Energizer Holdings, Inc. Announces Fiscal 2020 First Quarter Results and Reaffirms Full Year Guidance
ST. LOUIS, Feb. 5, 2020 /PRNewswire/ -- Energizer Holdings, Inc. (NYSE: ENR) today announced results for the first fiscal quarter, which ended December 31, 2019. Net earnings from continuing operations were $45.8 million, or $0.60 per diluted common share, compared to net earnings of $70.8 million, or $1.16 per diluted common share, in the prior year first quarter. Adjusted Net earnings from continuing operations in the first quarter were $63.7 million, or $0.85 per diluted common share, compared to Adjusted Net earnings from continuing operations of $100.2 million, or $1.64 per diluted common share, in the prior year first quarter.
"We are off to a solid start in fiscal 2020 and we remain on track to meet our full year outlook," said Alan Hoskins, Chief Executive Officer. "The entire Energizer team has been successfully executing our initiatives to grow our platform and market positions in the Batteries, Lights and Auto Care categories and we remain focused on achieving organic sales growth while realizing significant integration synergies. As we look ahead, we are confident in our ability to deliver on our current year plans as well as our long-term objectives."
First Quarter 2020 Financial Highlights (Unaudited)
The following is a summary of key results for the first quarter of Fiscal 2020. All comparisons are with the first quarter of Fiscal 2019 and represent continuing operations unless otherwise stated.
-- Net sales were $736.8 million, an increase of 28.8%: (a)
-- Organic Net sales decreased $19.7 million, or 3.4%, primarily due to
lower replenishment and phasing of holiday promotional activity;
-- The impact of the acquisitions increased Net sales by $186.9
million, or 32.6%; and
-- Unfavorable movement in foreign currencies, excluding Argentina,
resulted in decreased sales of $2.5 million, or 0.4%.
1) See Supplemental Schedules - Non - GAAP Reconciliations regarding non-GAAP financial measures.
-- Gross margin percentage on a reported basis was 40.9%, versus 48.2% in
the prior year. Excluding the current year acquisition and integration
costs, Gross margin was 41.8%, down 640 basis points from prior year,
largely driven by the lower margin rate profile of the acquired
businesses, as well as customer mix, unfavorable foreign currency,
tariffs and higher product costs due to lower production volumes in the
fourth quarter of Fiscal 2019. These decreases were partially offset by
improved pricing and realized synergies. (a)
-- A&P was 6.4% of net sales, or $46.8 million, an increase of $5.9 million
versus the prior year, with the acquired businesses adding $2.6 million.
The legacy business A&P was $44.2 million, an increase of $3.3 million
versus prior year. The increased spending on the legacy business
reflects continued support for the broad portfolio while spending for
the acquired businesses largely reflects increased product and packaging
innovation and promotional support for the auto care brands.
-- SG&A, excluding acquisition and integration costs, was 15.1% of net
sales, or $111.0 million, an increase of $25.3 million versus the prior
year, with the acquired business adding $23.5 million. The legacy
business as a percent of net sales was 15.9%, or $87.5 million, up $1.8
million or 90 basis points to prior year first quarter. (a)
-- Interest expense was $51.0 million compared to $48.2 million for the
prior year comparative period. Excluding the current year $4.2 million
loss on extinguishment of debt and prior year acquisition costs of $32.4
million, the current year Interest expense increased $31.0 million
attributed to higher debt associated with the acquisitions. (a)
-- Income tax rate on a year to date basis was 22.0% as compared to 21.3%
in the prior year. The prior year rate includes $1.5 million for the
one-time impact of U.S. tax legislation passed in December 2017.
Excluding the impact of our Non-GAAP adjustments, the year to date tax
rate was 22.5% as compared to 20.8% 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.
-- Diluted net earnings from continuing operations per common share for the
quarter was $0.60 and Adjusted Diluted net earnings from continuing
operations per common share for the quarter was $0.85. (a)
-- Net cash from operating activities from continuing operations on a year
to date basis was $133.5 million and Adjusted Free cash flow from
continuing operations on a year to date basis was $136.7 million, or
18.6% of net sales. (a)
-- Dividend payments in the quarter were $22.7 million, or $0.30 per common
share, and $4.0 million, or $1.875 per share of mandatory preferred
convertible stock.
