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Energizer (ENR) Q4 Earnings Top Estimates, Sales Up on Auto Care

Energizer Holdings, Inc. ENR posted sturdy fourth-quarter fiscal 2021 results, with the top and the bottom line increasing year over year as well as surpassing the Zacks Consensus Estimate. Robust performance in the auto care business supported the quarterly outcome.

The battery segment was dismal due to a tough year-over-year comparison, as demand conditions were high in the year-ago quarter. Also, gross margin was adversely impacted by industry inflationary trends in labor, commodities and transportation. Energizer expects inflationary pressures and decline in battery sales volume to persist in fiscal 2022. Accordingly, the company provided its view for fiscal 2022.

Given the challenges in the industry, Energizer expects to continue undertaking pricing actions and cost-reduction efforts. The company will continue investing in brands, boost returns to shareholders and lower debt levels.

The company’s shares moved up 2% during the trading session on Nov 10, following the quarterly results.

Q4 Metrics

Energizer posted an adjusted earnings of 79 cents per share, which surpassed the Zacks Consensus Estimate of 72 cents and increased nearly 34% from the year-ago quarter’s level. The bottom line gained from lower reduced SG&A expenses and interest savings driven by debt refinancing.

Energizer reported net sales of $766 million, which beat the Zacks Consensus Estimate of $734.3 million. The top line inched up 0.4% on a year-over-year basis, mainly buoyed by strong growth in its auto care business. The upside was offset by a decline in battery sales owing to higher demand in the prior-year quarter.

Organic sales declined 0.8% in the quarter under review. The metric was adversely impacted by a decline of 2.3% in replenishment, due to tough year-on-year comparison, as demand for battery was high in the year-ago quarter. Nevertheless, distribution gains of 0.9% in battery and auto as well as benefits from pricing of about 0.6% aided organic sales.

Energizer Holdings, Inc. Price, Consensus and EPS Surprise

Energizer Holdings, Inc. Price, Consensus and EPS Surprise
Energizer Holdings, Inc. Price, Consensus and EPS Surprise

Energizer Holdings, Inc. price-consensus-eps-surprise-chart | Energizer Holdings, Inc. Quote

Segments in Detail

Energizer’s Batteries segment revenues declined 2.4% year over year to $565.6 million, while revenues in the Auto Care segment increased 12% to $159.8 million. Revenues in the Lights, Licensing and Other segment inched down 0.5% to $40.6 million.

In the Americas, Energizer recorded revenues of $561.5 million, up 1.2% from the year-ago quarter’s figure. Revenues in the International segment amounted to $204.5 million, down 1.7% from the year-ago quarter’s level.

Margins

During the fourth quarter, Energizer’s adjusted gross margin contracted 70 basis points (bps) to 37.7%. The downside was caused by higher input costs like labor, commodities, tariffs and transportation stemming from the ongoing industry headwinds. Gross margin was also affected by unfavorable mix impacts due to lower margin in the auto care segment which, accounted for greater organic growth. The downsides were partly compensated by synergies worth $9 million and the elimination of pandemic-related expenses.

As a percentage of sales, adjusted SG&A expenses (excluding acquisition and integration costs) were 14.3%, down 130 bps from the year-ago quarter’s levels. The downtick was led by lower compensation costs year on year. As a percentage of sales, advertising and promotion (A&P) costs were 5.4%.

Adjusted EBITDA came in at $135.9 million, down 3.2% year over year.

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Other Financial Details

Energizer ended the quarter with cash and cash equivalents of $238.9 million, long-term debt of $3,333.4 million and shareholders' equity of $355.7 million.

For fiscal 2021, the company generated cash flows from continuing operations of $179.7 million. Adjusted free cash flow from continuing operations was $203.5 million.

During the quarter, Energizer paid out dividends worth $20 million on common stock and $4.1 million of mandatory preferred convertible stock. In fiscal 2021, the company paid out dividends amounting to $83.9 million on common stock and $16.2 million of mandatory preferred convertible stock

Energizer repurchased 2 million shares in fiscal 2021, including 1.5 million shares in the fourth quarter, as part of the $75-million Accelerated Share Repurchase (ASR) program. The program is expected to be completed in the first quarter of fiscal 2022. Nearly 1.9 million shares are expected to be repurchased under the program.

Outlook

Energizer provided its view for fiscal 2022. The company expects organic revenues to be flat year on year. Auto care growth and pricing actions across all businesses are likely to be offset by declines in battery as the prior-year elevated demand in the first two fiscal quarters is lapped. The company expects revenue to be adversely impacted by foreign currency headwinds of $20-25 million, based on current rates

Energizer expects inflationary pressures to persist in fiscal 2022. Input costs, including raw materials, labor and transportation costs have been rising rapidly. The company expects gross margin headwinds of approximately 150 basis points based on current rates and assumptions. Nevertheless, it expects the rise in input costs to be offset by pricing actions and cost-reduction efforts.

Based on the anticipated inflationary pressures and volume declines in battery in the first half of fiscal 2022, Energizer expects adjusted earnings per share in the range of $3.00-$3.30 and Adjusted EBITDA in the range of $560-$590 million. The Zacks Consensus Estimate for earnings in fiscal 2022 is currently pegged at $3.51.

The Zacks Rank #4 (Sell) company’s shares have declined 3.1% in the past three months compared with the industry’s fall of 6.7%.

How Other Stocks Fared

Here are the earnings highlights of some other stocks from the broader Consumer Staples space that houses Energizer.

Inter Parfums, Inc. IPAR delivered third-quarter 2021 results on Nov 9, with the top and the bottom line increasing year over year. Earnings surpassed the Zacks Consensus Estimate, while net sales met the same.

Inter Parfums reiterated its guidance for 2021. To maintain growth momentum, the company is heavily investing in promotion and advertising with significant campaigns worldwide. This Zacks Rank #1 (Strong Buy) company’s shares have increased 26.1% in the past three months against the industry’s decline of 14.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albertsons Companies, Inc. ACI posted second-quarter fiscal 2021 results on Oct 18. The company’s top- and bottom-line metrics reflected year-over-year growth as well as surpassed the Zacks Consensus Estimate. Results benefited from strong identical sales as well as digital revenues.

Albertsons saw strong traffic trends across stores as vaccinations have propelled consumers to spend more time outdoors. The company’s transformation strategy is also on track. Shares of this Zacks Rank #1 company have increased 14.9% in the past three months against the industry’s decline of 6.7%.

The Hain Celestial Group, Inc. HAIN posted first-quarter fiscal 2022 results on Nov 10, with sales and earnings surpassing the Zacks Consensus Estimate. However, the top and bottom line declined on a year-on-year basis. Quarterly performance was affected by tough year-over-year comparisons, thanks to elevated demand conditions stemming from the pandemic in the prior-year quarter.

Hain Celestial is confident regarding its business growth momentum in the long run and reaffirmed its guidance for fiscal 2022. This Zacks Rank #2 (Buy) company’s shares have increased 16.2% in the past three months compared with the industry’s rise of 0.7%.


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