Energizer (ENR) Q3 2024 earnings summary

Executive summary

• Q3 FY2024 net sales were $701.4 million, up 0.3% reported and 1.2% organic year-over-year, with growth in both Battery & Lights and Auto Care segments.

• Adjusted EPS rose 46% to $0.79, while reported EPS was a loss of $0.61 due to a $110.6 million non-cash impairment charge on Rayovac and Varta trade names.

• Adjusted gross margin expanded by 270 bps to 41.5%, driven by Project Momentum savings and lower input costs.

• Project Momentum delivered $117–$120 million in savings to date, targeting $180–$200 million by end of FY25.

• Year-to-date, $150 million of debt was repaid, reducing net leverage to 5.0x, with free cash flow of $195 million (9.4% of net sales).

Financial highlights

• Q3 net sales: $701.4 million, up 0.3% year-over-year; nine-month net sales: $2,081.3 million, down 3.1%.

• Adjusted EBITDA was $149.7 million in Q3, up 18% year-over-year; adjusted EPS was $0.79, a 46% increase.

• Q3 adjusted gross margin: 41.5% vs. 38.8% prior year; reported gross margin: 39.5% vs. 37.9%.

• Free cash flow for nine months: $195 million (9.4% of net sales); net leverage improved to 5.0x.

• Interest expense declined to $38.5 million in Q3 due to lower average debt balances.

Outlook and guidance

• Fiscal 2024 organic net sales expected to decline ~2%; Q4 organic net sales expected to be flat.

• Adjusted gross margin for FY2024 expected to improve by over 150 bps; Q4 improvement of ~150 bps.

• Full-year adjusted EBITDA and EPS expected at the high end of guidance: $610–$620 million and $3.20–$3.30 per share.

• Project Momentum savings for FY24 now expected at $80–$90 million, with total program savings of $180–$200 million.

• Debt paydown for the year expected at $175–$200 million; net leverage targeted below 5.0x by year-end.