Energizer Holdings, Inc. (ENR) Q4 2012 Earnings Report, Transcript and Summary

Good day. My name is Chanel, and I will be your conference operator today. At this time, I will like to welcome everyone to the Energizer Holdings Fourth Quarter and Fiscal Year End 2012 Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference call over to Jackie Burwitz, Vice President, Investor Relations. You may begin your conference.

Thank you, Chanel, and good morning -- good afternoon, everyone. And thank you for joining us on Energizer's Fourth Quarter and Fiscal Year 2012 Earnings Conference Call. With me this afternoon are Ward Klein, Chief Executive Officer; and Dan Sescleifer, Chief Financial Officer. This call is being recorded and will be available for replay via our website, energizerholdings.com. During our prepared comments and the question-and-answer session that follows, we may make statements expressing the expectations of management regarding our future plans and performance, including future results or events, future sales, earnings, earnings per share, investments, capital expenditures or advertising and promotional spending, the amount and timing of savings, and costs related to restructuring and other initiatives, the amount and timing of changes to our working capital metrics, the impact of price increases, currency fluctuations, raw material and commodity costs, category value, future plans for return of capital to shareholders, and future growth in our businesses. Any such statements are forward-looking statements, which reflects our current views with respect to future events. These statements are based on assumptions and are subject to risk and uncertainties, including those described under the caption, Risk Factors in our annual report on Form 10-K filed November 22, 2011. These risks and uncertainties may cause our actual results to be materially different from those expressed or implied by our forward-looking statements. We do not undertake to update these forward-looking statements, even though our situation may change, and these forward-looking statements represent our views as of today only. During this call, we will refer to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in the press release issued earlier today, which is available in the Investor Relations section of our website, energizerholdings.com. Management believes these non-GAAP measures provide investors valuable information on the underlying growth trends of the business. With that, I will turn the call over to Dan for the -- for a review of the quarter.

Thanks, Jackie. Before reviewing the financial results, I would like to thank all the participants for accommodating the change of both the day and the time of this call. Due to the significance of the restructuring announcement released after the close of the market today, this gives us much more time to communicate with our colleagues before the weekend. We are pleased to announce that the adjusted diluted earnings per share for fiscal 2012 were $6.20, which is at the high end of our outlook range. As outlined in the table in the earnings release, adjusted earnings per share were $1.76 for the September quarter, compared to $1.10 for the same quarter last year. On an organic basis, net sales declined 1.5%, which I will explain in greater detail when reviewing the divisional results. Gross margin for the quarter was 46.1%, a 60 basis point improvement versus a year ago, and up 150 basis points excluding unfavorable currencies. For the quarter, advertising and promotional was $99.6 million or 8.7% of net sales, compared to $138.8 million or 11.6% of net sales in the prior year quarter. This spending level was in line with our 2012 annual plan, which called for higher spending in the second and third quarters in support of product launches. For the full year, A&P as a percent of net sales is approximately 10%, which was in line with the level of average spending for periods just prior to our April 2010 launch of Schick Hydro in North America. SG&A for the quarter was favorably impacted by the reversal of a legal provision that was established earlier in the year. Exclusive of this item, SG&A increased $10 million as compared to the prior year quarter, driven by the quarter-over-quarter changes in the underlying value of the company's unfunded deferred compensation liabilities. Collectively, all other SG&A was essentially flat versus the fourth quarter of 2011. Turning to divisional results. In Personal Care, organic sales were flat in the quarter. Starting with Wet Shave, our overall Systems business grew 7% due to higher unit sales of both Hydro Men's and Hydro Silk. In addition, sales were positively impacted by lower promotional spending across several brands, partially offset by declines in legacy men's and women's sales. Sales of disposables declined nearly 4%, due to significant competitive promotional activity, predominantly in the U.S., which led to a market share loss of more than 3 percentage points in the latest full week data. Shave prep sales were down in the quarter also due to competitive promotional activity. Overall, Wet Shave net sales increased approximately 1% in the quarter. Net sales in Skin Care increased 13% due to higher volumes, especially in our international markets, and lower trade and promotional spending in part due to timing. Net sales in Infant Care declined due to continued category softness and high levels of competitive activity. Sun Care sales declined due to competitive new product launch activity. Segment profit, excluding currencies, increased approximately 47% for the quarter, reflecting lower advertising and promotional spending as planned. These results for the quarter include a $5 million charge for a voluntary market withdrawal with certain Sun Care products. Turning to Household Products, organic net sales declined $22 million or approximately 4% due to significant prior year hurricane response volumes, the negative impact on shipments and market share in the U.S. due to the loss of shelf space and display activities and continued softness in the global household battery category. These declines are partially offset by the favorable impact of pricing gains in the U.S. and certain Latin American markets. Operationally, segment profit increased $8.7 million or 7.6% as the top line shortfalls noted above were substantially offset by spending reductions and lower product costs. During the quarter, we repurchased 2.8 million shares at a cost of approximately $200 million. For the fiscal year, we repurchased a total of 5.9 million shares at a cost of $418 million. Our net working capital reduction project is proceeding as planned, and we are implementing the actions necessary to achieve a 400 basis point improvement in working capital as a percent of net sales, resulting in a targeted reduction of approximately $200 million. Working capital as a percent of net sales for fiscal 2012 was 21.4%, an improvement of 150 basis points versus the comparable fiscal 2011 baseline metric of 22.9%. A detailed schedule of our working capital metrics is included in the attachments of this earnings release, and posted on our website. To date, we have achieved modest improvement in both day sales outstanding and days in inventory and a more measurable improvement in day’s payable outstanding as compared to the base metrics. This is in line with our expectations as we assume that we would achieve certain benefits sooner while others would take longer to implement. We expect to experience a temporary increase in inventory days as we execute certain household products manufacturing footprint changes as part of our announced 2013 restructuring project. We expect to provide insight on the level of these temporary builds in our quarterly updates. With that overview of the quarter, I will now turn the call over to Ward.

