Customer Base and Market Presence - EnerSys serves over 10,000 customers in more than 100 countries, with no single customer accounting for more than 10% of revenues[26]. - The company operates four segments: Energy Systems, Motive Power, Specialty, and New Ventures, each serving diverse markets[22]. - EnerSys has a strong presence in the industrial energy storage market, competing with companies like East Penn Manufacturing and Exide Technologies[34]. - The company’s Energy Systems customers include those in telecommunications, data centers, and electric utilities, reflecting a diverse market base[27]. - Approximately 40% of net sales were generated outside of the United States in fiscal 2025, exposing the company to significant foreign currency translation risks[125]. Acquisitions and Growth Strategy - The company completed the acquisition of Bren-Tronics Defense LLC for $206.4 million, enhancing its Specialty line of business with portable power solutions for military applications[25]. - EnerSys has made thirty-six acquisitions globally from fiscal years 2003 through 2025, with no significant acquisitions in fiscal 2023 or 2024[25]. - The growth strategy is heavily dependent on acquisitions, and failure to identify suitable candidates or integrate acquired businesses could materially affect operations[100][102]. - Future acquisitions may involve issuing equity securities, which could dilute stockholder ownership and adversely impact the market price of the stock[103]. Financial Performance and Costs - The company estimates that raw material costs account for over 50% of its cost of goods sold, and fluctuations in the prices of materials like lead, lithium, and nickel could significantly impact financial results[85]. - The Company experienced lead prices ranging from approximately $0.85 to $1.00 per pound in fiscal 2025, impacting production costs[211]. - Approximately 25% of the Company's revenue is subject to agreements that adjust pricing based on a market-based index for lead[212]. - The Company anticipates that selling prices will be higher in fiscal 2026 compared to fiscal 2025 due to inflationary cost increases[213]. - The trailing three months net sales annualized was $3,899.2 million at March 31, 2025, compared to $3,642.8 million at March 31, 2024[215]. Sustainability and Environmental Goals - The company has committed to reducing its energy intensity by 25% over the next 10 years from a 2020 baseline[56]. - The company has set net-neutral goals for Scope 1 emissions by 2040 and Scope 2 emissions by 2050[56]. - The company has published its Climate Action Plan Roadmap in October 2024, detailing plans to achieve climate goals[56]. - The company has released comprehensive Sustainability Reports in 2022 and 2023, aligned with GRI and SASB standards[56]. - The company has a dedicated sustainability steering committee that includes members of senior management to oversee sustainability performance[73]. Risks and Challenges - The company is subject to significant pricing pressures due to competition from major international manufacturers and regional competitors, which could adversely affect profitability and cash flows[77]. - The company relies on third-party relationships for key aspects of its business, and any failure of these parties could expose it to risks of business disruption and higher costs[78]. - The company faces risks related to the introduction of new products and technologies, as failure to innovate could lead to reduced market acceptance[94]. - Cybersecurity incidents, including ransomware and phishing attacks, pose significant risks to the integrity and privacy of the company's data[106][107]. - The company faces risks from public health epidemics, such as COVID-19, which have previously disrupted global operations and supply chains[115][116]. Regulatory and Compliance Issues - Regulatory scrutiny in various countries may lead to substantial fines or operational disruptions, harming the company's reputation and business[119][120]. - The company is subject to extensive environmental liability, which could result in significant fines or operational restrictions if noncompliance occurs[143]. - The company is currently subject to conflict mineral disclosure regulations, which may increase costs and affect supplier relationships[153]. - The company is impacted by the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), which impose stringent requirements on data handling[155]. Financial Position and Capital Management - The company's total consolidated debt as of March 31, 2025, was $1,113 million, which may restrict operational flexibility and increase vulnerability to economic conditions[136]. - The company has $343 million in available cash and cash equivalents as of March 31, 2025[216]. - The company has approximately $653 million available and undrawn under all lines of credit as of March 31, 2025[216]. - A third amendment to the 2017 Credit Facility provided a new incremental delayed-draw senior secured term loan of up to $300 million[217]. - The company has a share repurchase program authorized for up to $200 million, with approximately $178.9 million remaining as of March 31, 2025[164]. Employee and Labor Relations - The company reported that approximately 28% of its 10,858 employees are covered by collective bargaining agreements, with 8% of these agreements expiring in the next twelve months[45]. - The company faces significant competition for qualified personnel, which could impact its ability to retain key employees and affect business continuity[166].

