Energizer Holdings, Inc. Announces Fiscal 2020 Second Quarter Results
ST. LOUIS, May 7, 2020 /PRNewswire/ -- 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%.
__________________
1) See Supplemental Schedules - Reconciliations of GAAP to Non-GAAP Reconciliation.
-- 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. (a)
-- Diluted net earnings from continuing operations per common share for the
quarter was $0.14 and Adjusted Diluted net earnings from continuing
operations per common share for the quarter was $0.37. (a)
-- Net cash from operating activities from continuing operations on a year
to date basis was $99.2 million and Adjusted Free cash flow from
continuing operations on a year to date basis was $107.3 million, or
8.1% of net sales. (a)
-- Dividend payments in the quarter were $21.0 million, or $0.30 per common
share, and $4.1 million, or $1.875 per share of mandatory preferred
convertible stock.
-- Repurchased approximately 980,000 shares of common stock for $45.0
million.
-- Discontinued operations reported a net loss of $131.4 million for the
quarter. Included in these results is the net loss on the disposition of
the Varta® consumer battery business to VARTA AG of $137.6 million. 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 cash proceeds
received from VARTA AG and Spectrum, along with the related hedging
arrangements, were approximately $346 million, which will be subject to
a working capital settlement and other contractual adjustments which is
expected to be completed in the third fiscal quarter. The Company
utilized these proceeds to pay down term loan debt in the quarter.
-- Subsequent to March 31, 2020, the company significantly increased
financial flexibility through an add-on bond offering of $250.0 million
to our 2026 Senior Notes and a credit agreement amendment which will
lower our primary leverage covenant at the end of the fourth quarter of
fiscal 2021.
(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 and
Six Months
Ended March
31, 2020
Q2 % Chg Six Months % Chg
Net sales -
FY'19 $
556.4 $
1,128.3
Organic 15.0 2.7 (4.7) (0.4)
% %
Impact of
Battery %
Acquisition
% 125.5 11.1
Impact of
Auto Care % %
Acquisition 23.7 4.3 85.1 7.5
Change in (0.7) (0.1)
Argentina % (0.5)
%
Impact of (7.4) (1.4) (9.9) (0.9)
currency % %
Net sales - $
587.0 5.5 $
1,323.8 17.3
FY'20 % %
Total Net sales increased 5.5%, or $30.6 million:
-- Organic Net sales increased 2.7%, or $15.0 million, in the second fiscal
quarter due to the following items:
-- Increased distribution across both of our segments contributed 1.9%;
-- Replenishment volumes, including the beneficial impacts of COVID-19
on battery demand, contributed 1.6%;
-- Channel and product mix in addition to trade investment reduced the
organic increase by 0.8%.
-- The Auto Care Acquisition, which occurred on January 28, 2019,
contributed one additional month of Net sales of $23.7 million, or 4.3%.
-- Our Argentina operations had an unfavorable impact on Net sales of $0.7
million.
-- Unfavorable movement in foreign currencies resulted in decreased sales
of $7.4 million, or 1.4%.
Total Segment profit (In millions -Unaudited)
For the Quarter and Six Months Ended March 31, 2020
Q2 % Chg Six Months % Chg
Segment profit -FY'19 $
125.1 $
295.8
Organic 14.7 11.8 (10.7) (3.6)
% %
Impact of Battery % 27.9 9.4
Acquisition
%
Impact of Auto Care 7.0 5.6 17.1 5.8
Acquisition
% %
Change in Argentina (0.3) (0.2) (0.9) (0.3)
% %
Impact of currency (4.3) (3.5) (5.6) (1.9)
% %
Segment profit -FY'20 $
142.2 13.7 $
323.6 9.4
% %
Total Segment profit in the second fiscal quarter increased $17.1 million, or 13.7%. The organic increase of $14.7 million, or 11.8%, was driven by top-line organic growth, realized synergies and improved material pricing, lower A&P spending and favorable SG&A due to reduced spending driven in part by COVID-19 impacts and restrictions. The impact of our Auto Care Acquisition was also favorable by $7.0 million, or 5.6%. Offsetting this favorable impact was our Argentina operations which had an unfavorable impact on segment profit of $0.3 million, or 0.2%, and unfavorable foreign currency impacts of $4.3 million, or 3.5%.
