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Energizer Holdings, Inc. Announces First Quarter Results and Provides Fiscal 2011 Earnings Guidance

ST. LOUIS Feb. 1, 2011 December 31, 2010 $110.4 million $1.55 $125.7 million $1.78

  • $3.8 million $0.06
  • $2.3 million $0.03 Venezuela
  • $1.7 million $0.02
  • $1.5 million $0.02

Last year’s first quarter included:

  • $25.5 million $0.36
  • $4.5 million $0.07

Ward Klein $5.10 to $5.30

December 31, 2010 Venezuela December 31, 2010 Schick Hydro Schick Hydro

Venezuela Venezuela

Household Products

$668.5 million $35.5 million Venezuela $14 million Venezuela $13 million $10 million Asia

$163.3 million $15.5 million Venezuela $2 million Venezuela $13 million $5 million

$14 to $16 million $20 to $25 million

$15 million

$65 to $85 million $25 to $35 million

Personal Care

$508.6 million $35.9 million $27 million November 23, 2010 Venezuela $12 million Venezuela $21 million

Venezuela

  • Schick Hydro
  • Skintimate
  • and incremental shipments of disposables due to a new value brand offering for a key U.S. retailer.  

Schick Hydro North America Japan Western Europe

Wet Ones Diaper Genie Gentle Glide Sport

$9.2 million Venezuela Schick Hydro North America Europe

$ 76.6 million $43.6 million $3 million $4 million Venezuela $5 million $46 million Schick Hydro Schick Hydro

Schick Hydro

Our evaluation of the ASR business and the potential impact of the acquisition on fiscal 2011 results is ongoing.  At this time, we do not expect this transaction to be accretive to reported earnings per share due to the negative impact of one-time deal costs and related integration expenses in fiscal 2011.  Absent these cost elements, earnings per share will likely be modestly accretive for fiscal 2011.

Other Items

$2.6 million

$2.8 million $32.4 million Venezuela

Venezuela

$19 million $34 million

Outlook

$4.30 to $4.50 $5.10 to $5.30

Non-GAAP Financial Measures.

Forward-Looking Statements.  

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:

  • Energizer’s ability to improve operations and realize cost savings;
  • Energizer’s ability to continue planned advertising and other promotional spending may be impacted by lower than anticipated cash flows, or by alternative investment opportunities;
  • Energizer’s ability to predict consumer consumption trends with respect to the overall battery category and Energizer’s other businesses;
  • the possibility that estimates related to the restructuring initiatives may change as management develops and finalizes its plans;
  • Energizer’s ability to timely implement the strategic initiatives in a manner that will positively impact our financial condition and results of operation;
  • the impact of the strategic initiatives on Energizer’s relationships with its employees, its major customers and vendors;
  • The success of new products and the ability to continually develop new products;
  • Risks related to the integration of the acquisition of ASR;
  • Risks related to the achievement of business plans, including risks that ASR earnings, net of one time deal and integration costs, are less than expected and are not modestly accretive.
  • Anticipating the impact of raw material and other commodity costs;
  • Energizer’s effective tax rate for the year could be impacted by legislative or regulatory changes by federal, state and local, and foreign taxing authorities, as well as by the profitability or losses of Energizer’s various subsidiary operations in both high-tax and low-tax countries;
  • Estimating the impact of foreign currency exchange rates and offsetting hedges on Energizer’s profitability for the year with any degree of certainty; and
  • Prolonged recessionary conditions in key global markets where Energizer competes could result in significantly greater local currency movements and correspondingly greater negative impact on Energizer than what can be anticipated from the current spot rates.

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.

September 30, 2010

ENERGIZER HOLDINGS, INC.