Core Viewpoint - EnerSys (ENS) is set to release its fourth-quarter fiscal 2025 results on May 21, with a history of positive earnings surprises averaging 2.2% [1] Group 1: Financial Performance Expectations - The consensus estimate for ENS's fourth-quarter revenues is $975.4 million, reflecting a 7.1% increase from the previous year [5] - The expected adjusted earnings per share for the quarter is $2.78, indicating a significant 33.7% increase from the year-ago quarter [5] Group 2: Segment Performance Insights - The Motive Power segment is projected to achieve net sales of $396 million, a slight increase of 0.3% year-over-year, driven by sales of maintenance-free thin plate pure lead and lithium products [2] - The Specialty segment is expected to report net sales of $165 million, representing a robust 12.2% increase from the previous year, benefiting from strong momentum in aerospace and defense markets [3] - The Energy Systems segment is anticipated to reach net sales of $416 million, reflecting a 12.7% increase year-over-year, supported by the expansion of U.S. communications networks driven by AI data demand [4] Group 3: Investment and Market Risks - EnerSys has been making significant investments to enhance growth, although high capital expenditures may negatively impact performance [6] - The company's international operations expose it to currency fluctuation risks, which could affect its performance in the upcoming quarter [6] Group 4: Earnings Prediction Insights - The current Earnings ESP for ENS is 0.00%, as both the Most Accurate Estimate and the Zacks Consensus Estimate are at $2.78, indicating uncertainty in predicting an earnings beat [8] - ENS holds a Zacks Rank of 3, suggesting a neutral outlook for earnings performance [8]

EnerSys (ENS) FY Conference Summary Company Overview - **Company**: EnerSys (ENS) - **Event**: Oppenheimer's 20th Annual Industrial Growth Conference - **Date**: May 08, 2025 - **Speakers**: Sean O'Connell (President and CEO), Andy Funk (CFO) Key Points Industry Context - The macroeconomic environment for EnerSys is described as the strongest in the company's history, focusing on energy security and labor efficiency [5][6][7] - The company is navigating challenges related to tariffs and supply chain adjustments, particularly in response to the current administration's policies [6][18] Strategic Priorities - Immediate focus on building credibility with investors and executing operational strategies [7][8] - Mid-term strategy includes leveraging macroeconomic trends to identify growth opportunities [8] - The company is enhancing its U.S. manufacturing footprint, including the closure of capacity in Mexico to expand in the U.S. [17][18] Leadership Changes - Keith Fisher has been appointed to lead the energy systems division, bringing extensive experience from Honeywell, particularly in managing energy transitions and operational efficiency [9][10][11] Product Innovations - EnerSys is implementing advanced technologies such as the Insight controller and energy router to optimize energy management for clients, particularly in the telecommunications sector [14][15][16] - The company is focusing on maintenance-free battery solutions and transitioning from flooded lead-acid batteries to newer technologies [18][19] Investment and Growth Opportunities - EnerSys is exploring mergers and acquisitions (M&A) in the aerospace and defense sectors, leveraging its strong relationship with the U.S. Department of Defense [22][23] - The company is committed to investing in research and development, particularly in software and control systems to enhance product offerings [24] Supply Chain and Tariff Management - EnerSys has diversified its supply chain to mitigate risks associated with tariffs, moving production from China to Vietnam and Mexico [30][31] - The company has established a dedicated task force to address tariff impacts and improve pricing strategies [34][36] Market Outlook - Positive trends are observed in the data center and telecommunications markets, with expectations of increased spending in these sectors [40][41][42] - The company anticipates a multi-year recovery driven by deferred maintenance and upgrades in technology infrastructure [46][47] Financial Resilience - EnerSys has demonstrated resilience during economic downturns, maintaining cash flow and operational efficiency [59][63] - The company expects revenue growth of approximately 10% over five years, with operating earnings projected to increase by over 50% [63] Specialty Markets - EnerSys is targeting growth in the aerospace, defense, and transportation sectors, emphasizing the importance of managing fleet assets and reducing downtime costs [66][67][68] Electric Vehicle (EV) Incentives - While there are some state-level incentives for electric forklifts, the overall economics of electric conversion are favorable without significant subsidies [70][71] Additional Insights - The company is well-positioned to capitalize on the growing demand for energy management solutions across various sectors, including material handling and data centers [49][50][55] - EnerSys is actively adapting its product offerings to meet the evolving needs of customers in a rapidly changing energy landscape [52][54]

