Edgewell Personal Care Co (EPC) 2015 Q2 法說會逐字稿

Good morning. My name is Tia and I will be your conference operator for today. At this time, I would like to welcome everyone to Energizer Holdings' second-quarter fiscal 2015 results conference call. I would now like to turn the conference over to Jackie Burwitz, Vice President Investor Relations. You may begin your conference.

Thank you, Tia, and good morning, everyone, and thanks for joining us on Energizer's conference call to discuss our second-quarter fiscal 2015 results. With me this morning are Ward Klein, Chief Executive Officer, and Dan Sescleifer, Chief Financial Officer. Joining us for the Q&A portion of the call are David Hatfield, CEO of Personal Care, and Alan Hoskins, CEO of Household Products.

This call is being recorded and will be available for replay via our website, Energizerholdings.com. During the call, we may make statements about our expectations for future plans and performance, including future sales, earnings, advertising, and promotional spending, product launches, savings and costs related to restructuring, changes to our working capital metrics, currency fluctuation, commodity costs, category value, future plans for return of capital to shareholders, whether the spinoff of the household products business is completed as expected or at all, the timing, cost, and terms of the spinoff, and whether the expected benefits of the spinoff can be achieved. Any such statements are forward-looking statements which reflect our current views with respect to future events. These statements are based on assumptions and are subject to risks, including those described under the caption "Risk Factors" in our annual report on Form 10-K filed November 18, 2014. These risks may cause our actual resulted be materially different from those expressed or implied by our forward-looking statements. We do not undertake to update these forward-looking statements.

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. The reconciliation of the non-GAAP financial measures to those 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 trends in the business.

With that, I would like to turn the call over to Dan.

Thanks, Jackie, and good morning, everyone. I would like to start with a financial overview of the quarter and then turn the call over to Ward to comment on the businesses and progress on the planned separation of the personal care and household products divisions.

We delivered solid second-quarter adjusted earnings per share of $1.97, an increase of 4.8% versus the prior year, despite significant currency headwinds. Net sales declined 5.1%, including approximately $60 million of unfavorable currency movements. Organic topline was up 0.3%, excluding the impact of increased sales in Venezuela. Gross margins improved 200 basis points. A&P spending increased $10.8 million, or 160 basis points on a percentage of sales basis. SG&A as a percent of sales, excluding unusual items, improved 90 basis points. I'll provide a deeper dive into each of these items.

Organic sales, excluding the year-over-year change in Venezuela, increased 0.3% as gains in the household products segment were offset by declines in the personal care segment. In household products, organic sales increased 3% due primarily to the second-quarter launch of EcoAdvanced, the first battery made with recycled batteries. Personal care organic sales declined 1.3% due to lower volumes in wet shave (technical difficulty) and feminine care as we continue to see elevated levels of competitive promotional spending. These lower volumes were partially offset by improved price mix in wet shave.

We continue to see strong gross margin expansion of 200 basis points, up to 49.8%, as we continue to make excellent progress with our restructuring initiatives. During the quarter, we realized $27 million in incremental savings, bringing the project to date savings to $310 million.

During the quarter, A&P increased $10.8 million to 10.7% of net sales, a 160 basis point increase versus prior year as spending increased in both segments in support of launch activity and brand building programs. SG&A, excluding restructuring and acquisition related costs and costs related (technical difficulty) decreased 90 basis points versus prior-year levels due to restructuring savings and continued tight spending controls.

And rounding out the P&L, our year-to-date effective tax rate, excluding unusual items, was 28.3% versus 29.3% in the prior year, reflecting a favorable mix of earnings.

Looking at operating profit, household products increased 9.3% as volume gains from the EcoAdvanced launch and restructuring savings more than offset currency headwinds and higher A&P spending. Excluding the impact of unfavorable currencies and year-over-year Venezuelan results, household products operating profit was up 36%.

Personal care segment profit was down 3.3% due to unfavorable currencies. Excluding currency impacts and year-over-year Venezuelan results, personal care segment profit increased 3.1%, driven by the restructuring savings and improved price mix partially offset by increased A&P investments.

