We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
EnerSys (ENS) Q3 Earnings Surpass Estimates, Revenues Up Y/Y
Read MoreHide Full Article
EnerSys (ENS - Free Report) reported mixed results for third-quarter fiscal 2023 (ended Jan 1, 2023). ENS’ earnings beat the Zacks Consensus Estimate of $1.24 by 2.4%. However, sales missed the same by 1.7%.
The bottom line increased 25.7% from the year-ago figure of $1.01 driven by higher sales generation across all segments.
Revenue Details
In the quarter under review, EnerSys’ revenues were $920.2 million, up 9% from the year-ago quarter. Organic sales in the quarter grew 5% on the back of strengthening markets. Pricing positively impacted sales by 8%, while forex woes left a negative impact of 4%.
ENS’ revenues missed the Zacks Consensus Estimate of $936 million.
Geographically, ENS' net sales increased 15% year over year to $665 million in the Americas, while the metric witnessed a decline of 2% to $199 million in Europe, the Middle East and Africa. Sales in Asia were $56 million, declined 11% year-over-year.
Segmental performance for the fiscal third quarter is briefly discussed below:
Energy Systems' sales were $434 million, contributing 47.2% to net revenues in the quarter under review. On a year-over-year basis, the segment's revenues increased 13%. Volume was up 8%, while pricing had a positive impact of 9%. Adverse foreign currency translations hurt 4%.
The Motive Power segment generated revenues of $362 million, contributing 39.3% to net revenues in the reported quarter. The figure increased 7% year over year based on 3% growth in volumes and an 8% contribution from pricing. Forex woes left a negative impact of 5%.
Specialty sales were $124 million, contributing 13.5% to net revenues in the quarter under review. On a year-over-year basis, the segment's revenues increased 4%. Volume and pricing had a positive impact of 1% and 5%, respectively, on the quarter, while foreign currency translations had a negative impact of 2%.
In the reported quarter, EnerSys' cost of sales increased 7.2% year over year to $707.4 million. The cost of sales was 78.9% of the quarter's net sales. The adjusted gross profit in the quarter increased 15.5% year over year to $212.8 million, while the gross margin increased 130 basis points (bps) year over year to 23.1%.
Operating expenses increased 2.8% year over year to $134.3 million. The metric represented 15.6% of net sales in the reported quarter compared with 15.5% in the year-ago quarter. Adjusted operating earnings were $84.9 million, increasing 41% year-over-year. The margin increased 200 bps year over year to 9.2%.
Balance Sheet and Cash Flow
While exiting the third quarter of fiscal 2023, EnerSys had cash and cash equivalents of $298.1 million, down 25.9% from $402.5 million recorded in the fourth quarter of fiscal 2022. Long-term debt decreased 11.1% to $1,105.1 million from $1,243 million recorded in the fourth quarter of fiscal 2022.
In the first nine months of fiscal 2023, ENS repaid short-term debt of $20.3 million and revolving credit borrowings of $422.1 million. However, proceeds for revolving credit borrowings were $291.1 million in the first nine months of fiscal 2023.
EnerSys generated net cash of $135.8 million for its operating activities in the first nine months of fiscal 2023 against $78 million used in the year-ago period. Capital expenditure totaled $57.5 million compared with $52.4 million in the previous year’s period.
ENS rewarded its shareholders with a dividend payout of $21.4 million in the first nine months of fiscal 2023. Treasury stock repurchase amounted to $22.9 million. ENS is left to buy back shares worth $40.8 million.
Dividend
EnerSys’ board of directors approved a quarterly cash dividend of 17.5 cents per share to its shareholders of record as of Mar 17, 2023. The disbursement will be made on Mar 31, 2023.
Outlook
EnerSys anticipates gaining from robust customer demand in diverse end markets. In the quarters ahead, the company expects to benefit from a slowdown as large portions of its business are cycle-independent as well as from its significant cash flow generation during past recessionary periods. However, microeconomic conditions, forex woes and European utility inflation are worrisome. Earnings for the fourth quarter of fiscal 2023 are expected to be $1.33-$1.43 per share. The gross margin is expected to be in the range of 22-24%. Capital expenditure is anticipated to be approximately $90 million for fiscal 2023 compared with $100 million predicted earlier.
Zacks Rank & Stocks to Consider
EnerSys currently has a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
Image: Bigstock
EnerSys (ENS) Q3 Earnings Surpass Estimates, Revenues Up Y/Y
EnerSys (ENS - Free Report) reported mixed results for third-quarter fiscal 2023 (ended Jan 1, 2023). ENS’ earnings beat the Zacks Consensus Estimate of $1.24 by 2.4%. However, sales missed the same by 1.7%.
