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Energizer Announces
Third Quarter Results

Overall retail consumption of Energizer Max units globally was down approximately 3% to 4% in the current quarter compared to last year

Energizer Holdings, Inc. Press Release (excerpted)

FlashlightNews.org - 7/29/2009


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Energizer Hard Case Tactical 2AA LED Flashlight

Energizer Hard Case Tactical 2AA LED Flashlight

ST.LOUIS, Mo. - Energizer Holdings, Inc., (NYSE: ENR), today announced results of its third quarter ended June 30, 2009. Net earnings for the quarter were $72.7 million, or $1.13 per diluted share, versus net earnings of $66.7 million, or $1.13 per diluted share in the third fiscal quarter of 2008. While net earnings were higher in the fiscal 2009 third quarter, the recently completed equity offering resulted in higher shares outstanding, or a $0.10 reduction in diluted earnings per share. The current quarter includes a favorable adjustment of $0.7 million, net of tax, or $0.01 per diluted share, resulting from a change in the policy by which the company's colleagues earn and vest in the company's paid time off (PTO) benefit. Last year's third quarter included an after-tax expense of $1.9 million, or $0.03 per diluted share, related to Playtex integration costs and a $4.0 million expense for income taxes, or $0.07 per diluted share, to adjust prior year tax accruals.

"Net earnings for the quarter and year-to-date continue to hold up despite volume shortfalls in batteries, currency headwinds across all businesses and an overall globally weak consumer environment," said Ward Klein, Chief Executive Officer. "This positive financial performance is due in part to our continued focus on innovation, strong overhead and spending cost reductions, and on-going deleveraging of our balance sheet. In the near-term, we expect a difficult fourth quarter comparison due to hurricane-related and early holiday season shipments last year. In addition, our brand investment spending will be at levels similar to the June quarter. Longer-term, we need to insure our cost structure remains aligned to the difficult consumer and macro-economic environment that prevails, while maintaining our investment in existing brands and new products."

For the current quarter, total net sales decreased $69.2 million, or 6%, to $997.5 million. On a constant currency basis, sales decreased $5 million, or less than 1%. Net sales in the Household Products division decreased $69.1 million, down 13%, or $33 million, down 6% on a constant currency basis. Net sales in the Personal Care business were essentially flat but increased $28 million, or 5%, on a constant currency basis. Gross margin decreased 180 basis points due to the unfavorable impact of currencies. Excluding currencies, gross margin was 47.9%, up 20 basis points versus the prior year. Segment profit decreased $10.1 million, or 6%, to $162.6 million. Excluding the unfavorable impact of currencies of approximately $31 million, segment profit increased approximately $21 million due primarily to lower advertising and promotional spending and marketing and selling expenses. General corporate and other expenses decreased $2.1 million, while interest expense and other net financing costs declined $9.3 million and $7.1 million, respectively.

Household Products

For the quarter, net sales were $468.0 million, down $69.1 million, or 13% versus the same quarter last year due partially to unfavorable currencies of approximately $37 million. Excluding the unfavorable currency impact, net sales declined $33 million, or 6% as lower sales volume was partially offset by favorable pricing and product mix. The sales volume decline was across all regions and was driven by a reduction in Energizer Max premium alkaline and low margin non-Energizer branded products volume. We estimate overall retail consumption of Energizer Max units globally was down approximately 3% to 4% in the current quarter compared to the same quarter last year. In the current global recessionary environment, we continue to see cautious retailer inventory investments and unfavorable device trends, primarily in developed markets. However, the company's broad performance battery portfolio has been able to offset overall alkaline battery category softness and allowed Energizer to hold or grow share in most of our key markets. Overall pricing and product mix was favorable globally driven by early fiscal 2009 price increases in the U.S. and a number of other markets.

For the nine months, net sales were $1,533.1 million, down $268.0 million, or 15% versus the prior nine month period including the impact of approximately $119 million of unfavorable currencies. Excluding the unfavorable currency impact, net sales declined $149 million, or 8% due to lower sales volume most notably in the U.S. The U.S. volume decline reflects significant retail inventory reductions, primarily in the first quarter, and declines in lower margin non Energizer branded products.

As mentioned above, the battery category has experienced declines recently. In response, on July 27, 2009, the company's Board of Directors approved a restructuring plan designed to reduce the overhead cost structure primarily in the Household Products business and right-size manufacturing and sales operations in light of market uncertainty. The plan provides for an offer of a voluntary enhanced retirement severance package to certain eligible hourly and salaried U.S. employees, and the elimination of additional positions as part of a limited involuntary reduction in force.

To read the entire Third Quarter financial results, as well as view the attached Statement of Earnings, visit: Energizer Holdings, Inc. Announces Third Quarter Results.

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