Energizer (ENR)2025-02-04 18:04Financial Performance - The Company reported net sales of $7.7 million and $12.3 million with operating profit of $1.9 million and $5.1 million for the three months ended December 31, 2024 and December 31, 2023, respectively[140]. - Net earnings for the first fiscal quarter of 2025 were $22.3 million, or $0.30 per diluted common share, compared to $1.9 million, or $0.03 per diluted common share in the prior year, representing a significant increase[153]. - Adjusted diluted net earnings per common share increased by approximately 14% to $0.67 from $0.59 in the prior year quarter[153]. - Total net sales for the first fiscal quarter of 2025 were $731.7 million, an increase of $15.1 million or 2.1% compared to the prior year[159]. - Organic net sales improved by 3.8%, driven by new distribution and hurricane-related volume increases of approximately $10 million[160]. - Gross margin percentage on a reported basis was 36.8%, down from 37.3% in the prior year, while adjusted gross margin improved to 40.0% from 39.5%[161]. - SG&A expenses were $131.3 million, or 17.9% of net sales, consistent with the prior year, with adjusted SG&A at $119.2 million, or 16.3% of net sales[163]. - Advertising and sales promotion expense increased to $53.4 million, or 7.3% of net sales, compared to $47.0 million, or 6.6% in the prior year[164]. - Battery & Lights segment net sales increased by 2.4%, with organic net sales improving by $24.9 million, or 4.0%[174]. - Auto Care reported a net sales increase of 0.5% year-over-year, with an organic net sales increase of $2.1 million, or 2.1%[175]. - Global reported segment profit increased by 0.4% compared to the prior year, with an organic profit increase of $8.2 million, or 5.9%[177]. - Auto Care's segment profit surged by 197.1% year-over-year, with an organic segment profit increase of $14.7 million, or 213.0%[179]. Currency and Economic Impact - The Company recognized $21.0 million in currency losses due to the devaluation of the Argentine Peso, including $14.7 million from remeasurement of monetary assets and $6.3 million in transactional currency exchange losses[141]. - The Company is subject to risks related to international operations, including currency fluctuations that could adversely affect results of operations[130]. - Energizer's foreign currency derivative contracts resulted in a loss of $8.4 million for the quarter ended December 31, 2024, compared to a gain of $3.2 million for the same quarter in 2023[208]. - The Egypt subsidiary's financial statements were consolidated under highly inflationary accounting effective October 1, 2024, due to a cumulative inflation rate exceeding 100 percent[216]. - The Argentina subsidiary's financial statements have been consolidated under highly inflationary accounting since July 1, 2018, and the economy remains highly inflationary as of December 31, 2024[217]. - Changes in non-functional currency balance sheet positions at foreign subsidiaries resulted in exchange gains or losses recorded in Other items, net[207]. Project Momentum and Restructuring - The Project Momentum program is expected to generate approximately $200 million in total pre-tax savings by the end of fiscal year 2025, with $161 million realized as of December 31, 2024[149]. - The Company incurred total Project Momentum restructuring and related pre-tax costs of $20.3 million and $22.4 million for the quarters ended December 31, 2024 and 2023, respectively[150]. - The restructuring component of Project Momentum is expected to incur one-time cash operating costs of $180 to $185 million and generate annual pre-tax savings of approximately $180 million[148]. - The Company’s future results may be impacted by operational execution and the ability to achieve cost savings from restructuring efforts[130]. Investments and Acquisitions - The Company acquired battery manufacturing assets in Belgium and all outstanding shares of Centralsul Ltda., enhancing its presence in Europe and Brazil[143][144]. - The Company recorded $2.6 million of acquisition and integration costs associated with the Belgium Acquisition during the three months ended December 31, 2023[146]. - The company entered into a share purchase agreement to acquire Advanced Power Solutions NV for a purchase price of EUR 26.8 million, expected to close in 2025[199]. Cash Flow and Debt - Cash flow from operating activities was $77.0 million, a decrease of $101.1 million year-over-year, primarily due to working capital changes[187]. - Net cash used by investing activities was $34.7 million, with capital expenditures of $34.6 million for the quarter[188]. - The company prepaid $22.0 million of the Term Loan during the quarter, resulting in a loss on extinguishment of debt of $0.1 million[185]. - As of December 31, 2024, the company had $195.9 million in cash and cash equivalents, with approximately 96% held outside the U.S.[182]. - The company has a contractual commitment to repay long-term debt of $3,105.0 million, with $12.0 million due within the next twelve months[197]. - The company had variable rate debt outstanding of $757.0 million under the 2020 Term Loan as of December 31, 2024[211]. - The weighted average interest rate on variable rate debt, inclusive of the interest rate swap, was 3.67% for the quarter ended December 31, 2024[213]. Other Financial Metrics - Incremental network transition costs of $14.0 million were incurred to maintain business continuity during the relocation of production lines[155]. - The effective tax rate for adjusted net earnings was 24.8%, slightly up from 24.0% in the prior year[169]. - General corporate and other expenses decreased to $27.4 million, representing 3.7% of net sales, down from 4.1% in the prior year[180]. - The company expects $7.3 million of the pre-tax gain included in accumulated other comprehensive loss to be recognized in earnings over the next twelve months[206]. - The company uses hedging instruments to reduce exposure to price volatility in raw materials, including zinc[209]. - The company has 16 open hedging contracts on future zinc purchases with a total notional value of approximately $24 million as of December 31, 2024[210].