Energizer's Organic Sales Swing to Growth as Margins Slip
Energizer Holdings posted 2.7% organic sales growth in its fiscal third quarter, a reversal from a 4.9% organic decline in the first half, even as adjusted profit fell.
Energizer Holdings (ENR) reported net sales of $734.1 million for its fiscal third quarter, up 1.2% on a reported basis and 2.7% organically from a year earlier.
The organic sales figure marked a sequential swing from the first half of fiscal 2026, when organic sales fell 4.9%. The shift came even as profitability moved the other way: adjusted earnings per share fell 11.8% year over year to $0.75, excluding out-of-period production credits, while reported EPS was $0.58 on net earnings of $39.9 million.
The Auto Care segment drove the top-line improvement, with net sales rising 10.4% on a reported basis and 9.5% organically. Batteries & Lights, the company's larger segment, moved in the opposite direction, with reported sales down 2.0% even as organic sales edged up 0.3%.
Margins narrowed even as volumes recovered. Adjusted gross margin came in at 39.2%, down 200 basis points from a year earlier excluding the prior-period production credits; reported gross margin was 38.2%. Adjusted EBITDA fell 8.6% to $138.7 million on the same adjusted basis. The effective tax rate on adjusted net earnings also rose, to 20.2% for the quarter ended June 30, 2026, from 13.5% a year earlier.
Energizer highlighted a new product in its Specialty segment, where it holds the top market share position: Energizer Ultimate Child Shield, a coin lithium battery launched in March 2026 and now stocked at major U.S. and international retailers. Category dollar sales in Specialty have grown 30% over the past four years.
For the fourth quarter, Energizer guides to organic net sales flat to down low single digits, with the second half of fiscal 2026 expected to land flat to slightly positive overall. The company narrowed its full-year outlook to the low end of prior ranges: adjusted gross margin of 40% to 41%, adjusted EBITDA of $580 million to $610 million, and adjusted EPS of $3.30 to $3.60.
Energizer paid down more than $80 million of debt through the third quarter, on pace for a targeted $150 million to $200 million of full-year repayment, while returning about $65 million to shareholders in dividends. Free cash flow totaled $105 million through the quarter, or 4.9% of sales. The debt reduction follows a September 2025 refinancing in which the company priced $400 million of 6.00% senior notes due 2033, upsized from an initial $300 million, along with a $100 million term loan add-on to redeem its 6.50% notes due 2027.