Energizer Holdings Q4 Profit Declines, But Results Beat View

(RTTNews) - Consumer goods company Energizer Holdings, Inc. (ENR) on Wednesday reported a 19 percent decline in profit for the fourth quarter from last year as higher sales were offset by one-time charges and an increase in expenses. However, both revenue and adjusted earnings per share for the quarter beat analysts' estimates.

St. Louis, Missouri-based company's net earnings for the fourth quarter were $85.2 million or $1.36 per share, down from $105.1 million or $1.66 per share in the year-ago period.

The latest quarter's results reflect the impact of organic top-line growth, continued margin rate improvement, accretion from the feminine care brands acquisition, increased A&P investments and a favorable effective tax rate versus the prior year. However, these items were offset by one-time items.

Excluding certain items, adjusted earnings for the quarter were $1.87 per share, compared to $1.38 per share in the prior-year quarter. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $1.61 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 7 percent to $1.14 billion from $1.07 billion in the same period last year. Analysts had a consensus revenue estimate of $1.12 billion.

The increase in sales was driven by incremental sales from the feminine care brands acquisition and organic growth within the Household Products segment. On an organic basis, net sales for the quarter increased 1.5 percent.

Personal Care net sales for the quarter rose 11 percent from the year-ago period to $654.7 million, while Household Products net sales grew 3 percent to $486.7 million.

Gross margin for the quarter expanded 350 basis points to 50.5 percent, primarily due to savings from the 2013 restructuring project and pricing gains within the Personal Care segment.

Selling, general and administrative expense increased 17 percent to $249.1 million, while advertising and sales promotion expense rose 26 percent to $153.4 million.

In the latest quarter, Energizer incurred pre-tax charges of $37.7 million related to its plan to spin-off the the Household Products business and thereby create two independent, publicly traded companies.

Energizer noted that total spin-off transaction costs have totaled about $45 million in fiscal 2014. The company said it will incur additional costs to execute the transaction and expects these costs to be material.

For fiscal 2014, Energizer's net earnings declined to $356.1 million or $5.69 per share from $407.0 million or $6.47 per share in the previous year. Adjusted net earnings for the year were $7.32, compared to $6.96 in the prior year.

Net sales for the year edged down to $4.45 billion from $4.47 billion last year.

Street expected the company to earn $7.05 per share for the year on revenues of $4.42 billion.

Looking ahead to fiscal 2015, Energizer expects total organic net sales to be flat and gross margin rates to remain near prior year levels. The company expects 2013 restructuring project savings of $300 million to be realized by June 30, 2015, resulting in an incremental $45 million of savings in the first nine months of fiscal 2015.

In addition, the company projects an unfavorable movement in foreign currencies to result in a pre-tax profit impact of about $35 million to $40 million in fiscal 2015.

ENR is trading at $125.93, up $1.14 or 0.91 percent on a volume of 340,651 shares.