costs related to the above acquisitions of $16.5 and $68.9 in the twelve months ended September 30, 2022, and 2021, respectively. There were no acquisition and integration costs during the twelve months ended September 30, 2023.
The current year rate was unfavorably impacted by the tax impact of the goodwill impairment. Excluding the impact of our non-GAAP adjustments, the year to date adjusted effective tax rate was 19.5% as compared to 22.6% in the prior year.
For fiscal 2022, the effective tax rate was a benefit of 24.2%. The current year rate was unfavorably impacted by the tax impact of the goodwill impairment. Excluding the impact of our non-GAAP adjustments, the year to date adjusted effective 39 tax rate was 19.5% as compared to 22.6% in the prior year.
As part of the annual goodwill impairment analysis, the Company estimated the fair value of each reporting unit under the income approach utilizing a discounted cash flow model which incorporates significant 52 estimates and assumptions, including future cash flows driven by revenue and gross margin projections and discount rates reflecting the risk inherent in future cash flows.
When performing a quantitative analysis the Company estimates the fair value of a reporting unit under the income approach utilizing a discounted cash flow model which incorporates significant estimates and assumptions, including future cash flows driven by revenue and gross margin projections and discount rates reflecting the risk inherent in future cash flows.
These non-GAAP financial measures exclude items that are not reflective of the Company's on-going operating performance, such as impairment of goodwill and intangible assets, acquisition and integration costs, restructuring costs, an acquisition earn out, the costs of the May 2022 flooding of our Brazilian manufacturing facility, the costs of exiting the Russian market, the gain on finance lease termination, the loss on extinguishment of debt and the one-time impact of Tax structuring and the Coronavirus Aid, Relief and Economic Security (CARES) Act.
These non-GAAP financial measures exclude items that are not reflective of the Company's on-going operating performance, such as Project Momentum restructuring and related costs, acquisition and integration costs, an acquisition earn out, an impairment of goodwill and intangible assets, the (gain)/loss on extinguishment of debt, the settlement loss on U.S. pension annuity buyout, the costs of exiting the Russian market, the gain on finance lease termination, the costs of the May 2022 flooding of our Brazilian manufacturing facility, and the one-time impact of Tax structuring.
The organic revenue growth in Auto Care noted above was not enough to offset the increased product input costs which negatively impacted gross margin.
The organic revenue growth in Auto Care noted above was not enough to offset the increased product input costs which negatively impacted gross margin. Partially offsetting this decline was lower A&P.
Restructuring Costs Subsequent to the fiscal year-end, 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 both segments.
Restructuring Costs 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.
Segment Profit For the Years Ended September 30, 2022 % Chg 2021 % Chg Batteries & Lights Segment Profit - prior year $ 553.6 $ 512.6 Organic 14.6 2.6 % 23.8 4.6 % Change in Russia operations (4.0) (0.7) % — — % Impact of FY21 Acquisitions — — % 1.4 0.3 % Change in Argentina operations 9.6 1.7 % 5.8 1.1 % Impact of currency (20.2) (3.6) % 10.0 2.0 % Segment Profit - current year $ 553.6 — % $ 553.6 8.0 % Auto Care Segment Profit - prior year $ 98.2 $ 79.4 Organic (48.2) (49.1) % 13.6 17.1 % Change in Russia operations — — % — — % Impact of FY21 Acquisitions — — % 1.1 1.4 % Change in Argentina operations 0.1 0.1 % 0 — % Impact of currency (3.6) (3.5) % 4.1 5.2 % Segment Profit - current year $ 46.5 (52.6) % $ 98.2 23.7 % Total Segment Profit Segment Profit - prior year $ 651.8 $ 592.0 Organic (33.6) (5.2) % 37.4 6.3 % Change in Russia operations (4.0) (0.6) % — — % Impact of FY21 Acquisitions — — % 2.5 0.4 % Change in Argentina operations 9.7 1.5 % 5.8 1.0 % Impact of currency (23.8) (3.6) % 14.1 2.4 % Segment Profit - current year $ 600.1 (7.9) % $ 651.8 10.1 % Refer to Note 10, Segments, in the Consolidated Financial Statements for a reconciliation from segment profit to (Loss)/earnings before income taxes.