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 has been able to operate effectively thus far in the environment relating to the COVID-19 pandemic and continues to move forward with its integration efforts for the acquired battery and auto care businesses, with expected synergy realization remaining unchanged. However, due to the uncertainties in this rapidly changing environment, including the possible impact of the pandemic on the global economy and consumer demand, Energizer withdrew its previously disclosed full year outlook, as indicated in our Current Report on Form 8-K, filed with the SEC on April 15, 2020.
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 second fiscal quarter earnings and recent trends in the business. 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/1192/33754
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.
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;
-- the impact of the novel coronavirus (COVID-19) global pandemic;
-- 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 distributors and suppliers;
-- our ability to improve operations and realize cost savings;
-- the impact of the United Kingdom's future trading relationships
following its exit from the European Union;
-- 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, as amended in our Current Report on Form 8-K, filed with the SEC on April 15, 2020.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Condensed)
(In millions, except per share data - Unaudited)
For the Quarter Ended March 31, For the Six Months Ended March 31,
2020 2019 2020 2019
---
Net sales $
587.0 $
556.4 $
1,323.8 $
1,128.3
Cost of products
sold (1) 351.4 362.2 786.9 658.6
Gross profit 235.6 194.2 536.9 469.7
Selling, general and
administrative
expense (1) 116.1 141.3 238.2 245.9
Advertising and
sales promotion
expense 22.8 24.7 69.6 65.6
Research and
development expense
(1) 8.3 8.7 17.2 14.2
Amortization of
intangible assets 14.2 12.5 28.0 15.7
Interest expense (1)
(2) 47.2 77.2 98.2 125.4
Other items, net (1) 5.1 3.8 5.1 (13.1)
Earnings/(loss)
before income taxes 21.9 (74.0) 80.6 16.0
Income tax
provision/
(benefit) 8.2 (11.7) 21.1 7.5
Net earnings/(loss)
from continuing
operations $
13.7 $
(62.3) $
59.5 $
8.5
Net loss from
discontinued
operations (3) (131.4) (11.0) (131.1) (11.0)
Net loss (117.7) (73.3) (71.6) (2.5)
Mandatory preferred
stock dividends (4.1) (3.3) (8.1) (3.3)
Net loss
attributable to
common shareholders $
(121.8) $
(76.6) $
(79.7) $
(5.8)
Basic net earnings/
(loss) per common
share -continuing
operations $
0.14 $
(0.97) $
0.74 $
0.08
Basic net loss per
common share -
discontinued
operations (1.90) (0.17) (1.89) (0.17)
Basic net loss per
common share $
(1.76) $
(1.14) $
(1.15) $
(0.09)
Diluted net
earnings/(loss)
per common share -
continuing
operations $
0.14 $
(0.97) $
0.74 $
0.08
Diluted net loss per
common share -
discontinued
operations (1.89) (0.17) (1.88) (0.17)
Diluted net loss per
common share $
(1.75) $
(1.14) $
(1.14) $
(0.09)
Dividend per common
share $
0.30 $
0.30 0.30 $
0.30
Weighted average
shares of common
stock -Basic 69.1 67.3 69.1 63.5
Weighted average
shares of common
stock -Diluted 69.5 67.3 69.8 64.6
(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 six months
ended March 31, 2020 includes a $4.2
million loss on extinguishment of
debt associated with the term loan
refinancing. Interest expense for
the quarter and six months ended
March 31, 2019 includes Acquisition
debt commitment fees, interest and
ticking fees of $33.2 million and
$65.6 million, respectively,
associated with the Battery and Auto
Care Acquisitions.
(3) Included in these results is the pre-
tax loss on the disposition of the
Varta consumer battery business of
$137.6 million in the quarter and
six months ended March 31, 2020.
The Net loss on discontinued
operations is net of an income tax
benefit of $13.7 million and $6.2
million for the quarter and six
months ended March 31, 2020,
respectively.
