Energizer Holdings, Inc. (NYSE: ENR) today announced results for the second fiscal quarter, which ended March 31, 2020. Net earnings from continuing operations were $13.7 million, or $0.14 per diluted common share, compared to a net loss from continuing operations of $62.3 million, or a $0.97 loss per diluted common share, in the prior year second quarter. Adjusted Net earnings from continuing operations in the second quarter were $29.9 million, or $0.37 per diluted common share, compared to Adjusted Net earnings from continuing operations of $16.8 million, or $0.20 per diluted common share in the second quarter of 2019.
“Energizer’s strong second-quarter performance was the result of the remarkable effort by our colleagues to serve the needs of our customers and consumers impacted by COVID-19,” said Alan Hoskins, Chief Executive Officer. “Energizer’s top priority is to ensure the safety and well-being of our colleagues concurrent with maintaining business continuity with our customers as the effects of the pandemic continue in the months ahead. We are well-positioned to provide our critical branded products to consumers during this crisis while also continuing the efforts underway to achieve our long-term strategic objective of becoming the leading global household products company in batteries, lights, and auto care.”
Second Quarter 2020 Financial Highlights (Unaudited)
The following is a summary of key results for the second quarter of Fiscal 2020. All comparisons are with the second quarter of Fiscal 2019 and represent continuing operations unless otherwise stated.
- Net sales were $587.0 million, an increase of 5.5%: (a)
- Organic Net sales increased $15.0 million, or 2.7%, primarily due to increased distribution in both segments and the net impact of COVID-19.
- The impact of one additional month of the Auto Care acquisition, which occurred on January 28, 2019, increased Net sales by $23.7 million, or 4.3%; and
- Unfavorable movement in foreign currencies, excluding Argentina, resulted in decreased sales of $7.4 million, or 1.4%.
- Gross margin percentage on a reported basis was 40.1%, versus 34.9% in the prior year. Excluding the current and prior year acquisition, integration and inventory step up costs, adjusted gross margin was 41.6%, up 100 basis points from the prior year, driven by realized synergies and improved material pricing partially offset by unfavorable channel and product mix, operational costs related to COVID-19 and foreign currency movements. (a)
- A&P was 3.9% of net sales, or $22.8 million, compared to 4.4% in the prior year, a decrease of $1.9 million due to the timing of spending for our broad portfolio as well as product and packaging innovation and promotional support for the auto care brands.
- SG&A, excluding acquisition and integration costs, was 18.4% of net sales, or $108.0 million, compared to prior year of 20.2% of net sales, a decrease of $4.2 million driven by synergy realization primarily due to transition service agreement (TSA) exits, lower mark to market expense on deferred compensation and reduced spending in the back half of the quarter due in part to COVID-19 impacts and restrictions. (a)
- Interest expense was $47.2 million compared to $77.2 million for the prior year comparative period. Excluding the prior year acquisition costs of $33.2 million, the current year Interest expense increased $3.2 million attributed to a higher average debt balance associated with the acquisitions. (a)
- Income tax rate on a year to date basis was 26.2% as compared to 46.9% in the prior year. The current year rate includes costs related to acquisition and integration in addition to the impact of the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was signed into law on March 27, 2020 and provides, among other things, increased interest deduction limitations to companies which can decrease overall cash taxes paid. The prior year rate includes $1.5 million for the one-time impact of U.S. tax legislation passed in December 2017 and the impact of disallowed transaction costs resulting from the acquisitions, which drove a higher tax rate in the prior year. Excluding the impact of these Non-GAAP adjustments, the year to date tax rate was 22.6% as compared to 20.9% in the prior year. The increase in the rate versus prior year is due to the country mix of earnings which drove a higher foreign tax rate as well as the expiration of certain tax holidays in foreign jurisdictions.
Full report HERE