ST. LOUIS, Jan. 26 /PRNewswire-FirstCall/ -- Energizer Holdings,
Inc., (NYSE:ENR), today announced results of its first quarter
ended December 31, 2009. Net earnings for the quarter were $125.7
million, or $1.78 per diluted share, versus net earnings of $111.0
million, or $1.88 per diluted share in the first fiscal quarter of
2009. First quarter diluted earnings per share were negatively
impacted by $0.35 per diluted share as compared to the prior year
quarter due to higher average shares outstanding due to the May
2009 equity issuance. In addition, the current quarter includes the
following: -- a charge of $25.5 million, after-tax, or $0.36 per
diluted share, related to the devaluation of our Venezuelan
affiliate's U.S. dollar payable to the parallel rate; and --
charges related to other business realignment and integration
activities of $4.5 million after-tax, or $0.07 per diluted share.
Last year's first quarter included integration and business
realignment costs of $3.0 million, after-tax, or $0.05 per diluted
share. For the current quarter, net sales increased $134.2 million,
or 13%, to $1,176.7 million. On a constant currency basis, sales
increased by approximately $89 million, or 9%. Net sales in the
Household Products division increased $56.0 million, or 9% on a
reported basis, or approximately $30 million, up 5% on a constant
currency basis. Net sales in Personal Care increased $78.2 million,
or 20% on a reported basis, and up approximately $59 million, or
15%, on a constant currency basis. The Personal Care results
included $34 million of net sales for the recently acquired Edge
and Skintimate shave preparation brands. Gross margin for the
current quarter was 47.6%. The first quarter gross margin
percentage was negatively impacted by 30 basis points due to
Venezuela. Segment profit increased $52.4 million, or 21%, from
$246.6 to $299.0 million. Excluding the favorable impact of
currency of approximately $16 million, segment profit increased
approximately $36 million, or 15%. "We had a strong first quarter,
especially in light of the stagnant consumer environment," said
Ward Klein, Chief Executive Officer. "In Household Products, we
improved profitability versus a difficult first quarter last year,
and our profit momentum continued in Personal Care, as a result of
our innovation efforts and bolstered by the addition of the Edge
and Skintimate shave preparation business. Nevertheless, we remain
cautious about the remainder of the year, especially in Household
Products, where negative battery category consumption trends
continue." Household Products For the quarter, net sales were
$704.0 million, up $56.0 million, or 9% versus the same quarter
last year, including the impact of favorable currencies of
approximately $26 million. Excluding the impact of favorable
currencies, net sales increased approximately $30 million, or 5%,
due to share gains, a more normalized shipment timing for the
holidays and a soft prior year quarter comparative. While we were
able to realize strong sales growth within the quarter, we believe
that the premium alkaline category remains sluggish, down mid to
high single digits as compared to the same quarter last year.
Overall pricing and product mix was unfavorable $10 million driven
by investments in North America and Europe, partially offset by
price increases in other areas of the world. Segment profit
increased $23.6 million for the quarter including the impact of
approximately $7 million of favorable currencies, the positive
impact of higher volume and lower advertising and promotion
expense. Personal Care Net sales for the quarter were $472.7
million, up $78.2 million, or 20% versus the same quarter last
year. This increase was due to many factors including the addition
of the Edge and Skintimate shave preparation brands, which added
approximately $34, million and the impact of favorable currencies,
which added approximately $19 million for the quarter. Excluding
these impacts, net sales increased approximately 6%. Wet Shave net
sales, excluding the Edge and Skintimate brands, increased 9% on
higher disposables and continued momentum in Quattro for Women
Trimmer razors and Quattro for Women replacement blades. Skin Care
sales increased 14% due to higher shipments of Wet Ones, which is a
continuation of recent trends. Infant Care sales increased 5% due
to continued growth in Diaper Genie and cups, partially offset by
lower sales of bottles. Finally, Feminine Care sales decreased 12%
due to lower shipments in the quarter of Gentle Glide, only
partially offset by increases in Sport. Segment profit for the
quarter was $120.2 million, up $28.8 million or 32% versus the same
quarter in the prior year. Excluding the impact of favorable
currencies of approximately $9 million, segment profit increased
approximately $20 million, including approximately $13 million in
segment profit from the Edge and Skintimate shave preparation
brands in the quarter. The balance of the increase was due
primarily to the timing of advertising and promotion and overhead
spending. Other Items General corporate and other expenses
increased $8.8 million due primarily to higher compensation expense
accruals in the fiscal 2010 quarter because the prior year quarter
included a reduction in expense due to a decline in the underlying
values of certain deferred compensation liabilities as a result of
the economic downturn and lower stock compensation amortization.
