Core Viewpoint - EnerSys, a global leader in stored energy solutions, has declared a quarterly cash dividend of $0.2625 per share, payable on December 26, 2025, to shareholders of record as of December 12, 2025 [1] Company Overview - EnerSys specializes in stored energy solutions for industrial applications, including the design, manufacturing, and distribution of energy systems solutions and motive power batteries, as well as specialty batteries [1]

Workforce Reduction and Restructuring - The company announced a reduction in force plan to reduce non-production global workforce by approximately 11%, or about 575 employees, with estimated one-time cash charges between $15.0 million to $20.0 million[160] - The company announced a reduction in force plan expected to reduce the global workforce by approximately 11%, or about 575 employees, with one-time cash charges estimated at $20.0 million[195] - The company plans to close its Monterrey, Mexico facility, incurring a pre-tax charge of approximately $13.7 million, with $12.2 million in cash charges expected for severance and related costs[196] - The company recorded a $3.9 million severance cost during the first half of fiscal 2026 related to restructuring efforts[197] - The company incurred cash charges of $9.2 million related to the closure of the Ooltewah, Tennessee facility, which produced flooded motive power batteries[207] Financial Performance - Net sales increased by $67.6 million or 7.7% in Q2 fiscal 2026 compared to Q2 fiscal 2025, driven by a 3% increase in organic volume and pricing[182] - Net sales for the first six months of fiscal 2026 rose by $107.7 million or 6.2% compared to the same period in fiscal 2025, attributed to a 2% increase in acquisitions and pricing[183] - Gross profit increased by $25.1 million or 9.9% in Q2 fiscal 2026, with gross profit margin improving by 60 basis points compared to Q2 fiscal 2025[189] - Operating earnings for the quarter ended September 28, 2025, were $92.0 million, a decrease of 7.4% from $99.4 million in the same quarter of the previous year[217] - Operating earnings decreased by $12.2 million or 6.4% for the six months of fiscal 2026 compared to the same period in fiscal 2025[220] - Earnings before income taxes for the six months ended September 28, 2025, were $142.1 million, down 13.1% from $163.5 million in the prior year[231] - Income tax expense for the six months ended September 28, 2025, was $16.2 million, a 45.8% increase from $11.1 million in the same period of 2024[233] - Interest expense remained flat at $23.5 million for the six months of fiscal 2026, compared to the same period in fiscal 2025[224] - Other (income) expense, net for the six months ended September 28, 2025, was an expense of $12.9 million, significantly higher than $3.7 million in the prior year[229] Segment Performance - Energy Systems segment net sales increased by $52.6 million or 13.8% in Q2 fiscal 2026, with a 10% increase in organic volume[185] - Motive Power segment net sales decreased by $7.0 million or 1.9% in Q2 fiscal 2026, primarily due to a 6% decrease in organic volume[186] - Specialty segment net sales increased by $22.0 million or 16.3% in Q2 fiscal 2026, driven by a 7% increase from acquisitions and organic volume[187] - The Energy Systems segment reported operating earnings of $33.6 million, a 37.8% increase from $24.2 million in the prior year[217] - The Motive Power segment experienced a decline in operating earnings to $47.9 million, down 16.7% from $57.6 million year-over-year[217] - The Specialty segment saw a significant increase in operating earnings to $14.6 million, up 97.7% from $7.5 million in the previous year[217] Cash and Liquidity - The company has $388.6 million in available cash and cash equivalents and $489.3 million in undrawn committed credit lines as of September 28, 2025[172] - The company purchased 2,375,741 shares for $217.8 million during the first six months of fiscal 2026, indicating strong capital structure and liquidity[181] - Operating activities generated cash of $219.0 million in the first six months of fiscal 2026, a significant increase from $44.0 million in the same period of fiscal 2025[240] - Investing activities used cash of $62.4 million in the first half of fiscal 2026, primarily for capital expenditures of $53.9 million and acquisitions of $12.7 million[242] - Financing activities used cash of $128.2 million in the first six months of fiscal 2026, including treasury stock purchases totaling $217.8 million[244] - Total cash and cash equivalents increased by $45.5 million to $388.6 million in the first half of fiscal 2026, compared to an increase of $74.6 million to $407.9 million in fiscal 2025[246] Market Conditions and Economic Factors - The ongoing geopolitical tensions, including the war in Ukraine and the Israel-Hamas conflict, are impacting global economic conditions and supply chains[164] - Inflation remains a challenge in North America, China, and EMEA, although it is somewhat more controlled compared to sharp increases in 2023[165] - The data center market is currently in a growth cycle driven by AI and increasing digitization, while the communications market is experiencing a slow spending recovery[167] - The company anticipates that selling prices will be higher in fiscal 2025 compared to fiscal 2024 due to inflationary cost increases[169] Commodity and Foreign Exchange Exposure - The company experienced fluctuations in lead prices, ranging from approximately $1.00 per pound to $0.90 per pound in fiscal year 2025, impacting production costs[168] - Approximately 25% of the company's revenue is now subject to agreements that adjust pricing based on a market-based index for lead, with customer pricing changes generally lagging behind commodity price movements by six to nine months[168] - The company has forward contracts for lead, with a total value of $95.2 million for 104.4 million pounds at an average cost of $0.91 per pound, covering 18% of lead requirements[262] - Approximately 93% of the cost of lead requirements is known for the remaining quarter of the fiscal year, considering hedge contracts and FIFO accounting policy[263] - A 10% increase in the cost of lead would have raised the cost of goods sold by approximately $18.0 million in the three months of fiscal 2026[264] - About 40% of sales and related expenses are transacted in foreign currencies, impacting sales revenue and profit margins[265] - The largest foreign currency exposure arises from converting U.S. dollar-based lead costs into local currencies in Europe[266] - The company hedges approximately 5% - 10% of its known annual foreign exchange transactional exposures[267] - Gains and losses from hedging instruments offset foreign exchange gains or losses on the underlying assets and liabilities[268] - An unfavorable 10% movement in exchange rates would have adversely changed hedge valuations by approximately $81.0 million and $48.8 million at September 28, 2025, and September 29, 2024, respectively[269] Taxation - The company continues to monitor the impact of global tax legislation, including the OECD's Pillar 2, which may affect future tax rates[234] - The consolidated effective income tax rates for Q2 fiscal 2026 and 2025 were 10.5% and 2.3%, respectively, with a six-month rate of 11.4% for fiscal 2026 compared to 6.8% for fiscal 2025[237] - Foreign income accounted for 53% of worldwide income for both fiscal 2026 and 2025, with foreign effective tax rates increasing from 15% in fiscal 2025 to 17% in fiscal 2026[238]

