Operator: Good morning, ladies and gentlemen, and welcome to the Energizer Holdings, Inc. Fourth Quarter and FY 2024 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, November 19, 2024. I would now like to turn the conference over to Jon Poldan, Vice President, Treasurer and Investor Relations. You may begin.

Jon Poldan: Good morning. And welcome to Energizer's fourth quarter and fiscal 2024 conference call. Joining me today are Mark Lavigne, President and Chief Executive Officer; and John Drabik, Executive Vice President and Chief Financial Officer. A replay of this call will be available on the Investor Relations section of our website, energizerholdings.com. In addition, a slide deck providing detailed financial results for the quarter is also posted on our website. During the call, we will make forward-looking statements about the company's future business, and financial performance, among other matters. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these statements. We do not undertake to update these forward-looking statements. Other factors that could cause actual results to differ materially from these statements are included in reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures. For reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories, and estimated market share discussed on this call relates to the categories where we compete and is based on Energizer's internal data, data from industry analysis and estimates we believe to be reasonable. The battery category information includes both brick-and-mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter, and year pertain to Energizer's fiscal year and all comparisons to prior year relate to the same period in fiscal 2023. With that, I would like to turn the call over to Mark.

Mark Lavigne: Good morning, everyone, and thanks for joining us today. The hard work and dedication of the Energizer teams paid off as we achieved a great deal in 2024. Specifically, we delivered organic net sales within our originally guided range bolstered by second-half top-line momentum. We improved adjusted gross margins by 190 basis points. We delivered free cash flow of nearly $340 million, and we paid down $200 million of debt reducing leverage to below 5 times. Let me expand on each of these. First, advancement of our strategic top-line growth initiatives coupled with steadily improving category trends came through in our back-half results. As we enter the new fiscal year, we are well-positioned to drive both top and bottom-line growth. Second, gross margins and earnings continued to improve. We achieved adjusted gross margins of 42.2% in the fourth quarter and nearly 41% for the full fiscal year. We also generated adjusted earnings per share of $3.32, exceeding the top-end of our original outlook. Third, cash flow remains healthy. Fiscal 2024 was another very good year with free cash flow of nearly 12% of net sales enabling another $50 million of debt reduction in the quarter, and a total of $200 million in the fiscal year. With the progress we have made over the past two years, we are carrying a lot of momentum into the year ahead. For fiscal 2025, we expect to deliver 1% to 2% organic sales growth across both batteries and Auto Care, adjusted EBITDA in the range of $625 million to $645 million, and adjusted earnings in the range of $3.45 to $3.65 per share. John will provide a bit more context on the outlook, but first, I wanted to touch on those areas where we expect to drive consistent top-line growth. First, distribution. We are expanding our footprint with retailers where we do not currently have distribution, and we are also expanding the space we have with existing customers. This is the strength of our organization. And based on the recent customer decisions, we expect to expand distribution in both batteries and Auto Care in 2025. Second, we are accelerating our growth in e-commerce both in the US and in key international markets. During fiscal 2024, we grew e-commerce by roughly 15%, and our goal for fiscal 2025 is even more ambitious. To drive this outsized growth, we have expanded our internal capabilities, enhanced external partnerships and invested in the right product assortment across our categories. Third, we are expanding our presence in developing markets. As we look to 2025, we are investing for growth in markets where population and GDP growth are healthy, where we believe that we can become the market leader. We expect developing markets to continue to drive outsized growth in the years ahead. In addition to expanding our footprint, we are also investing with our customers to drive velocity of our products, while remaining committed to ongoing margin improvement. We have expanded the capabilities of our pricing and revenue management teams to maximize the effectiveness of our trade spend and to optimize our pricing. This group leverages data-driven insights to highlight and emphasize those promotions that are most meaningful to consumers, and that will maximize category value for our customers. Finally, we are very excited about the role innovation will play in our growth. In batteries, we have recently talked about the introduction of the world's first three-in-one coin lithium Child Shield, which is in the market today and designed with secure packaging, bitter taste to deter ingestion and a new color alert technology, which is activated when it comes into contact with saliva. The consumer reaction to this innovation has been very positive and demonstrates our leadership in this fast-growing segment of the category. We have invested further in batteries in the form of plastic-free packaging. We have transitioned our European markets and over the next few years, nearly 90% of our products sold in the North American market will be converted to plastic-free packaging. In Auto Care, on our last earnings call, we mentioned exciting innovation. Today, I am very pleased to introduce our newest and most innovative product line, the Armor All Podium Series developed in partnership with Oracle Red Bull Racing. Armor All became the official auto cleaning and care partner of the team in 2021. Since then, Oracle Red Bull Racing and Formula One have seen tremendous success with a global TV audience in excess of 1 billion race fans. Oracle Red Bull Racing's unparalleled performance on-track and global brand recognition combined with the legacy and expertise of Armor All makes this an ideal evolution of the partnership. Podium Series will include a full portfolio of automotive appearance and air freshener products at the premium end-of-the category. We believe the new product line positions us well to capitalize on this fast-growing segment of the market. This type of innovation, combined with our leading brands and global platform will enable us to continue scaling this business into a meaningful growth engine for Energizer. In summary, we are proud of our performance in 2024, a year in which we executed our plan, achieved significant milestones, and delivered on our financial expectations as we closed out the year. As we move into 2025, we are squarely focused on driving growth while growing earnings and generating stable class-leading free cash flow. Let me now turn the call over to John to provide additional details about our financial performance and fiscal 2025 guidance.

