Holdings, Inc. Morgan Stanley Conference November 2010
Holdings, Inc. Forward-Looking Statements This document contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, our expectations as to anticipated pre-tax restructuring charges and future cost savings, statements regarding anticipated advertising and promotional spending, the estimated impact of foreign currency movements (excluding Venezuela) and expected raw material and commodity costs. These statements generally can be identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “intend,” “belief,” “estimate,” “plan,” “likely,” “will,” “should” or othe r similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this document are only made as of the date of this document and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: the preliminary nature of the estimates related to the restructuring initiatives, and the possibility they may change as management develops and finalizes its plans; Energizer’s ability to timely implement the strategic initiatives in a manner that will positively impact our financial condi tion and results of operation; the impact of the strategic initiatives on Energizer’s relationships with its employees, its major customers and vendors; Energizer’s ability t o improve operations and realize cost savings; Energizer’s ability to continue planned advertising and other promotional spending may be impacted by lower than anticipated cash flows, or by alternative investment opportunities; predicting consumer consumption trends with respect to the overall battery category, although it is likely that they will continue to be significantly negatively impacted by declines in the proliferation or consumption of primary battery-powered devices; anticipating the impact of raw material and other commodity costs, as it is difficult to predict with any accuracy whether raw material, energy and other input costs, or unit volumes, will stabilize, since such costs are impacted by multiple economic, political and other factors outside of the Company’s control, and volumes are impacted by consumption and category trends that are difficult to assess; the ability to obtain governmental approval of our acquisition of American Safety Razor on the proposed terms and schedu le; Energizer’s effective tax rate for the year could be impacted by legislative or regulatory changes by federal, state and local, and foreign taxing authorities, as well as by the profitability or losses of Energizer’s various subsidiary operations in both high -tax and low-tax countries; estimating the impact of foreign currency exchange rates and offsetting hedges on Energizer’s profitability for the year with any degree of certainty; and, prolonged recessionary conditions in key global mar kets where Energizer competes could result in significantly greater local currency movements and correspondingly greater negative impact on Energizer than what can be anticipated from the current spot rates. On the other hand, if concerted global stabilization measures achieve some degree of economic recovery, local currencies could be significantly strengthened relative to the dollar. In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of any such forward-looking statements. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Additional risks and uncertainties include those detailed from time to time in Energizer’s publicly filed docume nts; including its annual report on Form 10-K for the year ended September 30, 2009.
Holdings, Inc. Trademarks and Brands We use “Energizer” and the Energizer logo as our trademarks. Product names and company programs appearing in this presentation are trademarks of Energizer Holdings, Inc. or its subsidiaries. Market and Industry Data Unless we indicate otherwise, we base the information concerning our industry contained in this presentation on our general knowledge of and expectations concerning the industry. Our market position and market share is based on our estimates using data from various industry sources and assumptions that we believe to be reasonable based on our knowledge of the industry. We have not independently verified data from industry sources and cannot guarantee its accuracy or completeness. In addition, we believe that data regarding the industry and our market position and market share within such industry provides general guidance but is inherently imprecise.
Holdings, Inc. Global, diversified consumer products company with market leading positions Demonstrated track record of driving growth organically and through acquisitions Iconic brands supported by continued innovation and investment Long-term history of delivering strong operating performance Seasoned management team with extensive industry experience
An Evolution to a Global, Diversified Holdings, Inc. Consumer Products Company 2000 (post spin-off) 2005 (post Schick) 2010 (post PYX & Edge) Infant Feminine Razors Batteries 1 care care and 5% 100% 4% blades Skin care 31% 9% Wet Shave 30% Batteries¹ Batteries¹ 52% 69% Source: Company filings Note: Market share positions based on Company estimates 1 Represents battery and lighting products
Breadth of Portfolio is Extensive Holdings, Inc. Household Products Personal Care Products Household Wet Shave & #1 / #2 Specialty Batteries Tampons #1 #2 Global Infant Care Lighting #1 Products #1 Sun & Skin Care #1 Note: Market share position based on company estimates
Holdings, Inc. Household Products
Results – Household Products Holdings, Inc. Revenue ($mm) $3,000 $2,474 $2,376 $2,200 $2,147 $2,110 $1,945 $2,059 $1,800 $1,740 $2,000 $1,694 $1,000 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 +4% YOY Segment Profitability ($mm) Segment Profitability as a % of sales $600 30% $489 $472 $451 $442 $438 $406 $399 25% $370 $354 $400 $235 20% $200 15% $0 10% +13% YOY 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Company filings Note: September fiscal year-end;
Current Situation – Devices Holdings, Inc. Growth rate of devices that use primary batteries has slowed, especially in Developed Markets, due to macro-economic softness and due to more devices using built-in rechargeable battery systems U.S. Device Inventory 1,500 # of Devices 1,000 Primary Powered Devices 500 Battery on Board ex Cell Phones Total Primary: AA/AAA/C/D/9V Data Labels are 8 rolling waves ending Wave 4
Current Situation - Category Holdings, Inc. Household Battery Category trends have softened and Category has experienced deflation (lower selling price per unit) due to: - Free Batteries (Bonus Packs) from Manufacturers - Trade Down by Retailers (Private Label / Value Brands) - Inefficient Promotion by both Manufacturers and Retailers US FDMX Household Batts Category Trends Change versus Prior Year '05 '06 '07 '08 '09 YTD '10 Category EQ 0.7% 1.5% 2.3% -3.5% -4.4% 2.0% Category $ 0.7% 5.0% 7.1% -1.0% -5.7% -6.5% ENR $ Share Chg (0.2) 0.2 0.9 0.5 1.0 0.1 . . . ENR has grown market share with a diversified portfolio that meets consumer’s needs Source: US FDMX Household Batts (calendar year basis)
Lower price per battery has not increased consumption Holdings, Inc. Buying Purchase Households Occasions Pack Upsizing Causes Pantry Loading -2% -3% Reducing buying households and purchase frequency Dollars per Incremental Household Dollars Price Gaps and Promotion Lower Price -6% -10% Driving down dollars per household and incremental sales Source: Nielsen Home Scan Panel
Lower price per battery has not increased market share for most retailers, so they Holdings, Inc. aren’t “winning” Dollar Share Point Change vs. YA As price goes down… Average Price per EQ Change vs. YA Retailer share does not necessarily go up = Individual retailer results Source: Nielsen FDMx
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