Segment Profit For the Years Ended September 30, 2023 % Chg 2022 % Chg Batteries & Lights Segment Profit - prior year $ 553.6 $ 553.6 Organic 21.5 3.9 % 14.6 2.6 % Change in Russia operations (1.2) (0.2) % (4.0) (0.7) % Change in Argentina operations (1.4) (0.3) % 9.6 1.7 % Impact of currency (21.0) (3.8) % (20.2) (3.6) % Segment Profit - current year $ 551.5 (0.4) % $ 553.6 — % Auto Care Segment Profit - prior year $ 46.5 $ 98.2 Organic 29.5 63.4 % (48.2) (49.1) % Change in Argentina operations — — % 0.1 0.1 % Impact of currency (1.0) (2.1) % (3.6) (3.5) % Segment Profit - current year $ 75.0 61.3 % $ 46.5 (52.6) % Total Segment Profit Segment Profit - prior year $ 600.1 $ 651.8 Organic 51.0 8.5 % (33.6) (5.2) % Change in Russia operations (1.2) (0.2) % (4.0) (0.6) % Change in Argentina operations (1.4) (0.2) % 9.7 1.5 % Impact of currency (22.0) (3.7) % (23.8) (3.6) % Segment Profit - current year $ 626.5 4.4 % $ 600.1 (7.9) % Refer to Note 9, Segments, in the Consolidated Financial Statements for a reconciliation from segment profit to Earnings/(loss) before income taxes.
The Company completed its annual goodwill impairment analysis in the fourth fiscal quarter for each of these reporting units.
The Company completes its annual goodwill impairment analysis in the fourth fiscal quarter each year over each of these reporting units.
(7) The effective tax rate for the Adjusted - Non-GAAP Net earnings from continuing operations and Diluted net earnings from continuing operations per common share was 19.5%, 22.6% and 23.3% for the years ended September 30, 2022, 2021 and 2020, respectively, as calculated utilizing the statutory rate for where the costs were incurred.
(8) The effective tax rate for the Adjusted - Non-GAAP Net earnings and Diluted net earnings per common share was 21.2%, 19.5% and 22.6% for the years ended September 30, 2023, 2022 and 2021, respectively, as calculated utilizing the statutory rate for where the costs were incurred.
A 100 basis point decrease in the discount rate would increase U.S. pension obligations by $29.8 at September 30, 2022.
A 100 basis point decrease in the discount rate would increase U.S. pension obligations by $18.5 at September 30, 2023.
Operations for Energizer are managed via two major reportable product groupings: Battery & Lights and Auto Care. 35 Financial Results Net loss from continuing operations for the fiscal year ended September 30, 2022 was $231.5, or a loss of $3.37 per diluted common share, compared to net earnings from continuing operations of $160.9, or $2.11 per diluted common share, and $46.8, or $0.44 per diluted common share, for the fiscal years ended September 30, 2021 and 2020, respectively.
Operations for Energizer are managed via two major reportable product groupings: Battery & Lights and Auto Care. 33 Financial Results Net earnings for the fiscal year ended September 30, 2023 was $140.5, or $1.94 per diluted common share, compared to Net loss of $231.5, or a loss of $3.37 per diluted common share, for the fiscal year ended September 30, 2022, and Net earnings of $160.9, or $2.11 per diluted common share, for the fiscal year ended September 30, 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+3 added−0 removed12 unchanged
Biggest changeCurrency risk is heightened in areas with political or economic instability such as the Eurozone, Egypt, Russia and the Middle East and certain markets in Latin America. A significant portion of our sales are denominated in local currencies but reported in U.S. dollars, and a high percentage of product costs for such sales are denominated in U.S. dollars.
Biggest changeConsequently, we are subject to currency risks associated with doing business in foreign countries. Currency risk is heightened in areas with political or economic instability such as the Eurozone, Egypt, Russia and the Middle East and certain markets in Latin America.
The Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of forecasted inventory purchases due to currency fluctuations. Energizer’s primary foreign affiliates, which are exposed to 54 U.S. dollar purchases, have the Euro, the British pound, the Canadian dollar and the Australian dollar as their local currencies.
The Company has entered into a series of forward currency contracts to hedge the cash flow uncertainty of forecasted inventory purchases due to currency fluctuations. Energizer’s primary foreign affiliates, which are exposed to U.S. dollar purchases, have the Euro, the British pound, the Canadian dollar and the Australian dollar as their local currencies.
It is difficult to determine what continuing impact the use of highly inflationary accounting for Argentina may have on our consolidated financial statements as such impact is dependent upon movements in the applicable exchange rates between the local currency and the U.S. dollar and the amount of monetary assets and liabilities included in our affiliates' balance sheet. 56
It is difficult to determine what continuing impact the use of highly inflationary accounting for Argentina may have on our consolidated financial statements as such impact is dependent upon movements in the applicable exchange rates between the local currency and the U.S. dollar and the amount of monetary assets and liabilities included in our affiliates' balance sheet. 54
These foreign currencies represent a significant portion of Energizer's foreign currency exposure. At September 30, 2022 and 2021, Energizer had an unrealized pre-tax gain of $16.3 and $5.0, respectively, on these forward currency contracts accounted for as cash flow hedges included in Accumulated other comprehensive loss on the Consolidated Balance Sheets.
