- Operating cash flow of $161.0
million and Free cash flow of nearly 20% of Net Sales
driven by strong operating results and Project Momentum
initiatives.1
- Debt pay down of over $50
million in the first quarter and over $50 million subsequent to quarter-end.
- Reaffirms fiscal year outlook for Net sales, Adjusted
earnings per share and Adjusted EBITDA.1
ST.
LOUIS, Feb. 6, 2023 /PRNewswire/ --
Energizer Holdings, Inc. (NYSE: ENR) today
announced results for the first fiscal quarter ended
December 31, 2022.
"During the critical holiday season, we continued to deliver
strong operating results while advancing our Project Momentum
initiatives," said Mark LaVigne,
Chief Executive Officer. "Our focused efforts behind restoring
gross margins and reducing working capital drove free cash flow of
nearly 20% of net sales, enabling us to pay down over $100 million in debt in the first four months of
the fiscal year. Our categories remain strong and we believe
our brands continue to be chosen by consumers, which is
particularly important in today's evolving macroeconomic
environment. We continue to execute on our strategic
priorities, and are confident in our ability to deliver on our
current year plans as well as our long-term objectives."
Top-Line Performance
For the quarter, we had Net sales of $765.1 million compared to $846.3 million in the prior year period.
|
First
Quarter
|
|
% Chg
|
Net sales -
FY'22
|
$
846.3
|
|
|
Organic
|
(45.6)
|
|
(5.4) %
|
Change in
Argentina
|
1.3
|
|
0.2 %
|
Change in
Russia
|
(7.5)
|
|
(0.9) %
|
Impact of
currency
|
(29.4)
|
|
(3.5) %
|
Net sales -
FY'23
|
$
765.1
|
|
(9.6) %
|
- Organic Net sales declined 5.4% primarily due to the following
items:
-
- Approximately 13.5% of the organic decline was due to lower
volumes driven by the timing of holiday orders in the battery
business, and category declines from higher retail pricing and
retailer inventory management across both battery and auto care;
and
- As part of our focus on gross margin restoration, the Company
exited some lower margin profile battery customers and products
resulting in approximately 1.5% decline to organic sales.
- Partially offsetting these declines was the continued benefit
of global pricing actions in both the battery and auto care
businesses which contributed approximately 9.5% to organic
sales.
1) See Press Release attachments and supplemental schedules for
additional information, including the GAAP and Non-GAAP
reconciliations.
Gross Margin
Gross margin percentage on a reported basis was 39.0% versus
36.8% in the prior year. Excluding the current year restructuring
costs and prior year costs related to acquisition and integration,
adjusted gross margin was 39.0%, up 150 basis points from the prior
year adjusted gross margin of 37.5%, and up 280 basis points from
the fourth quarter of fiscal 2022.(1)
|
First
Quarter
|
Gross margin - FY'22
Reported
|
36.8 %
|
Prior year impact of
Acquisition and integration costs
|
0.7 %
|
Gross margin - FY'22
Adjusted(1)
|
37.5 %
|
Pricing
|
5.5 %
|
Project Momentum
continuous improvement initiatives
|
0.8 %
|
Mix impact
|
0.3 %
|
Product cost
impacts
|
(4.2) %
|
Currency impact and
other
|
(0.9) %
|
Gross margin - FY'23
Reported and Adjusted(1)
|
39.0 %
|
The Gross margin increase was largely driven by the continued
benefit of the pricing initiatives and Project Momentum savings of
$6.5 million as well as the positive
impact from exiting lower margin businesses. These benefits were
partially offset by higher operating costs, including material and
ocean freight costs, consistent with ongoing inflationary trends,
as well as adverse currency impacts.
Selling, General and Administrative Expense
(SG&A)
SG&A, excluding restructuring costs, for the first quarter
was 14.9% of Net sales, or $114.1
million, compared to 13.2%, or $111.6
million in the prior year excluding acquisition and
integration costs and acquisition earn out. The year-over-year
increase was primarily driven by higher stock compensation
amortization, factoring fees and increased depreciation expense
from our digital transformation initiatives. These increases
were partially offset by Project Momentum savings and favorable
currency impacts.(1)
Advertising and Promotion Expense (A&P)
A&P was 7.0% of net sales for the first fiscal quarter,
compared to 6.1% in the prior year or a $1.7
million increase due to planned brand support during the
holiday season.
Earnings Per Share
and Adjusted EBITDA
|
First
Quarter
|
(In millions, except
per share data)
|
2023
|
|
2022
|
Net earnings
|
$
49.0
|
|
$
60.0
|
Diluted net earnings
per common share
|
$
0.68
|
|
$
0.83
|
|
|
|
|
Adjusted net
earnings(1)
|
$
51.8
|
|
$
73.8
|
Adjusted diluted net
earnings per common share(1)
|
$
0.72
|
|
$
1.03
|
Adjusted
EBITDA(1)
|
$
145.6
|
|
$
161.8
|
|
|
|
|
Currency neutral
Adjusted diluted net earnings per common
share(1)
|
$
0.83
|
|
|
Currency neutral
Adjusted EBITDA(1)
|
$
155.6
|
|
|
The changes in operating results for the quarter reflect the
decline in organic net sales, increased A&P and SG&A
spending and adverse currency movements. These declines were
partially offset by Project Momentum savings.
Reported and Adjusted earnings per share were also impacted by
the increase of interest expense due to higher interest rates
compared to prior year.
