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Energizer Holdings, Inc. Announces Fiscal Second Quarter Results and Reaffirms Fiscal 2013 Outlook for Adjusted EPS of $6.75 to



Energizer Holdings, Inc. Announces Fiscal Second Quarter Results and Reaffirms
 Fiscal 2013 Outlook for Adjusted EPS of $6.75 to $7.00 and narrows the range
               for GAAP EPS to $5.60 to $5.90 per diluted share

Second Quarter Highlights (Unaudited)

- Net Earnings per diluted share of $1.35

- Adjusted net earnings per diluted share of $1.80 (a)

- Net Sales of $1,095.9 million (b)

(a) See Diluted EPS table below

(b) See Net Sales - Total Company table below

PR Newswire

ST. LOUIS, May 1, 2013

ST. LOUIS, May 1, 2013 /PRNewswire/ -- Energizer Holdings, Inc. (NYSE: ENR)
today announced results for the second fiscal quarter ended March 31, 2013. 
Net earnings for the quarter were $84.9 million, or $1.35 per diluted share,
as compared to net earnings of $77.9 million, or $1.17 per diluted share, in
the second fiscal quarter of 2012. 

The following tables provide a reconciliation of net earnings and net earnings
per diluted share to adjusted net earnings and adjusted net earnings per
diluted share, which are non-GAAP measures.

                                               Quarter Ended March 31,
                                             Net Earnings     Diluted EPS
                                               2013     2012    2013      2012
Net Earnings/Diluted EPS - GAAP (Unaudited)  $ 84.9   $ 77.9  $ 1.35    $ 1.17
Impacts, net of tax: Expense/(Income)
     2013 restructuring and related costs      24.8     —       0.39      —
     Prior restructuring                       —        1.2     —         0.02
Other realignment / integration                0.6      1.7     0.01      0.03
     Venezuela devaluation                     6.3      —       0.10      —
Adjustment to prior years' tax accruals        (3.0)    —       (0.05)    —
Net Earnings/Diluted EPS - adjusted          $ 113.6  $ 80.8  $ 1.80    $ 1.22
(Non-GAAP)
Weighted average shares - Diluted                               63.0      66.4

 

                                         Six Months Ended March 31,
                                         Net Earnings       Diluted EPS
                                         2013      2012     2013      2012
Net Earnings/Diluted EPS - GAAP          $ 214.7   $ 221.7  $ 3.42    $ 3.33
(Unaudited)
Impacts, net of tax: Expense/(Income)
     2013 restructuring and related        56.3      —        0.90      —
costs
Pension curtailment                        (23.5)    —        (0.37)    —
Prior restructuring                        —         (6.4)    —         (0.10)
Other realignment / integration            1.3       2.6      0.02      0.04
     Venezuela devaluation                 5.9       —        0.09      —
Adjustment to prior years' tax accruals    (3.0)     —        (0.05)    —
Net Earnings/Diluted EPS - adjusted      $ 251.7   $ 217.9  $ 4.01    $ 3.27
(Non-GAAP)
Weighted average shares - Diluted                             62.8      66.6

 

"We are pleased with second quarter earnings and the progress we have made on
our cost reduction initiatives, which are tracking ahead of plan," said Ward
Klein, Chief Executive Officer.  "We experienced flat organic sales in the
quarter as  modest top line growth in Personal Care was offset by declines in
Household Products.  The growth in Personal Care was negatively impacted by
extraordinary competitive promotional activity, which we believe contributed
to overall category deflation.  Despite these top line challenges, operating
margin improvement delivered strong growth in earnings per share versus the
prior year quarter.

"Given the significant progress on our 2013 restructuring project, we have
revised our fiscal 2013 gross savings estimate to $50 to $60 million from our
original estimate of $25 to $35 million.  For the total project, gross savings
have been increased to $225 million from the original estimate of $200
million.  We plan to re-invest these incremental total project savings in
support of our business, netting to the previously announced $150 million in
net savings by 2015.  Nevertheless, the increased savings this year are
offsetting the impact of some of the top-line softness and as a result, we are
maintaining our fiscal 2013 outlook for adjusted earnings per share at $6.75
to $7.00."               