Thank you, Dan. As many of you know, fiscal 2012 was planned to be a year of return on the investments made in fiscal 2011. As you will recall, 2 of our biggest investments in fiscal 2011 were in the global launch of the revolutionary Hydro shave system, and some downsizing of our battery production footprint. Both investments have been executed as planned, and were significant contributors to this year's record results. Against that backdrop, we delivered earnings that came in with the upper half of the range we guided you to a year ago. Nonetheless, we have become a bit more pessimistic on the outlook for the battery market, and therefore, have announced a major restructuring program that I would get into later. But first, a review of the current business, beginning with the Personal Care division. During fiscal 2012, we executed 2 key priorities in Personal Care related to Hydro. First, we expanded the Hydro franchise with the introduction of 2 new products, Hydro Silk for women and Schick Hydro 5 Power Select. Second, we generated significant profit growth in our Hydro Men's system franchise, as the global launch phase of this product line is now substantially complete. Hydro direct profit contribution, which we define as gross margin less A&P, increased dramatically as a result of increased volumes, lower product cost, reduced promotions and lower media spending. We are very pleased with the topline momentum of the Hydro franchise. In Hydro Men's systems, cartridges grew over 50% on higher unit volumes at lower trade spending. In addition, overall Hydro handles grew due to the successful introduction of Power Select. As a result of the combining growth in both handles and cartridges, total sales of Hydro's Men's systems increased by more than 40% in fiscal 2012. Consumer off-take of our new Hydro Silk product has been strong, and sales have been incremental to our women's system franchise in all markets where we've launched. This success was achieved in the face of the significant product launch by our largest competitor in their key women's product line. Specifically, our U.S. 52-week market share for women's system grew 1.9 share points to 39.1%. In addition to successfully executing behind our Hydro priorities, we also initiated and executed price increases across many of the personal care product lines, including a price increase in shave preps. These pricing actions favorably impacted fiscal '12 results, and the full year impact will flow through to fiscal '13. Consistent with what we discussed in our third quarter call, we continue to see a challenging competitive environment in the Wet Shave category. This was evidenced by heightened levels of promotional trade and consumer spending by our major competitor across all Wet Shave segments. As just discussed, our men's and women's systems segments delivered solid results. However, the heightened promotional activity did have a measurable impact on our U.S. disposable and shave prep segments, as these product categories are more susceptible to fluctuations resulting from pricing and promotional activity. In light of what we are currently experiencing, our business plans for 2013 assume this challenging competitive conditions will continue. Looking forward, we have new product introductions in most all of our personal care segments in 2013. There are 2 recently introduced products I would like to highlight. In Feminine Care, we've launched an improved Gentle Glide tampon, Gentle Glide 360, which features 3 layers of protection, a first in the category. Another exciting new product in an entirely new segment for us Litter Genie, which leverages the Diaper Genie technology. Litter Genie is a cat litter disposal system, which is a new, convenient solution for controlling cat litter odors. We have recently expanded distribution from specialty pet stores into the mass and club channels. These innovative new products are being supported with meaningful promotional programs and new advertising campaigns. We have also recently initiated pricing actions in Sun Care and Shave Preps, where we have leadership market positions. Turning to our Household Products division. Global Battery category volumes continued to be down, nearly 5% versus prior year in our latest 12-week data. Prior-year hurricane response volumes that are not repeated in our fiscal 2012 contributed nearly 2 points of the decline, the Battery category and value was also down nearly 3 points versus year ago in our latest 12-week data, as soft volumes are partially offset by higher retail pricing. I will discuss the impact of Hurricane Sandy on our first quarter fiscal of 2013 in a moment when covering the outlook for fiscal 2013. Despite these category challenges, the Household Products division delivered nearly 8% operational earnings growth in the quarter, as were able to offset top line softness with tight spending controls and the favorable impacts from our 2011 restructuring efforts. Now I will provide some additional insights by area. In North America, battery category declines and market share losses resulting from decreased shelf space and display activities at a key retailer, negatively impacted our top line results. Turning to Asia, we continue to experience top line softness in some of our key markets due in part to category volume declines and a difficult competitive environment, especially in Australia. However, we continue to increase our market share leadership position. We expect topline results to improve in the upcoming fiscal year. In Europe, organic top line results were nearly 3% below a year ago, driven by softness in some of our Western European markets. However, we have begun to see signs of more stable volume and pricing conditions across many markets. We are encouraged by the progress and financial discipline exhibited by our European teams in the face of extremely challenging macroeconomic conditions. Finally, in Latin America, our Battery business results