Energizer Holdings, Inc. (ENR) had a rough Tuesday, with shares plummeting after the battery and lighting company delivered fourth-quarter results that disappointed Wall Street and issued guidance suggesting the pain isn't over yet.
The company reported adjusted earnings per share of $1.05 for the fourth quarter, missing the analyst consensus of $1.12. Revenue came in better than expected at $832.80 million, up 3.4% year over year and ahead of the Street's $827.962 million estimate. But investors clearly weren't celebrating the revenue beat.
"We adjusted quickly, found opportunities, and executed with discipline to deliver a strong year," said CEO Mark LaVigne, putting an optimistic spin on what turned out to be a challenging period.
The Organic Picture Tells a Different Story
Peel back the headline revenue number and things look tougher. Organic net sales actually declined 2.2% in the fourth fiscal quarter compared to the prior year. Volume fell 2.9% as consumer demand weakened in North America, though the company found some bright spots in e-commerce and international markets for its Batteries & Lights segment.
The company tried to offset the volume pressure with pricing gains of 0.7%, supported by innovation and tariffs across both segments. New product launches and expanded distribution in Auto Care also helped cushion the blow, but it wasn't enough to reverse the trend.
Margin Compression and Cost Pressures
Adjusted gross margin took a hit, falling to 38.5% in the quarter—down a substantial 370 basis points from the prior year. The culprits? Higher input and logistics costs, production inefficiencies tied to network rebalancing, and the lower-margin APS business dragging down overall profitability.
On the cash flow front, Energizer generated $147.1 million in operating cash flow for fiscal 2025. Free cash flow came in at $63.2 million, representing 2.1% of net sales.
The company did highlight one success story: Project Momentum, its cost-savings initiative, delivered more than $200 million in savings over three years. Energizer is now extending the program into a fourth year, with the next phase targeting tariff mitigation, higher operational efficiency, and integration of the APS business.
A Grim Outlook Ahead
Here's where things get really uncomfortable for shareholders. Energizer expects first-quarter adjusted earnings per share of just 20 to 30 cents—dramatically below the 70-cent analyst estimate. The company also projected a first-quarter GAAP loss of 8 to 9 cents per share, compared to the 70-cent profit Wall Street had penciled in.
"As we begin fiscal 2026, we are operating through a period of transition, with the first quarter more heavily affected by temporary tariff costs and mitigation efforts," LaVigne explained, attempting to frame the weakness as short-term.
For the full year 2026, Energizer expects adjusted EPS of $3.30 to $3.60, slightly below the $3.59 analyst consensus.
Price Action: ENR shares were trading lower by 19.25% to $19.26 in premarket trading Friday, as investors absorbed the disappointing outlook and weighed the company's tariff challenges against its cost-cutting initiatives.