John Drabik: Thanks, Mark, and good morning, everyone. I will provide an update on the fourth quarter and full-year results before turning to our expectations for our 2025 performance. We delivered a strong end to the year. Organic net sales were up slightly in the quarter, combined with strong gross margins, we delivered adjusted earnings and free cash flow in excess of our outlook for the quarter. Fourth quarter organic revenue was positively impacted by improved category trends and new distribution globally partially offset by planned pricing and promotional investments. Adjusted gross margin increased 220 basis points to 42.2%, driven by $18 million of savings from Project Momentum and favorable commodity input costs. These benefits were partially offset by planned pricing and promotional investments. Adjusted SG&A as a percent of sales was 15.3%, or an increase of $7.5 million, mainly driven by an increase in digital transformation depreciation, higher travel expense, and an increase in wages and benefits. This was partially offset by Project Momentum savings. A&P as a percent of sales was 4.6%, up 50 basis points and consistent with the increased investment in our long-term growth initiatives. Interest expense decreased $3.8 million due to lower average debt outstanding, and lower interest rates. Project Momentum delivered almost $25 million of total savings in the quarter. These savings, combined with strong operational performance resulted in adjusted EBITDA of $187.3 million and adjusted earnings per share of $1.22. We also generated $143.9 million in free cash flow, or 17.9% of sales in the quarter and paid down $50 million of debt. For the full-year, organic net sales declined 2.2% in line with our original guide. Battery and lights organic sales declined 3.4% mainly driven by the timing of holiday orders, which benefited the fourth quarter of 2023, and planned pricing and promotional spend. These headwinds were partially offset by distribution gains and improved category trends. In Auto Care, organic sales increased 2.3%, driven by distribution gains, partially offset by planned promotional spend. Adjusted gross margin was up 190 basis points to 40.9% as savings from Project Momentum, and lower commodity costs more than offset planned pricing and promotional spending. Adjusted EBITDA grew 2.5% to $612.4 million and adjusted earnings per share grew 7.4% to $3.32. Free cash flow for the year was $339 million or 11.7% of net sales. We deployed this cash flow to pay down $200 million of debt and ended fiscal 2024 with a net leverage ratio of 4.9 times. And for the year, Project Momentum generated almost $90 million of savings. Looking forward to fiscal 2025, as Mark stated, we expect to generate organic top-line growth in the range of 1% to 2%, driven by new and expanded distribution as well as product launches across both our battery and Auto Care businesses. We expect gross margin expansion of roughly 50 basis points, which will put us above 41% for the full year. We expect SG&A on a dollar basis to be up between $15 million and $20 million year-over-year. Through our top-line growth initiatives, gross margin improvement and Project Momentum savings, we expect solid growth in our earnings again next year, resulting in an outlook for adjusted EBITDA in the range of $625 million and $645 million and adjusted earnings per share in the range of $3.45 to $3.65. Project Momentum savings of between $40 million to $60 million are included in our outlook. We intend for 2025 to be the final year of Project Momentum and we project total savings of the program to be between $180 million and $200 million. This program has been tremendously successful for the company and these results are a testament to the organization's ability to drive productivity allowing us to invest for growth in the years ahead. We expect to pay down between $150 million and $200 million of debt in 2025 resulting in reduced interest expense of roughly $8 million to $10 million. We project capital expenditures to be in the range of $80 million to $90 million driven by investments across operations, digital enablement and plastic-free packaging as well as one-time momentum costs. Due to some of these incremental investments, we expect to generate free cash flow between 8% and 10% of sales. I would also like to provide additional color on our expectations for the first quarter. We expect organic net sales to be up between 2% and 3%. In addition to continued solid category growth, the beginning of the quarter benefited from the demand related to two named hurricanes, which drove approximately $10 million of incremental sales providing a strong start to our year. Slightly offsetting these organic tailwinds is a sharp appreciation of the US dollar, which has been rallying versus the basket of our largest foreign currency exposures to start the year. Net, we anticipate reported revenue to be up 1% to 2% for the quarter. Adjusted gross margins are expected to be up between 50 basis points and 100 basis points. We expect adjusted earnings per share in the range of $0.60 and $0.65 up mid-single-digits versus the prior year first quarter at the midpoint. And lastly, I would like to provide some color on our capital structure and capital allocation priorities. Over the last two years, our organization has been heavily focused on the recovery of gross margins and a return to consistent free cash flow generation. We are ending fiscal 2024 with gross margins roughly in line with pre-pandemic performance, and have been able to utilize strong free-cash flows to pay down almost $500 million of debt, reducing our total outstanding debt by roughly 13%. Looking ahead, we will continue to focus on debt paydown as our number one priority for capital allocation. We believe this continued transition of value from debt-to-equity holders combined with our projected earnings growth, and meaningful dividend, offers a compelling return proposition for our shareholders. I would now like to turn the call back over to Mark for closing remarks.