have remained strong in many of our key markets. We continue to increase our market share leadership positions and have effectively grown volume and pricing to offset inflationary cost pressures, which have resulted in continued segment profit growth. Going forward, we expect global battery category volumes will continue to decline in the low to mid-single-digit range. I will now address our restructuring program announced today. Our world is changing, and we need to remain ahead of that change, to do so from a position of strength, not weakness. More specifically, our view of the primary battery market is less optimistic. A population of primary battery-powered devices declined significantly during the Great Recession, as did the battery category. We responded with our 2011 restructuring program. In 2010 and the first part of 2011, we saw some recovery to device populations and the battery category, though not back to prerecession levels. However, in the past year, we have seen a resumption of the negative device and battery unit trends, despite the slow economic recovery. We think these slow but steady negative trends are here to stay. To remain ahead of this, we have announced today the details of a major organizational restructuring program. As discussed during our third quarter fiscal 2012 earnings call in July, and our subsequent announcement of the restructuring savings target in September, we have reviewed and assessed our company-wide operating model and cost structure, including benchmarking our cost across the P&L compared with key peers. As a result, we have identified actions that we will take to improve our go-forward cost structure. Earlier this week, our Board of Directors authorized an enterprise-wide, multi-year restructuring plan. Upon completion, we expect to achieve gross annualized pretax cost savings of approximately $200 million, with about 3 quarters of the savings falling to the bottom line to improve shareholder returns, and the remainder invested in the business to enhance long-term growth. We estimate one-time charges associated with achieving these benefits to be approximately 1.25x gross annualized savings, of which approximately 25% to 30% are expected to be noncash charges. Due to the complexity and time needed to complete multiple restructuring initiatives, we expect savings will grow gradually over time, with modest savings achieved in fiscal 2013, and increasing as we move through fiscal 2014. We expect that a substantial portion of the actions necessary to achieve the targeted savings should be completed by the end of fiscal 2014. The total savings are expected to be fully realized in fiscal 2015. In order to achieve these savings, we are undertaking efforts to rationalize 3 and streamline 3 additional production facilities in the Household Products division, to consolidate general and administrative functional support across the organization, streamline the Household Products division product portfolio to enable increased focus on our core Battery business, streamline the marketing organization within our Household Products division, optimize our go-to-market strategies and organizational structures in our international markets, reduce overhead spending including changes to benefit programs and other targeted spending reductions, and to create a center-led purchasing function to drive procurement savings. These collective actions will result in a global workforce reduction of more than 10% or approximately 1,500 colleagues. These actions represent significant and necessary changes to our overall cost structure and organization that will support our long-term strategies to improve cash flow in household products, enable continued growth in Personal Care and to drive shareholder value. We believe that these changes enhance Energizer's ability to continue to compete effectively in the Personal Care and the Household Product categories. In addition, we have redesigned our short-term and long-term compensation structures to align the organization to achieve the targeted savings, increase return on invested capital and improve shareholder returns. Historically, both the long-term and short-term executive performance awards have been based on earnings per share. For the 2013 fiscal year, our short-term performance incentive targets have been revised to encourage delivery of both operating results and our significant initiatives, and will now be based on the following metrics: Cost savings from our restructuring initiative; adjusted earnings per share to encourage the delivery of bottom-line results; company-wide pretax operating profit to reward overall business performance; and networking capital as a percent of sales to improve how we manage our working capital and maintain savings achieved to date. The long-term performance incentive awards will be based on 3 new metrics: Cumulative EBITDA to reward growth in core earnings; return on invested capital to emphasize the importance of capital allocation decisions; and a relative, total shareholder return modifier based on our performance against peer companies. We are fully committed to achieving targeted savings, and will pursue these initiatives with urgency and focus. Before we move to Q&A, I will briefly recap our initial fiscal 2013 outlook, which was included in today's earnings release. Our initial financial outlook for adjusted, diluted earnings per share is $6.75 to $7. This outlook includes estimated net pretax restructuring savings of $25 million to $35 million for fiscal 2013, but does not include any and does not include any share repurchases during this fiscal year. Our estimate also includes approximately 20 million in shipments related to Hurricane Sandy. We realize this is a lot of information for everyone to digest in a condensed timeframe late in the day. We thank you for patience, and also for your interest in Energizer Holdings. And now, Dan and I would be happy to take your questions. Operator?