Capital Allocation
- Dividend payments in the quarter of approximately $21.8 million, or $0.30 per common share.
- Operating cash flow for the first fiscal quarter was
$161.0 million, and free cash flow
was $152.2 million, or approximately
20% of Net sales.
- Debt pay down in the quarter was $55.7
million and net debt decreased by $74.2 million. Net debt to Adjusted EBITDA was
5.9 times as of December 31,
2022.
- Subsequent to quarter end, the Company paid down an additional
$53 million of term loan debt.
Financial Outlook and Assumptions for Fiscal Year
2023(1)
We are maintaining our previously communicated full year
outlook, with organic revenue expected to increase low single
digits, Adjusted EBITDA in the range of $585
million to $615 million, and
Adjusted earnings per share in the range of $3.00 to $3.30. We
still expect low single digit declines for reported revenues with
currency headwinds of approximately $50
million and anticipate negative currency headwinds on
pre-tax earnings of approximately $20
million and $0.23 per share,
based on current rates.
Project Momentum remains on track with approximately
$7 million of savings delivered in
the current quarter and total project savings of $30 million to $40
million anticipated for the full year. Total one-time
project expenses for the current year are expected to be in the
range of $25 million to $35 million and capital expenditures for the
program this year are expected to be $15
million to $20 million, which
is largely incorporated into our annual capital budget expectations
of 2% of net sales. We remain on track to deliver our previously
reported total savings and one-time costs over the life of the
program.
Webcast Information
In conjunction with this announcement, the Company will hold an
investor conference call beginning at 10:00
a.m. Eastern Time today. The call will focus on first fiscal
quarter earnings and recent trends in the business. All interested
parties may access a live webcast of this conference call at
www.energizerholdings.com, under "Investors" and "Events and
Presentations" tabs or by using the following link:
https://app.webinar.net/v7JdNxj2eA9
For those unable to participate during the live webcast, a
replay will be available on www.energizerholdings.com, under
"Investors," "Events and Presentations," and "Past Events"
tabs.
This document contains both historical and forward-looking
statements. Forward-looking statements are not based on historical
facts but instead reflect our expectations, estimates or
projections concerning future results or events, including, without
limitation, the future sales, gross margins, costs, earnings, cash
flows, tax rates and performance of the Company. These statements
generally can be identified by the use of forward-looking words or
phrases such as "believe," "expect," "expectation," "anticipate,"
"may," "could," "will," "intend," "belief," "estimate," "plan,"
"target," "predict," "likely," "should," "forecast," "outlook," or
other similar words or phrases. These statements are not guarantees
of performance and are inherently subject to known and unknown
risks, uncertainties and assumptions that are difficult to predict
and could cause our actual results to differ materially from those
indicated by those statements. We cannot assure you that any of our
expectations, estimates or projections will be achieved. The
forward-looking statements included in this document are only made
as of the date of this document and we disclaim any obligation to
publicly update any forward-looking statement to reflect subsequent
events or circumstances. All forward-looking statements should be
evaluated with the understanding of their inherent uncertainty.
Numerous factors could cause our actual results and events to
differ materially from those expressed or implied by
forward-looking statements, including, without limitation:
- Global economic and financial market conditions, including the
conditions resulting from the COVID-19 pandemic, and actions taken
by our customers, suppliers, other business partners and
governments in markets in which we compete might materially and
negatively impact us.
- Competition in our product categories might hinder our ability
to execute our business strategy, achieve profitability, or
maintain relationships with existing customers.
- Changes in the retail environment and consumer preferences
could adversely affect our business, financial condition and
results of operations.
- We must successfully manage the demand, supply, and operational
challenges brought about by the COVID-19 pandemic and any other
disease outbreak, including epidemics, pandemics, or similar
widespread public health concerns.
- Loss or impairment of the reputation of our Company or our
leading brands or failure of our marketing plans could have an
adverse effect on our business.
- Loss of any of our principal customers could significantly
decrease our sales and profitability.
- Our ability to meet our growth targets depends on successful
product, marketing and operations innovation and successful
responses to competitive innovation and changing consumer
habits.
- We are subject to risks related to our international
operations, including currency fluctuations, which could adversely
affect our results of operations.
- If we fail to protect our intellectual property rights,
competitors may manufacture and market similar products, which
could adversely affect our market share and results of
operations.
- Changes in production costs, including raw material prices and
transportation costs, from inflation or otherwise, have adversely
affected, and in the future could erode, our profit margins and
negatively impact operating results.
- Our reliance on certain significant suppliers subjects us to
numerous risks, including possible interruptions in supply, which
could adversely affect our business.
- Our business is vulnerable to the availability of raw
materials, our ability to forecast customer demand and our ability
to manage production capacity.
- The manufacturing facilities, supply channels or other business
operations of the Company and our suppliers may be subject to
disruption from events beyond our control.
- The Company's future results may be affected by its operational
execution, including scenarios where the Company generates fewer
productivity improvements than estimated.
- If our goodwill and indefinite-lived intangible assets become
impaired, we will be required to record impairment charges, which
may be significant.
- A failure of a key information technology system could
adversely impact our ability to conduct business.
- We rely significantly on information technology and any
inadequacy, interruption, theft or loss of data, malicious attack,
integration failure, failure to maintain the security,
confidentiality or privacy of sensitive data residing on our
systems or other security failure of that technology could harm our
ability to effectively operate our business and damage the
reputation of our brands.