-- Discontinued operations reported income of $0.3 million for the quarter.
Included in these results are pre-tax costs related to divesting the
Varta® consumer battery business of $1.1 million.
-- Subsequent to the quarter end, on January 2, 2020, the company completed
the divestment of the Varta® consumer battery business to VARTA AG for
an aggregate purchase price of EUR180 million, subject to purchase price
adjustments. The initial proceeds received from VARTA AG and Spectrum
were approximately $345 million, which will be subject to a final true
up based upon the closing balance sheet. The Company utilized these
proceeds to pay down term loan debt.
(a) See Press Release attachments for additional information as well as the GAAP to Non-GAAP reconciliations.
Total Net sales (In millions -Unaudited)
For
the
Quarter
Ended
December
31,
2019
Q1 % Chg
Net
sales
-
FY'19 $
571.9
Organic (19.7) (3.4)
%
Impact
of %
Battery
Acquisition 125.5 21.9
Impact
of %
Auto
Care
Acquisition 61.4 10.7
Change
in
Argentina 0.2
%
Impact
of %
currency (2.5) (0.4)
Net
sales %
-
FY'20 $
736.8 28.8
Total Net sales increased 28.8%, or $164.9 million:
-- Organic Net sales decreased 3.4%, or $19.7 million, in the first fiscal
quarter due to the following items:
-- A decline in point-of-sale trends driven by the US price increase
taken in the prior year and the impacts of a competitive launch,
coupled with lower replenishment volumes associated with hurricane
activity in the fourth fiscal quarter of 2019, contributed 2.8% to
the decrease;
-- Phasing of holiday activity from the current quarter to the fourth
quarter of Fiscal 2019 contributed 2.4% to the decrease; and
-- Improved pricing offset the organic decrease by 1.8%.
-- The acquisitions contributed Net sales of $186.9 million, or 32.6%.
-- Our Argentina operations had a favorable impact on Net sales of $0.2
million.
-- Unfavorable movement in foreign currencies resulted in decreased sales
of $2.5 million, or 0.4%.
Total Segment profit (In millions -Unaudited)
For the Quarter Ended December 31, 2019
Q1 % Chg
Segment profit
-FY'19 $
170.7
Organic (25.4) (14.9)
%
Impact of
Battery %
Acquisition 27.9 16.3
Impact of Auto
Care %
Acquisition 10.1 5.9
Change in (0.6) (0.4)
Argentina
%
Impact of (1.3) (0.6)
currency
%
Segment profit $
181.4 6.3
-FY'20 %
Total Segment profit in the first fiscal quarter increased $10.7 million, or 6.3%. The organic decline of $25.4 million, or 14.9%, was driven by the Net sales decrease, the negative impact of tariffs and higher product costs due to lower production volumes in the fourth quarter of Fiscal 2019. In addition, higher A&P spending was nearly offset by SG&A favorability. Our Argentina operations had an unfavorable impact on segment profit of $0.6 million, or 0.4% and foreign currency impacts were unfavorable by $1.3 million, or 0.6%. Offsetting the segment profit organic decrease for the quarter was the favorable impact of the acquisition of $38.0 million, or 22.2%.
Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures attached for further information on our above breakouts.
Financial Outlook for Fiscal 2020
The Company is reaffirming all aspects of its previously provided financial outlook for Fiscal 2020 with reported Net sales growth of 9% to 10%, including organic growth in combined battery of 1% to 2% and combined auto care growing at 3.5%, Adjusted Diluted EPS from continuing operations of $3.00 to $3.20(1), Adjusted EBITDA of $610 to $640 million(1) and Adjusted Free cash flow of $310 to $340 million(1). This outlook includes a full year impact of the acquisitions completed in the second quarter of Fiscal 2019 and does not include any benefit associated with storm activity in Fiscal 2020, which, if it occurs, would be incremental.
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 the financial outlook for Fiscal 2020. 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://www.webcaster4.com/Webcast/Page/1192/32740
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.
Forward-Looking Statements.