[Operator Instructions] Our first question comes from the line of Wendy Nicholson of Citi.

My question -- my first question has to do with your comments about sort of the long-term outlook for the battery market, and you're expecting volumes to continue to decline. And I guess, as you entered into this sort of analysis of the restructuring and the cost-cutting opportunity, did you contemplate just exiting certain markets, whether it's Western Europe or Japan, or did -- was, is this just a cost-cutting initiative? Or was there sort of a deeper, broad, swathe at, hey should we be in this business, or is the long-term outlook so dire that we really want to diminish it as a percentage of the business as quickly as possible?

A good question. In terms of actually exiting specific markets, there's really no plans, per se, in that regard. Obviously, we look at every market from a growth and profit point of view. If there's some isolated markets you want to exit due to profitability, you will. But that's not really part of what we're saying here. What we're really looking at, really, is a global softness in the battery market. I mean, to varying degrees, by region, of course. And seeing that really being driven by what we're seeing on devices. And I think, as you know, you've heard us talk before, we track the population of devices that take our batteries, and had been for over 20 years. And pretty strong correlation over time between that device population who takes batteries and where the battery market is going. And it's really in reaction to resuming of a decline of the battery device population, and in the category, certainly following that, and naturally what this is a reaction to.

Got it. And then if I just may, a quick follow-up on your guidance with regard to the share repurchase program. Is there a change in strategy that you are going to just allocate more dollars to the dividend now and share repurchases are off the table? Or are you telling us, just don’t model them in terms of impacting earnings for now?

I think really the latter. As you've seen, we did a fairly healthy amount of share repurchase in this past fiscal year 2012. As we look at 2013, certainly at this point in time, we remain mindful of keeping a pretty neat balance sheet, and there will be a fair amount of expense associated with the magnitude of the restructuring we're talking about. So I think it's more a matter of keeping our powder dry to support our growth initiatives, as well as the restructuring effort. It's certainly not any sort of a permanent change in view as to the value of share repurchase.

