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Energizer (ENR) Reports Better-than-Expected Q4 Earnings

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Energizer Holdings, Inc. (ENR - Free Report) reported fourth-quarter fiscal 2016 results wherein both adjusted earnings of 54 cents per share and revenues of $432.4 million came in way ahead of the Zacks Consensus Estimate of 50 cents and $428.5 million, respectively.

On a year-over-year basis, adjusted earnings fell 11.5% while revenues grew 8.3% driven by the acquisition of HandStands. Organic revenues were up 1.7% mainly on the back of distribution and space gains, partly offset by reduced retail inventory levels.

Batteries revenues grew a little over 1% year over year to $375 million while Other batteries revenues more than doubled to $57.4 million.

In North America, the company recorded revenues of $255.4 million, up 13.3%. In Latin America, revenues amounted to $24.1 million, down 4.4% and in Europe, the Middle East and Africa (EMEA) region, revenues were $82.4 million, down 0.7%. Asia Pacific recorded revenue growth of 7.6% year over year to $70.5 million.

ENERGIZER HLDGS Price, Consensus and EPS Surprise

 

ENERGIZER HLDGS Price, Consensus and EPS Surprise | ENERGIZER HLDGS Quote

Gross margin in the quarter contracted 260 basis points (bps) to 43.3% primarily due to forex fluctuations. Selling, general and administrative expenses (excluding spin & restructuring costs) as a percentage of net sales were 21.5% compared with 22.3% 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 $4.6 million in the quarter.

As of Sep 30, 2016, Energizer had cash and cash equivalents of $287.3 million compared with $502.1 million as of Sep 30, 2015. Long-term debt was $981.7 million compared with $984.3 million as of Sep 30, 2015. For the fiscal, cash flow from operations came in at $193.9 million and free cash flow amounted to $161.8 million.

The company also repurchased shares worth $32 million in the fiscal and paid $63 million as dividends.

Guidance

The company initiated guidance for fiscal 2017. Adjusted earnings per share are estimated to be in a band of $2.55 to $2.75 that includes 15 to 20 cents contribution from the HandStands business. The company now expects revenues to be up in mid single digits with 5% -6% incremental contribution from HandStands. Organic revenues are expected to be flat or grow in low single digits. Free cash flow is expected to be above $180 million and gross margin rate is also expected to increase by up to 50 to 100 bps. Capex is expected to be in the range of $30 million - $35 million.

Pre-tax income is likely to be down approximately $5 million to $10 million on account of forex fluctuations.

However, management has cautioned that the first quarter will be marred by tougher year- over-year comparisons due to the timing of the holiday season last year and EcoAdvanced launch.

Currently, Energizer has a Zacks Rank #2 (Buy). Better-ranked stocks in the broader tech space include Jabil Circuit Inc. (JBL - Free Report) , Facebook Inc (FB - Free Report) and Intel Corporation (INTC - Free Report) .Jabil Circuit sports a Zacks Rank #1 (Strong Buy) while Facebook and Intel carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Jabil Circuit has delivered an average positive earnings surprise of 41.58% in the trailing four quarters while Facebook and Intel have delivered positive earnings surprises of 21.11% and 12.14%, respectively over the same time frame.

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