ENERGIZER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Condensed)
(In millions - Unaudited)
Assets March 31, September 30,
2020 2019
---
Current assets
Cash and cash equivalents $
277.9 $
258.5
Trade receivables 311.6 340.2
Inventories 470.7 469.3
Other current assets 205.9 177.1
Assets held for sale - 791.7
Total current assets $
1,266.1 $
2,036.8
Property, plant and equipment,
net 346.6 362.0
Operating lease assets 91.9
Goodwill 1,008.9 1,004.8
Other intangible assets, net 1,934.3 1,958.9
Deferred tax asset 21.9 22.8
Other assets 82.8 64.3
Total assets $
4,752.5 $
5,449.6
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-
term debt $
91.3
$
Current portion of capital
leases 1.7 1.6
Notes payable 184.1 31.9
Accounts payable 280.6 299.0
Current operating lease
liabilities 14.0
Other current liabilities 321.2 333.6
Liabilities held for sale - 402.9
Total current liabilities $
892.9 $
1,069.0
Long-term debt 3,010.6 3,461.6
Operating lease liabilities 80.0
Deferred tax liability 173.0 170.6
Other liabilities 222.3 204.6
Total liabilities $
4,378.8 $
4,905.8
Shareholders' equity
Common stock 0.7 0.7
Mandatory convertible
preferred stock -
Additional paid-in capital 853.9 870.3
Retained earnings 5.8 129.5
Treasury stock (179.6) (158.4)
Accumulated other
comprehensive loss (307.1) (298.3)
Total shareholders' equity $
373.7 $
543.8
Total liabilities and
shareholders' equity $
4,752.5 $
5,449.6
ENERGIZER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed)
(In millions - Unaudited)
For the Six Months Ended March 31,
2020 2019
---
Cash Flow from Operating Activities
Net loss $
(71.6) $
(2.5)
Net loss from
discontinued operations (131.1) (11.0)
Net earnings from
continuing operations 59.5 8.5
Non-cash integration and
restructuring charges 8.1
Depreciation and
amortization 56.1 40.0
Deferred income taxes 2.6 0.2
Share-based compensation
expense 15.9 14.1
Mandatory transition tax - 1.5
Inventory step up - 27.2
Non-cash items included
in income, net 14.4 (5.8)
Other, net (0.1) (3.5)
Changes in current assets
and liabilities used in
operations (57.3) (69.2)
Net cash from operating
activities from
continuing operations 99.2 13.0
Net cash used by
operating activities
from discontinued
operations (12.9) (11.2)
Net cash from operating
activities 86.3 1.8
Cash Flow from Investing Activities
Capital expenditures (27.7) (20.7)
Proceeds from sale of
assets 1.5 0.1
Acquisitions, net of cash
acquired (4.5) (2,403.8)
Net cash used by
investing activities
from continuing
operations (30.7) (2,424.4)
Net cash from/(used by)
investing activities
from discontinued
operations 305.9 (450.6)
Net cash from/(used by)
investing activities 275.2 (2,875.0)
Cash Flow from Financing Activities
Cash proceeds from
issuance of debt with
original maturities
greater than 90 days 365.0 1,800.0
Payments on debt with
maturities greater than
90 days (747.2) (438.4)
Net increase/(decrease)
in debt with original
maturities of 90 days or
less 150.3 (239.1)
Debt issuance costs (0.9) (40.1)
Net proceeds from
issuance of mandatory
convertible preferred
shares - 199.5
Net proceeds from
issuance of common stock - 205.3
Dividends paid on common
stock (43.7) (40.8)
Dividends paid on
mandatory convertible
preferred stock (8.1)
Common stock purchased (45.0)
Taxes paid for withheld
share-based payments (9.7) (7.1)
Net cash (used by)/from
financing activities
from continuing
operations (339.3) 1,439.3
Net cash used by
financing activities
from discontinued
operations (1.1) (1.0)
Net cash (used by)/from
financing activities (340.4) 1,438.3
Effect of exchange rate
changes on cash (1.7) (0.5)
Net decrease in cash,
cash equivalents, and
restricted cash from
continuing operations (272.5) (972.6)
Net increase/(decrease)
in cash, cash
equivalents, and
restricted cash from
discontinued operations 291.9 (462.8)
Net increase/(decrease)
in cash, cash
equivalents, and
restricted cash 19.4 (1,435.4)
Cash, cash equivalents,
and restricted cash,
beginning of period 258.5 1,768.3
Cash, cash equivalents,
and restricted cash, end
of period $
277.9 $
332.9
ENERGIZER HOLDINGS, INC.
Reconciliation of GAAP and Non-GAAP Measures
For the Quarter and Six Months Ended March 31, 2020
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 CARES Act and the new U.S. tax legislation (December 2017). 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 the charges related to acquisition and integration costs 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 costs 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 CARES Act and the U.S. tax legislation (December 2017).
