Energizer (ENR) Beats Q2 Earnings Estimates, Raises Guidance

Energizer Holdings, Inc. ENR reported second-quarter fiscal 2017 results wherein adjusted earnings of 50 cents per share easily beat the Zacks Consensus Estimate of 34 cents and grew 67% year over year. However, revenues of $359 million missed the consensus mark of $366.5 million but grew 7.5% year over year. The year-over-year growth was driven by sales from auto care acquisition.

Moreover, organic revenues were unchanged year over year as retailer inventory "de-load" offset gains from distribution space, better product and price mix.

Quarterly Details

Batteries revenues fell 0.4% year over year to $309.9 million while revenues from "Other" segment more than doubled to $49.1 million.

In Americas, the company recorded revenues of $218.5 million, up 12.1% from last year's quarter. Revenues from Europe, the Middle East and Africa region were $74.1 million, down 2.9%, whereas the Asia Pacific region recorded revenue growth of 5.7% year over year to $66.4 million.

Gross margin (excluding unusuals) in the quarter increased a record 390 basis points (bps) to 46.8%. Selling, general and administrative expenses (excluding acquisition and integration costs) as a percentage of net sales were 24.5% compared with 24.3% reported in the year-ago quarter.

As of Mar 31, 2017, Energizer had cash and cash equivalents of $372.2 million compared with $287.3 million as of Sep 30, 2016. Long-term debt was $979.8 million compared with $981.7 million as of Sep 30, 2016.

Energizer Holdings, Inc. Price, Consensus and EPS Surprise

Energizer Holdings, Inc. Price, Consensus and EPS Surprise | Energizer Holdings, Inc. Quote

For the six months ended Mar 31, 2017, cash flow from operations came in at $124.3 million and free cash flow amounted to $135.1 million.

As of Mar 31, 2017, the company had repurchased shares worth $8.6 million and paid $35 million as dividends.


For fiscal 2017, Energizer now expects adjusted earnings per share in a band of $2.75-$2.85, up from $2.55-$2.75 projected earlier which includes 15-20 cents contribution from the auto care business. Moreover, the company expects revenues to be up in mid single digits with 5-6% "incremental contribution" from the auto care business despite headwinds from currency fluctuations.

Organic revenues are expected to be up in low single digits. Free cash flow is expected to be $190 million and gross margin is expected to increase 100-125 bps up from earlier projection of 50-100 bps. Capex is expected in a range of $30-$35 million.

Stiff competition from regional players remains a major concern for Energizer. Moreover, forex volatility will continue to be a headwind for the company, reducing net sales by 1.5-2.5%.

Currently, Energizer has a Zacks Rank #3 (Hold). In the last one year, Energizer has generated a return of 24.26% as against the Zacks Consumer Product-Miscellaneous Staples industry's decline of 1.20%.

Better-ranked stocks in the broader tech space include Alphabet Inc. GOOGL , Ollie's Bargain Outlet Holdings OLLI , and Blue Buffalo Pet Products BUFF . While Alphabet and Ollie's Bargain sport a Zacks Rank #1 (Strong Buy), Blue Buffalo carries a Zacks Rank#2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

In the trailing four quarters, Alphabet, Ollie's Bargain and Blue Buffalo delivered average positive earnings surprises of 5.74%, 16.8% and 6.83%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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