Our next question comes from Chris Ferrara, Bank of America.

Can you talk about what you think the base business growth is, going forward like? Because if you take out the $150 million you're talking about that will drop to the bottom line, I mean, once upon a time, I guess you guys thought kind of high single digits EPS growth over time. If you back into what you need in base business growth for that over time, it's more like low single-digits. I mean, is that right given the new view on the state of affairs in household? Or should we think about it a different way?

Chris, this is Dan. I'll give you a view on 2013 as opposed to a really longer term good growth algorithm, which we'll present at a later time. But we're really looking at value to probably start following volume within -- or units within the battery category. And so as Ward had said earlier, low and mid-single digit declines, we would expect that to probably begin to occur in fiscal 2013. But on the Personal Care side, despite a pause over the last few months due to competitive pressures, and really the lack of launches within Personal Care, we think that our innovation pipeline is very healthy and you'll see that begin to roll out this fiscal year. So we think we're going to have mid-single-digit growth at Personal Care that'll offset the declines, and so I would say your expectation on, and this is on organic sales, is probably low single-digit growth.

And what percentage of your capacity in batteries is coming out? And I guess, where will your capacity utilization rate go to, and where has it been lately?

Yes, I don't have an exact number to give you. But it's going to go to a very high level. And the plants that we have remaining will be much more efficient and very close to full capacity. I want to also stress that we are very mindful of serving our customers. So we are not risking any volume shortfalls for our customers, and we're fully confident that we'll be able to supply the customers with the batteries they need.

Our next question comes from Ali Dibadj, Bernstein. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So what first, I want to say that the big cost-cutting and incentive changes are never easy to make, but I think it's the right thing to do. So you guys should really feel commendable. I know it's going to be tough the next few days, but probably the right thing to do. In terms of questions, I just wanted to follow-up on what drives your confidence in terms of reinvestments of the savings. So you said, you need to reinvest about 25%. Does that make sense still, given the changes in the environment? And I asked that particularly given the Personal Care mid-single digit growth you're targeting, and it sounds like you have some innovations. But if I look back in your history, I can't really find a year, as I look, where that segment has grown even 5%, maybe an X launch, has never grown 5% in that segment. Plus, given some of the competitive and category dynamic issues that you talked about in the prepared remarks, in batteries, it would tend to suggest you might have to fight back a little bit more. So I just want to get a sense, first off, of the confidence on your investment level?

I think it's a great question, and appreciate you understanding the difficulty of going through one of these restructurings, it's not easy, but it is necessary. In terms of piling some of this money back to the business, I would say the 2 areas that we're most likely to want to beef up investment is both brand equity, brand building and some of that on the battery side, certainly a fair amount of that on the Personal Care side. And the second general area of beefed-up investment where we see a pretty good return and have is in really innovation. I continue to be amazed at the breadth and depth of innovation across all the Personal Care categories that the Personal Care division is working on, and even has teed up for '13. And I'll give an example, the Litter Genie, this kitty litter idea, has been very well received in terms of product usage, cat owners love it. It's a totally new category. So we're not sure what's that right investment level, exactly where it will go. But that's an investment where I'd not hesitate to double down, from an investment point of view if we free up on through these savings. So innovation and the brand building is really still what it's all about, and we see frankly more opportunities on our plate right now than we're able to execute, and I think to this restructuring, we'll be able to have more resources to do that. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So I guess -- in that context, you still think 25% is roughly the right number? And then, different question around, trying to get a sense of what's in and out of your guidance for next year. So it sounds like buybacks don't put it in, what about things like Venezuela devaluation, if you talk a little bit about that, or some of the risk competitively that you have included, so you're assuming, for example, in Personal Care, and razor blades, et cetera, just to get kind of a -- here's some risk, and here's what's in and out. So at first kind of 25% right and then the other question.

Yes, Ali, we think 25% is right. And we spent time considering we had your -- certainly we're -- invest in the business to keep the innovation pipeline going, but obviously need to let, profits fall to the bottom line too and we think that's the right balance. The Venezuela devaluation is not something that is in our plans, so that would be something that would impact outside of plan. And in terms of -- within Personal Care, I think we think that the -- again, the innovation that we have is going to be sufficient with the A&T spending that we have planned.