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 and Six Months Ended March 31, 2020 (In millions - 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 and six months ended March 31, 2020 and 2019, respectively, are presented below:
Quarter Ended March 31, Six Months Ended March 31,
2020 2019 2020 2019
Net Sales
Americas $
409.9 $
381.6 $
924.4 $
755.1
International 177.1 174.8 399.4 373.2
Total net sales $
587.0 $
556.4 $
1,323.8 $
1,128.3
Segment Profit
Americas $
101.8 $
88.7 $
231.0 $
204.8
International 40.4 36.4 92.6 91.0
Total segment profit $
142.2 $
125.1 $
323.6 $
295.8
General corporate and
other expenses (1) (23.5) (29.7) (48.4) (48.4)
Global marketing
expense (2) (5.6) (6.4) (11.7) (9.5)
Research and
development expense -
Adjusted (3) (7.7) (8.7) (16.2) (14.2)
Amortization of
intangible assets (14.2) (12.5) (28.0) (15.7)
Acquisition and
integration costs (4) (16.9) (95.4) (36.2) (131.9)
Interest expense -
Adjusted (5) (6) (47.2) (44.0) (94.0) (59.8)
Loss on extinguishment
of debt (6) (4.2)
Other items, net -
Adjusted (7) (5.2) (2.4) (4.3) (0.3)
Total earnings/(loss)
before income taxes $
21.9 $
(74.0) $
80.6 $
16.0
(1) Recorded in SG&A on the Consolidated
(Condensed) Statement of Earnings.
(2) The quarter and six months ended
March 31, 2020 includes $2.6 million
and $5.5 million recorded in SG&A,
respectively, and $3.0 million and
$6.2 million recorded in Advertising
and sales promotion expense,
respectively, in the Consolidated
(Condensed) Statement of Earnings.
The quarter and six months ended
March 31, 2019 includes $2.2 million
and $3.4 million recorded in SG&A,
respectively, and $4.2 million and
$6.1 million recorded in Advertising
and sales promotion expense,
respectively, in the Consolidated
(Condensed) Statement of Earnings.
(3) Research and development expense for
the quarter and six months ended
March 31, 2020 included $0.6 million
and $1.0 million, respectively, 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 and
six months ended March 31, 2019
included $33.2 million and $65.6
million, respectively, of
Acquisition debt commitment fees,
interest and ticking fees which have
been reclassified for purposes of
the reconciliation above.
(6) Loss on extinguishment of debt for
the six months ended March 31, 2020
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.
Energizer Holdings, Inc.
Supplemental Schedules - Segment Information and Supplemental Sales Data
For the Quarter and Six Months Ended March 31, 2020 (In millions - Unaudited)
Supplemental product information is presented below for revenues from external customers:
Quarter Ended March 31, Six Months Ended March 31,
Net Sales 2020 2019 2020 2019
Batteries $
427.7 $
419.4 $
1,049.6 $
941.3
Auto Care 130.2 108.6 208.9 129.1
Lights and
Licensing 29.1 28.4 65.3 57.9
Total net sales $
587.0 $
556.4 $
1,323.8 $
1,128.3
Energizer Holdings, Inc.
Supplemental Schedules - GAAP EPS to Adjusted EPS Reconciliation
For the Quarter and Six Months Ended March 31, 2020
(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.