The bottom line increased 25.7% from the year-ago figure of $1.01 driven by higher sales generation across all segments.
Revenue Details
In the quarter under review, EnerSys’ revenues were $920.2 million, up 9% from the year-ago quarter. Organic sales in the quarter grew 5% on the back of strengthening markets. Pricing positively impacted sales by 8%, while forex woes left a negative impact of 4%.
ENS’ revenues missed the Zacks Consensus Estimate of $936 million.
Geographically, ENS' net sales increased 15% year over year to $665 million in the Americas, while the metric witnessed a decline of 2% to $199 million in Europe, the Middle East and Africa. Sales in Asia were $56 million, declined 11% year-over-year.
Segmental performance for the fiscal third quarter is briefly discussed below:
Energy Systems' sales were $434 million, contributing 47.2% to net revenues in the quarter under review. On a year-over-year basis, the segment's revenues increased 13%. Volume was up 8%, while pricing had a positive impact of 9%. Adverse foreign currency translations hurt 4%.
The Motive Power segment generated revenues of $362 million, contributing 39.3% to net revenues in the reported quarter. The figure increased 7% year over year based on 3% growth in volumes and an 8% contribution from pricing. Forex woes left a negative impact of 5%.
Specialty sales were $124 million, contributing 13.5% to net revenues in the quarter under review. On a year-over-year basis, the segment's revenues increased 4%. Volume and pricing had a positive impact of 1% and 5%, respectively, on the quarter, while foreign currency translations had a negative impact of 2%.
Enersys Price, Consensus and EPS Surprise
Enersys price-consensus-eps-surprise-chart | Enersys Quote
Margin Profile
In the reported quarter, EnerSys' cost of sales increased 7.2% year over year to $707.4 million. The cost of sales was 78.9% of the quarter's net sales. The adjusted gross profit in the quarter increased 15.5% year over year to $212.8 million, while the gross margin increased 130 basis points (bps) year over year to 23.1%.
Operating expenses increased 2.8% year over year to $134.3 million. The metric represented 15.6% of net sales in the reported quarter compared with 15.5% in the year-ago quarter. Adjusted operating earnings were $84.9 million, increasing 41% year-over-year. The margin increased 200 bps year over year to 9.2%.
Balance Sheet and Cash Flow
While exiting the third quarter of fiscal 2023, EnerSys had cash and cash equivalents of $298.1 million, down 25.9% from $402.5 million recorded in the fourth quarter of fiscal 2022. Long-term debt decreased 11.1% to $1,105.1 million from $1,243 million recorded in the fourth quarter of fiscal 2022.
In the first nine months of fiscal 2023, ENS repaid short-term debt of $20.3 million and revolving credit borrowings of $422.1 million. However, proceeds for revolving credit borrowings were $291.1 million in the first nine months of fiscal 2023.
EnerSys generated net cash of $135.8 million for its operating activities in the first nine months of fiscal 2023 against $78 million used in the year-ago period. Capital expenditure totaled $57.5 million compared with $52.4 million in the previous year’s period.
ENS rewarded its shareholders with a dividend payout of $21.4 million in the first nine months of fiscal 2023. Treasury stock repurchase amounted to $22.9 million. ENS is left to buy back shares worth $40.8 million.
Dividend
EnerSys’ board of directors approved a quarterly cash dividend of 17.5 cents per share to its shareholders of record as of Mar 17, 2023. The disbursement will be made on Mar 31, 2023.
Outlook
EnerSys anticipates gaining from robust customer demand in diverse end markets. In the quarters ahead, the company expects to benefit from a slowdown as large portions of its business are cycle-independent as well as from its significant cash flow generation during past recessionary periods. However, microeconomic conditions, forex woes and European utility inflation are worrisome. Earnings for the fourth quarter of fiscal 2023 are expected to be $1.33-$1.43 per share. The gross margin is expected to be in the range of 22-24%. Capital expenditure is anticipated to be approximately $90 million for fiscal 2023 compared with $100 million predicted earlier.
Zacks Rank & Stocks to Consider
EnerSys currently has a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE’s earnings surprise in the last four quarters was 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022 . The stock has gained 21.4% in the past six months.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 3.2%, on average.
AOS’ earnings estimates have increased 3.1% for 2023 in the past 60 days. Shares of A. O. Smith have risen 7.3% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 14.3%, on average.
In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 14.3% in the past six months.