Core Insights - EnerSys reported a strong performance in its second quarter of fiscal 2026, with net sales increasing by 8% compared to the previous year [1] Financial Performance - The company achieved net sales growth of 8% in the second quarter, reflecting solid execution and a commitment to continuous improvement [1] - Adjusted diluted earnings per share (EPS) figures were also highlighted, indicating positive financial health [1] Management Commentary - Shawn O'Connell, President and CEO of EnerSys, emphasized the importance of collaboration across the organization in driving performance [1]

Core Points - EnerSys will release its second quarter fiscal 2026 financial results on November 5, 2025, after market close, with a conference call scheduled for November 6, 2025, at 9:00 AM ET [1][2] - The company is a global leader in stored energy solutions for industrial applications, offering a range of products including energy systems, motive power batteries, specialty batteries, and battery chargers [3] Financial Information - The second quarter fiscal 2026 results will cover the period ending September 28, 2025 [1] - EnerSys has previously reported a revenue of $893 million for the first quarter fiscal 2026, reflecting a 5% year-over-year increase [9] Company Overview - EnerSys designs, manufactures, and distributes energy systems solutions and batteries for various applications, including telecommunications, utilities, and electric vehicles [3] - The company operates through four business lines: Energy Systems, Motive Power, Specialty, and New Ventures [3] - EnerSys provides customer support services in over 100 countries [3]

Core Viewpoint - EnerSys (ENS) shares experienced a significant increase of 5.7% in the last trading session, closing at $115.56, driven by strong trading volume and positive momentum in its Energy Systems segment [1][2]. Company Performance - EnerSys is expected to report quarterly earnings of $2.36 per share, reflecting an 11.3% year-over-year increase, with revenues projected at $888.23 million, a 0.5% rise from the previous year [3]. - The consensus EPS estimate for EnerSys has remained stable over the last 30 days, indicating no recent changes in earnings estimate revisions [4]. Industry Trends - The growth in EnerSys is supported by global megatrends such as 5G expansion, rural broadband development, modernization of energy grids, electrification, automation, and decarbonization [2]. - EnerSys operates within the Zacks Manufacturing - Electronics industry, which includes other companies like Franklin Electric (FELE), also holding a Zacks Rank of 3 (Hold) [4][5].

