On August 6, 2024, Energizer Holdings Inc (ENR, Financial) released its 8-K filing for the third fiscal quarter ended June 30, 2024. Energizer Holdings Inc, a company known for manufacturing and distributing household batteries, specialty batteries, and lighting products, reported a slight increase in net sales and a significant improvement in gross margin.
Company Overview
Energizer Holdings Inc makes and distributes household batteries, specialty batteries, and lighting products. Energizer offers batteries using lithium, alkaline, carbon-zinc, nickel-metal hydride, zinc-air, and silver oxide technologies. These products are sold under the Energizer, Rayovac, Varta, and Eveready brands at performance and premium price segments. It also offers auto care products in the appearance, fragrance, performance, and air conditioning recharge product categories. The company operates in two geographical segments: Americas and International, of which the majority of its revenue is derived from the Americas segment.
Performance and Challenges
For the third quarter, Energizer Holdings Inc reported net sales of $701.4 million, a 0.3% increase from $699.4 million in the prior year period. This fell short of the analyst estimate of $704.83 million. The slight increase in net sales was driven by a 1.2% organic net sales growth, which was partially offset by a 0.7% negative impact from currency fluctuations and a 0.2% decline due to changes in Argentina operations.
Despite the modest revenue growth, the company faced challenges such as pricing declines of 3.4%, primarily within the Battery & Lights segment, driven by planned strategic pricing and promotional investments.
Financial Achievements
One of the key highlights of the quarter was the improvement in gross margin. The gross margin percentage on a reported basis was 39.5%, up from 37.9% in the prior year. On an adjusted basis, the gross margin improved to 41.5%, compared to 38.8% in the previous year. This improvement was driven by Project Momentum initiatives, which delivered savings of approximately $14 million, as well as lower input costs, including improved commodity and material pricing and lower ocean freight.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Sales | $701.4 million | $699.4 million |
| Gross Profit | $277.2 million | $265.1 million |
| Net (Loss)/Earnings | $(43.8) million | $31.8 million |
| Adjusted Net Earnings | $57.4 million | $38.9 million |
| Adjusted EPS | $0.79 | $0.54 |
Balance Sheet and Cash Flow
As of June 30, 2024, Energizer Holdings Inc reported total assets of $4.24 billion, down from $4.51 billion as of September 30, 2023. The company paid down $150 million of debt year to date, reducing long-term debt to $3.21 billion. Operating cash flow for the first nine months of the year was $260.7 million, and free cash flow was $195.1 million, or 9.4% of net sales.
Commentary and Outlook
"We are extremely pleased with our third quarter performance," said Mark LaVigne, Chief Executive Officer. "Improving category dynamics supported a return to organic growth and combined with our strong gross margin expansion drove a 46% increase in adjusted earnings per share, exceeding our expectations. This over-delivery is expected to put us at the top end of our adjusted earnings per share guidance for the year."
For fiscal 2024, Energizer Holdings Inc expects adjusted earnings per share to be at the high end of the original range, with adjusted EBITDA expected to be in the range of $610 million to $620 million. The company also anticipates organic revenue to be down roughly 2% for the year.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Energizer Holdings Inc for further details.
