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Enersys (ENS) Q3 Earnings Beat Estimates, Revenues Miss
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Enersys (ENS - Free Report) reported third-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $2.56 per share, which surpassed the Zacks Consensus Estimate of $2.55. The bottom line surged 102% year over year due to lower sales costs.
Enersys’ total revenues of $861.5 million missed the consensus estimate of $897 million. The top line declined 6.4% year over year due to a 7% decrease in organic sales, which was partially offset by a 1% increase in pricing.
Segmental Discussion
The Energy Systems segment’s sales (accounting for 43.4% of total sales) were $373.5 million, down 14% year over year. This compares with the Zacks Consensus Estimate of $397 million. Segmental revenues decreased due to capital spending pauses of telecommunication and broadband customers. Price/mix had a positive impact of 1%, while organic revenues decreased 15% year over year.
The Motive Power segment generated revenues of $355.4 million (accounting for 41.3% of total sales), down 1.8% year over year. The consensus estimate for segmental revenues was $371 million. The downside was due to a 3% decrease in organic sales, partially offset by a 1% favorable impact from acquisitions.
The Specialty segment’s sales were $132.6 million (accounting for 15.4% of total sales), up 6.8% year over year. The consensus estimate for the same was $133 million. Organic volume increased sales by 6% year over year and foreign currency translation had a positive impact of 1%.
In the reported quarter, EnerSys' cost of sales decreased 18.2% year over year to $511 million. Gross profit in the quarter increased 16.4% year over year to $248.6 million, while the gross margin increased 760 basis points (bps) to 30.7%.
Operating expenses increased 7.1% year over year to $143.9 million. Adjusted operating earnings surged 53.5% year over year to $130.3 million. The margin increased 590 bps year over year to 15.1%.
Balance Sheet and Cash Flow
At the end of the third quarter of fiscal 2024, EnerSys had cash and cash equivalents of $332.7 million compared with $346.7 million at the end of fiscal 2023. Long-term debt (net of unamortized debt issuance costs) was $880.8 million compared with $1.04 billion at the fiscal 2023 end.
EnerSys generated net cash of $320.2 million from operating activities in the first nine months of fiscal 2024 against $135.8 million in the year-ago period. Capital expenditure totaled $59 million compared with $57.5 million in the previous year’s period.
In the first nine months of fiscal 2024, ENS rewarded its shareholders with a dividend payout of $25.4 million, up 18.7% year over year.
Fiscal Q4 Guidance
For the fourth quarter of fiscal 2024, EnerSys expects adjusted earnings to be $1.98-$2.08 per share. This includes 80-90 cents of IRC 45X tax benefits under the IRA. The gross margin is expected to be in the range of 26-28%. The company expects capital expenditures to be approximately $80-100 million.
PH delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for its 2023 earnings has increased 2.7%.
Flowserve Corporation (FLS - Free Report) presently has a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter average earnings surprise of 10.4%. The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings remained steady in the past 60 days.
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Enersys (ENS) Q3 Earnings Beat Estimates, Revenues Miss
Enersys (ENS - Free Report) reported third-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $2.56 per share, which surpassed the Zacks Consensus Estimate of $2.55. The bottom line surged 102% year over year due to lower sales costs.
Enersys’ total revenues of $861.5 million missed the consensus estimate of $897 million. The top line declined 6.4% year over year due to a 7% decrease in organic sales, which was partially offset by a 1% increase in pricing.
Segmental Discussion
The Energy Systems segment’s sales (accounting for 43.4% of total sales) were $373.5 million, down 14% year over year. This compares with the Zacks Consensus Estimate of $397 million. Segmental revenues decreased due to capital spending pauses of telecommunication and broadband customers. Price/mix had a positive impact of 1%, while organic revenues decreased 15% year over year.
The Motive Power segment generated revenues of $355.4 million (accounting for 41.3% of total sales), down 1.8% year over year. The consensus estimate for segmental revenues was $371 million. The downside was due to a 3% decrease in organic sales, partially offset by a 1% favorable impact from acquisitions.
The Specialty segment’s sales were $132.6 million (accounting for 15.4% of total sales), up 6.8% year over year. The consensus estimate for the same was $133 million. Organic volume increased sales by 6% year over year and foreign currency translation had a positive impact of 1%.
Enersys Price, Consensus and EPS Surprise
Enersys price-consensus-eps-surprise-chart | Enersys Quote
Margin Profile
In the reported quarter, EnerSys' cost of sales decreased 18.2% year over year to $511 million. Gross profit in the quarter increased 16.4% year over year to $248.6 million, while the gross margin increased 760 basis points (bps) to 30.7%.
Operating expenses increased 7.1% year over year to $143.9 million. Adjusted operating earnings surged 53.5% year over year to $130.3 million. The margin increased 590 bps year over year to 15.1%.
Balance Sheet and Cash Flow
At the end of the third quarter of fiscal 2024, EnerSys had cash and cash equivalents of $332.7 million compared with $346.7 million at the end of fiscal 2023. Long-term debt (net of unamortized debt issuance costs) was $880.8 million compared with $1.04 billion at the fiscal 2023 end.
EnerSys generated net cash of $320.2 million from operating activities in the first nine months of fiscal 2024 against $135.8 million in the year-ago period. Capital expenditure totaled $59 million compared with $57.5 million in the previous year’s period.
In the first nine months of fiscal 2024, ENS rewarded its shareholders with a dividend payout of $25.4 million, up 18.7% year over year.
Fiscal Q4 Guidance
For the fourth quarter of fiscal 2024, EnerSys expects adjusted earnings to be $1.98-$2.08 per share. This includes 80-90 cents of IRC 45X tax benefits under the IRA. The gross margin is expected to be in the range of 26-28%. The company expects capital expenditures to be approximately $80-100 million.
Zacks Rank & Other Stocks to Consider
ENS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked companies from the Industrial Products sector are discussed below:
Parker-Hannifin Corporation (PH - Free Report) presently carries a Zacks Rank #2 (Buy).
PH delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for its 2023 earnings has increased 2.7%.
Flowserve Corporation (FLS - Free Report) presently has a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter average earnings surprise of 10.4%. The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings remained steady in the past 60 days.