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Enersys' Q2 Earnings Surpass Estimates, Sales Decline Year Over Year
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Enersys (ENS - Free Report) reported second-quarter fiscal 2025 (ended Sept. 30, 2024) adjusted earnings of $2.12 per share, which surpassed the Zacks Consensus Estimate of $2.07. The bottom line increased 15% year over year.
Enersys’ net sales of $883.7 million missed the consensus estimate of $887 million. The top line declined 1.9% year over year due to headwinds in communications and transportation markets. Organic sales decreased 3%. While acquisitions boosted sales by 2%, price/mix had an adverse impact of 1%.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Segmental Discussion
The Energy Systems segment’s sales (accounting for 43.2% of total sales) were $382.1 million, down 9.6% year over year. The Zacks Consensus Estimate for segmental net sales was $383 million. Net sales decreased due to capital spending pauses of telecommunication and broadband customers. While volume decreased 8%, price/mix had an adverse impact of 2% on sales.
The Motive Power segment generated net sales of $367 million (accounting for 41.5% of total sales), up 3% year over year. The consensus estimate for segmental net sales was $369 million. The upside was driven by a 3% increase in volume.
The Specialty segment’s sales were $135 million (accounting for 15.3% of total sales), up 9% year over year. The consensus estimate was $137 million. While volume declined 4%, acquisitions and price/mix had positive impacts of 12% and 1%, respectively on sales.
EnerSys' cost of sales decreased 3.5% year over year to $553.8 million. Gross profit increased 5.2% year over year to $252.1 million, while the adjusted gross margin was up 210 basis points (bps) to 28.7%.
Operating expenses increased 4.7% year over year to $150.5 million. Operating earnings were up 12.2% to $99.4 million. The operating margin increased 140 bps year over year to 11.2%.
Balance Sheet and Cash Flow
At the end of the fiscal second quarter, EnerSys had cash and cash equivalents of $407.9 million compared with $333.3 million at the end of fiscal 2023. Long-term debt (net of unamortized debt issuance costs) was $1.2 billion compared with $801.9 million at the fiscal 2023-end.
EnerSys generated net cash of $44.1 million from operating activities in the fiscal first six months compared with $185.7 million in the year-ago period. Capital expenditure totaled $66.5 million compared with $35.9 million in the previous year’s period.
In fiscal 2024, EnerSys rewarded its shareholders with a dividend payout of approximately $18.6 million, up 14.1% year over year.
ENS’ Guidance
For fiscal 2025, EnerSys expects adjusted earnings to be in the range of $8.75–$9.05 per share compared with $8.80–$9.20 guided earlier. Net sales are now expected to be in the band of $3.675–$3.765 billion, lower than the previous projection of $3.735–$3.885 billion. The company expects capital expenditures to be approximately $100-$120 million. Tax rate is estimated to be in the band of 20–21%.
For the fiscal third quarter, the company anticipates adjusted earnings to be in the band of $2.20–$2.30 per share. Net sales are projected to be in the range of $920–$960 million.
Zacks Rank and Key Picks
ENS currently carries a Zacks Rank #4 (Sell). Here are some better-ranked stocks from the same space:
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In the past 60 days, the consensus estimate for Ingersoll-Rand’s 2024 earnings has inched up 0.6%.
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Enersys' Q2 Earnings Surpass Estimates, Sales Decline Year Over Year
Enersys (ENS - Free Report) reported second-quarter fiscal 2025 (ended Sept. 30, 2024) adjusted earnings of $2.12 per share, which surpassed the Zacks Consensus Estimate of $2.07. The bottom line increased 15% year over year.
Enersys’ net sales of $883.7 million missed the consensus estimate of $887 million. The top line declined 1.9% year over year due to headwinds in communications and transportation markets. Organic sales decreased 3%. While acquisitions boosted sales by 2%, price/mix had an adverse impact of 1%.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Segmental Discussion
The Energy Systems segment’s sales (accounting for 43.2% of total sales) were $382.1 million, down 9.6% year over year. The Zacks Consensus Estimate for segmental net sales was $383 million. Net sales decreased due to capital spending pauses of telecommunication and broadband customers. While volume decreased 8%, price/mix had an adverse impact of 2% on sales.
The Motive Power segment generated net sales of $367 million (accounting for 41.5% of total sales), up 3% year over year. The consensus estimate for segmental net sales was $369 million. The upside was driven by a 3% increase in volume.
The Specialty segment’s sales were $135 million (accounting for 15.3% of total sales), up 9% year over year. The consensus estimate was $137 million. While volume declined 4%, acquisitions and price/mix had positive impacts of 12% and 1%, respectively on sales.
Enersys Price, Consensus and EPS Surprise
Enersys price-consensus-eps-surprise-chart | Enersys Quote
ENS’ Margin Profile
EnerSys' cost of sales decreased 3.5% year over year to $553.8 million. Gross profit increased 5.2% year over year to $252.1 million, while the adjusted gross margin was up 210 basis points (bps) to 28.7%.
Operating expenses increased 4.7% year over year to $150.5 million. Operating earnings were up 12.2% to $99.4 million. The operating margin increased 140 bps year over year to 11.2%.
Balance Sheet and Cash Flow
At the end of the fiscal second quarter, EnerSys had cash and cash equivalents of $407.9 million compared with $333.3 million at the end of fiscal 2023. Long-term debt (net of unamortized debt issuance costs) was $1.2 billion compared with $801.9 million at the fiscal 2023-end.
EnerSys generated net cash of $44.1 million from operating activities in the fiscal first six months compared with $185.7 million in the year-ago period. Capital expenditure totaled $66.5 million compared with $35.9 million in the previous year’s period.
In fiscal 2024, EnerSys rewarded its shareholders with a dividend payout of approximately $18.6 million, up 14.1% year over year.
ENS’ Guidance
For fiscal 2025, EnerSys expects adjusted earnings to be in the range of $8.75–$9.05 per share compared with $8.80–$9.20 guided earlier. Net sales are now expected to be in the band of $3.675–$3.765 billion, lower than the previous projection of $3.735–$3.885 billion. The company expects capital expenditures to be approximately $100-$120 million. Tax rate is estimated to be in the band of 20–21%.
For the fiscal third quarter, the company anticipates adjusted earnings to be in the band of $2.20–$2.30 per share. Net sales are projected to be in the range of $920–$960 million.
Zacks Rank and Key Picks
ENS currently carries a Zacks Rank #4 (Sell). Here are some better-ranked stocks from the same space:
Zebra Technologies Corporation (ZBRA - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ZBRA delivered a trailing four-quarter average earnings surprise of 10.2%. In the past 60 days, the Zacks Consensus Estimate for Zebra Technologies’ 2024 earnings has increased 9.2%.
Crane Company (CR - Free Report) currently carries a Zacks Rank #2 (Buy). CR delivered a trailing four-quarter average earnings surprise of 7.6%. In the past 60 days, the consensus estimate for Crane’s 2024 earnings has increased 1%.
Ingersoll-Rand plc (IR - Free Report) presently carries a Zacks Rank of 2. IR delivered a trailing four-quarter average earnings surprise of 9.1%.
In the past 60 days, the consensus estimate for Ingersoll-Rand’s 2024 earnings has inched up 0.6%.