Why Is Energizer (ENR) Up 6.3% Since Last Earnings Report?

Core Viewpoint - Energizer Holdings reported mixed results for Q3 fiscal 2024, with adjusted earnings exceeding estimates while net sales fell short, indicating potential challenges ahead despite year-over-year growth in both metrics [2][3]. Financial Performance - Adjusted earnings per share were 79 cents, surpassing the Zacks Consensus Estimate of 67 cents, and reflecting a 46.3% increase from the previous year [3]. - Net sales reached $701.4 million, slightly below the Zacks Consensus Estimate of $705 million, but up 0.3% year-over-year [3]. - Organic sales increased by 1.2% year-over-year in Q3 [3]. Segment Performance - The Battery & Lights segment saw a revenue decline of 0.4% to $509.1 million, but segment profit rose 6.2% to $129.4 million [6]. - The Auto Care segment's revenues increased by 2.2% to $192.3 million, with segment profit surging 54% to $26.8 million [6]. Margin Analysis - Adjusted gross margin expanded by 270 basis points to 41.5%, driven by Project Momentum savings of approximately $14 million and reduced input costs [7]. - Adjusted SG&A expenses rose 4.5% year-over-year to $118.4 million, influenced by higher labor costs and increased travel expenses, although mitigated by savings from Project Momentum [8]. Cash Flow and Debt - As of June 30, 2024, cash and cash equivalents stood at $146.7 million, with long-term debt at $3.21 billion [9]. - The company paid down $150 million of debt during the fiscal third quarter, resulting in a net debt to adjusted EBITDA ratio of 5x [9]. Future Outlook - For fiscal 2024, Energizer anticipates organic revenues to decline by approximately 2%, with adjusted EBITDA projected between $610 million and $620 million [10]. - The company expects adjusted earnings per share to range from $3.20 to $3.30, with gross margin improvements of over 150 basis points year-over-year [10]. - For the fiscal fourth quarter, organic revenues are expected to be flat, with adjusted earnings per share anticipated between $1.10 and $1.20 [11]. Market Position - Despite recent downward revisions in estimates, Energizer holds a Zacks Rank 1 (Strong Buy), indicating expectations for above-average returns in the coming months [14]. - The company has a strong VGM Score of A, reflecting favorable growth and value metrics [13].