Moving to our balance sheet, working capital as a percent of sales was 15.3%, up slightly from the first quarter. We continue to realize improvements within days payable outstanding across both operating segments. However, days of inventory have increased versus recent trends due to the post restructuring changes and the household products manufacturing footprint, temporary inventory builds as a result of ongoing personal care footprint changes, and increased inventory levels in support of new products launch activity and lingering effects of West Coast port labor disruption.

Finally, in terms of capital allocation, dividend payments in the quarter were $31 million, equal to the prior-year quarter. No shares were repurchased during the quarter.

Before moving to the financial outlook, I would like to discuss our decision to deconsolidate our Venezuelan operations from our results. The economic and political situation in Venezuela remains very volatile and Venezuelan Exchange Control regulations have restricted our ability to obtain US dollars. Unfortunately, we expect this condition to continue for the foreseeable future. As a result of our decision to deconsolidate, we recorded a second-quarter one-time charge of $145 million. Our future consolidated results will not include the operating results of our Venezuelan business. We have provided a supplemental schedule in our press release to recap our trailing six quarters of net sales and segment profit for each business.

Now moving to our financial outlook. As indicated last quarter, due to the July 1 expected separation date, a full-year earnings per share estimate is not applicable. Our nine-month financial forecast has adjusted earnings per share below the prior-year nine-month period, in the mid-single digits due to lower earnings per share in the third quarter versus prior year, driven by higher A&P spending and the impact of unfavorable currencies. Excluding the negative impact of currencies, forecasted adjusted earnings per share is expected to be above prior year for the nine-month period.

Our focus for the third quarter remains on executing our new product launches, delivering top line results, enhancing margins and investing behind our brands. For the nine months, we are now anticipating total Company organic net sales to be slightly down. Personal care organic sales are expected to be flat and household products organic sales are projected to be down in the low single digits versus the prior year. We expect the total Company gross margin rate to increase versus prior-year levels for the nine months by approximately 50 basis points.

A&P investment as a percent of sales is expected to increase over 150 basis points for the nine months with a significant increase in the third quarter as we continue to invest behind innovation across both businesses. We are now estimating that the nine-month organic pretax profit growth will be negatively impacted $65 million to $70 million due to unfavorable foreign currency movement. And as previously discussed, Venezuela will be removed from our consolidated results beginning in the third quarter. The prior-year third quarter included net sales of $14.4 million and operating profit of $5.6 million from Venezuela.

Now I would like to turn the call over to Ward for a review of the businesses and an update on the progress of our proposed separation notice.

Thanks, Dan. As Dan stated, we delivered solid second-quarter results despite negative currency headwinds. Within the US personal care business, all categories exhibited growth in the March quarter for the second consecutive quarter. Feminine care, skin care, shave prep and infant care categories strengthened sequentially year-over-year while the razors and blades categories softened. Overall, our US personal care business experienced a 1 point aggregate share decline due primarily to high competitive promotional activities.

In wet shave, the US razors and blades category was up slightly by 0.3% as growth in women's systems and disposables was offset by a decline in men's systems. Our share was down 1 point across the following categories. Our high-growth franchise shares essentially flat as we anniversaried our Hydro Sensitive launch in the prior year while our legacy brands experienced declines due primarily to continued elevated competitive promotional activity and a decrease in some of our promotional activity this year versus the prior year.

The feminine care category grew approximately 1.8% with our share being relatively stable. Looking forward, we expect to see market share improvement in this category behind the recent launch of our sports pads and liners as well as gains in our Carefree and Stayfree brands as these brands have now lapped prior-year distribution losses.

Importantly, for the third quarter, we are planning to increase A&P support across our portfolio, including our new products, Hydro Silk Trim Style and our sports pads and liners, both of which began shipping in March. We also plan to increase equity investments across our key growth brands.

Turning to household products, the battery category showed improvement this quarter with volume up 1% and value flat. Net sales in the quarter improved 3% versus prior year, excluding currencies in Venezuela. This quarter's improvement was driven by Europe and the US where winter storms helped drive demand in January. Moving forward, we continue to expect the category to decline in the low single digits.

Energizer grew value share 1.1 points in the most recent 12 weeks due to increases in Europe and North America. We're getting new distribution in France and Germany and in the US, our growth was attributable to the strong focus on category fundamentals and the launch of EcoAdvanced late in the quarter. We believe we still have room to grow our share in profits through investing in our brands and introduce innovation like our EcoAdvanced battery, the first battery made with recycled batteries, bringing to market a product that satisfies unmet customer need while delivering our longest lasting alkaline battery ever.

