Delivers Gross Margin of 27.9%, up 300 Basis Points From
Prior Year
Fourth Quarter Fiscal 2024 Highlights (All comparisons
against the fourth quarter of fiscal year 2023 unless otherwise
noted)
- Delivered net sales of $911M, down 8%, primarily driven by
temporary spending pauses in telecom and broadband
- Achieved GM of 27.9%, +300 bps, and adjusted GM(b) of 28.0%,
+310 bps, including $36M benefit from Inflation Reduction Act / IRC
45X tax credits
- Realized diluted EPS of $1.48, down 7%, and adjusted diluted
EPS(1) of $2.08, +14%
- Reduced net leverage ratio(a) to 1.0 X EBITDA on operating cash
flow of $137M
- In May, published 2023 Sustainability Report
- In May, announced agreement to acquire Bren-Tronics, a leading
U.S. manufacturer of portable power solutions
Full Year Fiscal 2024 Highlights (All comparisons against
2023 unless otherwise noted)
- Delivered net sales of $3.6B, down 3%
- Achieved GM of 27.4%, +470 bps, and adjusted GM (b) of 28.0%,
+530 bps, including $136M benefit from Inflation Reduction Act /
IRC 45X tax credits
- Realized record diluted EPS of $6.50, +53% and adjusted diluted
EPS of $8.35 +56%
- Reported operating cash flow of $457M, +$177M
- Returned $130M to shareholders through share repurchases and
dividends
EnerSys (NYSE: ENS), the global leader in stored energy
solutions for industrial applications, announced today results for
its fourth quarter and full year fiscal 2024, which ended on March
31, 2024.
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Message from the CEO
We delivered a strong finish to the fiscal year with our
balanced business portfolio delivering solid results, highlighted
by adjusted earnings per share at the high end of our guidance
range. In the fourth quarter, net sales were down versus prior
year, in line with our expectations, as positive momentum in the
majority of our end markets continued to be muted by spending
pauses in telecom and broadband. We generated gross margin
improvement and adjusted operating earnings growth in our base
business, which were bolstered by IRC 45X tax credits. In addition,
we are realizing the benefits of our cost improvement actions in
Energy Systems, and we are positioning the business to benefit from
future growth opportunities. Our Motive Power revenue increased
with higher demand offsetting some of the decline in our Energy
Systems business. We continue to see increasing customer
conversions as maintenance-free sales, including lithium solutions,
reached a record 25% of Motive Power sales in the quarter. Data
Center growth was a bright spot, up 10% sequentially, bringing data
center revenue to 10% of total company revenue, up from 8% in prior
year fourth quarter. In our Specialty business, performance was
supported by productivity improvements in our Missouri factory. We
continue to progress toward full commercialization of our Fast
Charge and Storage (FC&S) solution and are on track for our
first system installations in late summer 2024.
We are advancing on the development of our lithium-ion cell
gigafactory. During the quarter, we selected Greenville, South
Carolina, as the location and we secured state and local funding
totaling $200 million. EnerSys has applied to the Department of
Energy for additional funding with awards expected to be announced
in August. We intend to use the IRC 45X tax credits to increase our
investments in domestic manufacturing of energy dense batteries, as
the law intended.
Subsequent to the end of the quarter, we were very pleased to
announce our agreement to acquire Bren-Tronics, a leading U.S.
manufacturer of portable power solutions, which will expand our
presence in critical defense applications, broaden our product
offerings, and strengthen our product development capabilities. The
acquisition will be immediately accretive to our earnings upon
closing, which is expected near the end of our fiscal first
quarter.
Fiscal 2024 was a year of several achievements toward our
long-term strategic goals, as we navigated through a challenging
environment. We are confident that the foundation we put in place
this year, coupled with the investments we have made in our
transformation, will yield accelerating results in the coming
years. Energy scarcity will continue to be a global concern as
megatrends are driving rapid growth in demand for reliable power.
As a critical supplier of energy systems and energy storage
solutions, EnerSys is strategically positioned to capitalize on
this growth. Looking to fiscal 2025 and beyond, we remain focused
on achieving the long-term targets we set at our Investor Day and
delivering long-term value to our stockholders.
