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Energizer Holdings (ENR) Up 4.5% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Energizer Holdings, Inc. (ENR - Free Report) . Shares have added about 4.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Energizer reported first-quarter fiscal 2015 non-GAAP earnings of $2.07 per share which missed the Zacks Consensus Estimate of $2.16 and declined 1.4% year over year. The bottom line was affected by negative currency translation, organic revenue declines and increased advertising and sales promotion expenses.
Revenues
Revenues decreased 6.8% from the year-ago quarter to $1.04 billion and missed the Zacks Consensus Estimate of $1.10 billion.
Personal Care (57.4% of revenues) dipped 2.4% year over year to $537.1 million. Organic net sales decreased 2.5% year over year due to lower volumes across Feminine Care, Wet Shave and Infant Care products, offset by improved price/mix in Wet Shave. The company registered increased competition in many of its U.S. personal care product lines.
Household products declined 11.1% from the year-ago quarter to $501.3 million. Organic net sales was down 6.9% due to the delays in holiday shipments, increased promotional spending and retail inventory reductions, primarily in the U.S.
Margins
Gross margin for the first fiscal quarter expanded 120 basis points (bps) to 47.1%. The growth was primarily due to savings from the 2013 restructuring project and lower commodity costs.
The company recorded advertising and sales promotion expense of $85.1 million, up 90 bps year over year. The increased spending was incurred due advertising and promotional programs and the feminine care brands acquisition under the Personal Care segment. Selling, general, and administrative expenses also rose 270 bps year over year. However, the company recorded lowered interest expense of $28.7 million compared with $31.2 million in the year-ago quarter owing to lower average interest rate on outstanding debt.
Personal Care segment profit was $116.2 million, down 10.8% year over year. Excluding the impacts of currency movements and the synergies from the Johnson & Johnson’s feminine care brands acquisition, segment profit declined 6.7% year over year. Household Products segment profit was $121.2 million, down 9.1% year over year but up 2.6% excluding the impact of currency movements.
Balance Sheet
In the fiscal first quarter, working capital as a percentage of revenues was 15.2%, up 20 bps from fiscal 2014. Capital expenditure was $15 million, down $5 million from the prior-year quarter.
Dividend Payments
The company paid total dividend of $31 million in the reported quarter.
2013 Restructuring Project Update
Restructuring savings increased approximately $26 million versus the prior-year quarter. The primary impacts of the savings were reflected in improved gross margin in both segments and lower overhead expenses. Project-to-date savings total was approximately $282 million.
The company expects to achieve $300 million of savings through Jun 30, 2015. Estimated total project savings is expected to be $330 million through fiscal 2016.
Restructuring-related charges for the first quarter were $10.7 million. The company incurred gains of $11.0 million on sale of the Asia battery packaging facility resulting in a net credit of $0.3 million in restructuring related charges.
Total project-to-date costs are approximately $260 million. The company expects to incur over $300 million as restructuring related charges through Jun 30, 2015 and expects project restructuring costs of $330 million through fiscal 2016.
Spin-off Program
On Apr 30, 2014, Energizer announced its intention to spin off the Household Products business and thereby create two independent, publicly traded companies. The spin-off is expected to be completed by Jul 1, 2015.
As a result, the company will incur incremental costs to evaluate, plan and execute the transaction. In first-quarter fiscal 2015, the company reported $40.8 million as pre-tax charges. Total spin-off transaction costs came in at approximately $85.5 million on a project-to-date basis. The company will incur additional costs to execute the transaction
The company estimates total spin-off and spin restructuring related costs through Jun 30, 2015 to be within $350-$425 million.
• $200-$225 million related to the transaction evaluation, planning and execution • $150-$200 million related to spin restructuring initiatives
Guidance
For the first nine months of fiscal 2015 ending Jun 30, 2015, organic net sales are expected to remain flat on a year-over-year basis. Personal Care organic net sales are expected to increase in low single-digits, while Household Products organic net sales are expected to be down in low single-digits.