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," "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. Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation:
-- market and economic conditions;
-- market trends in the categories in which we compete;
-- our ability to integrate businesses, to realize the projected results of
the acquired businesses, and to obtain expected cost savings, synergies
and other anticipated benefits of the acquired businesses within the
expected timeframe, or at all;
-- the impact of the acquired businesses on our business operations;
-- the success of new products and the ability to continually develop and
market new products;
-- our ability to attract, retain and improve distribution with key
customers;
-- our ability to continue planned advertising and other promotional
spending;
-- our ability to timely execute strategic initiatives, including
restructurings, and international go-to-market changes in a manner that
will positively impact our financial condition and results of operations
and does not disrupt our business operations;
-- the impact of strategic initiatives, including restructurings, on our
relationships with employees, customers and vendors;
-- our ability to maintain and improve market share in the categories in
which we operate despite heightened competitive pressure;
-- financial strength of disturbers and suppliers;
-- our ability to improve operations and realize cost savings;
-- the impact of foreign currency exchange rates and currency controls, as
well as offsetting hedges;
-- the impact of adverse or unexpected weather conditions;
-- uncertainty from the expected discontinuance of LIBOR and the transition
to any other interest rate benchmark;
-- the impact of raw materials and other commodity costs;
-- the impact of legislative changes or regulatory determinations or
changes by federal, state and local, and foreign authorities, including
customs and tariff determinations, as well as the impact of potential
changes to tax laws, policies and regulations;
-- costs and reputational damage associated with cyber-attacks or
information security breaches or other events;
-- the impact of advertising and product liability claims and other
litigation; and
-- compliance with debt covenants and maintenance of credit ratings as well
as the impact of interest and principal repayment of our existing and
any future debt.
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 19, 2019.
1) See Supplemental Schedules - Non - GAAP Reconciliations regarding non-GAAP financial measures.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Condensed)
(In millions, except per share data - Unaudited)
For the Quarter Ended
December 31,
2019 2018
---
Net
sales $
736.8 $
571.9
Cost
of
products
sold
(1) 435.5 296.4
Gross
profit 301.3 275.5
Selling,
general
and
administrative
expense
(1) 122.1 104.6
Advertising
and
sales
promotion
expense 46.8 40.9
Research
and
development
expense
(1) 8.9 5.5
Amortization
of
intangible
assets 13.8 3.2
Interest
expense
(1)
(2) 51.0 48.2
Other
items,
net
(1) - (16.9)
Earnings
before
income
taxes 58.7 90.0
Income
tax
provision
(3) 12.9 19.2
Net
earnings
from
continuing
operations $
45.8 $
70.8
Net
earnings
from
discontinued
operations
(4) 0.3
Net
earnings 46.1 70.8
Mandatory
preferred
stock
dividends (4.0)
Net
earnings
attributable
to
common
shareholders $
42.1 $
70.8
Basic
net
earnings
per
common
share
-
continuing
operations $
0.60 $
1.19
Basic
net
earnings
per
common
share
-
discontinued
operations -
Basic
net
earnings
per
common
share $
0.60 $
1.19
Diluted
net
earnings
per
common
share
-
continuing
operations $
0.60 $
1.16
Diluted
net
earnings
per
common
share
-
discontinued
operations -
Diluted
net
earnings
per
common
share $
0.60 $
1.16
Dividend
per
common
share $
0.30 $
0.30
Weighted
average
shares
of
common
stock
-
Basic 69.1 59.7
Weighted
average
shares
of
common
stock
-
Diluted 70.2 61.0
(1) See the Supplemental Schedules -
Non-GAAP Reconciliations attached
which break out the Acquisition and
integration related costs included
within these lines.
(2) Interest expense for the quarter
ended December 31, 2019 includes a
$4.2 million loss on extinguishment
of debt associated with the term
loan refinancing. Interest expense
for the quarter ended December 31,
2018 includes Acquisition debt
commitment fees, interest and
ticking fees of $32.4 million
associated with the Battery
acquisition.
(3) Income tax provision for the three
months ended December 31, 2018
includes $1.5 million of one-time
expense related to the enactment of
the Tax Cuts and Jobs Act of 2017
(U.S. Tax Legislation).