Mark Lavigne: Thanks, John. Our results in 2024 are further proof that our strategies are working. We have meaningfully strengthened our operating foundation and financial position, enabling continued investment in our long-term growth objectives. We enter 2025 in a position of strength, and I am confident in our ability to deliver our financial algorithm, anchored by consistent growth and class-leading free cash flow. Now let's open the call for questions.

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Lauren Lieberman with Barclays. Please go ahead.

Lauren Lieberman: Great. Thanks. Good morning. I was curious if we could talk a little bit about gross margin trajectory long term because you called out the accomplishment of getting back to pre-pandemic levels. We've made a lot of structural and underlying changes to the business, all the work with Momentum. So maybe as we look out over the next like three to five years, let's call it, how should we think about gross margin trajectory and kind of if we're talking about a new benchmark level. Thanks.

John Drabik: Sure. So if we've gotten back to where we started at the pandemic, we've done a lot of work to get there. We're calling for about 50 basis points next year in 2025. And then I think we'll go back to more algorithmic growth, which is probably more that 25 plus basis points every year. We've got a number of programs teed up beyond Momentum that we'll continue to lean into. So I think, we've got a good pipeline to continue to drive that year-after-year. But I think we'll get back to that more algorithmic growth level.

Lauren Lieberman: Okay, great. And if I can squeeze in another, I was just curious if you could talk a little bit about tariff impacts, steel cans, where do you produce product that's sold in the US. Just a little bit about the set of the global supply chain as we think about potential tariff risk broadly. Thanks.

John Drabik: Okay sure. That's one good thing about Project Momentum as well. With that we've really leaned into in market for market production which has helped minimize some of that exposure to tariffs. So as we kind of -- we're starting to look at that and we'll continue to evaluate as things progress over the next couple of months. But as we stand today, less than 5% of our global cost of goods sold dollars are subject to US tariffs due to China sourcing. So we think that we've really minimized that exposure pretty well and feel pretty good going into next year.

Lauren Lieberman: Okay, great. I'll pass it on and get back in the queue. Thank you.

Mark Lavigne: Thanks, Lauren.

Operator: And your next question comes from the line of Bill Chappell with Truist Securities. Please go ahead.

Bill Chappell: Thanks, good morning. Just a little bit more talk on, I guess, the battery category and why you think we're in a better place going forward and maybe the level of pricing you're seeing over the next year from both you and the whole category?

Mark Lavigne: No, I think the -- I mean, the battery category is proven to be a very resilient category. It's certainly a need-based product for consumers. We went through a lot of peaks and valleys over the last three to four years with surges in demand and then you had the COVID recovery, and pricing. And we really achieve a stability within the volume element of the category. So as you look at the category, we're expecting kind of that 1% growth trajectory in '25 and we would expect that to be the new baseline. You are seeing in the US and globally, very healthy volume trends. You're seeing kind of mid-single-digit volume in the 4% to 5% from a volume standpoint. So the slightly elevated promotion that you're seeing both in the US, and certain international markets is driving demand in the category that you would expect. I think over time, you'll see volume and value trended more in line with one another. But I think with the pricing that was taken than the slightly increased promotional, we've continued to invest to keep consumers engaged in the category and continue to drive demand. It's working and we're expecting growth in '25.

