EnerSys Delivers Strong Third Quarter Results for Fiscal 2025
EnerSys, a prominent global leader in stored energy solutions for industrial applications, reported solid earnings for the third quarter of fiscal 2025, reflecting robust growth despite facing mixed end-market conditions. For the quarter ending December 29, 2024, the company achieved substantial growth in earnings per share (EPS), which was driven by strong pricing, the integration of Bren-Tronics, and operational improvements in its Energy Systems segment. This performance surpassed the year-over-year growth in revenues and was aided by a significant benefit from the Inflation Reduction Act (IRA), which included a retroactive adjustment.
However, while revenue increased by 5% compared to the previous year, it fell slightly short of the company’s expectations. The key factors behind this shortfall included foreign exchange (FX) headwinds, a slower-than-anticipated recovery in the U.S. Communications market, and disruptions from a major Motive Power customer’s plant in Europe, Middle East, and Africa (EMEA).
Key Drivers of the Performance
In the Energy Systems segment, EnerSys saw significant improvements in volume and margins. The recovery in U.S. Communications spending, combined with the impact of cost-cutting initiatives, positively affected the company’s financial performance. The company also highlighted the progress made in Motive Power, particularly from the higher-value Thin Plate Pure Lead (TPPL) product sales. In the Specialty market, Aerospace and Defense (A&D) markets remained strong, and there were early indications of a rebound in the Transportation sector.
A notable achievement was the successful integration of Bren-Tronics, which is performing well beyond expectations. Additionally, EnerSys marked a major milestone by generating its first revenue from its Fast Charge and Storage (FC&S) systems.
Looking ahead, EnerSys remains optimistic as demand strengthens across its core markets, particularly in Communications and Transportation. The company’s management believes that it has reached an inflection point, and with a solid strategic execution, it expects to finish the fiscal year strongly and continue delivering value to its shareholders.
CEO’s Commentary
David M. Shaffer, CEO of EnerSys, expressed confidence in the company’s performance, despite the mixed market conditions. He emphasized that the company’s diversified portfolio, coupled with a strategic focus on operational efficiency and expansion, positions EnerSys for long-term success. He noted the positive trends across key end markets, particularly as the Communications and Transportation sectors show signs of recovery.
“We are particularly encouraged by the steady demand improvement in the U.S. Communications market and early signs of recovery in the Transportation sector,” said Shaffer. “Despite some challenges, our diversified portfolio has positioned us well for future growth, and we are confident that our fourth quarter will be one of our strongest.”
Financial Performance Overview
EnerSys reported net sales of $906.2 million for the third quarter of fiscal 2025, reflecting a 5.2% increase over the $861.5 million reported in the same quarter of the previous year. However, this was below the anticipated range of $920 million to $960 million. The increase in sales was driven by a combination of organic volume growth (2%), price increases (2%), and contributions from acquisitions (3%). However, this was offset by a 2% decrease from foreign currency translation effects.
Net earnings for the quarter were $114.8 million, or $2.88 per diluted share, which represented a significant increase over the $76.2 million or $1.86 per diluted share reported in the prior year. The quarter’s net earnings included a net impact of $9.5 million or $0.24 per diluted share from certain highlighted items. Excluding these items, adjusted net earnings per diluted share for the quarter were $3.12, which exceeded the guidance range of $3.00 to $3.10 provided by the company earlier in December. This represented an increase over the prior year’s adjusted net earnings of $2.56 per diluted share.
Year-to-Date Performance
For the first nine months of fiscal 2025, EnerSys reported net sales of $2,642.8 million, which was a slight decrease of 1.1% from the $2,671.1 million recorded in the same period of fiscal 2024. The decrease was attributed to a 1% decrease in organic volume, 1% reduction in pricing, and 1% impact from foreign currency translation. These were partially offset by a 2% increase in sales from acquisitions.
Net earnings for the nine-month period were $267.2 million, or $6.58 per diluted share, compared to $208.2 million, or $5.02 per diluted share, for the same period last year. The increase was primarily driven by improved operating performance, including a favorable tax impact from highlighted items.
Adjusted net earnings for the nine months were $7.19 per diluted share, up from $6.27 per diluted share in the prior year.
Cash Flow and Balance Sheet
EnerSys maintained a strong balance sheet with cash and cash equivalents totaling $463.2 million as of December 29, 2024. The company’s net debt was $852.1 million, and its net leverage ratio stood at 1.5x, up from 1.1x in the same period last year. This increase was primarily due to the Bren-Tronics acquisition.
The company also reported cash from operating activities of $81.1 million and free cash flow of $56.8 million for the third quarter. In line with its commitment to returning value to shareholders, EnerSys repurchased $38.7 million worth of shares during the quarter and paid $9.5 million in dividends.
Fourth Quarter and Full-Year 2025 Outlook
Looking ahead to the fourth quarter of fiscal 2025, EnerSys expects net sales in the range of $960 million to $1 billion, with adjusted diluted earnings per share in the range of $2.75 to $2.85. For the full fiscal year 2025, the company expects net sales to be in the range of $3,603 million to $3,643 million, which is slightly lower than the previous guidance of $3,675 million to $3,765 million. The company has adjusted its revenue expectations primarily due to the slower-than-expected recovery in Communications and Transportation markets.
Adjusted diluted earnings per share for the full year are expected to be in the range of $9.97 to $10.07, up from the prior guidance of $9.65 to $9.95. The company expects capital expenditures to be approximately $120 million for the year.
Andrea Funk, CFO of EnerSys, expressed confidence in the company’s outlook despite some uncertainties. “We remain focused on delivering long-term value for our stockholders, and the strength of our diversified portfolio and strategic investments will enable us to continue to generate cash flow and enhance profitability,” she said.