Now turning to the separation, we are quickly approaching the targeted July 1 spinoff date and are in the process of finalizing several key decisions related to the transaction. In addition to delivering our fiscal 2015 financial plan, our colleagues are working hard to execute the remaining milestones of the separation plans. We remain focused on the operational transition and business preparation to successfully operate as two separate companies. I have been truly impressed by the entire organization's focus, determination, and perseverance throughout this entire process.

Organization is all right and selection is nearly completed. At the regional level, our market execution plans remain on track. We have also completed distributor selection in the applicable markets and cross-functional teams have been created in each region to be accountable for the distribution -- distributor transition. We continue to engage with our key customers in order to ensure a smooth transition. We are now estimating gross disynergies before cost offsets of $65 million to $85 million relating primarily to corporate and regional headcount, real estate, IT systems, and professional services.

As we discussed last quarter, we are also executing a restructuring initiative in order to position both businesses for success as standalone entities and to offset these disynergies. These restructuring initiatives include adapting the global go-to-market footprint to reflect the future strategies and scale of each business; centralizing certain back-office functions and outsourcing certain non-core transactional activities both in an effort to increase efficiencies; and reducing headcount to optimize the cost structures of each business.

Both businesses are expected to reach a normalized run rate SG&A through the three to fourth quarters post bid as several duplicate costs will be maintained for a period of time post spin as we stabilize and complete restructuring initiatives. Based on the decision made today, we are estimating that total spinoff and restructuring and related costs through the close of the spinoff will be approximately $350 million to $425 million, including debt breakage costs of approximately $60 million. These estimates do not include costs related to any tax related charges for potential capital expenditures which may be incurred in the transaction and may be (technical difficulty).

The an initial Form 10 was filed on February. We have subsequently filed an amendment responding to SEC clarifying comments and questions. We plan to file another amendment on May 11 to include second-quarter financial results and pro forma information about the household products capital structure. Prior to spin, we intend to put in place the necessary debt capital to complete our separation and set up both businesses for long-term success. We expect total debt, excluding cash, at separation to be roughly 3 times EBITDA for each business. Based upon that metric, total debt levels would approximate $1.5 billion for personal care and $1 billion for household, leaving both companies with strong and stable opening balance sheets.

As you have seen from our filings last week, we have announced our intention to secure an interim bridge loan facility and prepay our private placement notes. This will, as the remaining company, will continue to hold the $600 million public notes due in 2021 and the $500 million public notes due in 2022. Our intent is to enter into permanent financing for both companies prior to the completion of the spin.

In terms of the capital allocation strategies for the two businesses, final decisions will be made by the two independent boards of directors post spin. It is likely that household products will pay a meaningful dividend given its ability to generate substantial and consistent cash flow. Share repurchases may also be part of the mix and could be opportunistic in nature.

For personal care, a balanced approach to capital allocation is likely focused on identifying the best opportunities to maximize shareholder returns, including internal investment, M&A, and share buybacks. Again, final decisions on capital allocations will be made by the respective boards post July 1.

On June 2, both management teams will host separate investor day presentations in New York City. This will provide investors and analysts the opportunity to meet here the senior leadership of the two businesses. In early to mid June, following the investor day presentations, each business will conduct roadshows or in Whizmaster the face-to-face sessions. Both businesses are committed to transparency with investors and plan to have the fullest interaction with investors and analysts moving forward.

In conclusion, our businesses are performing well despite significant currency headwinds and the enormous amount of work being conducted by the organization in preparation for the split. This split remains on schedule and on budget with the focus being to set up both companies in a strong manner and positioned for accelerating success. Our continued launch of new, truly innovative products in the first quarter increased investment in what we spend. And our increased investment in internal capital projects and buying with significant restructuring efforts underway all demonstrate our commitment to the long-term success of both businesses.

