Energizer Holdings Inc (ENR) Reports Fiscal 2023 Fourth Quarter and Full Year Results
Fourth-quarter net sales increased by 2.6% year-over-year, with organic growth contributing 2.0%.
Adjusted gross margin for Q4 rose to 40.0%, a 380 basis point improvement over the prior year.
Full-year operating cash flow reached $395.2 million, with free cash flow representing 11.5% of net sales.
ENR expects fiscal 2024 organic revenue to be flat to down low single digits, with adjusted EBITDA and EPS projected to grow in the low single digits.
Energizer Holdings Inc (NYSE:ENR) released its 8-K filing on November 14, 2023, announcing its fourth fiscal quarter and full fiscal year results ended September 30, 2023. The company reported a 2.6% increase in net sales for the quarter, reaching $811.1 million, and a 2.0% organic growth, primarily driven by global pricing actions and increased battery volumes. Despite a challenging macroeconomic environment, ENR delivered full-year adjusted earnings and adjusted EBITDA within the guided range and made significant strides in its Project Momentum initiative, unlocking over $50 million in efficiencies.
Financial Highlights
ENR's adjusted gross margin for the fourth quarter was 40.0%, marking a substantial increase from the previous year's 36.2%. This improvement was largely attributed to Project Momentum savings and a decline in product costs. The full-year gross margin also saw an uptick, settling at 39.0% compared to the prior year's 37.3%. Selling, General, and Administrative Expenses (SG&A) decreased to 14.2% of net sales for the quarter, down from 15.1% in the prior year.
Earnings and Cash Flow
The company reported a net earnings of $19.7 million for the quarter, a significant turnaround from the previous year's net loss of $362.9 million, which included a non-cash pre-tax impairment charge. Adjusted EBITDA for the quarter was $185.4 million, up from $146.0 million in the prior year. Operating cash flow for fiscal 2023 was robust at $395.2 million, with free cash flow amounting to $339.1 million, or 11.5% of net sales.
Debt Reduction and Capital Allocation
ENR reduced its net leverage by 0.6 times in fiscal 2023, driven by a $225 million debt paydown and over 5% growth in Adjusted EBITDA. The company's net debt decreased by $183.6 million, and the net debt to Adjusted EBITDA ratio improved to 5.2 times as of September 30, 2023, from 5.8 times the previous year.
Outlook for Fiscal 2024
Looking ahead to fiscal 2024, ENR expects organic revenue to be flat to down low single digits. Adjusted EBITDA is projected to be in the range of $600 to $620 million, and adjusted earnings per share are anticipated to be between $3.10 and $3.30. The company plans to continue focusing on gross margin restoration, free cash flow generation, and debt reduction.
ENR's CEO, Mark LaVigne, commented on the results, stating,
The fourth fiscal quarter provided a strong finish to fiscal year 2023. In a year impacted by continued macro-economic pressures, we delivered full year adjusted earnings and adjusted EBITDA within our original guided range and took actions to position the business for future success."
He also emphasized the success of Project Momentum and the company's strategic priorities, which include gross margin restoration, healthy free cash flow generation, and debt reduction.
For more detailed information on Energizer Holdings Inc's fiscal 2023 fourth quarter and full year results, investors are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Energizer Holdings Inc for further details.
This article first appeared on GuruFocus.
