Financial Data and Key Metrics Changes - Adjusted diluted EPS excluding 45X was $1.84, up 50% year-over-year, marking a company record for the third fiscal quarter [4][16] - Net sales increased by 1% to $919 million, driven by a 3% benefit from price mix and a 2% benefit from foreign currency translation, partially offset by a 4% decrease in organic volumes [14][15] - Adjusted operating earnings rose by 34% to $142 million, with an adjusted operating margin of 15.5% [15][16] - Free cash flow was strong at $171 million, an increase of $114 million year-over-year, with a free cash flow conversion rate of 190% [22] Business Line Data and Key Metrics Changes - Energy Systems revenue increased by 3% to $400 million, with adjusted operating earnings up 67% to $42 million, reflecting a 10.5% adjusted operating margin [18] - Motive Power revenue decreased by 2% to $352 million, with adjusted operating earnings flat at $53 million, resulting in an adjusted operating margin of 14.9% [19] - Specialty revenue increased by 8% to $168 million, with adjusted operating earnings more than doubling to $20 million, achieving an adjusted operating margin of 11.8% [20][21] Market Data and Key Metrics Changes - Data center sales were up 28% year-over-year, indicating strong demand in that segment [12][61] - The motive power segment experienced a 40% increase in forklift orders in December, signaling potential pent-up demand [10][37] - The communications market is expected to see mid-single-digit growth, with positive demand signals despite some year-end volatility [66][68] Company Strategy and Development Direction - The company is focused on optimizing its core operations, invigorating its operating model, and accelerating growth through strategic initiatives [6][7] - Plans for a lithium cell factory are progressing, with alignment to current administration priorities, although progress has been slower than anticipated [8][50] - The company aims to leverage its diversified business model to manage risks and enhance supply chain optionality amid geopolitical uncertainties [9][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth driven by durable demand trends for energy security and high-performance energy storage solutions [13][14] - The company anticipates continued volume softness in motive power and transportation, but expects a recovery driven by pent-up demand [10][11] - Management highlighted the importance of operational efficiencies and disciplined cost management in positioning the business for long-term growth [26] Other Important Information - The company repurchased 672,000 shares for $84 million and paid $9.6 million in dividends during the quarter [24] - The fourth quarter guidance includes expected net sales in the range of $960 million to $1 billion, with adjusted diluted EPS of $2.95 to $3.05 per share [25] Q&A Session Summary Question: Can you discuss the data center pipeline and its scaling in the quarters ahead? - Management expressed excitement about the data center opportunity, noting a commanding market share and strong demand for higher density products, with significant growth potential in lithium battery products [29][31] Question: What does "normalized margin improvement" mean for the energy systems segment? - Management indicated that while there may be some variability in margins, the overall trajectory remains encouraging, with expectations for continued improvement [33][34] Question: When do you expect to see inflection in motive order rates? - Management noted that there is pent-up demand in the market, with evidence of increased orders, but cautioned that recovery may take a couple of quarters [36][37] Question: Can you provide an update on the lithium factory strategy? - Management is optimistic about discussions with the Department of Energy and believes they are in the final stages of planning, with a focus on secure domestic supply chains [48][50] Question: How do you view the competitive landscape for lithium UPS systems? - Management acknowledged that while there are risks associated with lithium technology, there is significant demand and limited competition in the space, indicating a steady growth trajectory rather than an immediate ramp-up [81][85]

February 2026 © 2026 EnerSys. All Rights Reserved. Forward Looking Statements As a reminder, we will be presenting certain forward-looking statements on this call that are based on Management's current expectations and views regarding future events and operating performance and are subject to uncertainties and changes in circumstances. Our actual results may differ materially from the forward-looking statements for a number of reasons. Our forward-looking statements are applicable only as of the date of thi ...

分组1 - EnerSys reported quarterly earnings of $2.77 per share, exceeding the Zacks Consensus Estimate of $2.73 per share, but down from $3.12 per share a year ago, representing an earnings surprise of +1.34% [1] - The company posted revenues of $919.1 million for the quarter ended December 2025, missing the Zacks Consensus Estimate by 1.35%, compared to $906.2 million in the same quarter last year [2] - EnerSys shares have increased approximately 29.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.1% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $2.98 on revenues of $988.82 million, and for the current fiscal year, it is $10.28 on revenues of $3.76 billion [7] - The Zacks Industry Rank indicates that the Manufacturing - Electronics sector is currently in the bottom 38% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8]

