Energizer Holdings Inc.
) reported third-quarter 2013 non-GAAP earnings of $1.57 per
share, which comfortably beat the Zacks Consensus Estimate of
$1.34. Earnings per share also improved 33.1% from the year-ago
Revenues not only declined 1.1% from the year-ago quarter to
$1.11 billion but also lagged the Zacks Consensus Estimate of
$1.15 billion. Revenues for the quarter were affected by
unfavorable currencies in Asia and Latin America.
On an organic basis, revenues remained flat due to higher
volume in Household Products which offset declines in revenues
from Personal Care segment.
Revenues from Personal Care segment decreased 3.6% from the
year-ago quarter to $649.5 million primarily due to the effect of
unfavorable currencies. Organic sales declined modestly on a
Household Products revenues increased 2.5% from the year-ago
quarter to $462.0 million. Organic sales increased 3.7% on a
year-over-year basis, primarily attributed to volume increases
and soft year-over-year comparisons. Moreover, higher promotional
activities in the U.S. and distribution gains in Asia also helped
the segment's organic sales.
Gross margin for the quarter was down 110 basis points (bps)
to 45.9% due to the impact of unfavorable currencies and charges
related to restructuring initiatives. Excluding these
adjustments, gross margins remained flat at 47.0% on a
year-over-year basis primarily due to an increase in the price of
its household products, which was offset by an unfavorable
product mix in the Personal Care segment.
Operating margin increased from 15.9% in the year-ago quarter
to 19.0% primarily due to lower-than-expected costs. During the
quarter, selling, general and administrative expense declined
13.7% from the year-ago quarter primarily due to cost controls
and restructuring initiatives.
Advertising and sales promotion expense declined 14.7% due to
change in spending schedule. Research and development expense was
down 15.4% year over year. The company reported third-quarter
restructuring savings of $30 million.
Energizer reported non-GAAP net earnings of $99.3 million
which improved from $77.7 million. The company also increased its
dividend by 25% to 50 cents.
Energizer reiterated fiscal 2013 adjusted earnings per share
guidance in the range of $6.75 to $7.00. From the sales
perspective, management expects Personal Care segment's organic
sales to remain flat in fiscal 2013, down from the prior forecast
of low single-digit growth. The company expects gross pre-tax
restructuring savings to be $80 million in fiscal 2013.
For the fourth quarter, management expects low single-digit
organic sales growth from its Personal Care segment while for the
Household Products segment management continues to expect a 10%
decline primarily due to loss of market share, change of timing
in the promotional activities and shipments. Moreover,
storm-related volume in the prior-year quarter will also impact
Household Products segment.
Management expects advertising expenses to increase in the
latter half of 2013. The company expects the costs of
restructuring for the remaining part of fiscal 2013 to be between
$35 million and $45 million.
We believe that product innovations coupled with higher
pricing of Energizer's household products and the restructuring
initiatives would positively impact its results, going
Moreover, lower-than-expected operating expenses and prudent
product mix would expand margins in the near term. Energizer's
) AXE brand will also boost its shaving market share, going
forward. Additionally, the company's proposed acquisition of
feminine hygiene business from Johnson & Johnson Inc. is
expected to boost its feminine care brands.
However, the expected declines in volumes in Household Product
segment, unfavorable foreign exchange and increasing competition
from companies such as
Procter & Gamble Co.
) are the near-term headwinds.
Currently, Energizer carries a Zacks Rank #3 (Hold).
ENERGIZER HLDGS (ENR): Free Stock Analysis
KIMBERLY CLARK (KMB): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
UNILEVER N V (UN): Free Stock Analysis Report
To read this article on Zacks.com click here.