For the Quarter Ended March 31, For the Six Months Ended March 31,
2020 2019 2020 2019
Net loss attributable
to common
shareholders $
(121.8) $
(76.6) $
(79.7) $
(5.8)
Mandatory preferred
stock dividends (4.1) (3.3) (8.1) (3.3)
Net loss $
(117.7) $
(73.3) $
(71.6) $
(2.5)
Net loss from
discontinued
operations (131.4) (11.0) (131.1) (11.0)
Net earnings/(loss)
from continuing
operations $
13.7 $
(62.3) $
59.5 $
8.5
Pre-tax adjustments
---
Acquisition and
integration (1) $
16.9 $
95.4 $
36.2 $
131.9
Loss on extinguishment
of debt (2) 4.2
Total adjustments,
pre-tax 16.9 95.4 40.4 131.9
After tax adjustments
---
Acquisition and
integration 12.8 79.1 27.5 107.0
Loss on extinguishment
of debt 3.2
One-time impact of
the CARES Act 3.4 3.4
One-time impact of
the new U.S. Tax
Legislation 1.5
Total adjustments,
after tax 16.2 79.1 34.1 108.5
Adjusted net earnings
from continuing
operations (3) 29.9 16.8 93.6 117.0
Mandatory preferred
stock dividends (4.1) (3.3) (8.1) (3.3)
Adjusted net earnings
from continuing
operations
attributable to
common shareholders $
25.8 $
13.5 $
85.5 $
113.7
Diluted net earnings/
(loss) per common
share -continuing
operations $
0.14 $
(0.97) $
0.74 $
0.08
Adjustments
---
Acquisition and
integration 0.18 1.16 0.39 1.54
Loss on extinguishment
of debt 0.04
One time impact of the
CARES Act 0.05 0.05
One-time impact of
new U.S tax
legislation 0.02
Impact for diluted
share calculation (4) 0.01 0.05
Adjusted diluted net
earnings per diluted
common share -
continuing operations $
0.37 $
0.20 $
1.22 $
1.69
Weighted average
shares of common
stock -Diluted 69.5 67.3 69.8 64.6
Adjusted Weighted
average shares of
common stock -
Diluted (4) 69.5 68.3 69.8 69.3
(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 which occurred in the
first fiscal quarter of 2020 and was
recorded in interest expense on the
Consolidated (Condensed) Statement
of Earnings.
(3) The effective tax rate for the
quarters ended March 31, 2020 and
2019 for the Adjusted - Non-GAAP
Net Earnings and Diluted EPS was
22.9% and 21.5%, respectively, as
calculated utilizing the statutory
rate for where the costs were
incurred. The effective tax rate for
the six months ended March 31, 2020
and 2019 for the Adjusted - Non-
GAAP Net Earnings and Diluted EPS
was 22.6% and 20.9%, respectively,
as calculated utilizing the
statutory rate for where the costs
were incurred.
(4) Adjusted net earnings from continuing
operations for the quarter ended
March 31, 2019 results in net
earnings compared to the reported
number of a net loss. To calculate
the Adjusted diluted net earnings
per common share - continuing
operations, the Adjusted Weighted
average shares of common stock -
Diluted factor in the diluted
performance shares and restricted
shares of 1.0 million which were
anti-dilutive on a reported basis.
For the six months ended March 31,
2019 calculation, the Adjusted
Weighted average shares of common
stock -Diluted is assuming
conversion of the preferred shares
as those results are more dilutive.
The shares have been adjusted for
the 4.7 million share conversion and
the preferred dividend has been
adjusted out of the Adjusted net
earnings.
Energizer Holdings, Inc.
Supplemental Schedules - Segment Sales
For the Quarter and Six Months Ended March 31, 2020
(In millions, except per share data - Unaudited)
Net sales Q1'20 % Chg Q2'20 % Chg Six Months '20 % Chg
---
Americas
Net sales -prior
year $
373.5 $
381.6 $
755.1
Organic (19.0) (5.1) 10.9 2.9 (8.1) (1.1)
% % %
Impact of Battery 107.1 28.7 % 107.1 14.2
Acquisition
% %
Impact of Auto Care 52.9 14.2 21.1 5.5 74.0 9.8
Acquisition
% % %
Change in Argentina 0.2 0.1 (0.7) (0.2) (0.5) (0.1)
% % %
Impact of currency (0.2) (0.1) (3.0) (0.8) (3.2) (0.4)
% % %
---
Net sales -current 37.8 7.4 22.4
year
%
$
514.5 % $
409.9 $
924.4 %
---
International
Net sales -prior
year $
198.4 $
174.8 $
373.2
Organic (0.7) (0.4) 4.1 2.3 3.4 0.9
% % %
Impact of Battery 18.4 9.3 % 18.4 4.9
Acquisition
% %
Impact of Auto Care 8.5 4.3 2.6 1.5 11.1 3.0
Acquisition
% % %
Impact of currency (2.3) (1.2) (4.4) (2.5) (6.7) (1.8)
% % %
---
Net sales -current 12.0
year
% %
$
222.3 % $
177.1 1.3 $
399.4 7.0
---
Total Net Sales
Net sales -prior
year $
571.9 $
556.4 $
1,128.3
Organic (19.7) (3.4) 15.0 2.7 (4.7) (0.4)
% % %
Impact of Battery 125.5 21.9 % 125.5 11.1
Acquisition
% %
Impact of Auto Care 61.4 10.7 23.7 4.3 85.1 7.5
Acquisition
% % %
Change in Argentina 0.2 % (0.7) (0.1)
% (0.5) %
Impact of currency (2.5) (0.4) (7.4) (1.4) (9.9) (0.9)
% % %
---
Net sales -current 28.8 5.5 17.3
year
%
$
736.8 % $
587.0 $
1,323.8 %
---
Energizer Holdings, Inc.
