Energizer Holdings, Inc. Announces Multi-Year Restructuring Program
Estimated Gross Annualized Pre-Tax Cost Savings of approximately
$200 Million
ST. LOUIS, Nov. 8, 2012 /PRNewswire/ -- Energizer
Holdings, Inc. (NYSE: ENR) today announced that its Board
of Directors authorized an enterprise-wide restructuring plan and
has delegated authority to the company's management to determine
the final plan with respect to these initiatives.
Energizer expects to achieve gross annualized pre-tax cost
savings of approximately $200 million
as a result of this restructuring project. The Company expects that
nearly three quarters of the savings will improve profitability,
and the remaining portion of the savings will be invested in the
business to drive long-term growth. The Company estimates one-time
charges associated with achieving these benefits to be
approximately 1.25 times gross annualized savings, of which
approximately 25% to 30% are estimated to be non-cash
charges.
The Company expects that a substantial portion of the actions
necessary to achieve the targeted savings should be completed by
the end of fiscal 2014 and the total savings are expected to be
fully realized in fiscal 2015. A majority of the one-time
charges associated with these initiatives are expected to be
recorded within the next 12 to 18 months as restructuring costs
will likely be incurred ahead of achieving estimated savings (see
exhibit - schedule of savings and costs estimates).
These actions are expected to reduce the global workforce by
more than 10%, or approximately 1,500 colleagues.
In order to achieve these savings, we are undertaking efforts
to:
- Rationalize and streamline operations facilities in the
Household Products Division:
- Close Maryville, MO battery
manufacturing facility
- Close St. Albans, VT battery
manufacturing facility
- Close Tampoi, Malaysia battery
packaging facility
- Streamline Asheboro, NC
battery manufacturing and packaging facilities
- Streamline Walkerton, Canada
packaging facility
- Streamline lights manufacturing in China
- Consolidate G&A functional support across the
organization;
- Streamline the Household Products Division product portfolio to
enable increased focus on our core battery business;
- Streamline the marketing organization within our Household
Products division;
- Optimize our go-to-market strategies and organization
structures within our international markets;
- Reduce overhead spending including changes to benefit programs
and other targeted spending reductions; and
- Create a center-led purchasing function to drive procurement
savings.
In addition, there are on-going analyses of our international
footprint, legal entity structure and global delivery of
transactional services to identify and assess additional scale
efficiencies. These assessments will be completed in the
coming months.
The Company expects these savings will generate increased cash
flow and improve key operating metrics, including gross margin and
overheads as a percent of sales. In addition, approximately a
quarter of the gross savings will be used to increase investment in
brand building and innovation to drive future growth, and enable
investments in information technology systems to improve
capabilities and reduce costs.
"These actions represent significant and necessary changes to
our overall cost structure and organization. We have
performed a thorough review of our current and future business
requirements and have identified the changes that will support our
long-term strategies to maximize cash flow in Household Products,
enable continued growth in Personal Care and drive shareholder
value," said Ward Klein, Chief
Executive Officer. "We believe that these changes enhance
Energizer's ability to continue to compete effectively in the
personal care and household products categories. We have
redesigned our short term and long term compensation structures to
align the organization to achieve the targeted savings, increase
return on invested capital and improve shareholder returns.
We are fully committed to achieving targeted savings and will
pursue these initiatives with urgency and focus.
"Finally, in support of this effort, we have created the
position of Vice President, Global Business Transformation and have
named Brian Hamm, our current Vice
President of Finance, Household Products, to this role. Brian
will report directly to me and will oversee the successful
execution of this multi-year program. We will provide regular
updates on the progress of these initiatives in future
communications."
About Energizer:
Energizer Holdings, Inc., headquartered in St. Louis, Missouri, is a consumer goods
company operating globally in the broad categories of personal care
and household products. Energizer's Personal Care Division offers a
diversified range of consumer products in the wet shave, skin care,
feminine care and infant care categories. Our portfolio includes
well established brand names such as Schick(R) and Wilkinson
Sword(R) men's and women's shaving systems and disposables; Edge(R)
and Skintimate(R) shave preparations; Playtex(R) tampons, gloves
and infant feeding products; Banana Boat(R) and Hawaiian Tropic(R)
sun care products and Wet Ones(R) moist wipes. Energizer's
Household Products Division offers consumers the broadest range of
portable power solutions, anchored by our universally recognized
Energizer(R) and Eveready(R) brands.
The exhibit below reflects the Company's initial estimate of the
amount of gross savings that may be achieved during this multi-year
restructuring initiative, by line item, as presented in the
statement of earnings. While actual amounts may vary,
these estimates are included to provide additional insight into the
potential impact of the restructuring program on certain key
metrics that analysts and investors believe are valuable in their
analysis of Company performance. The breakdown of the
estimated restructuring charges between cash and non-cash is also
an initial estimate and is provided as insight into the potential
cash flow impact of the multi-year restructuring program.
Exhibit
|
|
|
($ in millions)
|
|
|
|
|
Estimated Amounts
|
Gross
Margin Savings (on-going)
|
|
$
|
110.0
|
|
Overhead
Savings (SG&A; A&P; R&D) (on-going)
|
|
90.0
|
|
Gross
Savings (on-going)
|
|
$
|
200.0
|
|
Investment
Spending (on-going)
|
|
(50.0)
|
|
Pre-Tax
Savings (on-going)
|
|
$
|
150.0
|
|
|
|
|
Estimated
Restructuring Charge
|
|
$
|
(250.0)
|
|
-
Cash
|
|
(175.0)
|
|
-
Non-Cash
|
|
(75.0)
|
|
|
|
|
Incremental Capital Expenditures (primarily
IT)
|
|
$
|
50.0
|
|
Forward Looking Statements. This press release contains
forward-looking statements including without limitation those
regarding Energizer's future business outlook, potential cost
savings and the timing of any such savings, costs to achieve such
savings, future investment in the business, actions required to
obtain the savings detailed, the impact of cost savings on
financial metrics, future earnings, future earnings per share,
changes to operating metrics, business strategy, the timing or
amount of capital expenditures, compensation practices and the
timing of future announcements. Forward-looking statements are not
based on historical facts but instead reflect our expectations,
estimates or projections concerning future results or events. These
statements generally can be identified by the use of
forward-looking words or phrases such as "believe," "expect,"
"anticipate," "may," "could," "intend," "belief," "estimate,"
"plan," "likely," "will," "should" 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. 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 timely implement its strategic
initiatives in a manner that will positively impact our financial
condition and results of operations;
- The impact of strategic initiatives on Energizer's
relationships with its employees, its major customers and
vendors;
- Energizer's ability to improve operations and realize cost
savings;
- General market and economic conditions;
- The success of new products and the ability to continually
develop new products;
- Energizer's ability to predict consumption trends with respect
to the overall battery category and Energizer's other
businesses;
- Energizer's ability to continue planned advertising and other
promotional spending;
- The impact of raw material and other commodity costs;
- The impact of foreign currency exchange rates and offsetting
hedges on Energizer's profitability for the year with any degree of
certainty;
- The impacts of interest and principal repayment from our
debt;
- The impact of legislative or regulatory determinations or
changes by federal, state and local, and foreign authorities,
including taxing authorities;
- Local currency movements.
The list of factors above is illustrative, but by no means
exhaustive. In addition, estimates provided in this press release
are preliminary and could change as the assessment develops, new
information is obtained and the implementation progresses. 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, 2011 as supplemented by the Current Report filed on Form
8-K on December 15, 2011. The
Company assumes no obligation to update any forward-looking
statements or information, which speak as of their respective
dates.
SOURCE Energizer Holdings, Inc.