Core Insights - EnerSys (NYSE:ENS) is recognized as one of the 11 Cheap Clean Energy Stocks to Buy, highlighting its significant upside potential [1] Company Performance - EnerSys's stock reached a 52-week high of $107.50 on September 12, 2025, with a market capitalization of $4 billion [2] - The company's share price has increased by 8.2% over the past year and 16.8% year-to-date [2] Demand and Financial Health - Analysts attribute EnerSys's strong stock performance to robust demand for its products and services in the Energy Systems and Motive Power segments [3] - The company's financial health is considered strong, attracting investor interest as it expands into industrial and renewable applications [3] Product Offerings - EnerSys provides global stored energy solutions, including power systems, large-scale energy storage, thermally managed enclosures, and integrated power solutions [4] - The company serves various sectors, including telecom, broadband, data centers, and renewable energy, positioning itself as one of the Best Clean Energy Stocks [4]

Group 1: Industry Overview - Artificial intelligence (AI) is driving significant changes in energy and transportation sectors, necessitating advancements in battery technology [1] - The global battery market is projected to reach a value of $329.84 billion by 2030, with a compound annual growth rate (CAGR) of 16.4% from 2025 to 2030 [1] Group 2: Company Insights - Honeywell - Honeywell International Inc. is a large-cap conglomerate involved in sustainable energy solutions, including lithium-ion batteries, with a current stock price of $217.01 and a 12-month price forecast of $254.00, indicating a 17.05% upside [3] - The company supplies batteries and energy systems to critical sectors such as aerospace, defense, and industrial markets, which will increasingly depend on electrification and longer-lasting power sources over the next decade [4] - Honeywell is spinning off its advanced materials business, which includes battery solutions, into a separate entity, expected to generate revenue between $3.7 billion and $3.9 billion this fiscal year with an EBITDA margin exceeding 25% [5][6] Group 3: Company Insights - EnerSys - EnerSys is a mid-cap company providing exposure to the buildout of AI infrastructure, with a current stock price of $98.52 and a 12-month price forecast of $118.33, representing a 20.11% upside [7][8] - The company is expanding its product portfolio to include next-generation technologies aimed at enhancing energy density, charging speed, and environmental sustainability, with its stock up 3.8% in 2025 [9] - EnerSys reported a double beat in its first quarter FY2026 earnings report, contributing to a more than 4% increase in stock price [9][10] Group 4: Company Insights - Joby Aviation - Joby Aviation is focused on manufacturing electric vertical take-off and landing vehicles (eVTOLs) and is expected to be a significant customer for battery companies, with a current stock price of $18.02 and a 12-month price forecast of $10.50, indicating a -41.73% downside [11] - The company recently acquired the passenger mobility business of Blade Mobility Inc., allowing it to leapfrog logistical development by acquiring a complete ecosystem [12] - Despite the potential of the eVTOL market, Joby Aviation is currently unprofitable and generating minimal revenue, facing substantial obstacles beyond FAA approval [12][13]

Core Insights - EnerSys (ENS) has a stronger Zacks Rank of 2 (Buy) compared to Emerson Electric (EMR) which has a Zacks Rank of 3 (Hold), indicating a more favorable earnings outlook for ENS [3] - Value investors typically assess various fundamental metrics to identify undervalued stocks, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] Valuation Metrics - ENS has a forward P/E ratio of 9.74, significantly lower than EMR's forward P/E of 22.12, suggesting that ENS may be undervalued [5] - The PEG ratio for ENS is 0.54, while EMR's PEG ratio is 2.59, indicating that ENS has a better valuation relative to its expected earnings growth [5] - ENS's P/B ratio is 2.01 compared to EMR's P/B of 3.76, further supporting the argument that ENS is more attractively valued [6] Conclusion - Given the stronger estimate revision activity and more favorable valuation metrics, ENS is positioned as the superior option for value investors at this time [7]