If I can even build on Dan's comment as it relates to competition in personal care. Certainly, we've seen a ramp-up of promotional activity in some of the Personal Care categories by our competition. We're prepared to meet them, but frankly, as you've heard us say before, I really prefer competing through innovation. So for example, when you see us losing a sizable bit of market share in disposable razors, for example, the United States, that tends to be one of those categories that's more responsive to promotional spend. We can certainly play that game as well, and we'll remain competitive. But our preference is to compete through innovation. And you can expect to see some interesting innovation from Energizer Personal Care in some of these spaces here in the next 12 months.

And Ali, just one more answer to that question is, we are anticipating that the heightened competitive activity is going to continue, and so that's, that -- with that assumption is included in our guidance.

Our next question comes from Bill Chappell, SunTrust.

Can you just, I guess, talk about what's going on, on the Wet Shave category. If you've seen changes in terms of, I mean, is it mainly coming on the mid-tier promotions or has it expanded to the high end? And when you say you're expecting that to continue, would you expect it to accelerate as we move in the next few months? Or is it just kind at the same level with the share?

I'm not sure I can speculate to that detail, or maybe I even should. But I will say what we're seeing is obviously a substantial increase in promotional support by our competitor in the area, for example, of disposables. We've seen our competitor increase the amount of -- percent of ACV on any promotion is up to 85% right now, from our competitor in the disposable area. Actually BIC has also responded from a promotional sense as well. So quite a lot of promotional activity taking place in the disposable area. I think we'll -- kind of expect that to continue, and I wouldn't speculate on how we're going to respond, other than our preference is to respond through innovation rather than just a price promotion. And we have some pretty good innovations coming in that area. I think in the systems area, it's been a little unusual that, again our major competitor, for example, started advertising Mach 3 for the first time in years, which is an unusual change. And nevertheless, as we talked in our results, our Hydro sales, both Hydro Men and the Premium Systems, our business has grown great guns this year. That -- it carries over even to Hydro Silk for Women, which has been a very successful launch for us, and completely incremental, mostly incremental to our women's system. So those are some of the dynamics we're seeing. We have a lot of innovation coming out, still, in razors and blades, not necessarily of a home-run magnitude of a Hydro, but a lot of the solid singles and doubles lined up, and we'll also remain competitive from a promotional point of view as called for.

Great. And then just a couple of housekeeping. Dan, did you say there is a $5 million charge in Skin Care, was that included in the numbers, and then, can you give us an idea what you're looking at for a tax rate for 2013?

Yes, the $5 million charge was included in the numbers in 2012. So in the numbers.

It's behind us.

Yes, it's behind us. The numbers we just reported. And we're looking at a tax rate somewhere in the 30% to 31% range, and there's a lot of assumptions behind that, and lot of it really comes down to country mix, since we have affiliates with various tax rates, but that's our plan that's included going forward, it's about 30.5%, actually.

Our next question comes from Bill Schmitz, Deutsche Bank.

When you look at the sales targets for next year, is that pretty much all volume driven?

It's not volume driven within Personal Care so much. I guess if you consider new products volume, then it would be. There's going to be some carryover pricing within Household. And obviously, as we talked about that, actually is, we're expecting sales declines there. But we're still anniversary-ing some of the shelf space loss that we experienced earlier this year. We are getting some new distribution in Asia, but it's not going to offset the declines that we're seeing with the shelf space loss.

And will there be any benefit from improved growth in that?

We hope so. I mean, that's actually one of the things we're focused on. But unfortunately, the cost of doing business is increasing, and so while we do spend a lot of time focusing on effective, what we call deflator spending, it's getting pretty tough out there, and there's a lot of bids and a lot of competitive pricing that we have to react to. So that's our intention, but I certainly can't commit to that.

Our next question comes from Connie Maneaty from BMO Capital.

I have a housekeeping question and then a follow up. Can you give us what the quarter end shares were, as well as operating cash flow and balance sheet cash?