Finally, in closing, I would be remiss if I didn't call out the immeasurable contributions of Dan Sescleifer to our organization. As many of you know, he has spent 15-plus years as our chief financial officer. Dan will be retiring from the Company at the time of the split. Dan's legacy at Energizer includes being the financial leader of a Company that has outperformed three-quarters of our packaged good peers during his tenure as well as leading a finance team that is second to none. This is Dan's last earnings call with Energizer, and I know many of the analysts, investors, and colleagues listening in today join me in thanking him for his loyal and effective service. We wish him well.

In the same vein, this is also Jackie's last call at Energizer. And many thanks to her.

This completes our prepared remarks in this fourth-quarter earnings call and Dan, David, Alan and I will be happy to take your questions. Operator?

(Operator Instructions). Olivia Tong, Bank of America.

I want to get a little bit more detail on the overhead. You had mentioned in the press release that it would take about three to four quarters to work off. Apologies if I missed some of your opening remarks, but I just wanted to see if you could give a little bit more color behind that. What are some of the things -- talk about some of the things that you are working on and what is going to drive that getting you back to that normalized run rate? Thank you.

Yes. Sure. Maybe I will give that over to Dan.

Yes. Olivia, if you think about what we are doing, we are separating entities in 50 markets around the world. We're creating two new corporate entities and, unfortunately, both businesses are going to have some interactions going forward, so there will be some transition services agreements that will be in place. We certainly will have some redundant costs as we work to implement our new go-to-market strategies and organizations internationally. So, with all of that, there is going to be duplicate costs and higher costs with the TSAs that we have in place and our anticipation is that, after a year, both companies will be freestanding and to the targeted cost structures that have already been determined.

Got it. And then did you also give the impact of the sell-in for EcoAdvanced?

It's Alan. Yes. So on EcoAdvanced, we are actually very pleased with the results so far. They are tracking to our launch plan. Our customers and our consumers our also elated with the launch thus far. We have got over 1 billion impressions in the market already on the launch of the brand in just two months, so we are very excited about that as well. We have shipped roughly $17 million in EcoAdvanced product into the stores to build the pegs and the planograms as well as the promotional displays. And we expect over the next two quarters for the turn to occur on that fill-in and then we will see retail inventory levels return to normalized levels.

Got it. So should we expect that batteries dip down before it comes back to a normalized run rate again going forward?

Yes. I think the best way to explain that, and it may be a recurring question today, during the latest 12 weeks, we did see some stabilization in the category with volume up 1.1%, value essentially flat. As Ward alluded to, that was driven by both North America and Europe. For the latest 52 weeks, it is in the normal run rate we have been projecting, which is in that minus 2.2% range and up to 4% as we have seen in previous years. Going forward, near term, we expect the category to be in low single digit decline.

Got it. Thank you so much.

Bill Schmitz, Deutsche Bank.

Kevin Grundy, Jefferies.

Dan and Jackie, congratulations and best of luck to both of you. My questions, actually, I have a couple here. Dan, is there anything else you'd point out? You talked about the disynergies and your ability to offset those over the next three to four quarters. Anything else that investors should be aware of with EBITDA for both businesses should look any different than currently what is in the marketplace I guess and based on your existing disclosures?

Yes. I would say the two biggest items -- and we have talked about this in our outlook -- is we are facing some pretty significant headwinds, so that is going to be a negative. And then, we are taking Venezuela out of the results going forward, so those would probably be the two biggest parts.

But there should be no other drag, Dan, route to market changes, shifting distributor model, anything like that, that would change the EBITDA base. Is that fair?

Well, the go-to-market changes are just now being executed and put in place. So I really -- I almost want to defer until June when we know more and when the two businesses are on the roadshows because there is clearly a risk. We think we can manage that risk, but I really don't know enough at this point in time to give you an answer on that.

Okay. And then two quick ones, unrelated. Fair to say Venezuela has been about a 0.5 point current contributor to top line for you guys going forward so we can be cognizant of that modeling going forward? And then, thanks for the capital structure commentary. That is helpful. Should we take that as certainty a view of what the more permanent capital structure, optimal capital structure, will be for both businesses? And that is it for me. Thank you.

On your second part, I would say it is our best guess right now, but as I alluded to in my comments, it is really going to be up to the two boards. But we have announced who is on the two boards. Both board members are aware of the sneaking at this point in time, but really it is going to be their decision after July 1. That is our best guess estimate right now on capital structure.

