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$ENR, a provider of lighting products, has agreed to acquire the portable lighting business of $ SPB for $2Bil in cash. The transaction is expected to be modestly accretive to Energizer’s earnings in the first year. The company intends to fund the transaction, which is expected to close by year-end, through a combination of cash and credit.
Electrical company $ENR named Timothy W Gorman as interim CFO, effective immediately. Gorman will succeed Brian K Hamm, who is leaving the company to pursue other opportunities. Gorman is currently serving as Energizer's VP and Chief Accounting Officer. $ENR also reaffirmed its adjusted EPS outlook for fiscal 2017 between $2.75 and $2.85.
$ENR expects its income tax rate, excluding integration cost and other unusual items, is expected to be in the range of 30-31%. The company expects acquisition and integration cost of $5-10MM related to HandStands. $ENR made good progress with its integration efforts and expects that the business will be fully integrated by the end of FY17.
$ENR's SG&A, excluding acquisition integration expenses, on a percent of sales basis is expected to be in the range of 19-20%, representing an improvement of 50-100 BPs. Earnings before income taxes are expected to be negatively impacted by the movement in foreign currencies of $5-10MM, net of hedge impact, based upon recent currency rates.
$ENR expects FY17 net sales to be up mid-single digits and organic net sales to be flat to up low-single digits. Gross margin is expected to improve by 50-100 basis points, driven by productivity initiatives. Adjusted EPS is predicted to be $2.55-2.75. $ENR sees capital spending of $30-35MM, and free cash flow to exceed $180MM.
$ENR's total segment profit for 4Q16 increased by 9.3% YoverY, driven primarily by the impact of the HandStands acquisition, which contributed an additional $9.5MM to segment profit. These increases were partially offset by an unfavorable currency impact of 3.6%. Organic growth of 2.9% was driven primarily by organic top-line increase.
$ENR reported a drop in 4Q16 earnings due to negative impact of foreign currencies, increased costs from product innovation investments. Net income fell to $21.6MM or $0.34 per share from $23.1MM or $0.37 per share last year. Sales grew 8.3% to $432.4MM, on higher organic sales and HandStands acquisition. Adjusted EPS slid to $0.54 from $0.61.
$ENR CEO David Shaffer said that the company remains committed to a balanced strategy of short-term productivity improvements in existing businesses, and longer-term investments. For 2Q17, non-GAAP adjusted diluted EPS is expected to be $1.06-1.10, excluding an expected charge of $0.04 from ongoing restructuring programs & acquisition expenses.
$ENR said its BoD declared 4Q16 dividend of $0.25 per common share, payable on Sept. 9, 2016 to all shareholders of record as of Aug. 19, 2016. In addition, the BoD announced their intention to increase regular quarterly dividend to $0.275 per share beginning in FY17. This represents a 10% increase over the current quarterly dividend of $0.25.
$ENR said it anticipates cost synergies of approx. $5MM from its HandStands acquisition, to be achieved by leveraging its global battery platform, infrastructure and supply chain network. These savings are projected to be achieved over a period of two years following the close of the acquisition scheduled in 4Q16.
$ENR said it intends to fund the acquisition through a combination of approx. $250MM of existing cash and committed debt facilities. Excluding one-time costs, earnings accretion from the transaction in the first FY following the close is estimated to be $0.15 to $0.20 per share and free cash flow is expected to rise by approx. $20MM.