(4) Net of an income tax expense of $7.5
million for the quarter ended
December 31, 2019.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Condensed)
(In millions - Unaudited)
Assets December 31, September 30,
2019 2019
---
Current assets
Cash and cash equivalents $
293.5 $
258.5
Trade receivables 369.9 340.2
Inventories 435.8 469.3
Other current assets 163.0 177.1
Assets held for sale 805.5 791.7
Total current assets $
2,067.7 $
2,036.8
Property, plant and equipment,
net 357.7 362.0
Operating lease assets 82.9
Goodwill 1,022.5 1,004.8
Other intangible assets, net 1,946.3 1,958.9
Deferred tax asset 23.4 22.8
Other assets 66.3 64.3
Total assets $
5,566.8 $
5,449.6
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-
term debt $
68.4
$
Current portion of capital
leases 1.7 1.6
Notes payable 28.1 31.9
Accounts payable 288.9 299.0
Current operating lease
liabilities 15.6
Other current liabilities 355.1 333.6
Liabilities held for sale 387.1 402.9
Total current liabilities $
1,144.9 $
1,069.0
Long-term debt 3,383.6 3,461.6
Operating lease liabilities 68.4
Deferred tax liability 176.2 170.6
Other liabilities 206.2 204.6
Total liabilities $
4,979.3 $
4,905.8
Shareholders' equity
Common stock 0.7 0.7
Mandatory convertible
preferred stock -
Additional paid-in capital 852.6 870.3
Retained earnings 149.1 129.5
Treasury stock (141.8) (158.4)
Accumulated other
comprehensive loss (273.1) (298.3)
Total shareholders' equity $
587.5 $
543.8
Total liabilities and
shareholders' equity $
5,566.8 $
5,449.6
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed)
(In millions - Unaudited)
For the Three Months Ended
December 31,
2019 2018
---
Cash Flow from Operating Activities
Net earnings $
46.1 $
70.8
Net earnings from discontinued
operations 0.3
Net earnings from continuing
operations 45.8 70.8
Non-cash integration and
restructuring charges 4.4
Depreciation and amortization 27.6 11.6
Deferred income taxes 2.8 2.3
Share-based compensation expense 7.2 6.5
Non-cash items included in income,
net 7.3 (9.1)
Other, net 2.6 (1.1)
Changes in current assets and
liabilities used in operations 35.8 37.9
Net cash from operating activities
from continuing operations 133.5 118.9
Net cash used by operating activities
from discontinued operations (10.0)
Net cash from operating activities 123.5 118.9
Cash Flow from Investing Activities
Capital expenditures (11.7) (4.8)
Proceeds from sale of assets 1.5 0.1
Acquisitions, net of cash acquired (3.6)
Net cash used by investing activities
from continuing operations (13.8) (4.7)
Net cash used by investing activities
from discontinued operations (2.4)
Net cash used by investing activities (16.2) (4.7)
Cash Flow from Financing Activities
Cash proceeds from issuance of debt
with original maturities greater
than 90 days 365.0 1,200.0
Payments on debt with maturities
greater than 90 days (400.3) (1.0)
Net (decrease)/increase in debt with
original maturities of 90 days or
less (4.0) 28.0
Debt issuance costs (0.9) (16.5)
Dividends paid on common stock (22.7) (19.8)
Dividends paid on mandatory
convertible preferred stock (4.0)
Taxes paid for withheld share-based
payments (9.4) (7.1)
Net cash (used by)/from financing
activities from continuing
operations (76.3) 1,183.6
Net cash used by financing activities
from discontinued operations (1.1)
Net cash (used by)/from financing
activities (77.4) 1,183.6
Effect of exchange rate changes on
cash 5.1 (2.3)
Net increase in cash, cash
equivalents, and restricted cash
from continuing operations 48.5 1,295.5
Net decrease in cash, cash
equivalents, and restricted cash
from discontinued operations (13.5)
Net increase in cash, cash
equivalents, and restricted cash 35.0 1,295.5
Cash, cash equivalents, and
restricted cash, beginning of period 258.5 1,768.3
Cash, cash equivalents, and
restricted cash, end of period $
293.5 $
3,063.8
ENERGIZER HOLDINGS, INC.
Reconciliation of GAAP and Non-GAAP Measures
For the Quarter Ended December 31, 2019
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 acquisition and integration costs and related items, settlement loss on pension plan terminations, loss on extinguishment of debt, and the one-time impact of the new U.S. tax legislation. In addition, these measures help investors to analyze year over year comparability when excluding currency fluctuations, acquisition activity 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 method 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, global marketing expenses, R&D expenses, amortization expense, interest expense, other items, net, and charges related to acquisition and integration have all been excluded from segment profit.