 

Net Sales - Total Company (In millions - Unaudited)
Quarter and Six Months Ended March 31, 2013
                        Q2              %Chg        Six Months  %Chg
Net Sales - FY '12      $   1,101.8                 $  2,299.9
Organic                     3.2         0.3    %       0.5      —     %
Impact of currency          (9.1)       (0.8)  %       (12.0)   (0.5) %
Net Sales - FY '13      $   1,095.9     (0.5)  %    $  2,288.4  (0.5) %

 

For the second fiscal quarter, net sales were essentially flat as modest
organic growth was offset by unfavorable currencies, primarily in Asia and
Latin America.  Organic net sales were stable for the quarter as low-single
digit organic growth in Personal Care was partially offset by a slight
reduction in organic sales in Household Products.  On a year to date basis,
net sales were down slightly due to unfavorable currencies.  Both Personal
Care and Household Products net sales were essentially flat on an organic
basis for the first half of fiscal 2013.

Gross margin for the quarter ended March 31, 2013, was 48.4%, up 150 basis
points as compared to the prior year quarter.  This increase was primarily
driven by improved gross margin in Household Products due to improved product
costs, including lower commodity costs and the early stages of savings
associated with our 2013 restructuring. On a year to date basis, gross margin
was 47.7%, up 70 basis points, again driven primarily by improved product
costs in Household Products.

For the quarter, advertising and sales promotion (A&P) was $102.5 million, or
9.4% of net sales as compared to $111.7 million, or 10.1% of net sales in the
prior year quarter. A&P was in line with the prior year quarter for Personal
Care, while spending in Household Products was down somewhat as compared to
the prior year quarter due primarily to promotional timing.

Total selling, general and administrative expense (SG&A) was $209.9 million,
or 19.2% of net sales, for the current year quarter as compared to $232.2
million, or 21.1% of net sales, for the prior year quarter.   SG&A expenses
were lower for the quarter due to effective spending controls and the
favorable impact of the early stages of our 2013 restructuring.  On a year to
date basis, SG&A as a percent of net sales was 17.9% as compared to 19.4% in
the prior fiscal period, or down 150 basis points, driven by lower expenses.

Personal Care      

 

Net Sales - Personal Care (In millions - Unaudited)
Quarter and Six Months Ended March 31, 2013
                          Q2             %Chg          Six Months  %Chg
Net Sales - FY '12        $   651.5                    $  1,215.9
Organic                       8.0           1.3     %     —        —     %
Impact of currency            (6.9)         (1.1)   %     (9.0)    (0.7) %
Net Sales - FY '13        $   652.6         0.2     %  $  1,206.9  (0.7) %

 

For the quarter, net sales increased 0.2% on a reported basis, including the
unfavorable impact of currencies. Organic sales increased 1.3% due primarily
to the following:

  o Wet Shave net sales decreased 2% on a reported basis, and declined nearly
    1% organically, due to prior year pipeline fill of Hydro Silk and the
    overall impact of competitive activity.  These shortfalls were mostly
    offset by the launch of Hydro disposables in North America and
    international growth in men's systems and disposables. 
  o Skin Care net sales increased 8% on both a reported and organic basis due
    to higher sales of Hawaiian Tropic, Banana Boat and Wet Ones.
  o All other product lines were essentially flat on a combined basis. 

For the six months, net sales were down slightly due to the unfavorable impact
of currencies.  Exclusive of the impact of currencies, net sales were flat for
the six month period primarily for the reasons noted above.

 

Segment Profit - Personal Care (In millions - Unaudited)
Quarter and Six Months Ended March 31, 2013
                         Q2       %Chg     Six Months  %Chg
Segment Profit - FY '12  $ 128.3           $   251.8
Operations                 13.4   10.4  %      5.7     2.2   %
Impact of currency         (5.3)  (4.1) %      (4.9)   (1.9) %
Segment Profit - FY '13  $ 136.4  6.3   %  $   252.6   0.3   %

 

Segment profit for the quarter was $136.4 million, up 6.3%, inclusive of the
negative impact of unfavorable currencies, most notably the weakening of the
Japanese yen.  Operationally, segment profit increased more than 10% in the
quarter driven by the favorable impact of the organic sales growth noted above
and lower overhead spending.