Bill Chappell: Got it. And just to follow-up on your comment on distribution gains. I think that meant you were talking about North America, and maybe you could help us understand like where that is. Is that -- is that holiday sets for the upcoming quarter? Or is this kind of more spring reset shelf space gains?

Mark Lavigne: It's global. So we do have distribution gains around the world. We do have distribution gains in the US, you are going to see some expanded space in certain retailers. You are going to see us pop-up in new retailers in the sort of second half of the year. So it's going to be sprinkled in throughout the fiscal year, but it will be a net positive for us throughout '25, both in the US and in international markets.

Bill Chappell: So it's not holiday weighted, it's full-year?

Mark Lavigne: It is full distribution weighted.

Bill Chappell: Got you. Thanks so much.

Operator: Your next question comes from the line of Robert Ottenstein with Evercore. Please go ahead.

Robert Ottenstein: Great. Thank you very much. I think I heard you say that you grew e-commerce 15% in 2024 and you expect to do more than that in '25. Is that -- was that the right number?

Mark Lavigne: That's correct.

Robert Ottenstein: Great. So can you give us a sense of how large e-commerce is as a channel for you? And then given your success there, how that may or may not change your overall retail strategy -- channel strategy? And does it give you more leverage with some of the brick-and-mortar retailers? Thank you.

Mark Lavigne: Well, let me dig into that, Robert, and then we can see if it's answering your questions. I think what I would say is if you look at the size of e-commerce within the battery category in the US, you're probably in that north of 20% range. I think it's maybe it can peak mid-20s, maybe not that high. So that's roughly, I think, size and that includes both Amazon as well as a lot of other online sites that are omnichannel sites from retailers. It's been an area that we've been investing in for a number of years. We've put people resources behind, the financial resources behind over a gate. We have the right partnerships externally. We're making sure we have the right product strategy for online. So it's becoming a center of excellence for us. We did grow 15% in '24. We do expect to grow meaningfully more than that in '25. So it's going to provide a nice tailwind from a growth rate standpoint for us. What that does, Robert, it makes us just a better partner for all of our retailers. I mean, certainly, this is an area of emphasis for brick-and-mortar retailers. It's an area of emphasis for pure-play online retailers and the better we can be at navigating that channel, the better partner will be all around.

Robert Ottenstein: And what -- you say, you're going to grow meaningfully greater than that. Can you give us some thoughts on what underscores that confidence?

Mark Lavigne: Well, I would be disappointed if we didn't double that growth rate next year.

Robert Ottenstein: And that's because you're going to be spending more investment on online promotions? Or I'm just trying to get a sense of why it should accelerate?

Mark Lavigne: Well, it will accelerate because of the investments we've been able to make because of Project Momentum. So with -- if you remember, so in Project Momentum, we took a step back, we got gross margins in a better place, we reinstalled free cash flow generation pays out of that. That was points of emphasis for momentum. What all of that hard work has done is it allowed us the flexibility to invest in those growth areas. So we've been able to redeploy some of those savings from momentum back into people resources, investment in financial resources, digital spending, digital content, product assortment and all of that investment, which you've seen and John provided in terms of the outlook of '25 are paying off in terms of that growth rate going forward.

Robert Ottenstein: Great. And then just finally, is e-commerce that channel for you at this point a margin profitability neutral or is it accretive or a detriment?

Mark Lavigne: Yes, Robert, I think that we'd have to get into it on a very product-specific basis. But overall, I would say it's, we're more neutral in terms of overall profitability. But obviously, there's some areas where it would be margin-accretive. There would be some areas where it would be margin dilutive. But on balance, we're agnostic in terms of brick-and-mortar online.

Robert Ottenstein: Terrific. Thank you very much.

Operator: Your next question comes from the line of Peter Grom with UBS. Please go ahead.

Peter Grom: Thanks, operator. Good morning, everyone. So I was just looking to get some color on the top-line phasing. Strong start to the year, and I apologize if I'd missed this, but it's kind of interesting, most CPG companies are more or less assuming the opposite, slower start and stronger growth in the back half. Is that just simply a comparison thing or is there something you're seeing quarter to date where the trends have been stronger and then just within the organic sales outlook, can you maybe just unpack what you're expecting in terms of volume including distribution gains and price as well as anything we should be aware of from a segment standpoint. Thanks.