Industry Overview - The Zacks Manufacturing - Electronics industry is poised for growth due to steady demand in electronic services, 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] Current Challenges - A slowdown in manufacturing activities and a contraction in new orders may negatively impact industry performance [2] - The Manufacturing Purchasing Manager's Index fell to 48.7% in April, indicating contraction, while the New Orders Index registered 47.2% for the third consecutive month [4] Market Trends - Despite manufacturing slowdowns, demand remains stable in key end markets, particularly in medical and life sciences, driven by the integration of advanced electronic components [5] - The industry is benefiting from technological advancements and digitization, enhancing operational productivity and product quality [6] Industry Performance - The Zacks Manufacturing - Electronics industry currently holds a Zacks Industry Rank of 66, placing it in the top 27% of 246 Zacks industries, indicating bullish near-term prospects [7][8] - Over the past year, the industry has underperformed compared to the broader sector and the S&P 500, losing 17.7% against the sector's decline of 7% and the S&P 500's growth of 9.7% [10] - However, the industry rebounded in the past month with a 15.1% increase, outperforming both the sector's and S&P 500's growth [10] Valuation Metrics - The industry is currently trading at a forward 12-month Price-to-Earnings (P/E) ratio of 21.19X, slightly above the S&P 500's 20.97X and the sector's 17.94X [13] Notable Companies - **Eaton Corporation plc (ETN)**: Benefits from improving end market conditions and strong demand in AI data centers, with shares rebounding 18.3% in the past month [19][20] - **Emerson Electric Co. (EMR)**: Witnessing solid momentum in its Intelligent Devices and Software segments, with shares gaining 0.9% in the past year [23][25] - **EnerSys (ENS)**: Positioned to benefit from product innovation and trends like 5G expansion, with shares rebounding 11.9% in the past month [28][29] - **Powell Industries, Inc. (POWL)**: Experiencing favorable trends in oil, gas, and petrochemical markets, with shares gaining 21.1% in the past year [32][34]

Core Viewpoint - The P/B ratio is emerging as a useful tool for identifying undervalued stocks with high growth potential, complementing traditional valuation metrics like P/E and P/S ratios [1][3]. Group 1: Understanding P/B Ratio - The P/B ratio is calculated by dividing the stock's market price by its book value per share, indicating how much investors pay for each dollar of book value [2][6]. - A P/B ratio of less than one suggests that a stock is undervalued, while a ratio greater than one indicates it may be overvalued [6][7]. - The P/B ratio is particularly relevant for industries with tangible assets, such as finance and manufacturing, but may be misleading for companies with high R&D expenditures or significant debt [9][10]. Group 2: Book Value Definition - Book value represents the total value remaining for shareholders if a company were to liquidate its assets after settling all liabilities [4][5]. - It is calculated by subtracting total liabilities from total assets, often equating to common stockholders' equity [5]. Group 3: Screening Parameters for Investment - Stocks with a P/B ratio lower than the industry median indicate potential for price appreciation [12]. - A lower P/S ratio compared to the industry average makes a stock more attractive, as it reflects how the market values the company's sales [12]. - A P/E ratio lower than the industry median is considered favorable, suggesting better valuation [13]. - A PEG ratio of less than 1 indicates that a stock is undervalued relative to its growth prospects [14]. - Stocks should have a minimum trading price of $5 and a significant average trading volume to ensure liquidity [15]. Group 4: Examples of Low P/B Stocks - General Motors (GM) has a projected 3-5 year EPS growth rate of 6.3% and currently holds a Zacks Rank of 2 with a Value Score of A [16][17]. - JD.com has a projected EPS growth rate of 32.3% and holds a Zacks Rank of 1 with a Value Score of A [18]. - Pfizer (PFE) has a projected EPS growth rate of 13.8% and a Zacks Rank of 2 with a Value Score of A [19]. - StoneCo (STNE) has a projected EPS growth rate of 21.6% and a Zacks Rank of 1 with a Value Score of B [20]. - EnerSys (ENS) has a projected EPS growth rate of 18.0% and a Zacks Rank of 2 with a Value Score of A [20].

Core Viewpoint - EnerSys (ENS) is experiencing growth due to strong performance across its segments and strategic acquisitions, while consistently rewarding shareholders through dividends [1][2] Business Strength - The Motive power segment is showing solid momentum, driven by increased sales of maintenance-free thin plate pure lead and lithium products, with expectations of benefiting from increased lift truck shipments [3] - The Specialty segment is supported by strong momentum in the aerospace and defense markets [3] - The Energy Systems segment is benefiting from the expansion of U.S. communications networks, driven by AI-related data demand [3] Expansion Efforts - EnerSys has enhanced its product portfolio and business opportunities through acquisitions, which contributed to a 3% sales boost in Q3 of fiscal 2025 [4] - The acquisition of Bren-Tronics, Inc. for $208 million in July 2024 has strengthened EnerSys's position in the energy transition and military defense markets [4] - The acquisition of Industrial Battery and Charger Services Limited in April 2023 has improved the company's motive power service offerings and expanded its presence in the U.K. market [5] Rewards to Shareholders - EnerSys paid out $28.1 million in dividends and repurchased shares worth $113.9 million in the first nine months of fiscal 2025 [6] - The quarterly dividend was increased by 7% to 24 cents per share in August 2024 [6] - A share repurchase program worth $150 million was announced in March 2022, followed by a new program worth $200 million authorized in November 2024, with no expiration date [6]