Supplemental Schedules - Segment Profit
For the Quarter and Six Months Ended March 31, 2020
(In millions, except per share data - Unaudited)
Segment profit Q1'20 % Chg Q2'20 % Chg Six Months '20 % Chg
---
Americas
Segment profit -
prior year $
116.1 $
88.7 $
204.8
Organic (17.1) (14.7) 8.6 9.7 (8.5) (4.2)
%
% %
Impact of Battery 21.8 18.8 % 21.8 10.6
Acquisition %
%
Impact of Auto Care 9.1 7.8 6.7 7.6 15.8 7.7
Acquisition %
% %
Change in Argentina (0.6) (0.5) (0.3) (0.3) (0.9) (0.4)
% % %
Impact of currency (0.1) (0.1) (1.9) (2.2) (2.0) (0.9)
% % %
---
Segment profit - 11.3 14.8 12.8
current year
%
$
129.2 $
101.8 % $
231.0 %
---
International
Segment profit -
prior year $
54.6 $
36.4 $
91.0
Organic (8.3) (15.2) 6.1 16.8 (2.2) (2.4)
%
% %
Impact of Battery 6.1 11.2 % 6.1 6.7
Acquisition %
%
Impact of Auto Care 1.0 1.8 0.3 0.8 1.3 1.4
Acquisition %
% %
Impact of currency (1.2) (2.2) (2.4) (6.6) (3.6) (3.9)
% % %
---
Segment profit - (4.4) 11.0
current year
% %
$
52.2 $
40.4 % $
92.6 1.8
---
Total Segment profit
Segment profit -
prior year $
170.7 $
125.1 $
295.8
Organic (25.4) (14.9) 14.7 11.8 (10.7) (3.6)
%
% %
Impact of Battery 27.9 16.3 % 27.9 9.4
Acquisition %
%
Impact of Auto Care 10.1 5.9 7.0 5.6 17.1 5.8
Acquisition %
% %
Change in Argentina (0.6) (0.4) (0.3) (0.2) (0.9) (0.3)
% % %
Impact of currency (1.3) (0.6) (4.3) (3.5) (5.6) (1.9)
% % %
---
Segment profit - 6.3 13.7
current year
% %
$
181.4 $
142.2 % $
323.6 9.4
---
Energizer Holdings, Inc.
Supplemental Schedules - Non-GAAP Reconciliations
For the Quarter and Six Months Ended March 31, 2020
(In millions, except per share data - Unaudited)
Gross profit Q1'20 Q2'20 Q1'19 Q2'19 Q2'20 YTD Q2'19 YTD
Net sales $
736.8 $
587.0 $
571.9 $
556.4 $
1,323.8 $
1,128.3
Cost of products
sold -adjusted 428.6 343.1 296.4 330.5 771.7 626.9
Adjusted Gross
profit $
308.2 $
243.9 $
275.5 $
225.9 $
552.1 $
501.4
Adjusted Gross 41.8 41.6 48.2 40.6
margin
%
%
% % % % 41.7 44.4
Acquisition and
integration costs 6.9 8.3 4.5 15.2 4.5
Inventory step up - 27.2 27.2
Reported Cost of
products sold 435.5 351.4 296.4 362.2 786.9 658.6
Gross profit $
301.3 $
235.6 $
275.5 $
194.2 $
536.9 $
469.7
Gross margin 40.9 40.1 48.2 34.9
%
%
% % % % 40.6 41.6
SG&A Q1'20 Q2'20 Q1'19 Q2'19 Q2'20 YTD Q2'19 YTD
Segment SG&A $
84.1 $
82.4 $
65.8 $
81.4 $
166.5 $
147.2
Corporate SG&A 24.0 23.0 18.7 28.6 47.0 47.3
Global Marketing 2.9 2.6 1.2 2.2 5.5 3.4
SG&A Adjusted -
subtotal $
111.0 $
108.0 $
85.7 $
112.2 $
219.0 $
197.9
SG&A Adjusted % of 15.1 18.4 15.0 20.2
Net sales
%
%
% % % % 16.5 17.5
Acquisition and
integration costs 11.1 8.1 18.9 29.1 19.2 48.0
Reported SG&A $
122.1 $
116.1 $
104.6 $
141.3 $
238.2 $
245.9