John Drabik: Peter, on the first point, so as we're looking at the full year, we see pretty stable growth quarter to quarter as we're projecting it right now. We did have the benefit of hurricanes to start in the beginning of October for us. So that was 10 million of incremental sales and that's going to drive 100 basis points to 150 basis points of top line growth. So when we say 2% to 3%, we've got good underlying growth within the categories, but we've also got that, that's kind of kickstarting it. We still expect to then see growth throughout the second, third and fourth quarters more in that 1% to 2%, kind of like we called for the full year. And I apologize, I kind of missed the last part of your question if it was…

Peter Grom: Yes, no, yes. Just anything in -- like in just in terms of when we think about the year, what are you anticipating volume, like maybe unpack how much you're embedding from the distribution gains and then just anything we should be aware of Auto Care versus kind of batteries as we think about our model.

John Drabik: Yes. So on a consolidated basis, I'd say volumes, we're looking at 200 basis points to 300 basis points. We're looking at probably pricing offsetting that by about 100, a little bit more than 100 basis points and that really gets you to the 1 to 2. It's consistent between both battery and auto. Battery is going to drive pretty solid growth this year through some distribution that we're going to get that Mark was talking about. And then auto, you've got the Podium Series that we're going to launch in the second quarter with a fair amount of investment behind it and feel really good about that launch. So we expect to see good growth in both of the segments as we go throughout the year.

Peter Grom: Awesome. Thanks so much. I'll pass it on.

Mark Lavigne: Thanks, Peter.

Operator: Your next question comes from the line of Andrea Teixeira with JP Morgan. Please go ahead.

Andrea Teixeira: Thank you. Good morning. I was just hoping, just following up to Peter's question on the pricing, you mentioned a bit of a headwind of 100 basis points. Is that something you're investing back in promo? I mean, assuming some of the commentary you made on innovation and definitely, you're going to have some nomination to reinvest back from Project Momentum. So just thinking about a combination of pricing and then also how if you can explain the investments back. I did a quick math on the implied EBITDA margin. So obviously you have margins expanding for Fiscal '25. So I would expect that to be mostly flowing through. But I was just thinking how to think about investments in marketing and how to think about pricing as we go price and mix. And if I can squeeze one other question, I -- we got the obviously the first quarter impact of FX from the implied top line growth against the organic growth. But just hoping to see what we should expect for FX, what are you embedding in your guidance for FX for the full year? Thank you.

Mark Lavigne: John, you want to talk FX first and then I cover the...

John Drabik: Yes, so you're right, Andrea. We entered the year, currency was pretty stable last couple of weeks. The dollar has really strengthened throughout November. So what we called out first quarter, we're expecting that to be kind of a top line drag of about 100 basis points to 150 basis points. And that we -- we're viewing that as about $0.03 to $0.05 of an EPS drag that's embedded in the outlook. We had assumed some currency headwinds in our full '25 guide. We believe we're still covered. I think as we kind of go through the first quarter and see where things settle, we'll give a better update on the full year FX outlook.

Mark Lavigne: Now, Andrea, on your pricing question, we did talk about roughly 100 basis points of headwind from pricing for the year. As you look at the promotional environment in the US, I would say in the latest 13 weeks, the end of September, you're seeing it below the promotionals. The promotions are below what they were a year ago, but they're still elevated from what you would have seen historically. I think that continues to be a symptom of the pricing that has been taken over the last two to three years. We and our competitors are continuing to invest to engage consumers, work them back to or work them up to the higher price points in temporary promotions. You're not seeing pricing rollbacks in any degree. So you are seeing elevated investment in promotions. We're seeing that it was below a year ago. I wouldn't say that's a trend that's going to continue necessarily, just because I think that's a symptom of timing with the way the holidays have fallen and the way that the planning is going. So I think those are smart investments to make in this time period. And as John alluded to, we have volumes that are positive with a little bit of headwind from pricing. I think we're finding that right balance between both of those dynamics and we'll continue to explore what's the right way to toggle promotional activity to drive growth and volume.

John Drabik: The only thing I'd add is that on the investment side, we're looking at advertising next year a little over 5%. So consistent with what we've done historically.

Andrea Teixeira: Okay. No, that's super helpful. Thank you. I'll pass it on.

Mark Lavigne: Thanks, Andrea.

Operator: Your next question comes from the line of Carla Casella with JP Morgan. Please go ahead.