Segment profit for the six months was essentially flat as compared to the same
period in the prior year inclusive of the impact of approximately $5 million
of unfavorable currencies.  Operationally, segment profit increased $5.7
million or 2.2% in the six month period due primarily to lower overhead
spending.

Household Products     

 

Net Sales - Household Products (In millions - Unaudited)
Quarter and Six Months Ended March 31, 2013
                             Q2             %Chg         Six Months  %Chg
Net Sales - FY '12           $   450.3                   $  1,084.0
Organic                          (4.8)      (1.1)   %       0.5      0.1   %
Impact of currency               (2.2)      (0.5)   %       (3.0)    (0.3) %
     Net Sales - FY '13      $   443.3      (1.6)   %    $  1,081.5  (0.2) %

 

Net sales decreased 1.6% on a reported basis, and decreased 1.1% organically
in the quarter.  The decrease in organic sales was due to a continued decline
in category unit volumes partially offset by favorable pricing due to the
impact of the fiscal 2012 price increase, primarily in the U.S.

On a year to date basis, net sales were essentially flat on a reported and
organic basis.  However, this result included approximately $18 million of
incremental sales related to Hurricane Sandy in the first fiscal quarter of
2013.  Excluding the impact of Hurricane Sandy, organic net sales declined
1.6% due to category unit volume declines partially offset by the favorable
impact of pricing as compared to the prior six months.

We estimate that the global battery category declined approximately 2% in
volume and was down approximately 1% in value during the latest 12 weeks.  We
have now reached the anniversary of the 2012 U.S. retail price increase. Thus,
we expect that the trend in category value will decline at a rate, which more
closely aligns with the declining unit volume trend over time.  However,
changes in promotions and other competitive activities may alter this
comparative in any given quarter.               

 

Segment Profit - Household Products (In millions - Unaudited)
Quarter and Six Months Ended March 31, 2013
                             Q2             %Chg         Six Months   %Chg
Segment Profit - FY '12      $   69.1                    $    217.9
Operations                       33.4       48.4    %         45.2    20.8  %
Impact of currency               (1.7)      (2.5)   %         (1.7)   (0.8) %
Segment Profit - FY '13      $   100.8      45.9    %    $    261.4   20.0  %

Segment profit for the quarter was $100.8 million, up $31.7, or 45.9%, versus
the same quarter last year.  This increase was driven by:

  o increased gross margin, despite lower sales, driven by favorable product
    costs, including lower commodity costs and the early stages of cost
    savings related to our 2013 restructuring,
  o lower A&P due to the timing of promotional activities, and
  o lower overhead costs driven primarily by cost savings from our 2013
    restructuring efforts, as well as continued focus on spending controls.

For the six months ended March 31, 2013, segment profit increased $43.5
million, or 20.0%, due to the factors noted above and the impact of the
incremental Hurricane Sandy volume in the first fiscal quarter of 2013.

Other Items

Interest expense was $32.8 million for the quarter as compared to $30.2
million for the same quarter in the prior fiscal year.  For the six months
ended March 31, 2013, interest expense was $66.3 million, up $6.2 million as
compared to the prior year.  The increase in interest expense for both the
fiscal 2013 quarter and year to date was due to a combination of higher
average debt outstanding, resulting, in part, from share repurchases in fiscal
2012, and somewhat higher average rates as a result of issuing ten-year public
notes that replaced the lower-rate, maturing term loan, in the third quarter
of the prior fiscal year. 

Other financing expense was $10.3 million for the second fiscal quarter of
2013 and $18.2 million for the six months ended March 31, 2013.  This cost
included a devaluation charge of approximately $6 million due to the recent
currency devaluation in Venezuela.  The remaining impact for both the quarter
and the year to date was due primarily to the weakening of the Japanese yen.

