Energizer (ENR) Q4 Earnings & Sales Beat Estimates, Up Y/Y
Energizer Holdings, Inc. ENR reported impressive results in fourth-quarter fiscal 2023, wherein its top and bottom lines surpassed the Zacks Consensus Estimate and grew year over year.
Shares of ENR have gained 4% in the past three months against the industry’s decline of 13.8%.
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Q4 Metrics
Energizer’s adjusted earnings of $1.20 per share came ahead of the Zacks Consensus Estimate of $1.14 and increased 46.3% from the year-ago quarter’s reported figure.
ENR reported net sales of $811.1 million, which beat the Zacks Consensus Estimate of $791 million. The top line also increased by 2.6% from the year-ago quarter’s reading. Organic sales grew 2% in the fiscal fourth quarter.
The increase was driven by the continued benefit of global pricing actions in the battery and auto care businesses, which contributed approximately 1.5% to organic sales and an increase in battery volumes. The upside was partially offset by volume declines from lost battery distribution in international markets.
For fiscal 2023, the company’s adjusted earnings came in at $3.09 per share, up by a penny from the previous fiscal’s reported figure. For the fiscal year, net sales were $2,959.7 million, down 3% year over year.
Energizer Holdings, Inc. Price, Consensus and EPS Surprise
Energizer Holdings, Inc. price-consensus-eps-surprise-chart | Energizer Holdings, Inc. Quote
Segments in Detail
On Oct 1, 2021, Energizer changed its segments from the two geographies of Americas and International to two reporting units, namely Battery & Lights and Auto Care. The move followed the acquisition of Spectrum Brands’ Battery and Auto Care units in the first quarter of fiscal 2022.
Energizer’s Batteries & Lights segment’s revenues increased from $639 million year over year to $656.1 million in fourth-quarter fiscal 2023 and beat our estimate of $639 million. Meanwhile, revenues in the Auto Care segment increased from $151.4 million to $155 million. In the quarter, we expected revenues of $150.3 million from the Auto Care segment.
Margins
In the fiscal fourth quarter, Energizer’s adjusted gross margin expanded 380 basis points to 40%, driven primarily by the Project Momentum savings of $19 million, continued gains from the pricing initiatives, lower product and other costs and positive currency impacts. The adjusted gross margin came in line with our estimate.
Excluding restructuring costs, this Zacks Rank #4 (Sell) company’s adjusted selling, general and administrative (“SG&A”) costs, as a rate of net sales, was 14.2% compared with 15.1% recorded in the prior-year quarter. We had expected adjusted SG&A cost as a rate of net sales to be 14.1% in the quarter under review. On a dollar basis, SG&A cost declined from $119.2 million to $115.5 million due to Project Momentum savings. Adjusted EBITDA was $185.4 million, up 27% year over year.
Other Financial Details
As of Sep 30, 2023, Energizer’s cash and cash equivalents were $223.3 million, with long-term debt of $3,332.1 million and shareholders' equity of $210.7 million. In fiscal 2023, ENR paid down $225 million of debt. At the end of the fiscal fourth quarter, the company’s net debt to adjusted EBITDA was 5.2 times. In the reported quarter, it paid out a dividend of about $22 million.
The operating cash flow for fiscal 2023 was $395.2 million and free cash flow was $339.1 million.
Outlook
We note that Project Momentum is on track, delivering savings of more than $50 million in fiscal 2023. It anticipates to continue generating savings from the project going forward. The company is expected to focus on its strategic priorities, including gross margin restoration, free cash flow generation and paying down debt for fiscal 2024.
Management provided its organic revenue guidance for fiscal 2024. Energizer currently anticipates organic revenues to be flat to down in the low single digits. For fiscal 2024, adjusted earnings per share are expected in the band of $3.10-$3.30, while adjusted EBITDA is envisioned to be in the range of $600-$620 million.
For the first quarter of fiscal 2024, Energizer anticipates organic revenues to decline by 6-8% due to projected category trends and shifts in the timing of holiday orders in fourth-quarter fiscal 2023. For the quarter, adjusted earnings per share are envisioned in the band of 50 cents to 60 cents.
Key Picks
Some better-ranked stocks from the same space are Lamb Weston LW, Ollie's Bargain Outlet OLLI and MGP Ingredients MGPI.
Lamb Weston, a global manufacturer and distributor of value-added frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings per share suggests growth of 28.3% and 24.8%, respectively, from the corresponding year-ago reported figures. LW has a trailing four-quarter earnings surprise of 46.2%, on average.
Ollie's Bargain, which is a retailer of brand-name merchandise, currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 1.3%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings per share suggests growth of 14.2% and 67.9%, respectively, from the corresponding year-ago reported figures.
MGP Ingredients, which produces and markets ingredients and distillery products, currently carries a Zacks Rank #2. MGPI has a trailing four-quarter earnings surprise of 16.2%, on average.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and earnings per share suggests growth of 6% and 14.2%, respectively, from the corresponding year-ago reported figures.
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Energizer Holdings, Inc. (ENR) : Free Stock Analysis Report
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Lamb Weston (LW) : Free Stock Analysis Report
