Income Taxes

12 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The (benefit)/provisions for income taxes consisted of the following:

	For the Years Ended September 30,
	2022		2021		2020
Current:
United States - Federal	$	(1.9)	$	4.7	$	13.5
State	3.5		1.6		3.0
Foreign	59.7		49.9		39.2
Total current	$	61.3	$	56.2	$	55.7
Deferred:
United States - Federal	(113.1)		(57.8)		(29.4)
State	(14.2)		(3.8)		(3.1)
Foreign	(8.0)		(1.3)		(2.3)
Total deferred	$	(135.3)	$	(62.9)	$	(34.8)
(Benefit)/provision for income taxes	$	(74.0)	$	(6.7)	$	20.9

The source of pre-tax (loss)/earnings was:

	For the Years Ended September 30,
	2022		2021		2020
United States	$	(554.5)	$	(90.1)	$	(114.1)
Foreign	249.0		244.3		181.8
Pre-tax (loss)/earnings	$	(305.5)	$	154.2	$	67.7

A reconciliation of income tax (benefit)/provision with the amounts computed at the statutory federal income tax rate follows:

	For the Years Ended September 30,
	2022				2021				2020
Computed tax at federal statutory rate	$	(64.2)	21.0	%	$	32.4	21.0	%	$	14.2	21.0	%
State income taxes, net of federal tax benefit	(9.7)		3.2		0.2		0.1		(0.7)		(1.0)
Foreign rate differential	4.4		(1.4)		0.8		0.5		2.0		3.0
Other taxes including repatriation of foreign earnings and GILTI	2.4		(0.8)		5.5		3.6		4.4		6.5
Foreign tax incentives	(2.8)		0.9		(3.7)		(2.4)		(3.6)		(5.3)
Uncertain tax positions	(10.1)		3.3		0.2		0.1		2.1		3.1
Nondeductible transaction expenses	—		—		—		—		1.0		1.5
Debt refinancing	—		—		(3.4)		(2.2)		—		—
Tax structuring	—		—		(39.5)		(25.6)		—		—
Other, net	6.0		(2.0)		0.8		0.6		1.5		2.1
Total	$	(74.0)	24.2	%	$	(6.7)	(4.3)	%	$	20.9	30.9	%

The Company has been granted two foreign tax incentives providing for a reduced tax rate on profits related to certain battery productions. One incentive expired in December 2019 and the second expires in March 2023.

The deferred tax assets and deferred tax liabilities at the end of each year are as follows:

	September 30,
	2022		2021
Deferred tax assets:
Accrued liabilities	$	30.1	$	33.6
Deferred and stock-related compensation	10.8		11.2
Tax loss carryforwards and tax credits	22.2		23.9
Intangible assets	2.6		2.5
Pension plans	6.2		5.6
Inventory differences and other tax assets	14.7		13.0
Operating lease assets	24.0		27.2
Interest expense limited under Sec 163j	110.6		90.5
Gross deferred tax assets	221.2		207.5
Deferred tax liabilities:
Depreciation and property differences	(25.2)		(25.7)
Intangible assets	(87.8)		(200.5)
Operating lease liabilities	(23.8)		(25.9)
Other tax liabilities	(28.9)		(9.9)
Gross deferred tax liabilities	(165.7)		(262.0)
Valuation allowance	(11.6)		(15.1)
Net deferred tax assets/(liabilities)	$	43.9	$	(69.6)

Future expirations of tax loss carryforwards and tax credits, if not utilized, are $4.9 between fiscal years 2023 and 2025 at September 30, 2022. In addition, there are $10.6 of tax loss carryforwards and credits with no expiration at September 30, 2022. The valuation allowance is primarily attributed to tax loss carryforwards and tax credits outside the U.S.

In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or very minimal. No provision has been provided for taxes that would result upon repatriation of our foreign investments to the United States. At September 30, 2022, approximately $1,099 of basis differential in our investment in foreign affiliates was considered indefinitely invested in those businesses. We estimate that the U.S. federal income tax liability that could potentially arise if indefinitely invested basis of foreign subsidiaries were repatriated in full to the U.S. would be significant. While it is not practicable to calculate a specific potential U.S. tax exposure due to changing statutory rates in foreign jurisdictions over time, as well as other factors, we estimate the potential U.S. tax may be in excess of $231, if all unrealized basis differences were repatriated assuming foreign cash was available to do so.

The unrecognized tax benefits activity is summarized below:

	For the Years Ended September 30,
	2022		2021		2020
Unrecognized tax benefits, beginning of year	$	13.5	$	14.2	$	12.8
Additions based on current year tax positions and acquisitions	—		0.1		0.1
Additions based on prior year tax positions and acquisitions	—		2.6		2.8
Reductions for prior year tax positions	—		—		(0.6)
Settlements with taxing authorities/statute expirations	(4.3)		(3.4)		(0.9)
Unrecognized tax benefits, end of year	$	9.2	$	13.5	$	14.2

Included in the unrecognized tax benefits noted above are $9.2 of uncertain tax positions that would affect Energizer’s effective tax rate, if recognized. Energizer does not expect any significant increases or decreases to their unrecognized tax benefits within twelve months of this reporting date. In the Consolidated Balance Sheets, unrecognized tax benefits are classified as Other liabilities (non-current) to the extent that payments are not anticipated within one year.

Energizer classifies accrued interest and penalties related to unrecognized tax benefits in the income tax provision. The accrued interest and penalties are not included in the table above. Energizer has accrued $3.0 of interest (net of the deferred tax asset of $0.1) and penalties of $1.2 at September 30, 2022, $6.8 of interest (net of the deferred tax asset of $1.1) and penalties of $3.4 at September 30, 2021, and $4.9 of interest (net of the deferred tax asset of $0.7) and penalties of $3.9 at September 30, 2020. Interest was computed on the difference between the tax position recognized in accordance with GAAP and the amount expected to be taken in the Company's tax return.

The Company files income tax returns in the U.S. federal jurisdiction, various cities and states, and more than 50 foreign jurisdictions where Energizer has operations. U.S. federal, state and local income tax returns for tax years ended September 30, 2018 and after remain subject to examination by the Internal Revenue Service. There are open examinations in the U.S. and at some of the foreign entities and the status of income tax examinations varies by jurisdiction. At this time, Energizer does not anticipate any material adjustments to its financial statements resulting from tax examinations currently in progress.

The Company is contractually indemnified by Spectrum for any tax liability of the Acquired Battery and Auto Care Businesses arising from tax years prior to the acquisitions. The Company is also contractually obligated to pay Spectrum any tax benefit it receives in a tax year after the acquisitions as a result of an indemnification payment made by Spectrum. An indemnification asset and liability, where necessary, has been recorded to reflect this arrangement. The Company has also indemnified VARTA AG for certain tax liabilities that existed as of the divestment date. An indemnification asset or liability, where necessary, has been recorded to reflect these arrangements.