Core Viewpoint - EnerSys has declared a quarterly cash dividend of $0.2625 per share, payable on March 27, 2026, to shareholders of record as of March 13, 2026 [1] Company Overview - EnerSys is recognized as a global leader in stored energy solutions for industrial applications [1] - The company specializes in the design, manufacturing, and distribution of energy systems solutions, including motive power batteries and specialty batteries [1]

Workforce Reduction and Restructuring - The company announced a reduction in force plan to reduce the global workforce by approximately 11%, or about 575 employees, with estimated one-time cash charges of $21.2 million and expected annualized savings of approximately $80 million starting in fiscal 2026[161]. - The company expects to realize approximately $30 million to $35 million in savings in fiscal 2026 from the restructuring plan, with material benefits beginning in the third quarter[161]. - The closure of the Monterrey, Mexico facility is expected to incur a pre-tax charge of approximately $13.7 million, with $12.2 million in cash charges related to severance and environmental expenses[198]. - The Company plans to stop production of residential renewable energy products, estimating total charges of $24.5 million, primarily non-cash charges of $23.6 million[200]. - The Spokane facility closure is estimated to incur total charges of approximately $3.6 million, including $1.4 million in cash charges for employee severance[203]. - The Sylmar facility closure is expected to result in total charges of approximately $13.7 million, with cash charges of $9.7 million primarily for severance[206]. - The Ooltewah facility closure is estimated to incur total charges of approximately $18.5 million, with cash charges of $9.2 million related to severance and cleanup[209]. Financial Performance - Net sales increased by $12.9 million or 1.4% in Q3 fiscal 2026 compared to Q3 fiscal 2025, driven by a 3% increase in pricing and a 2% increase from foreign currency translation[184]. - Net sales for the nine months ended December 28, 2025, increased by $120.6 million or 4.6% compared to the same period in fiscal 2025, attributed to a 2% increase from acquisitions and pricing[185]. - Gross profit for Q3 fiscal 2026 was $276.3 million, a decrease of $21.9 million or 7.3% compared to Q3 fiscal 2025, with a gross profit margin of 30.1%[191]. - Operating expenses for Q3 fiscal 2026 were $147.8 million, a decrease of $6.5 million or 4.2% compared to Q3 fiscal 2025, reflecting cost-saving initiatives[192]. - For the nine months ended December 28, 2025, total operating earnings decreased by $30.7 million or 9.2% compared to the same period in 2024, with operating earnings as a percentage of net sales decreasing by 160 basis points[222]. - Energy Systems operating earnings increased by 66.9% to $42.1 million in Q4 of fiscal 2025, compared to $25.3 million in Q4 of fiscal 2024[220]. - Corporate and other segment reported a significant decrease in operating earnings by 58.8%, from $67.8 million in Q4 of fiscal 2024 to $27.9 million in Q4 of fiscal 2025[220]. Market and Economic Conditions - The data center market is currently in a growth cycle driven by AI and increasing digitization, while the communications market is experiencing a modest recovery[168]. - Global defense budgets are increasing in response to rising geopolitical tensions, with spending in EMEA growing at a higher rate than in the US[168]. - The company experienced lead prices ranging from approximately $0.85 to $0.95 per pound in fiscal year 2026, with customer pricing changes generally lagging behind commodity price movements by six to nine months[169]. - The ongoing Israel-Hamas conflict has disrupted some shipments, leading to potential increases in ocean freight costs and transit times[167]. - The company is assessing the impacts of U.S. tariffs on imported goods, which could have substantial effects on its operations and supply chains[163]. Cash Flow and Financing - Operating activities generated cash of $403.6 million in the nine months of fiscal 2026, a significant increase from $125.1 million in the same period of fiscal 2025[244]. - Investing activities used cash of $75.7 million in the nine months of fiscal 2026, primarily for capital expenditures of $67.2 million and acquisitions of $12.7 million[245]. - Financing activities used cash of $241.4 million in the nine months of fiscal 2026, including treasury stock purchases totaling $301.4 million and cash dividends of $28.6 million[247]. - Total cash and cash equivalents increased by $107.0 million to $450.1 million in the nine months of fiscal 2026, compared to an increase of $129.8 million to $463.2 million in fiscal 2025[249]. - The Company entered into a sixth amendment to the 2017 Credit Facility, increasing the revolving credit facility to $1.0 billion, maturing on September 30, 2030[255]. Taxation and Interest - Interest expense for the nine months ended December 28, 2025, was $37.6 million, a decrease of $0.8 million from $38.4 million in the same period in 2024[228]. - Earnings before income taxes for the nine months ended December 28, 2025, decreased by $41.9 million or 14.4% compared to the same period in 2024, with earnings before income taxes as a percentage of total net sales at 9.0%[235]. - Income tax expense for the nine months ended December 28, 2025, was $32.0 million, an increase of $9.0 million or 39.2% compared to $23.0 million in the same period in 2024[237]. - The effective tax rate for the quarter ended December 28, 2025, was 14.9%, an increase of 5.5 percentage points from 9.4% in the same quarter of 2024[236]. - The company continues to monitor the impact of the OECD's global minimum corporate tax of 15% which may affect future tax liabilities[238]. - The consolidated effective income tax rates for Q3 fiscal 2026 and 2025 were 14.9% and 9.4%, respectively, with a nine-month rate of 12.9% for fiscal 2026 compared to 7.9% for fiscal 2025[241]. Foreign Exchange and Commodity Exposure - About 40% of sales and related expenses are transacted in foreign currencies, impacting sales revenue, production costs, and profit margins[268]. - The largest foreign currency exposure arises from converting U.S. dollar-based lead costs into local currencies in Europe[269]. - The company hedges approximately 5% - 10% of the nominal amount of known annual foreign exchange transactional exposures[270]. - Gains and losses from hedging instruments offset foreign exchange gains or losses on the underlying assets and liabilities being hedged[271]. - An unfavorable 10% movement in exchange rates would have adversely changed hedge valuations by approximately $83.6 million and $75.5 million as of December 28, 2025, and December 29, 2024, respectively[272]. - A 100 basis point increase in interest rates would have raised annual interest expense by approximately $3.9 million on the variable rate portions of the debt[264]. - The Company has forward contracts for lead, with a total value of $98.3 million for 106.8 million pounds at an average cost of $0.92 per pound, covering 20% of lead requirements[265]. - Approximately 100% of the cost of lead requirements is known for the remaining quarter of the fiscal year, considering hedge contracts and FIFO accounting policy[266]. - A 10% increase in the cost of lead would have raised the cost of goods sold by approximately $16.0 million in the three months of fiscal 2026[267].