Core Insights - EnerSys reported adjusted earnings of $2.08 per share for Q1 fiscal 2026, exceeding the Zacks Consensus Estimate of $2.05, marking a 5% year-over-year increase [1] - The company's net sales reached $893 million, surpassing the consensus estimate of $849 million, with a year-over-year growth of 4.7% driven by data center and communications markets, as well as the Bren-Tronics acquisition [2] Financial Performance - The Energy Systems segment generated sales of $391.4 million, accounting for 43.9% of total sales, reflecting an 8.4% year-over-year increase, outperforming the consensus estimate of $375 million [3] - The Motive Power segment's sales were $349.1 million, representing 39.3% of total sales, down 4.7% year-over-year, with a volume decline of 7% [4] - The Specialty segment reported sales of $148.5 million, accounting for 16.8% of total sales, up 18.1% year-over-year, benefiting from the Bren-Tronics acquisition [5] Margin Analysis - EnerSys' cost of sales increased by 5.7% year-over-year to $566.1 million, while gross profit rose by 6.2% to $253.2 million, resulting in a gross margin increase of 40 basis points to 28.4% [6] - Operating expenses increased by 14% year-over-year to $160.9 million, leading to a 5.3% decrease in operating earnings to $86.5 million, with the operating margin down 100 basis points to 9.7% [6] Balance Sheet and Cash Flow - As of the end of Q1 fiscal 2026, EnerSys had cash and cash equivalents of $346.7 million, slightly up from $343.1 million at the end of fiscal 2025, while long-term debt rose to $1.27 billion from $1.08 billion [7] - The company generated net cash of $1 million from operating activities in the first three months of fiscal 2026, down from $10.4 million in the same period last year, with capital expenditure totaling $33 million [8] Guidance - For Q2 fiscal 2026, EnerSys expects adjusted earnings to be in the range of $2.33 to $2.43 per share, indicating a growth of 26% at the mid-point, with net sales projected between $870 million and $910 million [10][11]

Financial Data and Key Metrics Changes - Net sales increased by 5% year over year to $893 million, driven by a 4% positive impact from the Brentronics acquisition and a 1% gain from positive price mix and FX tailwinds [17][28] - Adjusted operating earnings rose by 8% to $114 million, with an adjusted operating margin of 12.8% [17][28] - Adjusted EBITDA increased by 2% to $123 million, with an adjusted EBITDA margin of 13.8%, down 40 basis points year over year [17][29] - Adjusted diluted EPS for the first quarter was $2.08, a 5% increase over the prior year, while excluding 45X benefits, adjusted EPS was $1.11, down 6% due to FX impacts [29][39] Business Line Data and Key Metrics Changes - Energy Systems revenue increased by 8% to $391 million, with adjusted operating earnings up 44% to $27 million, reflecting increased volume and favorable price mix [30] - Motive Power revenue decreased by 5% to $349 million, with adjusted operating earnings down $9 million to $47 million, impacted by lower volumes and higher inflationary costs [31] - Specialty revenue increased by 18% to $149 million, driven by a 24% positive impact from the Brentronics acquisition, despite a 7% decrease in organic volumes [34] Market Data and Key Metrics Changes - Orders in the communications sector are picking up, with expectations for continued growth in customer spending behavior [22] - Data centers remain robust, with a 14% year-over-year increase in demand [49] - The defense sector is experiencing increased budgets and demand for next-generation power technologies, although U.S. A&D revenue was flat due to procurement delays [24][25] Company Strategy and Development Direction - The company launched "Energize," a strategic framework focusing on optimizing core operations, invigorating the operating model, and accelerating growth [6][10] - A strategic organizational realignment is underway, reducing 11% of the non-production workforce to generate $80 million in annualized savings [7][40] - The company aims to leverage its market positions to deliver new products addressing energy security and labor scarcity challenges [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and expects improving clarity in public policy to support stable market dynamics [19][42] - The first quarter is viewed as the low point for earnings, with expectations for recovery in subsequent quarters [39][54] - The company anticipates maintaining net leverage below the low end of its target range, providing flexibility for capital allocation [38][76] Other Important Information - The Board approved a $1 billion increase in share repurchase authorization to be executed over the next five years [19][38] - The company is committed to disciplined capital allocation and continues to evaluate accretive acquisition opportunities [38][76] Q&A Session Summary Question: Can you expand on the recovery in communications and expectations for the rest of the year? - Management noted good activity in telecom and broadband, with early-stage build-outs materializing and expectations for continued trends throughout the year [46][48] Question: What is the potential margin trajectory across the business with the cost optimization underway? - Management indicated that Q1 results were in line with expectations, and they believe Q1 will be the low point, with improvements expected in Q2 and beyond [52][54] Question: How does the company view the impact of the $80 million savings on margins? - Management confirmed that the $80 million savings could significantly impact margins, with expectations for improvement as macro uncertainties dissipate [60][62] Question: What is the company's capital allocation philosophy regarding the $1 billion buyback? - Management emphasized a disciplined and opportunistic approach to capital allocation, ensuring that share repurchases do not interfere with planned investments [74][76]