And the only other comment is on Venezuela it's been about 1.5 points, I believe, on the top line.

Okay. But, Dan, just to growth, not in terms of what it comprises in revenue.

Yes. I'm sorry. Yes you do know, yes.

So 0.5 point is fair?

Well, I haven't done the math on that number. We have disclosed it in the back. You can take a look in the back of the earnings release, the back two pages. I just haven't done the math on that, but you can see how much it contributes to -- Yes. So $54 million of sales in fiscal 2014. So, yes.

It's a little over 1 point then, yes.

Okay. Thank you.

Bill Chappell, SunTrust Bank.

Looking at the competitive landscape and what you are seeing, both battery and wet shave, are you seeing any positive signs as Duracell looks like it is going to go into a new home? I know it is still early and still hasn't happened.

And then, conversely, on the wet shave, do you think some of the competitive pressures are -- I think at one point you had thought that wet shave would be picking up by now and the overall category trends would be improving as we moved into the spring-summer. Do you think that a competitor is kind of taking advantage of the split to try to put excess pressure?

Let me turn the battery side over to Alan to answer and then to David on the wet shave.

In terms of -- as you know, we won't comment specifically on a competitor. Duracell has and always will be a strong competitor regardless of who runs that business. We will continue to monitor the competitive environment but firmly believe that, as we announced at CAGNE, we have got three core strategies that are going to allow us to really control our own destiny. We are very focused on very leading with innovation, continuing to operate with excellence from the point of manufacture all the way to the shelf and then, finally, continuing to drive productivity in our business. I think as you see the new Energizer going forward, those three strategies will continue to be in play for us and driving productivity will continue to be on the forefront as we look at ways to optimize our costs. So we are going to continue to monitor the environment. We're going to play our game plan out because we are very satisfied with the results thus far. We have a lot of momentum behind the activities we have in the market and we expect that to continue.

And then, on the shaving side, if you remember, last quarter, as you characterized, the promotional pressure is the highest we have ever seen in the shaving business, higher even than what was implemented two years ago under the 40-country category combination directive of a prior regime.

This quarter was -- it was equally high and in fact it increased -- well, or held on the women's system side and the disposable side. So this was very high levels.

I wouldn't really comment about why is it's been that high and I really can't comment about where it will go from here. What we are really focused on is driving innovation in the marketplace. We are actually feeling good about our share of shelf and our baseline shares have been strengthening, so we are feeling good coming out of the second quarter. So that is kind of how we see it there.

I appreciate it. I guess just in follow-up to that, on the batteries side, there is really no change right now on the competitive landscape. And then on wet shave, do you think we can get back to a mid single-digit category growth in the US? Or is that -- are we kind of past those days while the competitive environment is like that?

So, on the battery side, I think the simplest way to think about it is we plan on continuing to bring innovation to market, both in the forms of new product launch and marketing news, both of which our customers and consumers are certainly appreciating. We are seeing that translate into a number of different positives for our business. So, as an example, our brand health measures are improving as we have increased our level of A&P. We're also seeing strengthening of our brands. And as you have seen in the latest results, we have been able to build our market share globally at 1.1 points. So we are going to continue down that path because of the momentum we have behind it. Again, as I alluded to earlier again, we are just -- we are really seeing the category in low single-digit decline following the stabilization we have seen in the latest 12 weeks.

And then, on the shaving side for the US category, I think we see it in the low 1% to 2% for the near future and now recognize that that is just the US. From a global point of a view, we are actually seeing higher growth rates internationally.

I will also say that, with the changes in that category, we actually feel like we are positioned well to compete if we have Hydro on the premium side, we have brands to meet the needs of consumers in the middle, and then we have private label to meet the value needs and the opening price point niches.

Great. Thanks for the color. And Dan and Jackie, thanks. You will be missed.

(Operator Instructions). Megan Cody, UBS.

I know you guys had indicated that A&P spend will be up meaningfully in the June quarter and it seems like perhaps some new innovations are in the pipeline. But I was wondering if you could go through some more specific puts and takes for what you think will drive an improvement in your personal care business. Maybe some more specifics on those innovations, or if you think competitive pressures will abate? Have you seen any of that happen one month into the June quarter?