Gross margin is expected to increase marginally owing to higher restructuring savings. Advertising & sales promotion expense as a percentage of net sales is expected to increase 100 bps year over year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Energizer Holdings' stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Energizer Holdings (ENR) Up 4.5% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Energizer Holdings, Inc. (ENR - Free Report) . Shares have added about 4.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Energizer (ENR - Free Report) Tops Q4 Earnings & Revenue Estimates
Energizer reported first-quarter fiscal 2015 non-GAAP earnings of $2.07 per share which missed the Zacks Consensus Estimate of $2.16 and declined 1.4% year over year. The bottom line was affected by negative currency translation, organic revenue declines and increased advertising and sales promotion expenses.
Revenues
Revenues decreased 6.8% from the year-ago quarter to $1.04 billion and missed the Zacks Consensus Estimate of $1.10 billion.
Personal Care (57.4% of revenues) dipped 2.4% year over year to $537.1 million. Organic net sales decreased 2.5% year over year due to lower volumes across Feminine Care, Wet Shave and Infant Care products, offset by improved price/mix in Wet Shave. The company registered increased competition in many of its U.S. personal care product lines.
Household products declined 11.1% from the year-ago quarter to $501.3 million. Organic net sales was down 6.9% due to the delays in holiday shipments, increased promotional spending and retail inventory reductions, primarily in the U.S.
Margins
Gross margin for the first fiscal quarter expanded 120 basis points (bps) to 47.1%. The growth was primarily due to savings from the 2013 restructuring project and lower commodity costs.
The company recorded advertising and sales promotion expense of $85.1 million, up 90 bps year over year. The increased spending was incurred due advertising and promotional programs and the feminine care brands acquisition under the Personal Care segment. Selling, general, and administrative expenses also rose 270 bps year over year. However, the company recorded lowered interest expense of $28.7 million compared with $31.2 million in the year-ago quarter owing to lower average interest rate on outstanding debt.
Personal Care segment profit was $116.2 million, down 10.8% year over year. Excluding the impacts of currency movements and the synergies from the Johnson & Johnson’s feminine care brands acquisition, segment profit declined 6.7% year over year. Household Products segment profit was $121.2 million, down 9.1% year over year but up 2.6% excluding the impact of currency movements.
Balance Sheet
In the fiscal first quarter, working capital as a percentage of revenues was 15.2%, up 20 bps from fiscal 2014. Capital expenditure was $15 million, down $5 million from the prior-year quarter.
Dividend Payments
The company paid total dividend of $31 million in the reported quarter.
2013 Restructuring Project Update
Restructuring savings increased approximately $26 million versus the prior-year quarter. The primary impacts of the savings were reflected in improved gross margin in both segments and lower overhead expenses. Project-to-date savings total was approximately $282 million.
The company expects to achieve $300 million of savings through Jun 30, 2015. Estimated total project savings is expected to be $330 million through fiscal 2016.
Restructuring-related charges for the first quarter were $10.7 million. The company incurred gains of $11.0 million on sale of the Asia battery packaging facility resulting in a net credit of $0.3 million in restructuring related charges.
Total project-to-date costs are approximately $260 million. The company expects to incur over $300 million as restructuring related charges through Jun 30, 2015 and expects project restructuring costs of $330 million through fiscal 2016.
Spin-off Program
On Apr 30, 2014, Energizer announced its intention to spin off the Household Products business and thereby create two independent, publicly traded companies. The spin-off is expected to be completed by Jul 1, 2015.
As a result, the company will incur incremental costs to evaluate, plan and execute the transaction. In first-quarter fiscal 2015, the company reported $40.8 million as pre-tax charges. Total spin-off transaction costs came in at approximately $85.5 million on a project-to-date basis. The company will incur additional costs to execute the transaction
The company estimates total spin-off and spin restructuring related costs through Jun 30, 2015 to be within $350-$425 million.
• $200-$225 million related to the transaction evaluation, planning and execution
• $150-$200 million related to spin restructuring initiatives
Guidance
For the first nine months of fiscal 2015 ending Jun 30, 2015, organic net sales are expected to remain flat on a year-over-year basis. Personal Care organic net sales are expected to increase in low single-digits, while Household Products organic net sales are expected to be down in low single-digits.
Gross margin is expected to increase marginally owing to higher restructuring savings. Advertising & sales promotion expense as a percentage of net sales is expected to increase 100 bps year over year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Energizer Holdings, Inc. Price and Consensus
Energizer Holdings, Inc. Price and Consensus | Energizer Holdings, Inc. Quote
VGM Scores
At this time, Energizer Holdings' stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.