For the quarter, the Company's effective tax rate was approximately 25%. 
However, the effective tax rate was favorably impacted by certain discrete
items in the quarter including the retroactive reinstatement of the R&D tax
credit as part of the recently passed tax legislation and certain favorable
prior year foreign tax adjustments.  These items favorably impacted the
effective rate for the quarter by approximately 3 percentage points.

In addition our six month effective tax rate has been favorably impacted by
the fact that the costs to date associated with our 2013 restructuring
initiative have been primarily incurred in the U.S., which has resulted in a
higher tax benefit as compared to our overall global effective tax rate. 
Exclusive of the favorable discrete items in the second quarter of fiscal
2013, as well as the tax effect of the reconciling items shown on the net
earnings to adjusted net earnings reconciliation table, the Company's
effective tax rate was 30.0% for the first six months of fiscal 2013 as
compared to 31.4% for the same period in the prior year.

For the quarter, capital expenditures were approximately $23 million and
depreciation expense was approximately $36 million inclusive of approximately
$6 million of accelerated depreciation on assets currently in operation at
certain facilities, which will be impacted by our 2013 restructuring
initiatives. For the six months, capital expenditures were approximately $38
million and depreciation expense was approximately $73 million, inclusive of
approximately $10 million of accelerated depreciation on assets currently in
operation at the same impacted facilities.  The quarter and six month charges
for accelerated depreciation are included in the 2013 restructuring line in
the Statement of Earnings (Condensed).  In addition, impairment charges of
approximately $19 million were recognized in the first fiscal quarter of 2013
related to anticipated plant closures.

2013 Restructuring

The Company estimates that restructuring savings of approximately $15 million
were realized in the second fiscal quarter of 2013, with the primary impact
reflected in lower overhead expenses and improved gross margin.  On a year to
date basis, the Company estimates that restructuring savings were
approximately $22 million.

Implementation of restructuring initiatives is ahead of our original
assumptions. As a result, the Company estimates that gross pre-tax
restructuring savings for fiscal 2013 should be in the range of $50 to $60
million. For the total project, the Company has increased the total gross
pre-tax savings estimate for the restructuring project to $225 million, an
increase of an additional $25 million of gross savings, as a result of
identification of additional opportunities.  The Company plans to re-invest
the incremental total project savings in support of its businesses, netting to
the previously announced $150 million in net savings by 2015.

For the quarter and the six months ended March 31, 2013, the Company recorded
approximately $37 million and $86 million, respectively, of charges related to
the 2013 Restructuring Plan including:

  o Non-cash asset impairment charges of $19.3 million for the six months
    ended March 31, 2013 and accelerated depreciation charges of $5.7 million
    and $9.8 million for the quarter and six months ended March 31, 2013,
    respectively, (collectively for the six months $29.1 million) related
    primarily to anticipated plant closures,
  o Severance and related benefit costs of $17.7 million and $31.3 million for
    the quarter and six months ended March 31, 2013, respectively, associated
    with staffing reductions that have been identified to date, and
  o Consulting, program management and other exit costs associated with the
    restructuring of $14.0 million and $26.0 million for the quarter and six
    months ended March 31, 2013, respectively.

The Company estimates that restructuring costs for the remainder of fiscal
2013 will be in the range of $60 to $70 million, with total project costs
remaining in the range of $250 million. The vast majority of the 2013
restructuring and related charges are reported as a separate line in the
Consolidated Statements of Earnings (Condensed). A portion of the overall
project costs, which are costs associated primarily with certain information
technology enablement activities that are related to the restructuring are
included in the Company's total estimate of costs for the 2013 restructuring,
but are reported as part of SG&A in the Consolidated Statements of Earnings
(Condensed).

Working Capital Update

As previously disclosed, we are committed to improving working capital as a
percent of sales in excess of 400 basis points, as compared to our fiscal year
2011 baseline metric of 22.9%.  Achieving this target would result in a
reduction of more than $200 million of working capital.  We are targeting
completion of the actions required to drive this improvement by the end of
fiscal 2013, with full benefit achieved in fiscal 2014. 

