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EnerSys (ENS) Beats on Q3 Earnings; Revenues Miss Estimate
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EnerSys (ENS - Free Report) kept its recent streak of earnings beats alive with its third-quarter fiscal 2017 adjusted earnings of $1.18 per share surpassing the Zacks Consensus Estimate of $1.13 by 4.4%.
The bottom line fared even better on a year-over-year comparison, improving 28.3% from the prior-year tally of 92 cents. The figure also steered past the projected range of $1.12–$1.16.
Investors seemed unimpressed with the remarkable beat, as the company's shares remained flat during the regular trading session on Wednesday.
EnerSys’ diligent restructuring initiatives have produced tangible improvements in short-term productivity, which drove bottom-line growth. In addition, a fall in the cost of goods proved conducive to the earnings growth.
Inside the Headlines
Net sales edged down 1.7% year over year to $563.7 million during the quarter. Also, the top line fell short of the Zacks Consensus Estimate of $588 million. The year-over-year decline was stemmed by the adverse foreign currency fluctuations as well as a dip in organic revenues.
In terms of product lines, Reserve Power was flat on a year-over-year basis. While contributions from acquisitions boosted sales, this was completely offset by foreign currency headwinds. Motive Power product revenues were down 3.1% year over year. Fall in organic sales and foreign currency fluctuations played a major spoilsport for this segment.
In terms of geography, both the Asian and EMEA regions recorded a year-over-year decline. While the Asian region net sales dipped 9.7%, EMEA net sales were down by 5.4%, both on a year-over-year basis. However, the Americas region witnessed a modest year-over-year sales improvement of 2.5%, offsetting some of this decline. While currency translation woes and organic sales decline marred sales in both the EMEA and Asia; positive contributions from acquisition drove sales for the Americas.
EnerSys’ operating earnings for the quarter remained flat year over year at $55.1 million. Nevertheless, gross margin expanded 230 basis points to 27.7. Improvements in gross margins came on the back of improved manufacturing costs and favorable pricing of lead.
At the end of the fiscal third quarter, EnerSys had cash and cash equivalents of $467.1 million, up from $440.3 million at the end of second-quarter fiscal 2017. At the end of the reported quarter, the company’s long-term debt was $600.6 million, inching up from $599.4 million at the end of the fiscal second quarter.
During the quarter, net cash from operating activities came in at $166.7 million, compared with $232.7 million recorded in the prior-year quarter.
Guidance
Concurrent with the earnings release, EnerSys offered its guidance for fourth-quarter fiscal 2017. The company expects non-GAAP earnings in the range of $1.19–$1.23 per share, excluding projected charges of 3 cents from restructuring programs and 1 cent from acquisition expenses.
To Conclude
EnerSys posted mixed results for third-quarter fiscal 2017, with a bottom-line beat but a top-line miss. Going forward, we believe that positive industry trend and strong sales of products, like lead chargers and battery management systems, will drive growth of Motive business. Also, solid ODYSSEY sales are likely to bolster Reserve Power business sales. Moreover, the company’s focus on improving its higher margin products and diligent restructuring efforts are anticipated to boost margins over the long term.
However, with more than half of its sales generated abroad, this Zacks Rank #3 (Hold) company has been affected by a global slowdown in industrial spending. Additionally, intensifying price wars, currency fluctuations and volatility in commodity prices are likely to restrict the company’s near-term performance.
Key Picks
Better-ranked stocks in the broader sector that are worth a look now, include II-VI Inc. , ABB Ltd. and Applied Industrial Technologies Inc. (AIT - Free Report) . While II-VI and ABB boast a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies carries a Zacks Rank #2 (Buy).
II-VI Incorporated has registered a remarkable positive average surprise of 59.2% for the four trailing quarters, driven by strong, consecutive earnings beats throughout. You can see the complete list of today’s Zacks #1 Rank stocks here.
ABB has generated a positive average earnings surprise of 23.5% in the trailing four quarters.
Applied Industrial Technologies managed to beat estimates thrice over the trailing four quarters and has a positive earnings surprise of 6.2%.