We really feel like we have increased the E&P as a percent of sales in the fiscal year 2014. We have increased it as a percent of sales in the first half of fiscal year 2015. And we are actually seeing the results of that in our baseline shares of the shave and femcare. So those baseline shares have been stabilizing and are actually strengthening. We actually think that leads in well to the beginning of Quarter 3 where we will also see the benefit of innovation. And we have seen category growth accelerate for the second straight quarter, so we are feeling pretty good about Quarter 3. We also see international growth, which we had in Quarter 2 where we saw in all areas both volume growth and also price mix growth, we see that continuing into Quarter 3.

This is Ward. If I could add just from a corporate point of a view, the innovation that we are launching right now is why the A&P spend is up and will be up in the current quarter. YOU look at the EcoAdvanced launch on the battery side, truly a true innovation in the category. We are just getting started on that in the US, and that is just the US, so there are opportunities elsewhere past that.

And when you look on the personal care side, we have femcare. We are bringing sport into pads and liners. The pads and liners are innovative as themselves and sports name resonates with consumers. Again, we are just getting started on that.

Razors, the Trim Style that we have introduced is, I think, the best trimmer that is out there right now and, again, we are just getting started on that. And then you look back on Hydro Sensitive, which was our big launch last year, especially in the developed markets like the US, we are going against high comparables on that right now with Hydro, but Hydro is still stable and growing. And we have opportunities with Hydro Sensitive in international markets. We are just getting going on that.

So I hope that gives you kind of a sense of the innovation that our teams are pursuing even in the midst of a split. We haven't dropped that ball at all. In fact, there's quite a bit of activity right now.

Okay, great. Thank you so much.

(Operator Instructions). Ali Dibadj, Bernstein.

I just have really one question and it's if you can tell us a little bit more about what your advisors or legal counsel has said about either of the future two businesses being potentially sold within the two years given the fact pattern of your split and any tax risk with the IRS. Is there -- can you give us some details and thought process around that?

Really, as we have said in prior quarters, we are really just focusing on getting the two companies launched to be long-term successful companies in their own right. So everything that we have been sharing with you today and in past quarters, whether it relates to investments in the brand equities as indicated by A&P as a percent of sales, whether is it indicated by the innovation that we have already talked about, whether it is indicated by some of the investments we are making in capital and people as we do the split. All of these are to set both companies up for long-term success. And so that really remains our focus, and that is what we are going to execute.

And so you have never had any thoughts about any of these businesses being sold as a lot us clearly have?

You know, that's not really our focus right now.

Okay. Thanks.

Bill Schmitz, Deutsche Bank.

You might have already been asked this, but why are the spin costs so high? What goes into those numbers? And I guess a related follow-up to that is are you largely done with, say, changeover distributors in some of the international markets or is that still an ongoing process?

Let me give some topline comments and maybe turn it over to Dan for more granularity. But, when you think about what we are doing here in taking a $4.5 billion company and splitting it across 50 countries, it is not your typical spin. And so you have to go -- in really the way you think your entire global footprint. That is by country. That is by region and that, obviously, is globally. So you clone two IT systems, for example. You clone two supply chain systems, for example, HR systems, finance, the whole 9 yards. It is really not just a spinning off 50% of your business kind of incentive exercise.

And so it's the reason why we have been very deliberate on this; it is the reason why it's taking 15 months and we called that out early on. It has been difficult. I've really been impressed with how this organization has stepped up and done this project while keeping the wheels on the bus, keeping the momentum of the businesses. And so I think that gives you at least a 50,000 foot flavor that what we are doing is extraordinary. I am not aware of any other consumer packaged goods company, frankly, going through the sort of sweat that we are in fact are doing and doing successfully.

And then I will turn it over to Dan to add any other color to that.

Yes, I think Ward covered most of the items. If you think, it is a global organization and when we split this apart, there are significant IT expenses because we are on common IT platforms. Certainly, there is two different real estate tragedies going forward as we separate affiliates.

With respect to separating affiliates and looking at new go-to-market strategies, there is severance involved. In terms of the transaction itself, tax, legal, banking, there's a number of consulting fees related. So it adds up. We have got reams of detail on this. We track it very closely.