As shown on the attachments to this press release, working capital as a
percent of net sales for the trailing four quarters ended March 31, 2013 was
20.2%, an improvement of 120 basis points versus the comparable measure at
fiscal year end 2012 and an improvement of 270 basis points versus our fiscal
2011 baseline metric. 

Fiscal 2013 Financial Outlook

The Company's financial outlook for adjusted, diluted earnings per share
remains in the range of $6.75 to $7.00 for fiscal 2013.  This outlook includes
estimated gross pre-tax 2013 restructuring savings of $50 to $60 million for
fiscal 2013, which is a substantial increase as compared to our previous
estimate of $25 to $35 million in fiscal 2013, as savings realization has
occurred somewhat faster than expected in the early stages of our
restructuring.

While savings from our restructuring initiative are expected to be higher in
fiscal 2013 as compared to our original estimate, all of our key product
categories remain highly competitive.  In Personal Care, competition in Wet
Shave remains intense and, category growth in the Personal Care categories in
which we compete has slowed measurably.  In light of weaker category growth,
including a slow-start to the sun care season due to weather, and continued
competitive activity, our forecasted sales growth for Personal Care is 3% to
5% in the back half of the year, which equates to low-single digits for full
year fiscal 2013.

In Household Products, we believe that competitive activity has escalated as
manufacturers seek to retain market share or gain battery shelf space and
promotional display placement, given the negative category trends.   In this
competitive environment, we have experienced distribution gains and losses,
but overall we anticipate a near-term net loss of market share and a decline
in net sales in the fourth quarter of fiscal 2013.  We continue to estimate
the full fiscal year sales decline range to be in the low-single digits.

The Company expects total A&P spending to increase in the back half of fiscal
2013 as compared to the first half of fiscal 2013 and as compared to the back
half of the prior year. 

On a GAAP basis, the Company's financial outlook for GAAP diluted earnings per
share is in the range of $5.60 to $5.90, inclusive of both the estimates for
pre-tax restructuring savings and pre-tax restructuring costs noted above, and
includes the pension curtailment gain recorded in the first fiscal quarter of
2013.  This is a more narrow range as compared to the previous outlook range
of $5.60 to $6.10, as we have a clearer estimate of the timing of
restructuring costs in fiscal 2013 and restructuring activities have moved
somewhat faster than our expectations in the early stages of the project. 

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-quarter earnings and earnings guidance for fiscal 2013. All
interested parties may access a live webcast of this conference call at
www.energizerholdings.com, under "Investors", "Investor Information", and
"Webcasts and Presentations" tabs or by using the following link:

http://www.media-server.com/m/acs/fe35b917715f6566b5458f553a4a4970

For those unable to participate during the live webcast, a replay will be
available on www.energizerholdings.com, under "Investors", "Investor
Information", "Webcasts and Presentations", and "Audio Archives" tabs.

Non-GAAP Financial Measures. While the Company reports financial results in
accordance with accounting principles generally accepted in the U.S. ("GAAP"),
this discussion includes non-GAAP measures. These non-GAAP measures, such as
historical and forward-looking adjusted diluted earnings per share, operating
results, organic sales and other comparison changes, exclude the impact of
currencies, the devaluation of the Venezuela Bolivar Fuerte, the acquisition
of ASR including related integration and transaction costs, the costs
associated with restructuring, certain tax items including adjustments to
prior years' tax accruals, pension curtailment and certain other items as
outlined in the table below are not in accordance with, nor are they a
substitute for, GAAP measures. The Company believes these non-GAAP measures
provide a meaningful comparison to the corresponding historical or future
period and assist investors 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.

