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EnerSys (ENS) Lags Q3 Earnings Estimates, Declares Dividend

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EnerSys (ENS - Free Report) reported weaker-than-expected third-quarter fiscal 2020 (ended Dec 29, 2019) results, wherein both earnings and revenues missed estimates.

The company’s adjusted earnings were $1.04 per share, lagging the Zacks Consensus Estimate of $1.13. Also, the bottom line declined 11.1% from the year-ago figure of $1.17.

Enersys Price, Consensus and EPS Surprise

Enersys Price, Consensus and EPS Surprise

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

Revenues

In the quarter, EnerSys’ net sales were $763.7 million, up 12.3% from the year-ago quarter. The improvement was driven by 20% positive impact of Alpha and NorthStar acquisitions, partially offset by 5% decrease in organic volumes, 2% decline in pricing and forex woes of 1%. However, the top line missed the Zacks Consensus Estimate of $784 million.

Sales generated from the reserve power product line totaled $448.2 million, increasing 36% year over year while that from motive power declined about 10% to $315.5 million.

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

Revenues from the Americas (representing roughly 65.9% of the quarter’s net sales) were $503.1 million, increasing 25.1% year over year. The rise was driven by positive impact of 32% from the Alpha and NorthStar buyouts, partially offset by 4% decline in organic volume, 2% decrease in pricing and 1% adverse impact of forex woes.

Revenues from Europe, Middle East and Africa (26.5%) totaled $202.3 million, declining 7.1% year over year. The decline was attributable to 9% fall in organic volumes, 2% adverse impact of forex woes, partially offset by a positive impact of 4% from the NorthStar buyout.

Revenues from Asia (7.6%) were $58.3 million, down 3.2%.The decline was on account of 2% decrease in pricing and 1% adverse impact of forex woes.

Margins Details

In the quarter, EnerSys’ cost of goods sold was $574.6 million, up 12.3% year over year. It represented 75.2% of net sales. Gross profit increased 12.6% to $185.2 million, with margin increasing 10 basis points to 24.3%.

Operating expenses were $132.7 million, representing 17.4% of net sales. Total operating earnings decreased 13.8% to $43.1 million.

Balance Sheet and Cash Flow

Exiting the third quarter of fiscal 2020, EnerSys had cash and cash equivalents of $272.5 million compared with $397.2 million at the end of the year-ago quarter.

During the first nine months of fiscal 2020, the company generated net cash of $175.8 million from operating activities. Capital expenditure totaled $60.9 million compared with $52.7 million incurred in the year-ago period.

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 Mar 13, 2020. The payment will be made on Mar 27.

Outlook

For the fourth quarter of fiscal 2020 (ending March 2020), EnerSys anticipates adjusted earnings of $1.43-$1.47 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 SPX FLOW, Inc. (FLOW - Free Report) , Berry Global Group, Inc. (BERY - Free Report) and Barnes Group, Inc. (B - Free Report) . While SPX FLOW sports a Zacks Rank #1 (Strong Buy), Berry Global and Barnes Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SPX FLOW pulled off positive earnings surprise of 6.95%, on average, in the trailing four quarters.

Berry Global delivered positive earnings surprise of 0.26%, on average, in the trailing four quarters.

Barnes Group pulled off positive earnings surprise of 4.21%, on average,in the trailing four quarters.

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