- We have significant debt obligations that could adversely
affect our business and our ability to meet our obligations.
- If we pursue strategic acquisitions, divestitures or joint
ventures, we might experience operating difficulties, dilution, and
other consequences that may harm our business, financial condition,
and operating results, and we may not be able to successfully
consummate favorable transactions or successfully integrate
acquired businesses.
- Our business involves the potential for product liability
claims, labeling claims, commercial claims and other legal claims
against us, which could affect our results of operations and
financial condition and result in product recalls or
withdrawals.
- Our business is subject to increasing government regulations in
both the U.S. and abroad that could impose material costs.
- Increased focus by governmental and non-governmental
organizations, customers, consumers and shareholders on
environmental, social and governance (ESG) issues, including those
related to sustainability and climate change, may have an adverse
effect on our business, financial condition and results of
operations and damage our reputation.
- We are subject to environmental laws and regulations that may
expose us to significant liabilities and have a material adverse
effect on our results of operations and financial condition.
In addition, other risks and uncertainties not presently known
to us or that we consider immaterial could affect the accuracy of
any such forward-looking statements. The list of factors above is
illustrative, but by no means exhaustive. All forward-looking
statements should be evaluated with the understanding of their
inherent uncertainty. Additional risks and uncertainties include
those detailed from time to time in our publicly filed documents,
including those described under the heading "Risk Factors" in our
Form 10-K filed with the Securities and Exchange Commission on
November 15, 2022.
ENERGIZER HOLDINGS,
INC. CONSOLIDATED STATEMENT OF
EARNINGS (Condensed) (In millions, except per
share data - Unaudited)
|
|
|
For the Quarter
Ended
December 31,
|
|
2022
|
|
2021
|
Net sales
|
$
765.1
|
|
$
846.3
|
Cost of products sold
(1)
|
466.8
|
|
534.7
|
Gross profit
|
298.3
|
|
311.6
|
Selling, general and
administrative expense (1)
|
120.4
|
|
122.1
|
Advertising and sales
promotion expense
|
53.4
|
|
51.7
|
Research and
development expense (1)
|
7.6
|
|
8.9
|
Amortization of
intangible assets
|
16.0
|
|
15.2
|
Interest
expense
|
42.9
|
|
37.0
|
Gain on extinguishment
of debt (2)
|
(2.9)
|
|
—
|
Other items,
net
|
(1.4)
|
|
0.2
|
Earnings before income
taxes
|
62.3
|
|
76.5
|
Income tax
provision
|
13.3
|
|
16.5
|
Net earnings
|
49.0
|
|
60.0
|
Mandatory preferred
stock dividends (3)
|
—
|
|
(4.0)
|
Net earnings
attributable to common shareholders
|
$
49.0
|
|
$
56.0
|
|
|
|
|
Basic net earnings per
common share
|
$
0.69
|
|
$
0.84
|
Diluted net earnings
per common share (3)
|
$
0.68
|
|
$
0.83
|
|
|
|
|
Weighted average shares
of common stock - Basic
|
71.4
|
|
66.8
|
Weighted average shares
of common stock - Diluted (3)
|
72.2
|
|
67.1
|
|
|
(1)
|
See the attached
Supplemental Schedules - Non-GAAP Reconciliations, which break out
the Project Momentum restructuring costs and Acquisition and
integration related costs included within these lines.
|
(2)
|
The Gain on the
extinguishment of debt for the quarter ended December 31, 2022
relates to the repurchase of outstanding Senior Notes at a discount
and repayment of term loan.
|
(3)
|
For the quarter ended
December 31, 2021, the assumed conversion of the mandatory
convertible preferred stock (MCPS) is not dilutive and the
mandatory preferred stock dividends are included in the dilution
calculation. The Company no longer has any MCPS outstanding in
fiscal 2023.
|
ENERGIZER HOLDINGS,
INC.