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, statements regarding future company-wide or segment sales,
earnings and earnings per share, investments, capital expenditures, product
launches, consumer trends, the competitive environment, cost savings related
to restructuring projects, and the timing of such savings, costs necessary to
achieve those savings, improvements to working capital levels and the timing
and savings associated with such improvements, the impact of price increases,
advertising and promotional spending, the impact of foreign currency
movements, category value and future growth in our businesses. 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," "will," "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, performance or
achievements to differ materially from those expressed in or 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:

  o General market and economic conditions;
  o Market trends in the categories in which we operate;
  o The success of new products and the ability to continually develop and
    market new products;
  o Our ability to attract, retain and improve distribution with key
    customers;
  o Our ability to continue planned advertising and other promotional
    spending;
  o Our ability to timely execute its strategic initiatives, including
    restructurings, in a manner that will positively impact our financial
    condition and results of operations and does not disrupt our business
    operations;
  o The impact of strategic initiatives, including restructurings, on our
    relationships with employees, customers and vendors;
  o Our ability to maintain and improve market share in the categories in
    which we operate despite heightened competitive pressure;
  o Our ability to improve operations and realize cost savings;
  o The impact of raw material and other commodity costs;
  o The impact of foreign currency exchange rates and offsetting hedges on
    Energizer's profitability;
  o Compliance with debt covenants as well as the impact of interest and
    principal repayment of our existing and any future debt; or
  o The impact of legislative or regulatory determinations or changes by
    federal, state and local, and foreign authorities, including taxing
    authorities.

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 Energizer's publicly
filed documents, including its annual report on Form 10-K for the year ended
September 30, 2012.

 

ENERGIZER HOLDINGS, INC.
STATEMENT OF EARNINGS
(Condensed)
(In millions, except per share data - Unaudited)
                           Quarter Ended March 31,  Six Months Ended March 31,
                           2013          2012       2013           2012
Net sales                  $  1,095.9    $ 1,101.8  $   2,288.4    $  2,299.9
Cost of products sold         565.2        584.6        1,196.1       1,218.2
Gross profit                  530.7        517.2        1,092.3       1,081.7
Selling, general and          209.9        232.2        410.4         446.3
administrative expense
Advertising and sales         102.5        111.7        197.3         208.1
promotion expense
Research and development      24.8         27.7         49.4          53.3
expense
2013 restructuring            37.4         —            86.4          —
Pension curtailment           —            —            (37.4)        —
Prior restructuring           —            1.5          —             (7.7)
Interest expense              32.8         30.2         66.3          60.1
Other financing items,        10.3         0.9          18.2          0.2
net
Earnings before income        113.0        113.0        301.7         321.4
taxes
Income tax provision          28.1         35.1         87.0          99.7
Net earnings               $  84.9       $ 77.9     $   214.7      $  221.7
Earnings per share
Basic                      $  1.37       $ 1.19     $   3.46       $  3.37
Diluted                    $  1.35       $ 1.17     $   3.42       $  3.33
Weighted average shares       62.1         65.4         62.0          65.8
of common stock - Basic
Weighted average shares       63.0         66.4         62.8          66.6
of common stock - Diluted
See Accompanying Notes to Unaudited Condensed Financial Statements

 