Industry Overview - The Zacks Manufacturing - Electronics industry is experiencing stable demand due to the electronic services end market, increased adoption of advanced manufacturing technologies, and product innovation efforts [1] - A surge in e-commerce activities is expected to further support the industry's growth [1] Industry Challenges - A slowdown in the manufacturing sector and supply-chain issues are negatively impacting the performance of some industry participants [2] - The manufacturing sector has contracted for ten consecutive months, with the Manufacturing PMI at 47.9% in December, indicating a contraction in manufacturing activity [6] Industry Trends - Demand across key end markets remains stable despite manufacturing slowdowns, with electronics manufacturers benefiting from the integration of advanced electronic components [4] - Companies are increasingly investing in digitization to enhance operational productivity, product quality, and reduce costs [5] Industry Performance - The Zacks Manufacturing - Electronics industry has underperformed compared to the broader sector and the S&P 500, growing 5.4% over the past year, while the sector rose 10.3% and the S&P 500 increased by 19.4% [10] Current Valuation - The industry is currently trading at a forward 12-month Price-to-Earnings (P/E) ratio of 22.27X, which is above the sector's P/E of 21.68X but below the S&P 500's P/E of 23.38X [13] Notable Companies - **Powell Industries, Inc. (POWL)**: Engaged in manufacturing custom-engineered equipment, benefiting from strong project activity in electric utility and industrial markets, with shares up 55.2% in the past year [18][19] - **Emerson Electric Co. (EMR)**: Offers a range of products and services, experiencing solid momentum in the Final Control business, with shares gaining 18.9% in the past year [22][23] - **Eaton Corporation plc (ETN)**: A diversified power management company benefiting from rising demand in AI-data centers, with shares down 3.7% over the past year but up 5.6% in the past month [26][27] - **EnerSys (ENS)**: Focused on industrial batteries, well-positioned due to strong momentum in aerospace and defense markets, with shares rising 19.2% in the past year [30][31]

Core Viewpoint - EnerSys, a global leader in stored energy solutions for industrial applications, is set to release its third quarter fiscal 2026 financial results on February 4, 2026, after market close [1] Financial Results Announcement - The financial results will cover the period ended December 28, 2025 [1] - A press release and slide presentation will be made available in the Investor Relations section of the company's website [1] - The company will also host a conference call following the release of the financial results [1]

