Energizer Holdings, Inc. ENR posted better-than-expected results for second-quarter fiscal 2020, wherein both top and bottom lines improved year over year. However, management withdrew its fiscal 2020 view, given the uncertain impacts of COVID-19 on consumer demand and the global economy.
We note that shares of this Zacks Rank #3 (Hold) company have lost 26.2% in the past three months compared with the industry’s decline of 4.7%.
Q2 in Detail
Adjusted earnings came in at 37 cents per share, which surpassed the Zacks Consensus Estimate by a penny and surged 85% from the year-ago quarter’s 20 cents. This can be attributable to improved sales, elevated gross profit and a decline in interest expenses and SG&A expenses.
The company reported net sales of $587 million, which beat the Zacks Consensus Estimate of $579 million. Also, sales rose 5.5% on a year-over-year basis, buoyed by strength in acquired businesses and organic sales growth.
Meanwhile, organic sales grew 2.7% during the quarter, driven by gains from the Spectrum Brands’ SPB Global Auto Care acquisition, partly offset by an unfavorable impact from Argentina operations and currency headwinds.
Segments in Detail
Batteries revenues increased 2% year over year to $427.7 million, while revenues at the Auto Care segment grew 19% to $130.2 million. Revenues at Lights and Licensing segment improved 2.5% to $29.1 million.
In the Americas, the company recorded revenues of $409.9 million, up 7.4% from the year-ago quarter. Revenues at the International segment amounted to $177.1 million, reflecting an increase of 1.3% from the year-ago quarter.
Energizer’s adjusted gross margin expanded 100 basis points (bps) to 41.6% on gains from pricing and realized synergies’ strong pricing efforts. This was partly offset by the adverse impact of foreign currency, unfavorable product mix and elevated costs related to the COVID-19 crisis.
SG&A expenses, excluding acquisition and integration costs, amounted to $108 million, reflecting a decrease of $4.2 million from the year-ago quarter. This decline was driven by gains from realized synergy owing to the exit of transition service agreement (TSA) and a fall in spending in the back half of the quarter related to COVID-19 restrictions. Further, advertising and sales promotion expenses totaled $22.8 million, highlighting a decline of 7.7% from the year-ago quarter.
Additionally, the company reported earnings before income taxes of $21.9 million in the quarter against a loss of $74 million in the year-ago quarter.
Other Financial Details
Energizer ended the quarter with cash and cash equivalents of $277.9 million, long-term debt of $3,010.6 million and shareholders' equity of $373.7 million.
Adjusted free cash flow from continuing operations was $107.3 million year to date. During the quarter, the company paid out dividends of 30 cents per share, which totaled $21 million. It also paid out dividends of $4.1 million for mandatory preferred convertible stock. Further, Energizer repurchased about 980,000 shares for $45 million.
Energizer Holdings Inc Price, Consensus and EPS Surprise
Energizer Holdings Inc price-consensus-eps-surprise-chart | Energizer Holdings Inc Quote
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