Energizer Holdings Reports Strong Start to Fiscal 2025

Energizer Holdings Reports Strong Start to Fiscal 2025

Grew Net sales for the quarter by 2.1% and organic Net sales by 3.8% with organic growth in both Battery and Auto Care.

Gross margin for the first quarter was 36.8% and 40.0% as adjusted, reflecting a 50 bps improvement over the previous year’s Adjusted Gross margin.

Delivered Earnings per share of $0.30 and Adjusted Earnings per share of $0.67, indicating a 14% increase on an adjusted basis.

Reduced net leverage to 4.7 times through strategic debt paydown and growth in Adjusted EBITDA.

Increased organic Net sales fiscal year outlook to 2% to 3% and reaffirms expectations for Adjusted Earnings per share and Adjusted EBITDA.

Energizer Holdings, Inc. (NYSE: ENR) recently announced their results for the first fiscal quarter, which ended on December 31, 2024.

"We are delighted to commence fiscal 2025 with impressive results on both top and bottom lines, reflective of our successful execution of growth strategies," said Mark LaVigne, Chief Executive Officer. "Revenue saw an uptick of 2.1%, alongside a remarkable organic growth of 3.8%. Notably, we achieved mid-single-digit growth in Adjusted EBITDA and a 14% increase in Adjusted Earnings per share."

This earnings spike has fostered another quarter of substantial free cash flow, allowing the company to reduce debt for the tenth consecutive quarter. There remains a focus on significant investments to develop the capabilities required for sustained growth in areas such as innovation, distribution, and digital commerce.

The confidence in our financial trajectory is bolstered by our strong start to the year, further confirming that we are on the right path to meet our fiscal 2025 targets and achieve meaningful annual earnings growth for our shareholders.

Strong Top-Line Performance

The company reported Net sales of $731.7 million in the recent quarter, compared to the previous year’s $716.6 million.

Organic Net sales increased 3.8% due to several key factors:

• New and expanded distribution initiatives lifted sales volumes in Battery & Lights by approximately 3.8%.
• Hurricanes added about $10 million in volume during the quarter, effectively contributing around 1.4% organic growth.
• Growth in Auto Care was propelled by distribution gains, international expansion, and digital economy growth, while offset by an earlier holiday order shift, yielding 0.5% organic growth.
• Planned strategic pricing initiatives, along with promotional investments of 1.9%, counterbalanced the increased volumes.

Gross Margin Insights

The gross margin percentage stood at 36.8%, a slight decrease from 37.3% year-on-year. However, when restructuring and network transition costs from the current and prior years are excluded, the Adjusted Gross margin for fiscal 2025 improved to 40.0%, up from 39.5% in the prior year.

This improvement can largely be attributed to the Project Momentum initiative, which produced approximately $16 million in savings this quarter, complemented by a minor year-over-year improvement in product cost inputs. This benefit was somewhat offset by strategic pricing plans, promotional spending, and unfavorable currency impacts.

Operational Efficiency and Expense Management

For the first quarter, Selling, General and Administrative Expense (SG&A), excluding restructuring and acquisition costs, represented 16.3% of Net sales, amounting to $119.2 million. This is slightly higher than 16.4%, or $117.8 million, from the previous year. The increase primarily stems from elevated depreciation expenses related to digital transformation efforts and legal costs. However, this was mitigated by approximately $3 million in savings from Project Momentum, alongside reduced factoring and environmental expenses.

Advertising and Promotion expenses climbed by $6.4 million, reaching 7.3% of Net sales compared to 6.6% previously, driven mainly by increased investments in the brand and business in preparation for the busy holiday season.

Earnings Snapshot and Future Outlook

Net earnings for the quarter were $22.3 million, while the diluted net earnings per share registered at $0.30. Adjusted net earnings were reported at $49.4 million, with Adjusted Diluted net earnings per share standing at $0.67, up from $0.59 year-on-year.

The projections for fiscal year 2025 indicate anticipated Net sales growth of between 1% to 2%, with organic Net sales projected to increase by 2% to 3%. Adjusted EBITDA is expected in the range of $625 million to $645 million, corroborating the earlier insights for Adjusted earnings per share, which will range from $3.45 to $3.65.

Frequently Asked Questions

What were the key figures from the Energizer Holdings fiscal Q1 report?

Net sales increased to $731.7 million, with an organic growth of 3.8% and Adjusted Earnings per share of $0.67.

How did the gross margin change for Energizer Holdings?

The gross margin was reported at 36.8%, with an Adjusted Gross margin of 40.0%, reflecting a slight year-over-year improvement.

What initiatives contributed to revenue growth in Q1?

New distribution initiatives and hurricane-driven sales contributed significantly to revenue growth.

How did SG&A expenses perform compared to the previous year?

SG&A expenses represented 16.3% of Net sales, a slight increase compared to 16.4% in the prior year.

What is Energizer's outlook for fiscal year 2025?

The company anticipates Net sales growth of 1% to 2% and a more optimistic organic growth prediction of 2% to 3%.

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