Connie, we haven't filed the 8-K yet, we're still working through the balance sheets, that's why, unfortunately I can't give that to you. I apologize for that. And we'll get year-end shares, I know we have, think we disclosed what diluted shares are, but if you want the actual number, it's...

Because the quarter end is different than the average?

Yes, I know it is. I'll tell you what, we'll try to get that before the end of the call, and if not, we'll get back to you separately on that.

Okay, and then my follow-up question has to do with the dynamics in the Battery category. In the U.S. in particular, where it looks like Energizer is likely to continue to lose share in the mass market, until the shelf space allocations annualize maybe around midyear. At that point, do you think the Batteries category has to reach something like a steady-state between which of the 3 competitors have what kind of share? Or are we going to go through a whole other round of all sorts of upheaval. Do you have any sense on that?

It's hard for me to predict what the condition in the category will be in 2013. I already expect that some of the share losses that we have taken, we will earn back, and that will be the focus of our household team over the coming year. Again, our preference is to do that in a constructive way, working with our trade customers and helping them build their categories, which we've proven to be able to do time and time again, better than our competitors. And that strategy has been a very successful strategy for us long-term. Obviously, there's a short-term hiccup here. And we will do what we can to address it.

Connie, to answer your question. The average shares at the end of the quarter were 63.7 million and our assumption, because obviously we bought back a number of shares since the end of the quarter, 62.5 million going into '13.

Our next question comes from Jason Gere, RBC Capital Markets.

I guess just one housekeeping, and then just more strategic. So the housekeeping, if you think about the Personal Care, the mid-single-digits. Can you break out how much of that growth will be innovation versus, maybe international expansion? And then, the -- I guess the more strategic question is, thinking about the portfolio by the time that the restructuring is fully in place by 2015, what percent of your sales do you expect household to be of the total company, I think it's about half now. But I guess I'm just trying to figure out, like the Fem Care, the Infant Care, some of these businesses out there, that seems to be a little bit more challenged, along with Battery and maybe your appetite for making acquisitions to kind of change up the landscape of Energizer Holdings.

Yes, that was a lot of -- kind of a lot of questions there. Let me try to do a decent job, at least, of answering some of them. I think in terms of Personal Care growth, top line growth, that we're expecting over, not just this year, but the next couple of years, it really is coming from multiple sources. It's coming from international growth, and as you know, we've had, as an example, very good growth of the Sun Care products internationally ever since we acquired it. I mean, double-digit every year. I don't see that slowing down. The world's a big place and the Sun Care opportunity remains quite large. I think, so international growth is certainly part of that. Innovation is still going to be part of that. As I indicated earlier, we may not have another home run in the way of a Hydro planned for '13, but we have a large number of interesting new products that we're coming out with, that I think will be contributing to the top line growth. And then I think, finally, some pricing leverage. We've had some success at gaining price increases in a number of our Personal Care categories, it's never easy. You have to justify it. Maybe that will get tougher, depending on where the world economy goes. But that has been, I think will continue to play also part in the growth of our top line. In terms of the size of Batteries versus the size of the Personal Care division going forward, certainly the sales of Personal Care, as a result of all the organic growth they've generated, as well as the bolt-on acquisitions we've done, has resulted in Personal Care growing to be a little bit larger than the Household Products division. I'd like to remind everybody that the way that all happened was from -- we had excellent cash flows that have been generated out of the Household Products division over all these years. But that growth wouldn't have been able to take place without our Household Products division performing the way it did. But I think the trends probably will continue as Personal Care will continue to grow as a percent of the overall mix. But I'm not sure I really want to guide to a certain number.

Although we're at 54% this year, it was the mix of Personal Care sales and just given the guidance we just -- have given you for '13, that's obviously going to increase this year.

Our next question comes from John Faucher, JPMorgan. John A. Faucher - JP Morgan Chase & Co, Research Division: Just want to talk a bit about the decision to go with the lower promo spend and advertising spend this quarter, and you guys talked about the higher promotional spend, generally. And I guess I get the decision to say, look, we're not going to get down in the gutter, so to speak, and get involved. I guess, is there a risk from a market share standpoint if you lose the market share over the past 3 or 4 months, and then continue to lose that for the next 6 months, but the actual cost of getting that share back ends up being higher?