STATEMENTS OF EARNINGS

(Condensed)

(In millions, except per share data – Unaudited)

Quarter Ended December 31,

2010

2009

Net sales

$ 1,177.1

$ 1,176.7

Cost of products sold

622.2

616.5

Gross profit

554.9

560.2

Selling, general and administrative expense

207.9

184.0

Advertising and promotion expense

128.7

88.7

Research and development expense

23.4

21.4

Interest expense

29.2

32.0

Other financing expense, net

3.2

35.6

Earnings before income taxes

162.5

198.5

Income tax provision

52.1

72.8

Net earnings

$    110.4

$    125.7

Earnings per share

Basic

$      1.56

$      1.80

Diluted

$      1.55

$      1.78

Weighted average shares of common stock – Basic

70.6

69.7

Weighted average shares of common stock – Diluted

71.2

70.5

See Accompanying Notes to Condensed Financial Statements

Energizer Holdings, Inc.

Notes to Condensed Financial Statements

December 31, 2010

(Dollars in millions, except per share data)

1.

Operating results for any quarter are not necessarily indicative of the results for any other quarter or the full year.

2.

Operations for the Company are managed via two segments – Household Products (Battery and Lighting Products) and Personal Care (Wet Shave/Blades, Skin Care, Feminine Care and Infant Care).  On November 23, 2010, we completed the acquisition of American Safety Razor (ASR).  ASR is a leading global manufacturer of private label/value wet shaving razors and blades, and industrial and specialty blades and will be a part of the Company’s Personal Care segment.  Segment performance is evaluated based on segment operating profit, exclusive of general corporate expenses, share-based compensation costs, costs associated with most restructuring, integration or business realignment activities and amortization of intangible assets.  Financial items, such as interest income and expense, are managed on a global basis at the corporate level.  

The Company’s operating model includes a combination of stand-alone and combined business functions between the Household Products and Personal Care businesses, varying by country and region of the world.  Shared functions include product warehousing and distribution, various transaction processing functions, and in some countries, combined sales forces and management.  The Company applies a fully allocated cost basis, in which shared business functions are allocated between the businesses.  Such allocations do not represent the costs of such services if performed on a stand-alone basis.

The reduction in gross margin associated with the write-up and subsequent sale of inventory acquired in the acquisition of ASR is not reflected in the Personal Care segment, but rather presented as a separate line item below segment profit, as it is a non-recurring item directly associated with the ASR acquisition.  Such presentation reflects management’s view on how segment results are evaluated.  

In the quarter ended December 31, 2010, the Company recorded a charge of $2.3 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.  This result was recorded using an exchange rate of 5.9 Venezuelan Bolivar Fuerte to 1 U.S. dollar.  In the prior year quarter, the Company recorded a charge of $25.5 related to the devaluation of the exchange rate between the U.S. dollar and the Venezuelan Bolivar Fuerte.  These impacts, which are included in other financing on the Consolidated Statements of Earnings and Comprehensive Income (Condensed), are not considered in the evaluation of segment profit.  However, normal operating results in Venezuela, such as sales, gross margin 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 quarters ended December 31, 2010 and 2009, respectively, are presented below.

Quarter Ended December 31,

Net Sales

2010

2009

Household Products

$    668.5

$    704.0

Personal Care

508.6

472.7

 Total net sales

$ 1,177.1

$ 1,176.7

Operating Profit

Household Products

$    163.3

$    178.8

Personal Care

76.6

120.2

  Total operating profit

$    239.9

$    299.0

General corporate and other expenses

(32.1)

(29.5)

Acquisition inventory valuation

(2.7)

ASR deal costs/integration

(6.1)

Amortization

(4.1)

(3.4)

Venezuela devaluation/other impacts

(2.3)

(25.5)

Interest and other financing items

(30.1)

(42.1)

   Earnings before income taxes

$    162.5

$    198.5

Supplemental product information is presented below for revenues from external customers:

Quarter Ended December 31,

Net Sales

2010

2009

Alkaline batteries

$    406.0

$    445.7

Other batteries and lighting products

262.5

258.3

Wet Shave/Blades

364.7

316.8

Skin Care

52.5

59.8

Feminine Care

44.3

46.2

Infant Care

47.1

49.9

 Total net sales

$ 1,177.1

$ 1,176.7

3.

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 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.

The General corporate and other expenses for the current and prior year quarter include pretax charges of $2.2 and $6.8, respectively, related to integration and certain other business realignment activities.  

SOURCE Energizer Holdings, Inc.

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