David M. Shaffer, President and Chief Executive Officer,
EnerSys
Key Financial Results and
Metrics
Fourth quarter ended
Twelve months ended
In millions, except per share amounts
March 31, 2024
March 31, 2023
Change
March 31, 2024
March 31, 2023
Change
Net Sales
$
910.7
$
989.9
(8.0
)%
$
3,581.8
$
3,708.5
(3.4
)%
Diluted EPS (GAAP)
$
1.48
$
1.59
$
(0.11
)
$
6.50
$
4.25
$
2.25
Adjusted Diluted EPS
(Non-GAAP)(1)
$
2.08
$
1.82
$
0.26
$
8.35
$
5.34
$
3.01
Gross Profit (GAAP)
$
254.3
$
246.0
$
8.3
$
982.8
$
840.1
$
142.7
Operating Earnings (GAAP)
$
80.9
$
95.4
$
(14.5
)
$
351.5
$
278.3
$
73.2
Adjusted Operating Earnings
(Non-GAAP)(2)
$
109.2
$
107.1
$
2.1
$
450.2
$
322.2
$
128.0
Net Earnings (GAAP)
$
60.9
$
65.9
$
(5.0
)
$
269.1
$
175.8
$
93.3
EBITDA (Non-GAAP)(3)
$
101.1
$
112.9
$
(11.8
)
$
434.1
$
361.3
$
72.8
Adjusted EBITDA (Non-GAAP)(3)
$
124.5
$
118.2
$
6.3
$
506.8
$
387.5
$
119.3
Share Repurchases
$
13.4
$
—
$
13.4
$
95.7
$
22.9
$
72.8
Dividend per share
$
0.225
$
0.175
$
0.05
$
0.850
$
0.700
$
0.15
Total Capital Returned to
Stockholders
$
22.5
$
7.1
$
15.4
$
130.3
$
51.3
$
79.0
(a) Net leverage ratio is a non-GAAP financial measure as
defined pursuant to our credit agreement and discussed under
Reconciliations of GAAP to Non-GAAP Financial Measures.
(b) Adjusted gross margin, and adjusted free cash flow
conversion are non-GAAP financial measures defined and discussed
under Reconciliations of GAAP to Non-GAAP Financial Measures.
(1) Adjusted Diluted EPS is a non-GAAP financial measure and
discussed under Reconciliations of GAAP to Non-GAAP Financial
Measures.
(2) Operating Earnings are adjusted for charges that the Company
incurs as a result of restructuring and exit activities, impairment
of goodwill and indefinite-lived intangibles and other assets,
acquisition activities and those charges and credits that are not
directly related to operating unit performance. A reconciliation of
operating earnings to Non-GAAP Adjusted Earnings are provided in
tables under the section titled Business Segment Operating
Results.
(3) Non-GAAP EBITDA is calculated as net earnings adjusted for
depreciation, amortization, interest and income taxes. Non-GAAP
Adjusted EBITDA is further adjusted for certain charges such as
restructuring and exit activities, impairment of goodwill and
indefinite-lived intangibles and other assets, acquisition
activities and other charges and credits as discussed under
Reconciliations of GAAP to Non-GAAP Financial Measures.
Summary of Results
Fourth Quarter 2024
Net sales for the fourth quarter of fiscal 2024 were $910.7
million, a decrease of 8.0% from the prior year fourth quarter net
sales of $989.9 million. The decrease compared to prior year
quarter was the result of a 7% decrease in organic volume and a 1%
decrease in foreign currency translation impact.
Net earnings attributable to EnerSys stockholders (“Net
earnings”) for the fourth quarter of fiscal 2024 was $60.9 million,
or $1.48 per diluted share, which included an unfavorable
highlighted net of tax impact of $24.3 million, or $0.60 per
diluted share, from highlighted items described in further detail
in the tables shown below, reconciling non-GAAP adjusted financial
measures to reported amounts.
Net earnings for the fourth quarter of fiscal 2023 was $65.9
million, or $1.59 per diluted share, which included an unfavorable
highlighted net of tax impact of $9.5 million, or $0.23 per diluted
share, from highlighted items described in further detail in the
tables shown below, reconciling non-GAAP adjusted financial
measures to reported amounts.