Reported SG&A % of 16.6 19.8 18.3 25.4
Net sales
%
%
% % % % 18.0 21.8
Acquisition and
integration Q1'20 Q2'20 Q1'19 Q2'19 Q2'20 YTD Q2'19 YTD
Inventory step up
(COGS)
$
$
$ $
27.2
$ $
27.2
Cost of products
sold 6.9 8.3 4.5 15.2 4.5
SG&A 11.1 8.1 18.9 29.1 19.2 48.0
Research and
development 0.4 0.6 1.0
Interest expense - 32.4 33.2 65.6
Other items, net 0.9 (0.1) (14.8) 1.4 0.8 (13.4)
Acquisition and
integration
related items $
19.3 $
16.9 $
36.5 $
95.4 $
36.2 $
131.9
Other items, net Q1'20 Q2'20 Q1'19 Q2'19 Q2'20 YTD Q2'19 YTD
Interest income $
(0.1) $
(0.1) $
(0.3) $
(0.7) $
(0.2) $
(1.0)
Foreign currency
exchange
(gain)/loss (0.4) 5.5 (1.1) 3.8 5.1 2.7
Pension benefit
other than
service costs (0.5) (0.5) (0.7) (0.7) (1.0) (1.4)
Other 0.1 0.3 0.4
Other items, net -
Adjusted $
(0.9) $
5.2 $
(2.1) $
2.4 $
4.3 $
0.3
Acquisition
foreign currency
loss/(gain) 2.2 (9.0) 2.2 (9.0)
Interest income on
restricted cash - (5.8) (5.8)
Transition
services
agreement income (0.3) (0.1) (0.1) (0.4) (0.1)
Gain on sale of
assets (1.0) (1.0)
Settlement of
acquired business
hedging contract - 1.5 1.5
Acquisition and
integration cost $
0.9 $
(0.1) $
(14.8) $
1.4 $
0.8 $
(13.4)
Total Other items,
net
$ $
5.1 $
(16.9) $
3.8 $
5.1 $
(13.1)
Energizer Holdings, Inc.
Supplemental Schedules - Non-GAAP Reconciliations cont.
For the Quarter and Six Months Ended March 31, 2020
(In millions, except per share data - Unaudited)
Q2'20 Q1'20 Q4'19 Q3'19 LTM Q2'19
3/31/20 (1)
---
Net earnings/(loss)
from continuing
operations $
13.7 $
45.8 $
47.0 $
9.2 $
115.7 $
(62.3)
Income tax
provision/
(benefit) 8.2 12.9 0.7 0.2 22.0 (11.7)
Earnings/(loss)
before income taxes $
21.9 $
58.7 $
47.7 $
9.4 $
137.7 $
(74.0)
Interest expense 47.2 51.0 48.7 51.9 198.8 77.2
Depreciation &
Amortization 28.5 27.6 22.0 30.8 108.9 28.4
EBITDA $
97.6 $
137.3 $
118.4 $
92.1 $
445.4 $
31.6
Adjustments:
Acquisition and
integration costs 16.9 19.3 28.5 28.0 92.7 62.2
Settlement loss on
pension plan
terminations - 3.7 3.7
Share-based
payments 8.7 7.2 6.3 6.7 28.9 7.6
Adjusted EBITDA $
123.2 $
163.8 $
156.9 $
126.8 $
570.7 $
101.4
(1) LTM defined as the latest
12 months for the period
ending March 31, 2020.
Free Cash Flow Q2'20 YTD Q2'19 YTD
Net cash from operating activities from continuing operations $
99.2 $
13.0
Capital expenditures (27.7) (20.7)
Proceeds from sale of assets 1.5 0.1
Free cash flow from continuing operations - subtotal $
73.0 $
(7.6)
Cash paid for acquisition and integration expenses 19.5 108.7
Cash paid for integration related capital expenditures 14.8
Adjusted Free cash flow $
107.3 $
101.1
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SOURCE Energizer Holdings, Inc.
