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EnerSys (ENS) Q1 Earnings & Revenues Miss Estimates, Up Y/Y

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EnerSys (ENS - Free Report) reported weaker-than-expected results for the first quarter of fiscal 2020 (ended Jun 30, 2019), wherein both earnings and revenues missed estimates.

The company’s adjusted earnings were $1.30 per share, missing the Zacks Consensus Estimate of $1.32. However, the bottom line increased 11.1% from the year-ago figure of $1.17.

Revenues

In the reported quarter, EnerSys’ net sales were $780.2 million, reflecting growth of 16.3% from the year-ago quarter. The improvement was driven by 22% positive impact of the Alpha acquisition, partially offset by 3% decrease in organic volumes, 1% decline in pricing and forex woes of 2%. However, the top line lagged the Zacks Consensus Estimate of $827.4 million.

Sales generated from the reserve power product line totaled $436 million, increasing 34.6% year over year while that from motive power declined 0.9% to $344 million.

Enersys Price, Consensus and EPS Surprise

Enersys Price, Consensus and EPS Surprise

Enersys price-consensus-eps-surprise-chart | Enersys Quote

The company reports net sales under three segments as discussed below:

Revenues from the Americas (representing roughly 66.3% of the quarter’s net sales) were $517.1 million, increasing 31.7% year over year. The rise was driven by 39% increase from acquired assets, partially offset by 1% adverse impact of forex woes and 6% decline in organic volume.

Revenues from Europe, Middle East and Africa (26%) totaled $203.2 million, declining 3.5% year over year. Adverse impact of 5% from unfavorable movements in foreign currencies and 2% adverse impact from unfavorable pricing was offset by 3% growth in organic volumes.

Revenues from Asia (7.7%) were $59.9 million, down 11.8%. Decline in organic volume affected results by 8% and forex woes had an adverse 4% impact.

Margins Details

In the quarter, EnerSys’ cost of goods sold was $578.7 million. It represented 74.2% of net sales. Gross profit increased 21.9% year over year to $201.5 million, with margin increasing 120 basis points (bps) to 25.8%.

Operating expenses jumped 31.7% year over year to $130.8 million. It represented 16.8% of net sales. Operating income in the quarter increased 6.4% to $68.3 million. Operating margin slipped 80 bps to 8.8%.

Balance Sheet and Cash Flow

Exiting the first quarter of fiscal 2020, EnerSys had cash and cash equivalents of $262.1 million compared with $512.5 million at the end of the year-ago quarter.

During the quarter, the company generated net cash of $30.4 million from operating activities, reflecting an increase of 18.8%. Capital expenditure totaled $17.3 million compared with $15.5 million incurred in the year-earlier quarter.

Concurrent with the earnings release, the company’s board of directors approved a quarterly cash dividend of 17.5 cents per share to shareholders on record as of Sep 13, 2019. The payment will be made on Sep 27.

Outlook

For the second quarter of fiscal 2020 (ending September 2019), EnerSys anticipates adjusted earnings of $1.20-$1.24 per share.

Zacks Rank & Key Picks

EnerSys currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Industrial Products sector are Roper Technologies, Inc. (ROP - Free Report) , Dover Corporation (DOV - Free Report) and Tetra Tech, Inc. (TTEK - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Roper delivered average positive earnings surprise of 6.92% in the trailing four quarters.

Dover pulled off average positive earnings surprise of 6.91% in the trailing four quarters.

Tetra Tech delivered average positive earnings surprise of 8.72% in the trailing four quarters.

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