Interest expense declined $7.0 million due to lower outstanding
debt and lower interest on variable rate debt. Other financing
items increased $14.7 million primarily due to the Venezuela
devaluation charge noted above. The effective tax rate was 36.7%
for the quarter. Excluding the impact of the Venezuela devaluation
charge, which had no current period tax benefit, the effective tax
rate for the 2010 quarter was 32.5% versus 31.7% in the prior year
quarter. We expect to record a tax benefit of approximately $5
million related to the devaluation charge in the second quarter of
fiscal 2010, in conjunction with the devaluation of the official
exchange rate effective January 2010. For the quarter, capital
expenditures were $23.2 million, and depreciation expense was $30.0
million. Energizer's Debt to Earnings before Interest, Taxes,
Depreciation and Amortization (EBITDA) Ratio for the last four
quarters, as defined by the company's credit agreements, was 3.04
to 1.00. This ratio includes the negative impact of the Venezuela
devaluation charge as a reduction of EBITDA. At December 31, 2009,
the company's debt level was $2.56 billion, with $2.23 billion, or
87%, at fixed rates averaging 5.19%. In addition, the company's
reported cash at December 31, 2009 was $408.2 million. At this
time, Energizer plans to pay only scheduled debt maturities over
the course of the fiscal year with the intent to preserve committed
liquidity. Outlook Looking ahead, despite the sales growth in the
quarter, we remain cautious regarding the battery category as
consumption remains sluggish and the effect of device trends on the
battery category remains difficult to assess due to the economic
downturn. Previously, we expressed our intention to increase our
investment in advertising and promotion and certain innovation and
growth initiatives in fiscal 2010. This remains our objective.
While advertising and promotion expense was lower on a dollar and
as a percentage of net sales in the first quarter, we continue to
track to an estimated advertising and promotion spend in the range
of 12% of net sales for the full year of fiscal 2010. Last quarter,
we noted that fiscal 2010 would be negatively impacted by
approximately $15 to $20 million due to the use of the parallel
rate to pay for newly imported product in Venezuela. Effective
December 31, 2009, we are translating our Venezuela local currency
financial results for the purpose of consolidation using the
parallel rate. Assuming the current parallel rate, we expect a
further reduction in operating profit of approximately $5 to $7
million for the remainder of fiscal 2010 as a result of this change
in the translation rate. Also, since the Venezuela economy is
considered highly inflationary under U.S. GAAP, effective January
1, 2010, the translation impact on monetary assets and liabilities
resulting from changes in the parallel rate will be reflected in
operating earnings rather than in currency translation adjustment
on the balance sheet, which is the normal accounting treatment. We
are unable to predict what, if any, impact this will have on the
financial statements for the remainder of fiscal 2010 and beyond,
as we cannot predict with any degree of certainty the timing,
direction or extent of changes to the parallel rate. Excluding
Venezuela, and based on current foreign exchange rates, we estimate
currencies will favorably impact operating profit by approximately
$35 to $40 million, net of the impact of hedging activities,
through the balance of the fiscal year versus the same period in
the prior year. Finally, based on current market prices and our
existing hedging contracts and other commitments, we expect raw
material and commodity costs to be $12 to $14 favorable over the
balance of the year as compared to the same period last year. While
Energizer Holdings, Inc. reports financial results in accordance
with accounting principles generally accepted in the U.S. ("GAAP"),
this press release includes non-GAAP measures. These non-GAAP
measures, consisting of comparison changes excluding the impact of
currencies, the acquisition of the Edge and Skintimate shave
preparation brands, and the Venezuelan devaluation charge, are not
in accordance with, nor are they a substitute for, GAAP measures.
The Company believes these non-GAAP measures provide a more
meaningful comparison to the corresponding reported period and
assist investors 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. Statements in this press
release that are not historical, particularly statements regarding
declines in the U.S. premium battery category and battery
consumption trends, expected tax benefits related to the Venezuelan
devaluation, Energizer's intent to pay only scheduled debt
maturities in order to preserve committed liquidity, projections of
advertising and promotion spending, the impact on operating profit
as a result of utilization of the Venezuelan parallel rate, and
estimates of favorable material costs and currencies, may be
considered forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Energizer
cautions readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made. Energizer advises
readers that various risks and uncertainties could affect its
financial performance and could cause Energizer's actual results
for future periods to differ materially from those anticipated or
projected. The current negative global economic conditions are
unprecedented in recent years and it is difficult to assess the
likelihood of improvement or further deterioration in the near
future; consequently it is difficult to assess if employment levels
and consumer confidence, and consequent consumer spending and
retail inventory levels, will remain low for the year, or if
improvement in economic conditions will spur significant spending
and retail inventory loading. Energizer's estimates of premium
battery category decline are based solely on limited data available
to Energizer and management's reasonable assumptions about market
conditions, and consequently may be inaccurate, or may not reflect
significant segments of the retail market. Consumer confidence and
consumption trends with respect to the overall battery category are
difficult to predict, although it is likely that they will continue
to be significantly negatively impacted by continuing economic
turmoil, as well as by declines in the proliferation or consumption
of battery-powered devices. In light of uncertain category and
competitive dynamics, it is uncertain whether the Company's broad
battery portfolio will continue to be effective in offsetting
category softness and/or preserving market share. Energizer's
intent to preserve committed liquidity and its ability to increase
brand investment spending may be impacted by lower than anticipated
cash flows or other unforeseen business needs or obligations. The
anticipated moderation of negative currency trends is also
difficult to assess with any degree of certainty. Prolonged
recessionary conditions in key global markets where Energizer
competes could result in significantly greater local currency
devaluation and correspondingly greater negative impact on
Energizer than what can be anticipated from the current spot rates.