Excluding these highlighted items, adjusted Net earnings per
diluted share for the fourth quarter of fiscal 2024, on a non-GAAP
basis, were $2.08, compared to the guidance of $1.98 to $2.08 per
diluted share for the fourth quarter given by the Company on
February 7, 2024. These earnings compare to the prior year fourth
quarter adjusted Net earnings of $1.82 per diluted share. Please
refer to the section included herein under the heading
“Reconciliations of GAAP to Non-GAAP Financial Measures” for a
discussion of the Company’s use of non-GAAP adjusted financial
information, which includes tables reconciling GAAP and non-GAAP
adjusted financial measures for the quarters ended March 31, 2024
and March 31, 2023.
In the first quarter of fiscal 2024, we introduced a new line of
business, New Ventures, that includes energy storage and management
systems for demand charge reduction, utility back-up power, and
dynamic fast charging for electric vehicles. The financial results
of the New Ventures segment includes start up operating expenses
and is included in the Corporate and other line in our operating
earnings.
Fiscal Year 2024
Net sales for the twelve months of fiscal 2024 were $3,581.8
million, a decrease of 3.4% from the prior year twelve months net
sales of $3,708.5 million. This decrease was due to a 7% decrease
in organic volume, partially offset by a 4% increase in
pricing.
Net earnings for the twelve months of fiscal 2024 was $269.1
million, or $6.50 per diluted share, which included an unfavorable
highlighted net of tax impact of $76.2 million, or $1.85 per
diluted share, from highlighted items described in further detail
in the tables shown below, reconciling non-GAAP adjusted financial
measures to reported amounts.
Net earnings for the twelve months of fiscal 2023 was $175.8
million, or $4.25 per diluted share, which included an unfavorable
highlighted net of tax impact of $45.0 million, or $1.09 per
diluted share, from highlighted items described in further detail
in the tables shown below, reconciling non-GAAP adjusted financial
measures to reported amounts.
Adjusted Net earnings per diluted share for the twelve months of
fiscal 2024, on a non-GAAP basis, were $8.35. This compares to the
prior year twelve months adjusted Net earnings of $5.34 per diluted
share. Please refer to the section included herein under the
heading “Reconciliations of GAAP to Non-GAAP Financial Measures”
for a discussion of the Company’s use of non-GAAP adjusted
financial information.
First Quarter and Full Year 2025 Outlook
Beginning with the first quarter of 2025, EnerSys is making
changes to its quarterly guidance metrics. The Company will now
provide guidance on net sales and adjusted diluted earnings per
share on a quarterly and fiscal year basis. The Company believes
this information will provide a clearer view of its anticipated
financial performance.
In the first quarter of fiscal 2025, EnerSys expects:
- Net sales in the range of $860M to $900M
- Adjusted diluted earnings per share in the range of $1.93 to
$2.03*
For the full year fiscal 2025, EnerSys expects:
- Net sales in the range of $3,675M to $3,825M
- Adjusted diluted earnings per share in the range of $8.55 to
$8.95*
- Capital expenditures in the range of $100M to $120M
"We remain optimistic about the trajectory of our business and
are on track to achieve the aggregate fiscal year 2027 targets we
set at our Investor Day in June 2023. While we are seeing healthy
demand trends in the majority of our end markets, we are managing
our business prudently to navigate the temporary spending pauses by
our telecom and broadband customers. In the first quarter, we
expect seasonally lower volume in Motive Power and continued
telecom and broadband spending pauses in Energy Systems. We expect
to see some cost improvements and benefits from operational
efficiencies flowing through to our bottom line. For fiscal year
2025, we expect volume growth driven by maintenance-free products
in Motive Power, an increase in transportation aftermarket sales,
and our first revenues from Fast Charge and Storage, with only
moderate recovery in telecom and broadband markets to begin to
occur towards the end of the fiscal year. The need for intelligent
energy storage and management systems will only increase as the
demand for electricity is significantly outpacing the capacity of
the global grid infrastructure. EnerSys is well-positioned to
capitalize on market opportunities as we deliver innovative
products that are strategically aligned with these secular trends,"
said Andrea Funk, EnerSys Chief Financial Officer.