Adjusted Net Earnings From Continuing Operations and Adjusted Diluted Net Earnings Per Common Share - Continuing Operations (EPS). These measures exclude the impact of the costs related to acquisition and integration, the loss on extinguishment of debt and the one-time impact of the new U.S. income tax legislation.
Non-GAAP Tax Rate. This is the tax rate when excluding the pre-tax impact of acquisition and integration and the loss 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, as well as the one-time impact of the new U.S. tax legislation.
Organic. This is the non-GAAP financial measurement of the change in revenue or segment profit that excludes or otherwise adjusts for the impact of acquisitions, change in Argentina operations and impact of currency from the changes in foreign currency exchange rates as defined below:
Impact of acquisitions. Energizer completed the Auto Care Acquisition on January 28, 2019 and the Battery Acquisition on January 2, 2019. These adjustments include the impact of the acquisitions' ongoing operations contributed to each respective income statement caption for the first year's operations directly after the acquisition date. This does not include the impact of acquisition and integration costs associated with any acquisition.
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 difference between the value of current year foreign operations at the current period ending USD exchange rate, compared to the value of the current year foreign operations at the prior period ending USD exchange rate.
Adjusted Comparisons. Detail for adjusted gross profit, adjusted gross margin, adjusted SG&A, adjusted SG&A as percent of sales, adjusted R&D, adjusted interest expense and adjusted Other items, net are also supplemental non-GAAP measure disclosures. These measures exclude the impact of costs related to acquisition and integration and the loss on extinguishment of debt.
Free Cash Flow and Adjusted 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. Adjusted Free Cash Flow is defined as Free Cash Flow excluding the cash payments for acquisition and integration expenses and integration capital expenditures. The expense cash payments are net of the statutory tax benefit associated with the payment.
EBITDA and Adjusted EBITDA. EBITDA is defined as net earnings before income tax provision, interest and depreciation and amortization. Adjusted EBITDA further excludes the impact of the costs related to acquisition and integration, settlement loss on pension plan termination and share based payments.
Energizer Holdings, Inc.
Supplemental Schedules - Segment Information and Supplemental Sales Data
For the Quarter Ended December 31, 2019
(In millions, except per share data - Unaudited)
Operations for Energizer are managed via two major geographic reportable segments: Americas and International. Energizer's operating model includes a combination of standalone and shared business functions between the geographic segments, varying by country and region of the world. Energizer applies a fully allocated cost basis, in which shared business functions are allocated between segments. Such allocations are estimates, and do 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 tax, for the quarter ended December 31, 2019 and 2018, respectively, are presented below:
Quarter Ended December 31,
2019 2018
Net Sales
Americas $
514.5 $
373.5
International 222.3 198.4
Total net sales $
736.8 $
571.9
Segment Profit
Americas $
129.2 $
116.1
International 52.2 54.6
Total segment profit $
181.4 $
170.7
General corporate and
other expenses (1) (24.9) (18.7)
Global marketing
expense (2) (6.1) (3.1)
Research and
development expense -
Adjusted (3) (8.5) (5.5)
Amortization of
intangible assets (13.8) (3.2)
Acquisition and
integration costs (4) (19.3) (36.5)
Interest expense -
Adjusted (5) (6) (46.8) (15.8)
Loss on extinguishment
of debt (6) (4.2)
Other items, net -
Adjusted (7) 0.9 2.1
Total earnings before
income taxes $
58.7 $
90.0
(1) Recorded in SG&A on the Consolidated
(Condensed) Statement of Earnings.
(2) Global marketing expense for the
quarters ended December 31, 2019 and
2018 included $2.9 million and $1.2
million, respectively, recorded in
SG&A, and $3.2 million and $1.9
million, respectively, recorded in
Advertising and sales promotion
expense in the Consolidated
(Condensed) Statement of Earnings and
Comprehensive Income.
(3) Research and development expense for
the quarter ended December 31, 2019
included $0.4 million of acquisition
and integration costs which have been
reclassified for purposes of the
reconciliation above.
(4) See the Supplemental Schedules - Non-
GAAP Reconciliations for where these
charges are recorded in the
Consolidated (Condensed) Statement of
Earnings.
