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Energizer (ENR) Q3 Earnings & Sales Top Estimates, Fall Y/Y
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Energizer Holdings, Inc. (ENR - Free Report) reported third-quarter fiscal 2016 results wherein both adjusted earnings of 32 cents per share and revenues of $361 million came in way ahead of the Zacks Consensus Estimate of 29 cents and $355.6 million, respectively.
On a year-over-year basis, adjusted earnings fell 50% while revenues declined 3.6% mainly due to forex fluctuations and International go-to-market changes. Shares were down 2.5% yesterday.
Organic revenues were up 1.2% mainly on the back of distribution and space gains in North America, partly offset by reduced retail inventory levels and intensifying competition in some Asia Pacific markets.
Alkaline batteries revenues fell 2.3% year over year to $228.6 million while Other batteries and lighting products revenues declined 5.7% year over year to $132.4 million.
In North America, the company recorded revenues of $188.8 million, up 1.7%. In Latin America, revenues amounted to $25.9 million, down 6.8% and in Europe, the Middle East and Africa (EMEA) region, revenues were $77.2 million, down 6.2%. Asia Pacific also recorded a revenue decline of 11.9% year over year to $69.9 million.
Gross margin in the third quarter contracted 300 basis points (bps) to 42.6% primarily due to forex fluctuations. Selling, general and administrative expenses (excluding spin & restructuring costs) as a percentage of net sales was 22.4% compared with 18.6% reported in the year-ago quarter.
On Jul 1, 2015, Energizer completed the spin off its Household Products business. Following the spin-off, two independent, publicly traded companies were created, namely Energizer Holdings, Inc. and Edgewell Personal Care Company. Energizer incurred spin-off and spin restructuring related charges of $2.8 million in the quarter.
As of Jun 30, 2016, Energizer had cash and cash equivalents of $567.1 million compared with $502.1 million as of Sep 30, 2015. Long-term debt was $982.4 million compared with $984.3 million as of Sep 30, 2015. For the nine months ended Jun 30, 2016, cash flow from operations came in at $141.9 million and free cash flow amounted to $125.6 million.
The company also repurchased 0.6 million shares worth $21.8 million in the quarter and paid $15.5 as dividends.
The company has reiterated its guidance for 2016. Adjusted EBITDA is now estimated to be $280 million to $300 million. The company now expects revenues to be down in low digits. Organic revenues are expected to be up in low single digits. Free cash flow is expected to be above $150 million and gross margin rate is also expected to decline by up to 250 bps.
Intensifying forex fluctuations are expected to unfavorably impact sales by $60 million to $70 million and deconsolidation of Venezuelan operations will negatively impact sales by $8.5 million. International go-to-market changes are expected to negatively impact sales in low single digits.
Pre-tax income is likely to be down approximately $50 million to $60 million on account of forex fluctuations.
For 2016, spin off and restructuring expenses are expected to be approximately $17 million to $20 million compared with $15 million to 20 million projected earlier.
However, following the buyout of HandStands, the company expects earnings per share in the fourth quarter to increase 4 cents to 5 cents. For the current quarter, adjusted earnings are estimated to be in the range of $2.20 to $2.30. The company expects to incur over $30 to $35 million as acquisition and integration related costs over the next 12 to 15 months with majority coming in the fourth quarter. The company expects to register $17 million to $19 million of acquisition costs in the current quarter.
Currently, Energizer has a Zacks Rank #3 (Hold). Better-ranked stocks include Facebook Inc , Quantum Corporation and Seagate Technology plc (STX - Free Report) . While Facebook and Quantum Corporation sport a Zacks Rank #1 (Strong Buy), Seagate carries a Zacks Rank #2 (Buy).
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Energizer (ENR) Q3 Earnings & Sales Top Estimates, Fall Y/Y
Energizer Holdings, Inc. (ENR - Free Report) reported third-quarter fiscal 2016 results wherein both adjusted earnings of 32 cents per share and revenues of $361 million came in way ahead of the Zacks Consensus Estimate of 29 cents and $355.6 million, respectively.
On a year-over-year basis, adjusted earnings fell 50% while revenues declined 3.6% mainly due to forex fluctuations and International go-to-market changes. Shares were down 2.5% yesterday.
Organic revenues were up 1.2% mainly on the back of distribution and space gains in North America, partly offset by reduced retail inventory levels and intensifying competition in some Asia Pacific markets.
Alkaline batteries revenues fell 2.3% year over year to $228.6 million while Other batteries and lighting products revenues declined 5.7% year over year to $132.4 million.
In North America, the company recorded revenues of $188.8 million, up 1.7%. In Latin America, revenues amounted to $25.9 million, down 6.8% and in Europe, the Middle East and Africa (EMEA) region, revenues were $77.2 million, down 6.2%. Asia Pacific also recorded a revenue decline of 11.9% year over year to $69.9 million.
Gross margin in the third quarter contracted 300 basis points (bps) to 42.6% primarily due to forex fluctuations. Selling, general and administrative expenses (excluding spin & restructuring costs) as a percentage of net sales was 22.4% compared with 18.6% reported in the year-ago quarter.
On Jul 1, 2015, Energizer completed the spin off its Household Products business. Following the spin-off, two independent, publicly traded companies were created, namely Energizer Holdings, Inc. and Edgewell Personal Care Company. Energizer incurred spin-off and spin restructuring related charges of $2.8 million in the quarter.
As of Jun 30, 2016, Energizer had cash and cash equivalents of $567.1 million compared with $502.1 million as of Sep 30, 2015. Long-term debt was $982.4 million compared with $984.3 million as of Sep 30, 2015. For the nine months ended Jun 30, 2016, cash flow from operations came in at $141.9 million and free cash flow amounted to $125.6 million.
The company also repurchased 0.6 million shares worth $21.8 million in the quarter and paid $15.5 as dividends.
ENERGIZER HLDGS Price, Consensus and EPS Surprise
ENERGIZER HLDGS Price, Consensus and EPS Surprise | ENERGIZER HLDGS Quote
Guidance
The company has reiterated its guidance for 2016. Adjusted EBITDA is now estimated to be $280 million to $300 million. The company now expects revenues to be down in low digits. Organic revenues are expected to be up in low single digits. Free cash flow is expected to be above $150 million and gross margin rate is also expected to decline by up to 250 bps.
Intensifying forex fluctuations are expected to unfavorably impact sales by $60 million to $70 million and deconsolidation of Venezuelan operations will negatively impact sales by $8.5 million. International go-to-market changes are expected to negatively impact sales in low single digits.
Pre-tax income is likely to be down approximately $50 million to $60 million on account of forex fluctuations.
For 2016, spin off and restructuring expenses are expected to be approximately $17 million to $20 million compared with $15 million to 20 million projected earlier.
However, following the buyout of HandStands, the company expects earnings per share in the fourth quarter to increase 4 cents to 5 cents. For the current quarter, adjusted earnings are estimated to be in the range of $2.20 to $2.30. The company expects to incur over $30 to $35 million as acquisition and integration related costs over the next 12 to 15 months with majority coming in the fourth quarter. The company expects to register $17 million to $19 million of acquisition costs in the current quarter.
Currently, Energizer has a Zacks Rank #3 (Hold). Better-ranked stocks include Facebook Inc , Quantum Corporation and Seagate Technology plc (STX - Free Report) . While Facebook and Quantum Corporation sport a Zacks Rank #1 (Strong Buy), Seagate carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>