CONSOLIDATED BALANCE SHEETS
(Condensed)
(In millions - Unaudited)
|
|
Assets
|
December 31,
2022
|
|
September
30,
2022
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
280.3
|
|
$
205.3
|
Trade
receivables
|
364.3
|
|
421.7
|
Inventories
|
754.7
|
|
771.6
|
Other current
assets
|
202.6
|
|
191.4
|
Total current
assets
|
$
1,601.9
|
|
$
1,590.0
|
Property, plant and
equipment, net
|
354.1
|
|
362.1
|
Operating lease
assets
|
102.6
|
|
100.1
|
Goodwill
|
1,016.1
|
|
1,003.1
|
Other intangible
assets, net
|
1,281.8
|
|
1,295.8
|
Deferred tax
asset
|
62.4
|
|
61.8
|
Other assets
|
159.0
|
|
159.2
|
Total
assets
|
$
4,577.9
|
|
$
4,572.1
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Current maturities of
long-term debt
|
$
12.0
|
|
$
12.0
|
Current portion of
capital leases
|
0.4
|
|
0.4
|
Notes
payable
|
—
|
|
6.4
|
Accounts
payable
|
352.7
|
|
329.4
|
Current operating
lease liabilities
|
16.1
|
|
15.8
|
Other current
liabilities
|
315.8
|
|
333.9
|
Total current
liabilities
|
$
697.0
|
|
$
697.9
|
Long-term
debt
|
3,506.6
|
|
3,499.4
|
Operating lease
liabilities
|
90.4
|
|
88.2
|
Deferred tax
liability
|
16.3
|
|
17.9
|
Other
liabilities
|
136.8
|
|
138.1
|
Total
liabilities
|
$
4,447.1
|
|
$
4,441.5
|
Shareholders'
equity
|
|
|
|
Common
stock
|
0.8
|
|
0.8
|
Additional paid-in
capital
|
802.9
|
|
828.7
|
Retained
losses
|
(256.0)
|
|
(304.7)
|
Treasury
stock
|
(242.0)
|
|
(248.9)
|
Accumulated other
comprehensive loss
|
(174.9)
|
|
(145.3)
|
Total shareholders'
equity
|
$
130.8
|
|
$
130.6
|
Total liabilities and
shareholders' equity
|
$
4,577.9
|
|
$
4,572.1
|
ENERGIZER HOLDINGS,
INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (Condensed) (In millions -
Unaudited)
|
|
|
For the Three Months
Ended
December 31,
|
|
2022
|
|
2021
|
Cash Flow from
Operating Activities
|
|
|
|
Net
earnings
|
$
49.0
|
|
$
60.0
|
Non-cash integration
and restructuring charges
|
—
|
|
3.0
|
Depreciation and
amortization
|
32.1
|
|
29.4
|
Deferred income
taxes
|
0.9
|
|
—
|
Share-based
compensation expense
|
4.6
|
|
1.3
|
Gain on extinguishment
of debt
|
(2.9)
|
|
—
|
Non-cash items
included in income, net
|
3.4
|
|
5.5
|
Other, net
|
0.8
|
|
(0.3)
|
Changes in current
assets and liabilities used in operations
|
73.1
|
|
(153.5)
|
Net cash from/(used by)
operating activities
|
161.0
|
|
(54.6)
|
|
|
|
|
Cash Flow from
Investing Activities
|
|
|
|
Capital
expenditures
|
(9.5)
|
|
(24.4)
|
Proceeds from sale of
assets
|
0.7
|
|
—
|
Acquisitions, net of
cash acquired and working capital settlements
|
—
|
|
0.4
|
Net cash used by
investing activities
|
(8.8)
|
|
(24.0)
|
|
|
|
|
Cash Flow from
Financing Activities
|
|
|
|
Payments on debt with
maturities greater than 90 days
|
(49.8)
|
|
(3.6)
|
Net
(decrease)/increase in debt with original maturities of 90 days or
less
|
(5.9)
|
|
94.2
|
Debt issuance
costs
|
—
|
|
(2.5)
|
Dividends paid on
common stock
|
(21.8)
|
|
(20.5)
|
Dividends paid on
mandatory convertible preferred stock
|
—
|
|
(4.0)
|
Taxes paid for
withheld share-based payments
|
(1.9)
|
|
(2.2)
|
Net cash (used by)/from
financing activities
|
(79.4)
|
|
61.4
|
|
|
|
|
Effect of exchange rate
changes on cash
|
2.2
|
|
(0.5)
|
|
|
|
|
Net increase/(decrease)
in cash, cash equivalents, and restricted cash
|
75.0
|
|
(17.7)
|
Cash, cash equivalents,
and restricted cash, beginning of period
|
205.3
|
|
238.9
|
Cash, cash equivalents,
and restricted cash, end of period
|
$
280.3
|
|
$
221.2
|
ENERGIZER HOLDINGS,
INC.
Reconciliation of GAAP and Non-GAAP
Measures
For the Quarter Ended December 31, 2022
The Company reports its financial results in accordance with
accounting principles generally accepted in the U.S.
("GAAP"). However, management believes that certain non-GAAP
financial measures provide users with additional meaningful
comparisons to the corresponding historical or future period. These
non-GAAP financial measures exclude items that are not reflective
of the Company's on-going operating performance, such as
restructuring charges, acquisition and integration costs, an
acquisition earn out and the gain on extinguishment of debt.
In addition, these measures help investors to analyze year over
year comparability when excluding currency fluctuations as well as
other Company initiatives that are not on-going. We believe
these non-GAAP financial measures are an enhancement to assist
investors in understanding our business and in performing analysis
consistent with financial models developed by research analysts.
Investors should consider non-GAAP measures in addition to, not as
a substitute for, or superior to, the comparable GAAP measures. In
addition, these non-GAAP measures may not be the same as similar
measures used by other companies due to possible differences in
methods and in the items being adjusted.
We provide the following non-GAAP measures and calculations, as
well as the corresponding reconciliation to the closest GAAP
measure in the following supplemental schedules:
Segment Profit. This amount represents the
operations of our two reportable segments including allocations for
shared support functions. General corporate and other expenses,
amortization expense, interest expense, gain on extinguishment of
debt, other items, net, the charges related to acquisition and
integration costs, restructuring costs, and an acquisition earn out
have all been excluded from segment profit.
Adjusted Net Earnings and Adjusted Diluted Net Earnings Per
Common Share (EPS). These measures exclude the impact of
the costs related to acquisition and integration, restructuring
costs, an acquisition earn out and the gain on extinguishment of
debt.
Non-GAAP Tax Rate. This is the tax rate when excluding
the pre-tax impact of acquisition and integration costs,
restructuring costs, an acquisition earn out and the gain on
extinguishment of debt, as well as the related tax impact for these
items, calculated utilizing the statutory rate for where the impact
was incurred.
