Energizer Holdings, Inc. (ENR - Free Report) 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 - Free Report) 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
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