*Inclusive of IRC 45X tax benefits under the IRA. Note that the
IRS has not yet finalized guidance related to section 45X, which
could materially increase or decrease the quantity of our U.S.
produced batteries that qualify for this credit.
Please refer to the section included herein under the heading
“Reconciliations of GAAP to Non-GAAP Financial Measures” for a
discussion of the Company’s use of non-GAAP adjusted financial
information.
Conference Call and Webcast Details
The Company will host a conference call to discuss its fourth
quarter and full year 2024 financial results at 9:00 AM (EST)
Thursday, May 23, 2024. A live broadcast as well as a replay of the
call can be accessed via
https://edge.media-server.com/mmc/p/xu2zf64r/ or the Investor
Relations section of the company’s website at
https://investor.enersys.com.
To join the live call, please register at
https://register.vevent.com/register/BI78f078f5018241cf976352875e14708b.
A dial-in and unique PIN will be provided upon registration.
About EnerSys
EnerSys is the global leader in stored energy solutions for
industrial applications and designs, manufactures and distributes
energy systems solutions and motive power batteries, specialty
batteries, battery chargers, power equipment, battery accessories
and outdoor equipment enclosure solutions to customers worldwide.
The company goes to market through four lines of business: Energy
Systems, Motive Power, Specialty and New Ventures. Energy Systems,
which combine power conversion, power distribution, energy storage,
and enclosures, are used in the telecommunication, broadband, and
utility industries, uninterruptible power supplies, and numerous
applications requiring stored energy solutions. Motive power
batteries and chargers are utilized in electric forklift trucks and
other industrial electric powered vehicles. Specialty batteries are
used in aerospace and defense applications, large over-the-road
trucks, premium automotive, medical and security systems
applications. New Ventures provides energy storage and management
systems for various applications including demand charge reduction,
utility back-up power, and dynamic fast charging for electric
vehicles. EnerSys also provides aftermarket and customer support
services to its customers in over 100 countries through its sales
and manufacturing locations around the world. More information
regarding EnerSys can be found at www.enersys.com.
Sustainability
Sustainability at EnerSys is about more than just the benefits
and impacts of our products. Our commitment to sustainability
encompasses many important environmental, social and governance
issues. Sustainability is a fundamental part of how we manage our
own operations. Minimizing our environmental footprint is a
priority. Sustainability is our commitment to our employees, our
customers and the communities we serve. Our products facilitate
positive environmental, social, and economic impacts around the
world. To learn more visit:
https://www.enersys.com/en/about-us/sustainability/.
Caution Concerning Forward-Looking Statements
This press release, and oral statements made regarding the
subjects of this release, contains forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995, or the Reform Act, which may include, but are not limited
to, statements regarding EnerSys’ earnings estimates, intention to
pay quarterly cash dividends, return capital to stockholders,
plans, objectives, expectations and intentions and other statements
contained in this press release that are not historical facts,
including statements identified by words such as “believe,” “plan,”
“seek,” “expect,” “intend,” “estimate,” “anticipate,” “will,” and
similar expressions. All statements addressing operating
performance, events, or developments that EnerSys expects or
anticipates will occur in the future, including statements relating
to sales growth, earnings or earnings per share growth, order
intake, backlog, payment of future cash dividends, commodity
prices, execution of its stock buyback program, judicial or
regulatory proceedings, ability to identify and realize benefits in
connection with acquisition and disposition opportunities, and
market share, as well as statements expressing optimism or
pessimism about future operating results or benefits from its cash
dividend, its stock buyback programs, application of Section 45X of
the Internal Revenue Code, future responses to and effects of the
pandemic, adverse developments with respect to the economic
conditions in the U.S. in the markets in which we operate and other
uncertainties, including the impact of supply chain disruptions,
interest rate changes, inflationary pressures, geopolitical and
other developments and labor shortages on the economic recovery and
our business are forward-looking statements within the meaning of
the Reform Act. The forward-looking statements are based on
management's current views and assumptions regarding future events
and operating performance, and are inherently subject to
significant business, economic, and competitive uncertainties and
contingencies and changes in circumstances, many of which are
beyond the Company’s control. The statements in this press release
are made as of the date of this press release, even if subsequently
made available by EnerSys on its website or otherwise. EnerSys does
not undertake any obligation to update or revise these statements
to reflect events or circumstances occurring after the date of this
press release.