(5) Interest expense for the quarter ended
December 31, 2018 included $32.4
million of acquisition debt ticking
fees and interest expense which have
been reclassified for purposes of the
reconciliation above.
(6) Loss on extinguishment of debt for the
quarter ended December 31, 2019
includes the write off of deferred
financing fees related to the term
loan refinancing and was recorded in
interest expense on the Consolidated
(Condensed) Statement of Earnings.
(7) See the Supplemental Non-GAAP
reconciliation for the Other items,
net reconciliation between the
reported and adjusted balances.
Supplemental product information is presented below for revenues from external customers:
Quarter Ended December 31,
Net Sales 2019 2018
Batteries $
621.9 $
521.9
Auto Care 78.7 20.5
Lights and
Licensing 36.2 29.5
Total net sales $
736.8 $
571.9
Energizer Holdings, Inc.
Supplemental Schedules - GAAP EPS to Adjusted EPS Reconciliation
For the Quarter Ended December 31, 2019
(In millions, except per share data - Unaudited)
The following tables provide a reconciliation of Net earnings from continuing operations and Diluted net earnings per common share - continuing operations to Adjusted net earnings from continuing operations and Adjusted diluted net earnings per share - continuing operations, which are non-GAAP measures.
Quarter Ended December 31,
2019 2018
Net
earnings
attributable
to
common
shareholders $
42.1 $
70.8
Mandatory
preferred
stock
dividends (4.0)
Net
earnings $
46.1 $
70.8
Net
earnings
from
discontinued
operations 0.3
Net
earnings
from
continuing
operations $
45.8 $
70.8
Pre-tax
adjustments
---
Acquisition
and
integration
(1) 19.3 $
36.5
Loss on
extinguishment
of debt
(2) 4.2
Total
adjustments,
pre-tax $
23.5 $
36.5
After tax
adjustments
---
Acquisition
and
integration $
14.7 27.9
Loss on
extinguishment
of debt 3.2
One-time
impact
of the
new U.S.
Tax
Legislation 1.5
Total
adjustments,
after
tax $
17.9 $
29.4
Adjusted
net
earnings
from
continuing
operations
(3) $
63.7 $
100.2
Mandatory
preferred
stock
dividends (4.0)
Adjusted
net
earnings
from
continuing
operations
attributable
to
common
shareholders $
59.7 $
100.2
Diluted
net
earnings
per
common
share -
continuing
operations $
0.60 $
1.16
Adjustments
---
Acquisition
and
integration 0.21 0.46
Loss on
extinguishment
of debt 0.04
One-time
impact
of new
U.S tax
legislation 0.02
Adjusted
diluted
net
earnings
per
diluted
common
share -
continuing
operations $
0.85 $
1.64
Weighted
average
shares
of
common
stock -
Diluted 70.2 61.0
(1) See Supplemental Schedules -
Non-GAAP Reconciliations for where
these costs are recorded on the
unaudited Consolidated (Condensed)
Statement of Earnings.
(2) This loss on extinguishment of
debt is associated with the term
loan refinancing and recorded in
interest expense on the Consolidated
(Condensed) Statement of Earnings.
(3) The effective tax rate for the
quarter ended December 31, 2019 and
2018 for the Adjusted - Non-GAAP
Net Earnings and Diluted EPS was
22.5% and 20.8%, respectively, as
calculated utilizing the statutory
rate for where the costs were
incurred.
Energizer Holdings, Inc.