These foreign currencies represent a significant portion of Energizer's foreign currency exposure. At September 30, 2023 and 2022, Energizer had an unrealized pre-tax gain of $3.3 and $16.3, respectively, on these forward currency contracts accounted for as cash flow hedges included in Accumulated other comprehensive loss on the Consolidated Balance Sheets.
The change in estimated fair value of the foreign currency contracts for the twelve months ended September 30, 2022 resulted in a gain of $6.6 and was recorded in Other items, net on the Consolidated Statements of Earnings and Comprehensive Income. Commodity Price Exposure The Company uses raw materials that are subject to price volatility.
The change in estimated fair value of the foreign currency contracts for the twelve months ended September 30, 2023 resulted in a loss of $2.0 and was recorded in Other items, net on the Consolidated Statements of Earnings and Comprehensive Income. Commodity Price Exposure The Company uses raw materials that are subject to price volatility.
The unrealized pre-tax loss on the zinc contracts was $6.1 at September 30, 2022 and the unrealized pre-tax gain recorded on zinc contracts was $4.7 at 2021. These were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet. Interest Rate Exposure The Company has interest rate risk with respect to interest expense on variable rate debt.
The unrealized pre-tax loss on the zinc contracts was $0.7 and $6.1 at September 30, 2023 and 2022. These were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet. 53 Interest Rate Exposure The Company has interest rate risk with respect to interest expense on variable rate debt.
Assuming foreign exchange rates versus the U.S. dollar remain at September 30, 2022 levels, over the next twelve months, $15.7 of the pre-tax gain included in Accumulated other comprehensive loss is expected to be included in earnings.
Assuming foreign exchange rates versus the U.S. dollar remain at September 30, 2023 levels, over the next twelve months, $3.0 of the pre-tax gain included in Accumulated other comprehensive loss is expected to be included in earnings.
At September 30, 2022, Energizer had variable rate debt outstanding with a principal balance of $1,188.4 under the 2020 Term Loans and international borrowings. There were no outstanding borrowings on the 2020 Revolving Credit Facility at September 30, 2022.
At September 30, 2023, Energizer had variable rate debt outstanding with a principal balance of $990.2 under the 2020 Term Loans and international borrowings. There were no outstanding borrowings on the 2020 Revolving Credit Facility at September 30, 2023.
Therefore, although we may hedge a portion of the exposure, the strengthening of the U.S. dollar relative to such currencies can negatively impact our reported sales and operating profits.
A significant portion of our sales are denominated in local currencies but reported in U.S. dollars, and a high percentage of product costs for such sales are denominated in U.S. dollars. Therefore, although we may hedge a portion of the exposure, the strengthening of the U.S. dollar relative to such currencies can negatively impact our reported sales and operating profits.
Currency Exposure Our business is conducted on a worldwide basis, with approximately 40% of our sales in fiscal 2022 arising from foreign countries, and a significant portion of our production capacity and cash located overseas. Consequently, we are subject to currency risks associated with doing business in foreign countries.
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. 52 Currency Exposure Our business is conducted on a worldwide basis, with approximately 40% of our sales in fiscal 2023 arising from foreign countries, and a significant portion of our production capacity and cash located overseas.
For the year ended September 30, 2022, our weighted average interest rate on variable rate debt was 4.06%. 55 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.
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.
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.
The Argentina economy exceeded the three year cumulative inflation rate of 100 percent as of June 2018, and remains highly inflationary as of September 30, 2023.
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.
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 pre-tax gain recognized on this interest rate swap was $86.4 and $11.7 as of September 30, 2022 and 2021, respectively. These were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet.
These were included in Accumulated other comprehensive loss on the Consolidated Balance Sheet. For the year ended September 30, 2023, our weighted average interest rate on variable rate debt was 4.59%.
Added
In February 2023, the Company amended its Credit Agreement to transition the interest reference rate from LIBOR to SOFR. The amendment was entered into because the LIBOR rate historically used was no longer published after June 30, 2023.
Added
The Company also amended the 2020 Interest rate swap to coincide with the amended credit agreement, effectively fixing the variable benchmark component (SOFR) at an interest rate of 1.042%. There were no other changes to the interest rate swap agreement or expected timing of cash flows associated with the swap.
Added
The Company utilized expedients within ASC 848 to conclude that this modification should be accounted for as a continuation of the existing swap agreement, resulting in no impact on the Company's financial statements. The pre-tax gain recognized on this interest rate swap was $79.8 and $86.4 as of September 30, 2023 and 2022, respectively.

Other ENR 10-K year-over-year comparisons