Carla Casella: Hi. You commented on the holiday timing shift. Can you just remind us exactly the amount and kind of what that shift was?

John Drabik: Yes, well, this shift would have been explaining '24. So it was last year. So this year, we're not -- we're just comping it. There's no significant impact.

Carla Casella: And then...

John Drabik: It was probably 300 basis points or so. I think that went back into fiscal '23.

Carla Casella: Okay, great. So you just made the compare this year a little more difficult. Okay. And then I'm just wondering on as you spend behind the brands and as you gain additional shelf space, are you seeing any change in retailers are asking for in terms of either marketing support or trade spend?

Mark Lavigne: Yes, I think we work with our individual retailers to make sure we tailor our programs to meet the needs for their particular shopper. So I would not say it's a change in terms of how we're doing business or they're doing business, but each retailer is going to have their own specific approaches and we make sure that we meet them where they are and invest appropriately.

Carla Casella: Okay. I guess, I was more wondering, is there like an industry shift way or another or anything going on there between marketing and trade spend in general?

Mark Lavigne: Nothing meaningful, no.

Carla Casella: Okay. Great. The rest of my questions were answered.

Mark Lavigne: Thank you.

Operator: And your next question comes from the line of Brian McNamara with Canaccord Genuity. Please go ahead.

Brian McNamara: Hey, good morning, guys. Thanks for taking the questions. I guess first I was hoping you could touch on Auto Care organic growth. There has been elusive with the businesses kind of significant exposure to new and used car sales which are depressed relative to recent memory, especially in appearance. Profitability was hit hard and you've had a nice recovery there. I believe when the business was acquired at the roughly low 20s and EBITDA margins versus today call it high teens. So what should investors expect from that business in 2025 and on a longer term basis?

Mark Lavigne: I think we had a really solid year in Auto Care. We grew over 2% in '24. We're going to have 1% to 2% growth in Auto Care. We continue to expand that business internationally. We have a fantastic launch with Podium Series with Armor All going forward in 2025. We're continuing to expand our presence online with our online platform teams that we have here and driving incremental growth with Auto Care in that direction. So I think, and on top of it, we've been meaningfully improved gross margins over the last couple of years with Project Momentum. So I think we feel great with where Auto Care is sitting today, the growth prospects and the ability to continue to improve margins going forward.

Brian McNamara: Great. And then secondly, I mean, despite the progress, leverage remains a key sticking point for many investors we speak with that are yet to be involved in the stock. Is a half turn reduction in that leverage annually still the right way to think about it?

John Drabik: Yes, that's what we're still targeting. We talked about $150 million to $200 million of pay down in 2025, we paid down almost $500 million over the last two plus years. So we're making really good progress.

Brian McNamara: Okay. Thanks a lot guys. Appreciate it.

Operator: [Operator Instructions] Your next question comes from the line of William Reuter with Bank of America. Please go ahead.

William Reuter: Good morning. I just have two. The first, in terms of your outlook for input costs for Fiscal Year '25, I guess zinc prices have moved up a little. Steel is still down. As a whole, is there any meaningful change in your kind of cost basket?

John Drabik: Yes, I think on the material side specifically, we're thinking it's slightly positive going into '25. And like you said, some of the headwinds are coming from zinc, copper, nickel, some corrugate product is a headwind, but we've got some offsets in lithium, silicone and some of the gas we buy for the refrigerant business. So net-net slightly positive going into next year.

William Reuter: Got it. And then your commentary around deleveraging and use of free cash flow for debt reduction has stayed pretty consistent here. You talked about transferring value towards shareholders. What would have to change or what are the targets that you would be looking for where you would start to allocate more free cash flow towards either M&A or something shareholder friendly?

John Drabik: Well, I think we're going to continue like you said, number one priority is paying down debts and we'll continue to shore up the balance sheet. I think as we continue to go down, we got below five times, which was our target for the year. We're going to try to keep making progress to drive that down. Like we said, half a turn a year and I think that'll just create more flexibility. So as we get into a better position, we can consider some of those other options for capital allocation. I don't know that we have set targets, but we'll continue to make good progress towards those.

William Reuter: Got it. All right. That's all from me. Thank you.

Mark Lavigne: Thanks, Will.

Operator: Thank you. And I'm showing no further questions at this time. I would like to turn the call over to Mark Lavigne for closing remarks.

Mark Lavigne: Thanks for joining us today, everyone, and your interest in Energizer. Hope everyone has a great rest of the day.

Operator: Thank you, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.