EnerSys(US:ENS)2024-05-22 20:17Risk Management and Hedging - The company has entered into lead forward purchase contracts and foreign exchange contracts to manage risks associated with fluctuations in raw material costs, foreign currency exchange rates, and interest rates, with liabilities at $20.9 million and assets at $3.6 million as of March 31, 2024[304]. - The company hedges approximately 10% - 15% of its known foreign exchange transactional exposures, primarily through foreign currency exchange contracts[313]. - The company has cross-currency fixed interest rate swap contracts with a notional amount of $150 million, maturing on December 15, 2027, to hedge against exchange rate volatility[305]. - A 100 basis point increase in interest rates would have increased annual interest expense by approximately $0.4 million on the variable rate portions of the company's debt[308]. - An unfavorable 10% movement in exchange rates would have adversely changed hedge valuations by approximately $29.5 million as of March 31, 2024[316]. - The company has established a hedging and risk management program to manage market and counterparty risk, including credit review and portfolio stress tests[386]. - The company entered into foreign currency forward contracts totaling $46,159 as of March 31, 2024, up from $45,823 in 2023, indicating a slight increase in hedging activity[492]. - Interest rate swap agreements effectively convert $200,000 of variable-rate debt to a fixed-rate basis as of March 31, 2024, maintaining the same amount as in 2023[493]. - The total liabilities related to net investment hedges were $19,167 as of March 31, 2024, compared to $15,760 in 2023, indicating an increase in hedging liabilities[499]. - The company reported a pretax loss of $846 from foreign currency forward contracts not designated as hedging instruments for the fiscal year ended March 31, 2024[502]. Financial Performance - Net sales for the fiscal year ended March 31, 2024, were $3,581.9 million, a decrease of 3.4% from $3,708.6 million in 2023[345]. - Gross profit increased to $982.9 million in 2024, up from $840.1 million in 2023, reflecting a gross margin improvement[345]. - Operating earnings rose to $351.6 million in 2024, compared to $278.4 million in 2023, marking a 26.3% increase[345]. - Net earnings attributable to EnerSys stockholders were $269.1 million for 2024, a significant increase of 53.1% from $175.8 million in 2023[345]. - Basic net earnings per share increased to $6.62 in 2024, up from $4.31 in 2023, representing a 53.6% growth[345]. - Cash flows from operating activities increased to $457,029,000 in 2024, compared to $279,938,000 in 2023, indicating a significant improvement in operational efficiency[353]. - The company recognized a benefit of $136.4 million to cost of sales related to the tax credit under Section 45X of the Internal Revenue Code for the year ended March 31, 2024[326]. Assets and Liabilities - Total assets decreased to $3,466.0 million as of March 31, 2024, down from $3,616.7 million in 2023[343]. - Total liabilities decreased to $1,708.9 million in 2024, compared to $2,012.8 million in 2023, indicating improved financial health[343]. - Retained earnings increased to $2,163.9 million in 2024, up from $1,930.1 million in 2023, reflecting strong profitability[343]. - The company had $333.3 million in cash and cash equivalents deducted from the calculation of net debt for fiscal 2024[306]. - Long-term debt net of unamortized issuance costs decreased to $801,965 as of March 31, 2024, from $1,041,989 as of March 31, 2023, a reduction of 23.0%[448]. - The company’s total liabilities increased, with net borrowings on short-term debt showing a repayment of $231,000 in 2024, compared to a repayment of $21,719,000 in 2023[353]. Shareholder Returns - Dividends per common share increased to $0.85 in 2024, up from $0.70 in 2023, indicating a commitment to returning value to shareholders[345]. - The company purchased treasury stock amounting to $95,688,000 in 2024, compared to $22,907,000 in 2023, reflecting a strategic move to enhance shareholder value[353]. Inventory and Receivables - Total inventory decreased to $697,698 as of March 31, 2024, down from $797,798 in 2023, representing a reduction of about 12.5%[439]. - As of March 31, 2024, total accounts receivable decreased to $532,832 from $646,592 in 2023, reflecting a decline of approximately 17.6%[433]. - The company sold $710,746 of accounts receivables during fiscal 2024, with net proceeds equal to the sale amount, indicating effective cash flow management[436]. Tax and Compliance - The Company accounts for income taxes using the asset and liability approach, recognizing deferred tax assets and liabilities based on enacted tax rates[395]. - The Company has elected the period cost method for GILTI tax rules, treating taxes due on future US inclusions in taxable income as a current-period expense[399]. - The Inflation Reduction Act resulted in a reduction of costs of goods sold and income tax payable of $136,360 in fiscal 2024, compared to $17,283 in fiscal 2023[403]. Goodwill and Intangible Assets - Indefinite-lived intangible assets were valued at $130.2 million as of March 31, 2024, and are tested for impairment annually[331]. - Goodwill balance as of March 31, 2024, is $682,934, an increase from $676,715 as of March 31, 2023, reflecting a net increase of $6,219[442]. - The estimated tax-deductible goodwill is approximately $78,147 as of March 31, 2024, down from $86,709 as of March 31, 2023, indicating a decrease of 9.0%[445]. - The Company did not record any impairment relating to its goodwill during fiscal 2024, 2023, and 2022[443]. Lease and Operating Expenses - Operating lease expense for fiscal 2024 was $28,030, up from $20,232 in 2023, indicating a year-over-year increase of about 38.5%[431]. - The company recognized total lease expense of $48,131 for fiscal 2024, compared to $34,463 in 2023, representing a significant increase of approximately 39.6%[431]. - The right-of-use assets for operating leases decreased to $76,413 in 2024 from $85,237 in 2023, a decline of about 10.5%[431]. Capital Expenditures and Investments - Capital expenditures for the fiscal year 2024 were $86,437,000, slightly lower than $88,772,000 in 2023[353]. - The Company issued $300,000 in aggregate principal amount of 6.625% Senior Notes due January 15, 2032, with proceeds used to pay down the Fourth Amended Credit Facility[452].