Yes, it's a great question. I guess I'd answer it a couple of ways. First of all, it's easier to rent share, it's hard to own share. And you own share through innovation, not through promotion. It is easy to respond to heavy promotional levels by your competitors, by doing heavy promotion. And in some cases, you'll do that. What we prefer to do instead is go at our promotions spend, consumer promotion spend and trade promotion spend in a more thoughtful manner. And so to really get the best execution, for example, out of our promotional spend, you need to be working with your customers 6 to 9 months out. You can always respond with a 2 or 3 month lead time kind of blitz, but you'll never really optimize your return on that investment versus if you've worked with the customers in a more thoughtful way. And so, in -- certainly the Personal Care space, we work for the customers in a more thoughtful way. The fourth quarter, our fiscal fourth quarter '12 spend, where we ended up is frankly exactly where we plan to be a year ago. And as kind of a natural cadence or rhythm of the new product flows that were taking place in personal care. We are aware of what our competitors are doing in various categories. Our plans in '13 reflect that. And as Dan alluded to, the promotional environment we're seeing right now is in our plans for the current year and in the guidance that we have given you. John A. Faucher - JP Morgan Chase & Co, Research Division: Okay, and then just one follow-up on that which is, as I'm looking at some scanner data and sort of checking out the seasonality of the category, it looks like it skews a little bit towards the summer. Should we expect to see maybe a little bit of a -- more of this activity come back and you guys sort of getting more involved a little bit as we got closer to that slightly higher seasonal time period?

I'm not sure. Which category are you talking about? John A. Faucher - JP Morgan Chase & Co, Research Division: I'm talking about, I'm looking at blades, the entire Wet Shave category.

Yes, part of that seasonality, if you got -- I'm not exactly sure what you're looking at, obviously Women's is the seasonal component of overall razors and blades. And yes, you can expect heightened spending and investment in new product launches for the Women's segment to pretty much coincide during that late spring, summer timeframe. That's certainly when we launched our Hydro Silk, which has been so successful. In terms of overall, in terms of Men's or Disposables, I'm really not aware of much, of much of seasonality to speak of, other than maybe a Father's Day kind of promotion, a holiday kind of promotion around upscale razors, but nothing really of consequence. That said, in terms of how we'll plan to spend in '13, we'd rather not talk about.

Our next question comes from the line of Nik Modi, UBS.

So just 2 quick questions. The first just on the quarterly flow for next year. Would it be fair to assume that you obviously will have the hit from lost distribution at Walmart, but that'll be slightly offset by Sandy in terms of the Battery by pull forward. If you can just give us perspective on some of the quarterly flow? And then my main question is around capital allocation and the dividend. I mean, it seems that a lot of the things that Energizer will be doing over the next few years is going to have a direct impact on cash flow in a positive way, and so I'm just curious about how you're thinking about the dividend growth, I mean, granted that you guys just initiated it, but just kind of, how you think about it, philosophically, going forward?

Nik this is Dan. I'll answer the first question and really, the growth versus this year on at least, earnings per our guidance is going to be more back-end loaded. And it's again, the competitive pressures in the front end of the year, and we expect to probably start realizing some savings from the restructuring project in the back half of the year, so it will be more back half loaded.

In terms of our view on dividends, obviously, as you know, we're fairly new at the dividend paying game. I think you could expect, certainly, that will continue at the current rate for a while, and where we may go, I just, I wouldn't really care to speculate right now. A lot of things in the air in that regard, but you're right, your basic premise is absolutely correct. Between the working capital project that Dan is leading and just talked about before, and between the savings we expect to get after we get through the cost of achieving those savings from project transformers. Along with just basic margin structure of our business, we do and expect to continue to generate those significant, positive cash flow.

Yes, and on the share repurchase part of capital allocation, we've obviously bought a lot of shares over the recent periods. And we will have some fairly significant cash needs related to the restructuring projects. So we think it's prudent right now to keep some dry powder around and really focus on getting the cost savings.

That was our final question. I will now turn the call back over to Ward Klein for closing comments.

Okay, well, again, a big thank you to everybody for being flexible on the schedule change, and for hanging in there late in the day. We do appreciate your interest in Energizer. And hope to see all you soon. With that, operator, I'll turn it back to you.

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