Energizer Holdings, Inc.
Notes to Condensed Financial Statements
March 31, 2013
(In millions, except per share data - Unaudited)
1. Operating results for any quarter are not necessarily indicative of the
   results for any other quarter or the full year.
   Operations for the Company are managed via two segments - Personal Care
   (Wet Shave, Skin Care, Feminine Care and Infant Care) and Household
   Products (Battery and Portable Lighting).  Segment performance is
   evaluated based on segment operating profit, exclusive of general
   corporate expenses, share-based compensation costs, costs associated with
   most restructurings including the previously announced 2013 Restructuring
2. Plan, acquisition integration or business realignment activities, and
   amortization of intangible assets.  Financial items, such as interest
   expense and income, are managed on a global basis at the corporate level. 
   The exclusion from segment results of charges such as inventory write-up
   related to purchase accounting, if any, other acquisition transaction and
   integration costs, and substantially all restructuring and realignment
   costs, reflects management's view on how it evaluates segment performance.
   The Company's operating model includes a combination of stand-alone and
   combined business functions between the Personal Care and Household
   Products businesses, varying by country and region of the world.  Shared
   functions include product warehousing and distribution, various
   transaction processing functions, and in most countries, a  combined sales
   force and management.  The Company applies a fully allocated cost basis,
   in which shared business functions are allocated between the segments. 
   Such allocations may not represent the costs of such services if performed
   on a stand-alone basis. 
   For the quarter and six months ended March 31, 2013, the Company recorded
   pre-tax expense of $37.4 and $86.4, respectively, related to its 2013
   restructuring.  These costs were reported on a separate line in the
   Consolidated Statements of Earnings (Condensed).  It should be noted that
   costs of $1.1 million pre-tax, associated with certain information
   technology enablement activities related to our restructuring initiative
   were included in SG&A for the second fiscal quarter of 2013.  These costs
   are considered part of the total costs incurred for our restructuring
   initiative.
   In the first quarter of fiscal 2013, the Company approved and communicated
   changes to its U.S. pension plan, which is the most significant of the
   Company's pension obligations. Effective January 1, 2014, the pension
   benefit earned to date by active participants under the legacy Energizer
   U.S. pension plan will be frozen and future service benefits will no
   longer be accrued under this retirement program.  For the six months ended
   March 31, 2013, the Company recorded a pre-tax curtailment gain of $37.4
   as a result of this plan change.  The pension curtailment gain was
   reported on a separate line in the Consolidated Statements of Earnings
   (Condensed).  
   In the quarter and six months ended March 31, 2013, the Company recorded
   expense of approximately $6 million related to the devaluation of its net
   monetary assets in Venezuela as a result of accounting for the translation
   of this affiliate under the accounting rules governing a highly
   inflationary economy. These results reflect an exchange rate of 6.30
   Venezuelan Bolivar Fuerte to one U.S. dollar. These impacts, which are
   included in Other financing items, net on the Consolidated Statements of
   Earnings (Condensed), are not considered in the evaluation of segment
   profit. However, normal operating results in Venezuela, such as sales,
   gross profit and spending, have been negatively impacted by translating at
   less favorable exchange rates and by the impact of unfavorable economic
   conditions in the country. These operating results remain part of the
   reported segment totals. The negative segment impacts of the Venezuela
   devaluation and the unfavorable economic impact on operating results are
   discussed separately when considered relevant to understanding the
   year-over-year comparatives.
   Segment sales and profitability for the quarter and six months ended March
   31, 2013 and 2012, respectively, are presented below.

 

                    Quarter Ended March 31,     Six Months Ended March 31,
Net Sales           2013            2012        2013            2012
Personal Care       $      652.6    $  651.5    $      1,206.9  $  1,215.9
Household Products  443.3           450.3       1,081.5         1,084.0
Total net sales     $      1,095.9  $  1,101.8  $      2,288.4  $  2,299.9
Operating Profit
Personal Care       $      136.4    $  128.3    $      252.6    $  251.8
Household Products  100.8           69.1        261.4           217.9
Total operating     237.2           197.4       514.0           469.7
profit
General corporate   (37.1)          (46.0)      (66.6)          (84.2)
and other expenses
   2013
restructuring and   (38.5)          —           (87.5)          —
related activities
(1)
   Pension          —               —           37.4            —
curtailment
   Prior            —               (1.5)       —               7.7
restructuring
Amortization of     (5.5)           (5.8)       (11.1)          (11.5)
intangibles
   Venezuela
devaluation/other   (6.3)           —           (5.9)           —
impacts
Interest and other  (36.8)          (31.1)      (78.6)          (60.3)
financing items
Total earnings
before income       $      113.0    $  113.0    $      301.7    $  321.4
taxes

(1)  Includes $1.1 million of pre-tax costs associated with certain
information technology and related activities, which are included in SG&A on
the Statement of Earnings, Condensed.