Supplemental Schedules - Segment Sales
For the Quarter Ended December 31, 2019
(In millions, except per share data - Unaudited)
Net sales Q1'20 % Chg Q1'19 % Chg
Americas
Net sales -prior year $
373.5 $
373.1
Organic (19.0) (5.1) 4.7 1.3
% %
Impact of Battery Acquisition 107.1 28.7
% %
Impact of Auto Care 52.9 14.2
Acquisition
% %
Impact of Nu Finish % 1.0 0.3
Acquisition
%
Change in Argentina 0.2 0.1 (3.3) (0.9)
% %
Impact of currency (0.2) (0.1) (2.0) (0.6)
% %
37.8
%
Net sales -current year $
514.5 % $
373.5 0.1
International
Net sales -prior year $
198.4 $
200.2
Organic (0.7) (0.4) 5.2 2.6
% %
Impact of Battery Acquisition 18.4 9.3
% %
Impact of Auto Care 8.5 4.3
Acquisition
% %
Impact of currency (2.3) (1.2) (7.0) (3.5)
% %
12.0
%
Net sales -current year $
222.3 % $
198.4 (0.9)
Net sales
Net sales -prior year $
571.9 $
573.3
Organic (19.7) (3.4) 9.9 1.7
% %
Impact of Battery Acquisition 125.5 21.9
% %
Impact of Auto Care 61.4 10.7
Acquisition
% %
Impact of Nu Finish % 1.0 0.2
Acquisition
%
Change in Argentina 0.2 % (3.3) (0.6)
%
Impact of currency (2.5) (0.4) (9.0) (1.5)
% %
28.8
%
Net sales -current year $
736.8 % $
571.9 (0.2)
Energizer Holdings, Inc.
Supplemental Schedules - Segment Profit
For the Quarter Ended December 31, 2019
(In millions, except per share data - Unaudited)
Segment profit Q1'20 % Chg Q1'19 % Chg
---
Americas
Segment profit -
prior year $
116.1 $
123.1
Organic (17.1) (14.7) (4.2) (3.4)
%
%
Impact of Battery 21.8 18.8
Acquisition % %
Impact of Auto Care 9.1 7.8
Acquisition % %
Impact of Nu Finish - % 0.5 0.4
Acquisition %
Change in Argentina (0.6) (0.5) (1.9) (1.5)
% %
Impact of currency (0.1) (0.1) (1.4) (1.2)
% %
---
Segment profit - $
129.2 11.3 $
116.1 (5.7)
current year
% %
---
International
Segment profit -
prior year $
54.6 $
49.2
Organic (8.3) (15.2) 11.1 22.6
% %
Impact of Battery 6.1 11.2
Acquisition % %
Impact of Auto Care 1.0 1.8
Acquisition % %
Impact of currency (1.2) (2.2)
%
% (5.7) (11.6)
---
Segment profit - $
52.2 (4.4) $
54.6 11.0
current year
% %
---
Total Segment profit
Segment profit -
prior year $
170.7 $
172.3
Organic (25.4) (14.9) 6.9 4.0
% %
Impact of Battery 27.9 16.3
Acquisition % %
Impact of Auto Care 10.1 5.9
Acquisition % %
Impact of Nu Finish - % 0.5 0.3
Acquisition %
Change in Argentina (0.6) (0.4) (1.9) (1.1)
% %
Impact of currency (1.3) (0.6) (7.1) (4.1)
% %
---
Segment profit - $
181.4 6.3 $
170.7 (0.9)
current year
% %
---
Energizer Holdings, Inc.
Supplemental Schedules - Non-GAAP Reconciliations
For the Quarter Ended December 31, 2019
(In millions, except per share data - Unaudited)
FY20 Non-GAAP Reconciliations
Gross profit Q1'20 Q1'19
---
Net sales $
736.8 $
571.9
Cost of products
sold -adjusted 428.6 296.4
Adjusted Gross
profit $
308.2 $
275.5
Adjusted Gross 41.8 48.2
margin
% %
Acquisition and
integration costs 6.9
Reported Cost of
products sold 435.5 296.4
Gross profit $
301.3 $
275.5
Gross margin 40.9 48.2
% %
---
SG&A Q1'20 Q1'19
---
Segment SG&A $
84.1 $
65.8
Corporate SG&A 24.0 18.7
Global Marketing 2.9 1.2
SG&A Adjusted -
subtotal $
111.0 $
85.7
SG&A Adjusted % of 15.1 15.0
Net sales
% %
Acquisition and
integration costs 11.1 18.9
Reported SG&A $
122.1 $
104.6
Reported SG&A % of 16.6 18.3
Net sales
% %
---
Acquisition and
integration Q1'20 Q1'19
---
Cost of products
sold $
6.9
$
SG&A 11.1 18.9
Research and
development 0.4
Interest expense - 32.4
Other items, net 0.9 (14.8)
Acquisition and
integration
related items $
19.3 $
36.5
Other items, net Q1'20 Q1'19
---
Interest income $
(0.1) $
(0.3)
Foreign currency
exchange gain (0.4) (1.1)
Pension benefit
other than
service costs (0.5) (0.7)
Other 0.1
Other items, net -
Adjusted $
(0.9) $
(2.1)
Acquisition
foreign currency
loss/(gain) 2.2 (9.0)
Interest income on
restricted cash - (5.8)
Transition
services
agreement income (0.3)
Gain on sale of
assets (1.0)
Acquisition and
integration cost $
0.9 $
(14.8)
Total Other items,
net
$ $
(16.9)
Energizer Holdings, Inc.
