ENR - Energizer gains after posting strong organic sales

Energizer Holdings ( NYSE: ENR ) rallied in early trading on Tuesday after sailing past consensus marks with its FQ4 earnings report .

Organic sales rose 7.4% during the quarter with pricing executed in both battery and auto care driving an organic increase of approximately 13.3% for those categories.

Excluding the current year costs from the flooding of Energizer's Brazilian manufacturing facility, exiting the Russian market, and the acquisition and integration costs in both years, gross margin came in at 36.2% for the fourth fiscal quarter vs. 37.7% a year ago.

CEO update: "Despite a volatile operating environment and significant headwinds, we achieved our seventh consecutive year of net sales growth, driven by strong organic growth across both of our operating segments. We generated $95 million in free cash flow in the fourth quarter, paid down debt and reduced net leverage by 0.3X."

Energizer also issed solid revenue guidance ($790M vs. $776M consensus) and EPS guidance with a midpoint below the consensus mark ($3.00 to $3.30 vs. $3.21).

The ENR report was not enough to push Morgan Stanley off its Equal-weight rating on the stock in its first post-earnings crack at the name.

"Net, Q4 results were low quality, and FY23 EPS guidance in-line with consensus despite FX pressure, buoyed by a new Project Momentum restructuring program driving pre-tax savings of ~$80-100M in total, including $30-40M in FY23 (worth 38 cents in EPS at its midpoint)," noted analyst Dara Mohsenian.

Shares of Energizer jumped 5.25% in premarket action after the earnings topper.

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