 

Supplemental product information is presented below for revenues from external
customers:
                Quarter Ended March 31,         Six Months Ended March 31,
                                                            
Net Sales                             % Change                        % Change
                2013       2012                 2013       2012
   Wet Shave    $ 403.7    $ 413.6    (2)    %  $ 798.2    $ 824.1    (3)   %
Alkaline          261.4      261.4    —      %    663.1      655.2    1     %
batteries
   Other
batteries and     181.9      188.9    (4)    %    418.4      428.8    (2)%
lighting
products
Skin Care         147.3      136.5    8      %    210.4      194.7    8     %
Feminine Care     40.8       43.6     (6)    %    82.8       84.2     (2)%
Infant Care       47.6       46.0     3      %    88.6       90.7     (2)%
Other personal    13.2       11.8     12     %    26.9       22.2     21    %
care products
Total net       $ 1,095.9  $ 1,101.8  (0.5)  %  $ 2,288.4  $ 2,299.9  (1)   %
sales

   Basic earnings per share is based on the average number of common shares
   outstanding during the period.  Diluted earnings per share is based on the
3. average number of shares used for the basic earnings per share calculation,
   adjusted for the dilutive effect of stock options and restricted stock
   equivalents.
4. Working Capital Metrics at September 30, 2011 as compared to March 31,
   2013, respectively, are presented below.

 

Fiscal '11 Baseline Working Capital
Metrics
($ in millions)
                            FY '11     Days
                                              Working Capital Improvement
                                              Objective:
Receivables, as reported                      -- improve working capital
(1)                       $ 717.5             investment in all three major
                                              working capital categories
Less: Trade allowance in    (96.6)
accrued liabilities
Receivables, adjusted       620.9      48.8
(2)
                                              -- Targeted working capital
                                              reduction of more than $200
                                              million v. FY'11 baseline
Inventories                 697.1      101.7
                                              -- improve working capital as a
Accounts Payable            253.4      37.0   % of net sales by more than 400
                                              basis points versus FY '11
                                              baseline.
Average Working Capital,                      -- improvements targeted by the
net (3)                   $ 1,064.6           end of fiscal '13 for full
                                              benefit in FY '14
Average Working Capital     22.9    %
as % of Net Sales (4)

(1) Receivables reflects reclass adjustments disclosed in Q2 2012, for all
quarters in fiscal 2011.
(2) Trade receivable adjusted for trade allowance recorded as a reduction of
net sales per US GAAP, but included in accrued expenses on the consolidated
balance sheet.
(3) Average Working Capital for FY '11 calculated using an average of the four
quarter end balances for each working capital component.
(4) Average Working Capital / FY '11 net sales.

Q2 Fiscal '13 Working Capital Metrics
($ in millions)                                   FY '13      Days
  Receivables, as reported                        $  668.7
Less:  Trade allowance in accrued liabilities     (106.6)
  Receivables, adjusted (1)                       $  562.1    45.0
Inventories (2)                                   658.1       99.8
Accounts Payable                                  299.1       45.4
   Average Working Capital, net (3)               $  921.1
   Average Working Capital as % of Net Sales (4)  20.2     %

(1) Trade receivable adjusted for trade allowance recorded as a reduction of
net sales per US GAAP, but included in accrued expenses on the consolidated
balance sheet.
(2) Average inventory adjusted by approximately $3 million to exclude short
term inventory build as a result of plant closures related to the 2013
restructuring.
(3) Average Working Capital for FY '13 Q2 calculated using an average of the
four quarter end balances for each working capital component.
(4) Average Working Capital / Trailing 4 Quarter net sales.
Statements in this Working Capital Comparative are not guarantees of
performance and are inherently subject to known and unknown risks and
uncertainties which could cause actual performance or achievements to differ
materially from those expressed in or indicated by those statements. Numerous
factors could cause our actual results and events to differ materially from
those expressed or implied by forward-looking statements.  Please refer to
Energizer's publicly filed documents for the risks that may cause actual
results to differ from statements herein, including its annual report on Form
10-K for the year ended September 30, 2012.

 

 

 

SOURCE Energizer Holdings, Inc.

Website: http://www.energizer.com
Contact: Jacqueline E. Burwitz, Vice President, Investor Relations,
+1-314-985-2169, Jacquelinee.burwitz@energizer.com
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