On the other hand, if concerted global stabilization measures
achieve some degree of economic recovery, local currencies could be
significantly strengthened relative to the dollar. Anticipated
favorability in material and other commodity costs could be less
significant than anticipated, as it is difficult to predict with
any accuracy whether raw material, energy and other input costs, or
unit volumes, will stabilize, since such costs are impacted by
multiple economic, political and other factors outside of the
Company's control, and volumes are impacted by consumption and
category trends that are difficult to assess in the current
environment. The anticipated tax benefit associated with the
Venezuelan devaluation could be impacted by legislative or
regulatory changes by federal, state and local, and foreign taxing
authorities. 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. Energizer does
not undertake any obligation to update any forward-looking
statements to reflect events that occur or circumstances that exist
after the date on which they were made. Additional risks and
uncertainties include those detailed from time to time in
Energizer's publicly filed documents; including its annual report
on Form 10-K for the year ended September 30, 2009. ENERGIZER
HOLDINGS, INC. STATEMENTS OF EARNINGS (Condensed) (In millions,
except per share data - Unaudited) Quarter Ended December 31, 2009
2008 ---- ---- Net sales $1,176.7 $1,042.5 Cost of products sold
616.5 529.0 ----- ----- Gross profit 560.2 513.5 Selling, general
and administrative expense 184.0 174.0 Advertising and promotion
expense 88.7 97.1 Research and development expense 21.4 19.9
Interest expense 32.0 39.0 Other financing items, net 35.6 20.9
---- ---- Earnings before income taxes 198.5 162.6 Income tax
provision 72.8 51.6 ---- ---- Net earnings $125.7 $111.0 ======
====== Earnings per share Basic $1.80 $1.90 ===== ===== Diluted
$1.78 $1.88 ===== ===== Weighted average shares of common stock
-Basic 69.7 58.3 ---- ---- Weighted average shares of common stock
-Diluted 70.5 59.1 ---- ---- See Accompanying Notes to Condensed
Financial Statements Energizer Holdings, Inc. Notes to Condensed
Financial Statements December 31, 2009 (Dollars in millions, except
per share data) 1. Operating results for any quarter are not
necessarily indicative of the results for any other quarter or the
full year. 2. Operations for the Company are managed via two major
segments - Household Products (Battery and Lighting Products) and
Personal Care (Wet Shave, Skin Care, Feminine Care and Infant
Care). Segment performance is evaluated based on segment operating
profit, exclusive of general corporate expenses, share-based
compensation costs, costs associated with most restructuring,
integration or business realignment activities and amortization of
intangible assets. Financial items, such as interest income and
expense and other financing items, are managed on a global basis at
the corporate level. The Company's operating model includes a
combination of stand-alone and combined business functions between
the Household Products and Personal Care businesses, varying by
country and region of the world. Shared functions include product
warehousing and distribution, various transaction processing
functions, certain environmental activities, and, in some
countries, a combined sales force and management. Historical
segment sales and profitability for the quarter ended December 31,
2009 and 2008, respectively, are presented below. All prior periods
have been restated to conform with the current segment
presentation. Quarter Ended December 31, Net Sales 2009 2008 ----
---- Household Products $704.0 $648.0 Personal Care 472.7 394.5
----- ----- Total net sales $1,176.7 $1,042.5 ======== ========
Profitability Household Products $178.8 $155.2 Personal Care 120.2
91.4 ----- ---- Total segment profitability $299.0 $246.6 General
corporate and other expenses (29.5) (20.7) Amortization (3.4) (3.4)
Venezuela devaluation (25.5) - Interest and other financing (42.1)
(59.9) ----- ----- Earnings before income taxes $198.5 $162.6
====== ====== Supplemental product information is presented below
for revenues from external customers: Quarter Ended December 31,
Net Sales 2009 2008 ---- ---- Alkaline batteries $445.7 $400.3
Carbon zinc batteries 58.1 55.9 Other batteries and lighting
products 200.2 191.8 Wet Shave 316.8 245.6 Skin Care 59.8 50.6
Feminine Care 46.2 51.6 Infant Care 49.9 46.7 ---- ---- Total net
sales $1,176.7 $1,042.5 ======== ======== 3. Basic earnings per
share is based on the average number of common shares outstanding
during the period. Diluted earnings per share is based on the
average number of shares used for the basic earnings per share
calculation, adjusted for the dilutive effect of stock options and
restricted stock equivalents. Weighted average diluted shares
outstanding were higher in fiscal 2010 due to the May 2009 stock
issuance. 4. The current and prior year quarter include pretax
charges of $6.8 and $4.6, respectively, related to certain other
business realignment activities. These are included in General
corporate and other expenses in Note 2 above. DATASOURCE: Energizer
Holdings, Inc. CONTACT: Jacqueline E. Burwitz, Vice President,
Investor Relations of Energizer Holdings, Inc., +1-314-985-2169 Web
Site: http://www.energizer.com/
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