Supplemental Schedules - Non-GAAP Reconciliations cont.
For the Quarter Ended December 31, 2019
(In millions, except per share data - Unaudited)
Q1'20 Q4'19 Q3'19 Q2'19 LTM Q1'19
12/31/19 (1)
---
Net earnings/(loss)
from continuing
operations $
45.8 $
47.0 $
9.2 $
(62.3) $
39.7 $
70.8
Income tax
provision/
(benefit) 12.9 0.7 0.2 (11.7) 2.1 19.2
Earnings/(loss)
before income taxes $
58.7 $
47.7 $
9.4 $
(74.0) $
41.8 $
90.0
Interest expense 51.0 48.7 51.9 77.2 228.8 48.2
Depreciation &
Amortization 27.6 22.0 30.8 28.4 108.8 11.6
EBITDA $
137.3 $
118.4 $
92.1 $
31.6 $
379.4 $
149.8
Adjustments:
Acquisition and
integration costs 19.3 28.5 28.0 62.2 138.0 4.1
Settlement loss on
pension plan
terminations - 3.7 3.7
Share-based
payments 7.2 6.3 6.7 7.6 27.8 6.5
Adjusted EBITDA $
163.8 $
156.9 $
126.8 $
101.4 $
548.9 $
160.4
(1) LTM defined as the
latest 12 months for the
period ending December 31,
2019
Free
Cash
Flow Q1'20 YTD Q1'19 YTD
Net
cash
from
operating
activities
from
continuing
operations $
133.5 $
118.9
Capital
expenditures (11.7) (4.8)
Proceeds
from
sale
of
assets 1.5 0.1
Free
cash
flow
from
continuing
operations
-
subtotal $
123.3 $
114.2
Cash
paid
for
acquisition
and
integration
expenses 8.0 36.7
Cash
paid
for
integration
related
capital
expenditures 5.4
Adjusted
Free
cash
flow $
136.7 $
150.9
Energizer Holdings, Inc.
Supplemental Schedules - Non-GAAP Reconciliations cont.
FY 2020 Outlook
(In millions, except per share data - Unaudited)
Fiscal Year 2020 Outlook Reconciliation -Adjusted earnings from continuing operations and Adjusted diluted net
earnings per common share -continuing operations (EPS)
(in millions,
except per
share data) Net earnings EPS
Fiscal Year
2020 -GAAP
Outlook $165 to $190 $2.20 to $2.53
Impacts:
Acquisition
and
integration
costs, net
of tax
benefit 60 to 50 0.80 to 0.66
Fiscal Year
2020 -
Adjusted
Outlook $225 to $240 $3.00 to $3.20
===
Weighted average shares -
Diluted (1) 75.1 75.1
(1) The Weighted average
shares -Diluted of 75.1
million assumes conversion of
the MCPS. When assuming no
conversion, the outlook
remains within the range
provided.
Fiscal Year 2020 Outlook Reconciliation -Adjusted EBITDA
(in millions, except per share data)
Earnings before
income taxes $195 to $255
Interest expense 190 to 185
Amortization 60 to 55
Depreciation 60 to 55
---
EBITDA $505 to $550
Adjustments:
Integration costs 75 to 65
Share-based
payments 30 25
---
Adjusted EBITDA $610 to $640
===
Fiscal Year 2020 Outlook Reconciliation -Adjusted Free Cash Flow
(in millions, except per share data)
Net cash from
operating
activities $295 to $330
Capital expenditures 105 to 90
---
Free cash flow $190 to $240
Adjustments:
Integration costs 60 to 50
Integration related
capital
expenditures 60 to 50
---
Adjusted free cash
flow $310 to $340
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SOURCE Energizer Holdings, Inc.