I would add the one thing that we have thrown into the number this time is the costs on refunding the private placement notice of $50 million which we had not talked about before. So it is more of a complete number that we show. But, all of these things add up and it is really a function of the scale of this business and the complexity of the transaction.

If I could even just further comment, again, what it's a little bit unusual too here is, as we sit there and create disynergies by duplicating a lot of the resources that are required when you do something like this is the implementation of further restructuring to offset those disynergies.

And honestly, the teams, both the household team, the personal care team, corporate, have gone after those restructuring opportunities as part of this wed aggressively and I think wisely, again, along the lines of setting up both of these companies to be in the strongest position possible to go forward.

Great. That's really helpful. And I am sure you guys already addressed this. I apologize because I got on so late, but on the battery side, how much of the growth this quarter was the pipeline sale from the new launch and then how much is it just share gains and the ongoing health of the category? Because the holiday period was obviously super aggressive by you guys. I don't know if there were price rollbacks, like list price rollbacks or they were just promotional activity. But I am just curious if the holiday pricing is being carried forward or if that was sort of like an anomaly in a high-volume, high-demand season and kind of back to normal now.

It's Alan. So a couple of things. First, the EcoAdvanced was roughly $17 million that we shipped in of our total to fill pegs and to fill displays. If you look at the category, we did see improvement in the category during the latest 12 weeks, as I mentioned earlier were up 1.1% in volume and basically flat in value attributed to performance improvement in the category in both North America and in Europe. Now, the North America piece, a part of that, don't forget, was driven by winter storms, which impacted that number. So as we go forward again, we are anticipating sort of low single-digit decline in the category.

As we look forward for Energizer, we believe that the opportunity for us really lies in a few things. So first and foremost, we are going to continue to drive the EcoAdvanced. The launch right now is just in North America. Our plans obviously going forward entail the globe, but we will get into that later at a different point in time.

We have also got a cycle plan of marketing news that we are bringing to customers. These are consumer solutions that come out of our global brand group which also help us build momentum behind our products and our portfolio in the stores.

So we are very excited about what we have got in play. There is a lot more detail that we will be sharing in June at investor day. But right now, we are going to stay the course because we are pleased with the momentum we are getting, both in terms of our rebound in share and what we are seeing in the category. As you look at pricing and promotion in general, if you go back to June of 2014, we have actually seen a continued decline both in the level of promotions that we have in the market and the depth of those promotions. And that comes pulsing certainly out of holiday. You're going to see a normal spike up in promotional activity during that OND period but it subsides after that and gets back to more normalized levels and that is what we are seeing.

Okay, great. That's very helpful. Thank you guys. Sorry if I repeated other questions.

John Faucher, JPMorgan.

I am going to repeat Bill's comment. I apologize if this has been covered already. Can you talk a little bit about the raw material trends? And two questions on this, how we should think about this over the next couple of quarters and then maybe longer-term as we look at some of the potential for disynergies on the raw material side. As you fully separate the two companies, is purchasing going to be a negative leverage point? Thanks.

Dan, do you want to get that?

Yes. So on raw materials, John, we have been primarily focused on Q3. I think we are going to have some slight positives. Obviously, trolling costs are down and so that is a benefit to both businesses. So I would expect slightly positive raw material impacts in Q3.

Longer-term, in terms of disynergies, yes, procurement disynergies are part of that calculation but we do believe that, overall, as we've said in the release and in the script -- I know you didn't listen to the prepared remarks comments, but basically we think we can offset all those synergies going forward with other cost reductions. So yes, there will be some adverse impacts from separating the two procurement organizations. I would like to defer specifics to the roadshows in June because Brian and Sandy will have more details at that point in time.

Any particular commodities that we would look at that would be an issue there?

Well, I think it's anything that is jointly purchased. So packaging might be an example. Certainly, there are some benefits to having combined warehousing and distribution that we will lose going forward. So those are two vehicles.

Okay. Thank you.

At this time, there are no further questions in queue. I would now like to turn the call back over to Mr. Ward for any closing remarks.

Thank you, operator. Again, thank you, everyone, for listening in and for your questions and for your interest in this company as it embarks on its upcoming split. I am certain we will be seeing a lot of you here in June in New York. Have a good day.

Ladies and gentlemen, thank you for your participation in today's conference. That concludes the presentation. You may now disconnect. Have a great day.