Organic. This is the non-GAAP financial measurement
of the change in revenue or segment profit that excludes or
otherwise adjusts for the change in Russia and Argentina operations and impact of currency
from the changes in foreign currency exchange rates as defined
below:
Change in Russia Operations. The Company exited the
Russian market in the second quarter of fiscal 2022 due to the
increased global and economic and political uncertainty resulting
from the ongoing conflict between Russia and Ukraine. This adjusts for the change in
Russian sales and segment profit from the prior year post exit.
Change in Argentina Operations. The Company is
presenting separately all changes in sales and segment profit from
our Argentina affiliate due to the
designation of the economy as highly inflationary as of
July 1, 2018.
Impact of currency. The Company evaluates
the operating performance of our Company on a currency neutral
basis. The Impact of Currency is the change in foreign currency
exchange rates year-over-year on reported results, which is
calculated by comparing the value of current year foreign
operations at the current period USD exchange rate versus the value
of current year foreign operations at the prior period USD exchange
rate. The impact of currency also includes gains/(losses) of
currency hedging programs, and it excludes hyper-inflationary
markets.
Adjusted Comparisons. Detail for adjusted gross
profit, adjusted gross margin, adjusted SG&A and adjusted
SG&A as percent of sales are also supplemental non-GAAP measure
disclosures. These measures exclude the impact of costs related to
acquisition and integration and an acquisition earn out.
EBITDA and Adjusted EBITDA. EBITDA is defined as net
earnings before income tax provision, interest, the gain on
extinguishment of debt, depreciation and amortization.
Adjusted EBITDA further excludes the impact of the costs
related to acquisition and integration, restructuring costs,
acquisition earn out, and share-based payments.
Free Cash Flow. Free Cash Flow is defined as net
cash provided by operating activities reduced by capital
expenditures, net of the proceeds from asset sales.
Net Debt. Net Debt is defined as total Company debt,
less cash and cash equivalents.
Currency-neutral. Currency-neutral excludes the Impact of
currency as defined above on key measures. Hyper inflationary
markets are excluded from this calculation.
Energizer Holdings,
Inc. Supplemental Schedules - Currency Neutral
Results For the Quarter Ended December 31,
2022 (In millions, except per share data -
Unaudited)
|
|
|
For the Quarter
Ended
|
|
Prior
Quarter
ended
|
|
|
|
|
December 31,
2022
|
|
|
%
Change
|
%
Change
|
|
As
Reported
|
Impact of
Currency(1)
|
Currency
Neutral
|
|
December 31,
2021
|
|
As Reported
Basis
|
Currency
Neutral
Basis
|
As Reported under
GAAP
|
|
|
|
|
|
|
|
Diluted net earnings
per common share
|
$
0.68
|
$
(0.11)
|
$
0.79
|
|
$
0.83
|
|
(18.1) %
|
(4.8) %
|
Net Earnings
|
$
49.0
|
$
(7.9)
|
$
56.9
|
|
$
60.0
|
|
(18.3) %
|
(5.2) %
|
|
|
|
|
|
|
|
|
|
As Adjusted
(non-GAAP)(2)
|
|
|
|
|
|
|
|
Adjusted diluted net
earnings per common share
|
$
0.72
|
$
(0.11)
|
$
0.83
|
|
$
1.03
|
|
(30.1) %
|
(19.4) %
|
Adjusted
EBITDA
|
$
145.6
|
$
(10.0)
|
$
155.6
|
|
$
161.8
|
|
(10.0) %
|
(3.8) %
|
|
|
(1)
|
The Impact of Currency
is the change in foreign currency exchange rates year-over-year on
reported results, which is calculated by comparing the value of
current year foreign operations at the current period USD exchange
rate versus the value of current year foreign operations at the
prior period USD exchange rate. The impact of currency also
includes gains/(losses) of currency hedging programs, and it
excludes hyper-inflationary markets.
|
(2)
|
See supplemental
schedules - Non-GAAP Reconciliations for full reconciliations of
the Company's non-GAAP adjusted amounts.
|
Energizer Holdings,
Inc.
Supplemental Schedules - Segment
Information
For the Quarter Ended December 31, 2022
(In millions -
Unaudited)
Operations for Energizer are managed via two product segments:
Batteries & Lights and Auto Care. Energizer's operating model
includes a combination of standalone and shared business functions
between the product segments, varying by country and region of the
world. Shared functions include the sales and marketing functions,
as well as human resources, IT and finance shared service costs.
Energizer applies a fully allocated cost basis, in which shared
business functions are allocated between segments. Such allocations
are estimates, and may not represent the costs of such services if
performed on a standalone basis. Segment sales and profitability,
as well as the reconciliation to earnings before income taxes for
the quarters ended December 31, 2022 and 2021, respectively,
are presented below:
|
Quarters Ended
December 31,
|
|
2022
|
|
2021
|
Net
Sales
|
|
|
|
Batteries &
Lights
|
$
671.6
|
|
$
740.2
|
Auto Care
|
93.5
|
|
106.1
|
Total net
sales
|
$
765.1
|
|
$
846.3
|
Segment
Profit
|
|
|
|
Batteries &
Lights
|
138.3
|
|
168.4
|
Auto Care
|
10.6
|
|
(0.2)
|
Total segment
profit
|
$
148.9
|
|
$
168.2
|
General corporate and other expenses (1)
|
(25.4)
|
|
(21.7)
|
Amortization of intangible assets
|
(16.0)
|
|
(15.2)
|
Project Momentum restructuring costs (2)
|
(6.6)
|
|
—
|
Acquisition and integration costs (2)
|
—
|
|
(16.5)
|
Acquisition earn out (3)
|
—
|
|
(1.1)
|
Interest expense
|
(42.9)
|
|
(37.0)
|
Gain
on extinguishment of debt (4)
|
2.9
|
|
—
|
Other items, net
|
1.4
|
|
(0.2)
|
Total earnings
before income taxes
|
$
62.3
|
|
$
76.5
|
|
|
(1)
|
Recorded in SG&A on
the Consolidated (Condensed) Statement of Earnings.