Core Viewpoint - EnerSys (ENS) has shown strong stock performance, with a 5.3% increase over the past month and reaching a 52-week high of $156.21, outperforming the Zacks Industrial Products sector and the Zacks Manufacturing - Electronics industry year-to-date [1] Financial Performance - EnerSys has consistently beaten earnings estimates, reporting an EPS of $2.56 against a consensus estimate of $2.36 in its last earnings report [2] - For the current fiscal year, EnerSys is projected to achieve earnings of $10.28 per share on revenues of $3.76 billion, reflecting a 1.28% increase in EPS and a 3.96% increase in revenues [3] - The next fiscal year forecasts earnings of $12.41 per share on revenues of $3.88 billion, indicating a year-over-year growth of 20.72% in EPS and 3.03% in revenues [3] Valuation Metrics - EnerSys has a Value Score of B, with Growth and Momentum Scores of C and F respectively, resulting in a combined VGM Score of B [6] - The stock trades at 15.1 times the current fiscal year EPS estimates, below the peer industry average of 23.5 times, and at 11.9 times trailing cash flow compared to the peer group's average of 23.2 times [7] - The PEG ratio stands at 1, which does not position the company among the top value stocks [7] Zacks Rank - EnerSys holds a Zacks Rank of 1 (Strong Buy), supported by a favorable earnings estimate revision trend [8] - The combination of a Zacks Rank of 1 or 2 and Style Scores of A or B suggests that EnerSys shares may have further upside potential in the near term [8]

Core Insights - The reshoring trend and the push for supply-chain independence are significantly transforming U.S. manufacturing, driven by factors such as post-pandemic vulnerabilities, trade disputes, and recent tariff policies [1][2]. Industry Overview - The imposition of import tariffs on various products has made offshore production costly, prompting companies to relocate manufacturing back to the U.S. to stabilize supply chains and avoid tariffs [2]. - Favorable U.S. government policies, including the CHIPS & Science Act and the Inflation Reduction Act (IRA), are encouraging investments in sectors like semiconductors and clean energy, which in turn is boosting demand for related industries [3]. Company Focus: Caterpillar Inc. (CAT) - Caterpillar has shifted its construction equipment production from Japan to Georgia and Texas, enhancing its supply chain efficiency and reducing transit times [6]. - The company plans to invest $725 million in its engine manufacturing facility in Lafayette, IN, to improve workforce skills and meet rising demand for power generation engines [6]. - CAT's shares have increased by 60.6% over the past year, with earnings growth expected to be 19% in 2026 [8]. Company Focus: EnerSys (ENS) - EnerSys is relocating battery production to Kentucky to avoid tariffs and leverage IRA tax credits, ceasing operations in its Mexican facility [10]. - The company anticipates benefiting from the IRA, expecting its products to qualify for tax credits, which will support its high-density battery portfolio expansion [11]. - ENS shares have risen 62.6% in the past year, with projected earnings growth of 20.7% for fiscal 2027 [12]. Company Focus: GE Aerospace - GE Aerospace is investing $1 billion in U.S. manufacturing to enhance production capabilities and meet growing demand for engines and services [13][16]. - This investment is expected to create approximately 5,000 jobs in the U.S. and focuses on improving engine quality and delivery [16]. - GE's shares have surged 87.5% over the past year, with earnings growth projected at 13.1% for 2026 [17].

Group 1 - EnerSys (ENS) has shown strong year-to-date performance, returning approximately 63.4% since the start of the calendar year, significantly outperforming the average gain of 7.3% in the Industrial Products sector [4] - The Zacks Rank for EnerSys is currently 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] - The Zacks Consensus Estimate for EnerSys' full-year earnings has increased by 5.3% over the past quarter, reflecting improving analyst sentiment [3] Group 2 - EnerSys is part of the Manufacturing - Electronics industry, which consists of 15 companies and is currently ranked 34 in the Zacks Industry Rank, with stocks in this group gaining about 2.6% year-to-date [5] - Another company in the Industrial Products sector, Flowserve (FLS), has also performed well, with a year-to-date return of 23.5% and a Zacks Rank of 2 (Buy) [4][5] - The Manufacturing - General Industrial industry, which includes Flowserve, has 41 stocks and is ranked 98, with an average gain of 9.8% since the beginning of the year [6]