Zacks' Top 10 Stocks for 2017
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EnerSys (ENS) Beats on Q3 Earnings; Revenues Miss Estimate
EnerSys (ENS - Free Report) kept its recent streak of earnings beats alive with its third-quarter fiscal 2017 adjusted earnings of $1.18 per share surpassing the Zacks Consensus Estimate of $1.13 by 4.4%.
The bottom line fared even better on a year-over-year comparison, improving 28.3% from the prior-year tally of 92 cents. The figure also steered past the projected range of $1.12–$1.16.
Investors seemed unimpressed with the remarkable beat, as the company's shares remained flat during the regular trading session on Wednesday.
EnerSys’ diligent restructuring initiatives have produced tangible improvements in short-term productivity, which drove bottom-line growth. In addition, a fall in the cost of goods proved conducive to the earnings growth.
Inside the Headlines
Net sales edged down 1.7% year over year to $563.7 million during the quarter. Also, the top line fell short of the Zacks Consensus Estimate of $588 million. The year-over-year decline was stemmed by the adverse foreign currency fluctuations as well as a dip in organic revenues.
In terms of product lines, Reserve Power was flat on a year-over-year basis. While contributions from acquisitions boosted sales, this was completely offset by foreign currency headwinds. Motive Power product revenues were down 3.1% year over year. Fall in organic sales and foreign currency fluctuations played a major spoilsport for this segment.
In terms of geography, both the Asian and EMEA regions recorded a year-over-year decline. While the Asian region net sales dipped 9.7%, EMEA net sales were down by 5.4%, both on a year-over-year basis. However, the Americas region witnessed a modest year-over-year sales improvement of 2.5%, offsetting some of this decline. While currency translation woes and organic sales decline marred sales in both the EMEA and Asia; positive contributions from acquisition drove sales for the Americas.
EnerSys’ operating earnings for the quarter remained flat year over year at $55.1 million. Nevertheless, gross margin expanded 230 basis points to 27.7. Improvements in gross margins came on the back of improved manufacturing costs and favorable pricing of lead.
Enersys Price, Consensus and EPS Surprise
Enersys Price, Consensus and EPS Surprise | Enersys Quote
Liquidity
At the end of the fiscal third quarter, EnerSys had cash and cash equivalents of $467.1 million, up from $440.3 million at the end of second-quarter fiscal 2017. At the end of the reported quarter, the company’s long-term debt was $600.6 million, inching up from $599.4 million at the end of the fiscal second quarter.
During the quarter, net cash from operating activities came in at $166.7 million, compared with $232.7 million recorded in the prior-year quarter.
Guidance
Concurrent with the earnings release, EnerSys offered its guidance for fourth-quarter fiscal 2017. The company expects non-GAAP earnings in the range of $1.19–$1.23 per share, excluding projected charges of 3 cents from restructuring programs and 1 cent from acquisition expenses.
To Conclude
EnerSys posted mixed results for third-quarter fiscal 2017, with a bottom-line beat but a top-line miss. Going forward, we believe that positive industry trend and strong sales of products, like lead chargers and battery management systems, will drive growth of Motive business. Also, solid ODYSSEY sales are likely to bolster Reserve Power business sales. Moreover, the company’s focus on improving its higher margin products and diligent restructuring efforts are anticipated to boost margins over the long term.
However, with more than half of its sales generated abroad, this Zacks Rank #3 (Hold) company has been affected by a global slowdown in industrial spending. Additionally, intensifying price wars, currency fluctuations and volatility in commodity prices are likely to restrict the company’s near-term performance.
Key Picks
Better-ranked stocks in the broader sector that are worth a look now, include II-VI Inc. , ABB Ltd. and Applied Industrial Technologies Inc. (AIT - Free Report) . While II-VI and ABB boast a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies carries a Zacks Rank #2 (Buy).
II-VI Incorporated has registered a remarkable positive average surprise of 59.2% for the four trailing quarters, driven by strong, consecutive earnings beats throughout. You can see the complete list of today’s Zacks #1 Rank stocks here.
ABB has generated a positive average earnings surprise of 23.5% in the trailing four quarters.
Applied Industrial Technologies managed to beat estimates thrice over the trailing four quarters and has a positive earnings surprise of 6.2%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>