|
(2)
|
See the Supplemental
Schedules - Non-GAAP Reconciliations for the line items where these
charges are recorded in the Consolidated (Condensed) Statement of
Earnings.
|
(3)
|
This represents the
earn out achieved through December 31, 2021 under the incentive
agreements entered into with the fiscal 2021 acquisition of a
formulations company, and is recorded in SG&A on the
Consolidated (Condensed) Statement of Earnings.
|
(4)
|
The Gain on the
extinguishment of debt for the quarter ended December 31, 2022
relates to the repurchase of outstanding Senior Notes at a discount
and repayment of term loan.
|
Supplemental segment information is presented below for
depreciation and amortization:
|
Quarters Ended
December 31,
|
Depreciation and
amortization
|
2022
|
|
2021
|
Batteries &
Lights
|
$
13.4
|
|
$
12.2
|
Auto Care
|
2.7
|
|
2.0
|
Total segment
depreciation and amortization
|
$
16.1
|
|
$
14.2
|
Amortization of
intangible assets
|
16.0
|
|
15.2
|
Total depreciation
and amortization
|
$
32.1
|
|
$
29.4
|
Energizer Holdings,
Inc. Supplemental Schedules - GAAP EPS to Adjusted EPS
Reconciliation For the Quarter Ended December 31,
2022 (In millions, except per share data -
Unaudited)
|
|
|
For the Quarters
Ended December 31,
|
|
2022
|
|
2021
|
Net earnings
attributable to common shareholders
|
$
49.0
|
|
$
56.0
|
Mandatory preferred
stock dividends
|
—
|
|
(4.0)
|
Net earnings
|
49.0
|
|
60.0
|
Pre-tax
adjustments
|
|
|
|
Project Momentum
restructuring costs (1)
|
6.6
|
|
—
|
Acquisition and
integration (1)
|
—
|
|
16.5
|
Acquisition earn
out
|
—
|
|
1.1
|
Gain on extinguishment
of debt
|
(2.9)
|
|
—
|
Total adjustments,
pre-tax
|
$
3.7
|
|
$
17.6
|
Total adjustments,
after tax
|
$
2.8
|
|
$
13.8
|
Adjusted net earnings
(2)
|
$
51.8
|
|
$
73.8
|
Mandatory preferred
stock dividends
|
—
|
|
(4.0)
|
Adjusted net earnings
attributable to common shareholders
|
$
51.8
|
|
$
69.8
|
|
|
|
|
Diluted net earnings
per common share
|
$
0.68
|
|
$
0.83
|
Adjustments
|
|
|
|
Project Momentum
restructuring costs (1)
|
0.07
|
|
—
|
Acquisition and
integration
|
—
|
|
0.18
|
Acquisition earn
out
|
—
|
|
0.01
|
Gain on extinguishment
of debt
|
(0.03)
|
|
—
|
Impact for diluted
share calculation (3)
|
—
|
|
0.01
|
Adjusted diluted net
earnings per diluted common share (3)
|
$
0.72
|
|
$
1.03
|
Weighted average shares
of common stock - Diluted
|
72.2
|
|
67.1
|
Adjusted Weighted
average shares of common stock - Diluted (3)
|
72.2
|
|
71.8
|
|
|
(1)
|
See Supplemental
Schedules - Non-GAAP Reconciliations for the line items where these
costs are recorded on the unaudited Consolidated (Condensed)
Statement of Earnings.
|
(2)
|
The effective tax rate
for the Adjusted - Non-GAAP Earnings and Diluted EPS for the
quarters ended December 31, 2022 and 2021 was 21.5% and 21.6%,
respectively, as calculated utilizing the statutory rate for where
the costs were incurred.
|
(3)
|
For the quarter ended
December 31, 2021, the Adjusted diluted net earnings per common
share and Weighted average shares of common stock - Diluted is
assuming the conversion of the preferred shares, as those results
are more dilutive. The shares have been adjusted for the 4.7
million share conversion and the preferred dividend has been
excluded from the Adjusted net earnings.
|
Energizer Holdings,
Inc.
