Energizer Holdings Inc (NYSE:ENR) announced results for the first fiscal quarter, which ended December 31, 2015.  For the first fiscal quarter, net earnings were $65.5 million, or $1.05 per diluted share, compared to net earnings of $61.7 million, or $0.99 per diluted share, in the prior year first quarter. Adjusted net earnings in the first quarter were $72.3 million, or $1.16 per diluted share, compared to adjusted net earnings of $71.2 million, or $1.14 per diluted share.

“Fiscal 2016 is off to a strong start,” said Alan Hoskins, Chief Executive Officer.  “We continue to see positive signs that the strategies and objectives put in place since our spin are paying off.   We increased distribution and implemented price increases in several markets while continuing to closely manage costs.   In addition, the battery category continues to show signs of stabilization and a favorable mix shift to premium, performance and specialty products.  Looking forward, we remain focused on executing our strategies and delivering top-tier cash flow performance.”

Mr. Hoskins continued, “Given the strong start to Fiscal 2016, we now expect to be at the upper end of the previously provided ranges for both Adjusted EPS of $1.90 to $2.10 and Adjusted EBITDA of $275 million to $295 million and have raised our guidance on free cash flow now to exceed $150 million.”

First Fiscal Quarter Highlights (Unaudited)

The following is a summary of key first fiscal quarter results.  All comparisons are with the first quarter of fiscal 2015 unless otherwise stated.

Net sales were $506.8 million, an increase of 1.1%: (a)

  • Organic net sales increased 9.5% reflecting positive volume contributions, improved pricing and favorable product mix. In the quarter, Energizer experienced organic net sales growth in all geographic segments.
  • The following items were offsetting amounts to the organic net sales increase:
    • Unfavorable currency impacts were $33.2 million, or 6.7%;
    • International go-to-market changes, including the exit from certain markets and shift to distributors,  resulted in a decline of$5.6 million, or 1.1%; and
    • Change in Venezuela results, due to the deconsolidation, resulted in a decline of $3.1 million, or 0.6%.
  • Gross Margin percentage was 45.3%, down 130 basis points driven primarily by unfavorable currency.  Excluding the impact of currencies, change in Venezuela results and international go-to-market changes, gross margin percentage improved 190 basis points driven by lower commodity costs and favorable product mix. (a)
  • A&P spending was 5.9% of sales, a decrease of 100 basis points, or $4.3 million, due to higher prior year spending related to the EcoAdvanced launch and the timing of current year promotional activity.
  • SG&A, excluding spin and restructuring costs, was 15.3% of net sales compared to 17.6% in the prior year.  The improved percentage comparison versus the prior year quarter reflects the improved top-line performance, benefits of cost control efforts and timing of current year spending. (a)
  • Restructuring related charges were $3.3 million in the first fiscal quarter. (a)
  • Spin-off and spin restructuring related charges were $6.9 million in the first fiscal quarter. (a)
  • Pretax income of $94.5 million was positively impacted by top-line growth, gross margin rate improvement and lower overhead costs which was partially offset by unfavorable foreign currency of approximately $29 million, net of hedge impact.
  • Net earnings per diluted share were $1.05.
  • Adjusted net earnings per diluted share were $1.16, which included a $0.33 negative impact from unfavorable currencies. (a)
  • Adjusted EBITDA was $130 million. (a)
  • Free Cash Flow was $88.3, or 17.4% of net sales. (a)
  • Dividend payments in the quarter were approximately $15.4 million, or $0.25 per share.
  • Repurchased 600,000 shares of common stock.

(a) See Press Release attachments and investor website (www.energizerholdings.com) for GAAP to Non-GAAP reconciliations.

Results for the first quarter of fiscal 2015 are based on carve out financial data.  Net sales, Gross profit, Advertising & promotion (A&P) and Research & development (R&D) spending are directly attributable to our business.  However, certain Selling, general, and administrative expense (SG&A), Interest expense, Other financing items and Spin-off and Restructuring related charges are allocated from our former parent company, Edgewell, and not necessarily representative of Energizer’s stand-alone results or expected future results as an independent company.

Total Net Sales (In millions – Unaudited)

For the Quarter Ended December 31, 2015

Q1

% Chg

Net Sales – FY’15

$501.3

Organic

$47.4

9.5%

International Go-to-Market

$(5.6)

(1.1)%

Change in Venezuela results

$(3.1)

(0.6)%

Impact of currency

$(33.2)

(6.7)%

Net sales – FY’16

$506.8

1.1%

**Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures attached.

Total net sales increased 1.1% as positive volume contributions, improved pricing and favorable product mix were partially offset by the unfavorable impact of foreign currency, the deconsolidation of Venezuela, and the impact of go-to-market changes, including the exit and shift to distributors in certain markets.