Core Viewpoint - EnerSys (ENS) has announced a strategic restructuring plan aimed at enhancing manufacturing productivity and focusing on higher-performance battery technologies, including Thin Plate Pure Lead and lithium-ion batteries [1]. Group 1: Restructuring Plan - The realignment plan includes ceasing operations at the flooded lead-acid battery manufacturing plant in Monterrey, Mexico, and relocating production to Richmond, KY, to mitigate tariff risks and optimize cost structure [2]. - The company anticipates incurring a pre-tax charge of approximately $20 million, with cash charges projected at $12.4 million for severance, decommissioning, and legal costs, while the remaining $7.6 million will be a non-cash charge related to inventory and equipment write-offs [3]. Group 2: Investment and Benefits - EnerSys plans to invest around $4.5 million to increase production capacity at its flooded lead battery manufacturing plant in Bielsko-Biala, Poland, to meet rising demand in Europe [4]. - The restructuring is expected to yield a pre-tax benefit of $19 million annually starting from fiscal 2027 [4]. Group 3: Stock Performance and Market Position - EnerSys has a market capitalization of $3.6 billion and holds a Zacks Rank 2 (Buy), benefiting from strong product offerings and innovation, particularly in the Motive Power segment [5]. - Over the past year, EnerSys stock has increased by 1%, contrasting with a 20.7% decline in the industry, and the Zacks Consensus Estimate for fiscal 2025 earnings has risen by 2.2% to $10.00 per share [6].

Company Overview - EnerSys is a leading player in the industrial battery market, focusing on advanced energy storage and management solutions [1] - The company is based in the US and is recognized as one of the global leaders in its sector [1] Investment Focus - The analysis emphasizes a focus on high-growth companies with a market capitalization of up to $15 billion, particularly those that prioritize innovation and scalability [1] - The core focus areas include renewable energy and cutting-edge industrial innovation, which are seen as key drivers for future growth [1]

Market Overview - U.S. equities experienced modest gains, with the S&P 500 rising 0.08% to 5,667.56, the Nasdaq Composite increasing 0.52% to 17,784.05, and the Dow Jones Industrial Average adding 32.05 points, also up 0.08% to 41,985.35 [1][2] Economic Concerns - Uncertainty regarding potential tariffs has created caution among investors, impacting economic momentum and sentiment [2] - The Federal Reserve has maintained its benchmark interest rate in the range of 4.25-4.5%, unchanged since December [2] Investment Strategy - In a volatile market characterized by geopolitical uncertainty and changing monetary policy, value stocks are highlighted as a compelling investment option due to their trading below intrinsic value, providing a margin of safety [3] - The Price to Cash Flow (P/CF) ratio is emphasized as an effective valuation metric for assessing value stocks, with lower ratios indicating better financial health [4][7] Value Investing Insights - Value investing focuses on fundamentally sound stocks that have been undervalued due to external factors, with the potential for recovery as investors recognize their inherent value [5] - Positive cash flow is crucial for a company's liquidity, enabling it to meet obligations and reinvest, while negative cash flow indicates declining liquidity and reduced flexibility [9] Stock Selection Criteria - A comprehensive approach to identifying true-value stocks includes using multiple valuation metrics such as P/CF, price-to-book, price-to-earnings, and price-to-sales ratios, along with Zacks Rank and Value Score [10][14] - Specific parameters for selecting value stocks include a P/CF ratio less than or equal to the industry median, a minimum stock price of $5, and a substantial average trading volume [11][12] Highlighted Value Stocks - Fresenius Medical Care AG (FMS) has a Zacks Rank 1, with a trailing four-quarter earnings surprise of 15.7% and a Value Score of A, showing a 28.2% increase in shares over the past year [15][16] - EnerSys (ENS) holds a Zacks Rank 2, with a trailing four-quarter earnings surprise of 2.2% and a Value Score of A, with shares up 3.9% in the past year [16][17] - General Motors Company (GM) also carries a Zacks Rank 2, with a trailing four-quarter earnings surprise of 15.8% and a Value Score of A, experiencing a 14.3% share increase over the past year [18] - Itron, Inc. (ITRI) has a Zacks Rank 2, with a trailing four-quarter earnings surprise of 40.8% and a Value Score of B, with shares rising 18.5% in the past year [19]

Core Insights - Five stocks have been added to the Zacks Rank 1 (Strong Buy) List, indicating strong potential for investment returns Group 1: Company Performance - Third Coast Bancshares (TCBX) has seen a 11.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Komatsu (KMTUY) has experienced an 11.3% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Plains All American Pipeline (PAA) has seen a 10.1% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3] - Limbach (LMB) has experienced a 9.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [4] - Enersys (ENS) has seen a 7.2% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [4]