Supplemental Schedules - Segment Sales
For the Quarter Ended December 31, 2022
(In millions - Unaudited)
|
|
Net
sales
|
Q1'23
|
|
% Chg
|
Batteries &
Lights
|
|
|
|
Net sales - prior
year
|
$
740.2
|
|
|
Organic
|
(34.8)
|
|
(4.7) %
|
Change in
Argentina
|
1.3
|
|
0.2 %
|
Change in
Russia
|
(7.3)
|
|
(1.0) %
|
Impact of
currency
|
(27.8)
|
|
(3.8) %
|
Net sales - current
year
|
$
671.6
|
|
(9.3) %
|
|
|
|
|
Auto
Care
|
|
|
|
Net sales - prior
year
|
$
106.1
|
|
|
Organic
|
(10.8)
|
|
(10.2) %
|
Change in
Russia
|
(0.2)
|
|
(0.2) %
|
Impact of
currency
|
(1.6)
|
|
(1.5) %
|
Net sales - current
year
|
$
93.5
|
|
(11.9) %
|
|
|
|
|
Total Net
Sales
|
|
|
|
Net sales - prior
year
|
$
846.3
|
|
|
Organic
|
(45.6)
|
|
(5.4) %
|
Change in
Argentina
|
1.3
|
|
0.2 %
|
Change in
Russia
|
(7.5)
|
|
(0.9) %
|
Impact of
currency
|
(29.4)
|
|
(3.5) %
|
Net sales - current
year
|
$
765.1
|
|
(9.6) %
|
Energizer Holdings,
Inc.
Supplemental Schedules - Segment Profit
For the Quarter Ended December 31, 2022
(In millions - Unaudited)
|
|
Segment
profit
|
Q1'23
|
|
% Chg
|
Batteries &
Lights
|
|
|
|
Segment profit - prior
year
|
$
168.4
|
|
|
Organic
|
(15.6)
|
|
(9.3) %
|
Change in
Russia
|
(0.6)
|
|
(0.4) %
|
Impact of
currency
|
(13.9)
|
|
(8.2) %
|
Segment profit -
current year
|
$
138.3
|
|
(17.9) %
|
|
|
|
|
Auto
Care
|
|
|
|
Segment profit/(loss) -
prior year
|
$
(0.2)
|
|
|
Organic
|
12.3
|
|
NM *
|
Change in
Argentina
|
(0.1)
|
|
NM *
|
Impact of
currency
|
(1.4)
|
|
NM *
|
Segment profit -
current year
|
$
10.6
|
|
NM *
|
|
|
|
|
Total Segment
Profit
|
|
|
|
Segment profit - prior
year
|
$
168.2
|
|
|
Organic
|
(3.3)
|
|
(2.0) %
|
Change in
Argentina
|
(0.1)
|
|
(0.1) %
|
Change in
Russia
|
(0.6)
|
|
(0.4) %
|
Impact of
currency
|
(15.3)
|
|
(9.0) %
|
Segment profit -
current year
|
$
148.9
|
|
(11.5) %
|
|
NM - These percentage
calculations are not meaningful.
|
Energizer Holdings,
Inc.
Supplemental Schedules - Non-GAAP Reconciliations
For the Quarter Ended December 31, 2022
(In millions - Unaudited)
|
|
Gross
profit
|
Q1'23
|
|
Q1'22
|
Net sales
|
$
765.1
|
|
$
846.3
|
Reported Cost of
products sold
|
466.8
|
|
534.7
|
Gross
profit
|
$
298.3
|
|
$
311.6
|
Gross
margin
|
39.0 %
|
|
36.8 %
|
Project Momentum
restructuring costs
|
0.3
|
|
—
|
Acquisition and
integration costs
|
—
|
|
6.0
|
Cost of products sold -
adjusted
|
466.5
|
|
528.7
|
Adjusted Gross
profit
|
$
298.6
|
|
$
317.6
|
Adjusted Gross
margin
|
39.0 %
|
|
37.5 %
|
|
|
|
|
SG&A
|
Q1'23
|
|
Q1'22
|
Reported
SG&A
|
$
120.4
|
|
$
122.1
|
Reported SG&A %
of Net sales
|
15.7 %
|
|
14.4 %
|
Segment
SG&A
|
$
88.7
|
|
$
89.9
|
Corporate
SG&A
|
25.4
|
|
21.7
|
Adjustments
|
|
|
|
Project Momentum
restructuring costs
|
6.3
|
|
—
|
Acquisition and
integration costs
|
—
|
|
9.4
|
Acquisition earn
out
|
—
|
|
1.1
|
SG&A Adjusted -
subtotal
|
$
114.1
|
|
$
111.6
|
SG&A Adjusted %
of Net sales
|
14.9 %
|
|
13.2 %
|
|
|
|
|
Other items,
net
|
Q1'23
|
|
Q1'22
|
Interest
income
|
$
(0.2)
|
|
$
(0.2)
|
Foreign currency
exchange (gain)/loss
|
(1.0)
|
|
1.3
|
Pension cost/(benefit)
other than service costs
|
0.7
|
|
(1.1)
|
Other
|
(0.9)
|
|
0.2
|
Total Other items,
net
|
(1.4)
|
|
$
0.2
|
|
|
|
|
Acquisition and
integration
|
Q1'23
|
|
Q1'22
|
Cost of products
sold
|
$
—
|
|
$
6.0
|
SG&A
|
—
|
|
9.4
|
Research and
development
|
—
|
|
1.1
|
Acquisition and
integration related items
|
$
—
|
|
$
16.5
|
Energizer Holdings,
Inc. Supplemental Schedules - Non-GAAP Reconciliations
cont. For the Quarter Ended December 31,
2022 (In millions - Unaudited)
|
|
|
