Energizer Holdings, Inc. announced results for the third fiscal quarter ended June 30, 2013. Net earnings for the quarter were $87.2 million, or $1.38 per diluted share, as compared to net earnings of $70.2 million, or $1.06 per diluted share, in the third fiscal quarter of 2012.
"We are pleased with the adjusted earnings per share growth of 33% for the third quarter," said Ward M. Klein, Energizer Holdings' CEO. "We continue to make good progress on our restructuring efforts implementing many of the initiatives earlier than planned. As a result, we have revised our fiscal 2013 estimated gross savings from $50–60 million to more than $80 million. We are also ahead of schedule with our working capital reduction initiative with a 370 basis point reduction from our fiscal 2011 base period. However, we are disappointed with our weak top line results as we continued to see elevated levels of competitive promotional activity in our personal care categories and many of these categories showed value deflation in the quarter. Despite these top line challenges, our restructuring savings helped to improve operating margins and deliver strong growth in earnings per share. Even though we expect weak category dynamics to continue into our fourth quarter, the incremental savings from the restructuring program will keep us on track with our adjusted earnings per share outlook of $6.75–7.00.
"As we look towards fiscal 2014, our key points of focus will include delivering our stated cost and working capital reduction objectives, restoring top line growth in personal care and investing in innovation and brand development activities to ensure the long-term health of the business," continued Klein. "We face many challenges including a difficult competitive environment and unfavorable currency headwinds. We believe we can follow our expected double digit adjusted earnings per share growth for each of the last two fiscal years with mid-single digit growth in adjusted earnings per share in fiscal 2014. We'll provide more insights and our initial financial outlook range for fiscal 2014 in our November communication.
"Finally, I am pleased to announce that the board approved an increase in the Energizer quarterly dividend to $0.50 per share, which represents a 25% increase, effective with the September dividend," Klein concluded.
For the third fiscal quarter, net sales declined by approximately 1% on a reported basis due to unfavorable currencies primarily in Asia and Latin America. On an organic basis, net sales were essentially flat as higher volume in household products offset a modest decline in organic sales in personal care. On a year-to-date basis, reported net sales were down less than 1% driven primarily by unfavorable currencies. Organically, net sales were essentially flat for the nine month period. In household products, net sales increased approximately 1% organically for the nine months due to the favorable impact of incremental storm volume earlier in the fiscal year. In addition, unfavorable volume trends were offset by improved pricing and mix. Organically, net sales were flat for personal care in the nine month period.
On a year to date basis gross margin as a percentage of net sales was 47.1%, up 10 basis points on a reported basis and up 60 basis points excluding the unfavorable impact of currencies and the inventory charge noted above due primarily to improved product costs in household products.
Specifically for the company's personal care division, net sale were $649.5 million, a decrease of 3.6% on a reported basis, with approximately one-half of the decline due to the unfavorable impact of currencies. Organic sales growth remained challenging, particularly in North America, and the company estimates that most of the U.S. categories in personal care in which it competes declined in value during the latest twelve-week period.
From a product standpoint, the net sales change on a reported and organic basis was due primarily to the following: wet shave net sales decreased approximately 1% on a reported basis, but increased about 1% organically, due to higher sales of disposable products, including the launch of Hydro disposables, partially offset by lower sales of shave preps, and sales of men's and women's systems increased slightly for the quarter as continued growth in Hydro branded systems was mostly offset by further declines in legacy systems; skin care net sales decreased approximately 7% on both a reported and organic basis due to an unusually wet weather pattern in North America, which has unfavorably impacted sun care consumption; and all other product categories decreased due to continued competitive activity and category softness.
For the nine months, reported net sales declined 1.7% due primarily to the unfavorable impact of currencies. Exclusive of the unfavorable impact of currencies, net sales declined less than 1% due to the overall impact of competitive activity in multiple categories including wet shave and the overall category sluggishness in the U.S.