Organic net sales increased 9.5% due primarily to a favorable year over year comparison due to a shift in timing of holiday shipments, earlier than expected replenishment orders and incremental storm volume.  Also contributing to the organic sales increase was incremental innovation volume due to EcoAdvanced, increased distribution and pricing gains and a positive mix shift to the premium, performance and specialty categories.  In the quarter, Energizer experienced organic net sales growth in all geographic segments.

Total Segment Profit (In millions – Unaudited)

For the Quarter Ended December 31, 2015

Q1

% Chg

Segment Profit – FY’15

$133.0

Organic

$31.1

23.4%

International Go-to-market

$1.6

1.2%

Change in Venezuela results

$(0.5)

(0.4)%

Impact of currency

$(24.0)

(18.0)%

Segment Profit – FY’16

$141.2

6.2%

**Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures attached.

Total Segment Profit in the first fiscal quarter grew 6.2% or $8.2 million.  Excluding the unfavorable movement in foreign currency of $24.0 million, the $0.5 million change in Venezuela results (due to the Company’s previously announced deconsolidation) and the favorable $1.6 million net impact of go-to-market changes resulting from overhead reductions, organic segment profit increased 23.4% in the current fiscal quarter.  This increase was driven by top-line growth explained above, or improved organic margin rate and lower overhead costs, which benefited from cost control efforts and timing of current year spending.  In the quarter, Energizer experienced organic profit growth in all geographic segments.

Financial Outlook Projection for Fiscal Year 2016

Given the strong performance in the current quarter, the company now expects to be at the upper end of the previously provided Adjusted EPS range of $1.90 to $2.10.  The Company is also providing the following assumptions related to the full year financial outlook for fiscal year 2016:

  • Net Sales are now expected to be down low to mid-single digits:
    • Organic net sales are now expected to be flat to up low-single digits;
    • The negative impact of foreign currency movement is creating additional headwinds and are now expected to reduce net sales by $65 to $75 million;
    • International go-to-market changes are expected to reduce net sales in the low single digits, consistent with the prior outlook; and
    • Change in Venezuela results, due to the previously announced deconsolidation, will reduce net sales by $8.5 million, or 0.5%, consistent with the prior outlook.
  • Gross Margin rates are now expected to decline up to 250 basis points driven in part by unfavorable currency impacts, international go-to-market changes and the impact from the Venezuela deconsolidation.  The updated outlook is favorable compared to our previous estimates.
  • SG&A as a percent of net sales, excluding spin related and restructuring costs, is expected to be in the low 20’s, consistent with the prior outlook.
  • Pre-tax income is now expected to be negatively impacted due to the movement in foreign currencies by $55 to $65 million.
  • Income Tax Rate is expected to be in the range of 30 to 31 percent, consistent with the prior outlook.
  • Adjusted EBITDA is now expected to be at the upper end of the previously provided range of $275 to $295 million, reflecting the improved performance in the current quarter offset by additional headwinds from foreign currencies.
  • Free Cash Flow is now expected to exceed $150 million.
  • Spin and restructuring costs are expected to be approximately $15 million in fiscal year 2016.

All comparisons above are with the fiscal year ended September 30, 2015 (which was on a carve out basis through the first three quarters), unless otherwise stated. (Original Source)

Shares of Energizer Holdings closed yesterday at $31.58 . ENR has a 1-year high of $144.95 and a 1-year low of $28.86. The stock’s 50-day moving average is $33.04 and its 200-day moving average is $37.98.

On the ratings front, Energizer Holdings (NYSE: ENR) has been the subject of a number of recent research reports. In a report issued on January 25, Jefferies Co. analyst Kevin Grundy maintained a Hold rating on ENR, with a price target of $33, which represents a slight upside potential from current levels. Separately, on November 13, UBS’s Stephen Powers reiterated a Hold rating on the stock and has a price target of $37.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Kevin Grundy and Stephen Powers have a total average return of -3.1% and 0.6% respectively. Grundy has a success rate of 57.4% and is ranked #2682 out of 3600 analysts, while Powers has a success rate of 59.3% and is ranked #1649.

Energizer Holdings Inc is a manufacturers, marketers and distributors of household batteries, specialty batteries and lighting products. It offers batteries using many technologies including lithium, alkaline, carbon zinc, and silver oxide.