Q1'23
|
|
Q4'22
|
|
Q3'22
|
|
Q2'22
|
|
LTM
12/31/22 (1)
|
|
Q1'22
|
Net
earnings/(loss)
|
$ 49.0
|
|
$ (362.9)
|
|
$ 52.4
|
|
$ 19.0
|
|
$
(242.5)
|
|
$ 60.0
|
Income tax
provision/(benefit)
|
13.3
|
|
(112.2)
|
|
12.7
|
|
9.0
|
|
(77.2)
|
|
16.5
|
Earnings/(loss)
before income taxes
|
62.3
|
|
(475.1)
|
|
65.1
|
|
28.0
|
|
(319.7)
|
|
76.5
|
Interest
expense
|
42.9
|
|
42.0
|
|
41.1
|
|
38.3
|
|
164.3
|
|
37.0
|
Gain on extinguishment
of debt
|
(2.9)
|
|
—
|
|
—
|
|
—
|
|
(2.9)
|
|
—
|
Depreciation &
Amortization
|
32.1
|
|
32.6
|
|
30.4
|
|
29.2
|
|
124.3
|
|
29.4
|
EBITDA
|
$
134.4
|
|
$
(400.5)
|
|
$
136.6
|
|
$ 95.5
|
|
$
(34.0)
|
|
$
142.9
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Project Momentum
restructuring costs
|
6.6
|
|
0.9
|
|
—
|
|
—
|
|
7.5
|
|
—
|
Acquisition and
integration costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16.5
|
Exit of Russian
market
|
—
|
|
0.6
|
|
—
|
|
14.0
|
|
14.6
|
|
—
|
Gain on finance lease
termination
|
—
|
|
—
|
|
(4.5)
|
|
—
|
|
(4.5)
|
|
—
|
Brazil flood damage,
net of insurance proceeds
|
—
|
|
(0.2)
|
|
9.9
|
|
—
|
|
9.7
|
|
—
|
Acquisition earn
out
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1.1
|
Impairment of goodwill
& intangible assets
|
—
|
|
541.9
|
|
—
|
|
—
|
|
541.9
|
|
—
|
Share-based
payments
|
4.6
|
|
3.3
|
|
3.5
|
|
5.1
|
|
16.5
|
|
1.3
|
Adjusted
EBITDA
|
$
145.6
|
|
$
146.0
|
|
$
145.5
|
|
$
114.6
|
|
$
551.7
|
|
$
161.8
|
|
|
(1)
|
LTM defined as the
latest 12 months for the period ending December 31,
2022.
|
Free Cash
Flow
|
12/31/2022
|
|
|
Net cash from operating
activities
|
$
161.0
|
Capital
expenditures
|
(9.5)
|
Proceeds from sale of
assets
|
0.7
|
Free Cash Flow for
the three months ended December 31, 2022
|
$
152.2
|
Net
Debt
|
12/31/2022
|
|
9/30/2022
|
|
|
|
|
Current maturities of
long-term debt
|
$
12.0
|
|
$
12.0
|
Current portion of
finance leases
|
0.4
|
|
0.4
|
Notes
payable
|
—
|
|
6.4
|
Long-term
debt
|
3,506.6
|
|
3,499.4
|
Total debt per the
balance sheet
|
$
3,519.0
|
|
$
3,518.2
|
Cash and cash
equivalents
|
280.3
|
|
205.3
|
Net
Debt
|
$
3,238.7
|
|
$
3,312.9
|
|
|
|
|
|
|
|
|
Energizer Holdings,
Inc.
Supplemental Schedules - Non-GAAP Reconciliations cont.
FY 2023 Outlook
(In millions - Unaudited)
|
|
Fiscal Year 2023
Outlook Reconciliation - Adjusted earnings and diluted net earnings
per common share -(EPS)
|
(in millions, except
per share data)
|
Adjusted Net
earnings
|
|
Adjusted
EPS
|
Fiscal Year 2023 - GAAP
Outlook
|
$192
|
to
|
$222
|
|
$2.66
|
to
|
$3.07
|
Impacts:
|
|
|
|
|
|
|
|
Project Momentum
restructuring costs
|
27
|
to
|
19
|
|
0.37
|
to
|
0.26
|
Gain on extinguishment
of debt
|
(2)
|
|
(2)
|
|
(0.03)
|
to
|
(0.03)
|
Fiscal Year 2023 -
Adjusted Outlook
|
$217
|
to
|
$239
|
|
$3.00
|
to
|
$3.30
|
Fiscal Year 2023
Outlook Reconciliation - Adjusted EBITDA
|
(in millions, except
per share data)
|
|
|
|
Net earnings
|
$192
|
to
|
$222
|
Income tax
provision
|
32
|
to
|
61
|
Earnings before income
taxes
|
$224
|
to
|
$283
|
Interest
expense
|
172
|
to
|
168
|
Gain on extinguishment
of debt
|
(3)
|
to
|
(3)
|
Amortization
|
62
|
to
|
58
|
Depreciation
|
70
|
to
|
64
|
EBITDA
|
$525
|
to
|
$570
|
|
|
|
|
Adjustments:
|
|
|
|
Project Momentum
restructuring costs
|
35
|
to
|
25
|
Share-based
payments
|
25
|
to
|
20
|
Adjusted
EBITDA
|
$585
|
to
|
$615
|
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multimedia:https://www.prnewswire.com/news-releases/energizer-holdings-inc-announces-fiscal-2023-first-quarter-results-301738694.html
SOURCE Energizer Holdings, Inc.