Although EnerSys does not make forward-looking statements unless
it believes it has a reasonable basis for doing so, EnerSys cannot
guarantee their accuracy. The foregoing factors, among others,
could cause actual results to differ materially from those
described in these forward-looking statements. For a list of other
factors which could affect EnerSys’ results, including earnings
estimates, see EnerSys’ filings with the Securities and Exchange
Commission, including “Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations,” and
“Forward-Looking Statements,” set forth in EnerSys’ Annual Report
on Form 10-K for the fiscal year ended March 31, 2024. No undue
reliance should be placed on any forward-looking statements.
EnerSys
Consolidated Condensed
Statements of Income (Unaudited)
(In millions, except share and
per share data)
Quarter ended
Twelve months ended
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Net sales
$
910.7
$
989.9
$
3,581.8
$
3,708.5
Gross profit
254.3
$
246.0
$
982.8
$
840.1
Operating expenses
157.3
$
146.1
$
589.6
$
544.9
Restructuring and other exit charges
8.5
$
4.0
$
28.1
$
16.4
Impairment of indefinite-lived
intangibles
7.6
$
0.5
$
13.6
$
0.5
Operating earnings
80.9
$
95.4
$
351.5
$
278.3
Earnings before income taxes
66.6
$
75.7
$
292.2
$
210.6
Income tax expense
5.7
$
9.8
$
23.1
$
34.8
Net earnings attributable to EnerSys
stockholders
$
60.9
$
65.9
$
269.1
$
175.8
Net reported earnings per common share
attributable to EnerSys stockholders:
Basic
$
1.51
$
1.61
$
6.62
$
4.31
Diluted
$
1.48
$
1.59
$
6.50
$
4.25
Dividends per common share
$
0.225
$
0.175
$
0.850
$
0.70
Weighted-average number of common shares
used in reported earnings per share calculations:
Basic
40,365,995
40,873,977
40,669,392
40,809,235
Diluted
41,054,904
41,505,060
41,371,439
41,326,755
EnerSys
Consolidated Condensed Balance
Sheets (Unaudited)
(In Thousands, Except Share
and Per Share Data)
March 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
333,324
$
346,665
Accounts receivable, net of allowance for
doubtful accounts
(2024–$8,107; 2023–$8,775)
524,725
637,817
Inventories, net
697,698
797,798
Prepaid and other current assets
226,949
113,601
Total current assets
1,782,696
1,895,881
Property, plant, and equipment, net
532,450
513,283
Goodwill
682,934
676,715
Other intangible assets, net
319,407
360,412
Deferred taxes
49,798
49,152
Other assets
98,721
121,231
Total assets
$
3,466,006
$
3,616,674
Liabilities and Equity
Current liabilities:
Short-term debt
$
30,444
$
30,642
Current portion of finance leases
237
90
Accounts payable
369,456
378,641
Accrued expenses
323,720
308,947
Total current liabilities
723,857
718,320
Long-term debt, net of unamortized debt
issuance costs
801,965
1,041,989
Finance leases
647
254
Deferred taxes
30,583
61,118
Other liabilities
151,882
191,112
Total liabilities
1,708,934
2,012,793
Commitments and contingencies
Equity:
Preferred Stock, $0.01 par value,
1,000,000 shares authorized, no shares issued or outstanding at
March 31, 2024 and at March 31, 2023
—
—
Common Stock, $0.01 par value per share,
135,000,000 shares authorized, 56,363,924 shares issued and
40,271,936 shares outstanding at March 31, 2024; 56,004,613 shares
issued and 40,901,059 shares outstanding at March 31, 2023
564
560
Additional paid-in capital
629,879
596,464
Treasury stock at cost, 16,091,988 shares
held as of March 31, 2024 and 15,103,554 shares held as of March
31, 2023
(835,827
)
(740,956
)
Retained earnings
2,163,880
1,930,148
Contra equity - indemnification
receivable
—
(2,463
)
Accumulated other comprehensive loss
(204,851
)
(183,474
)
Total EnerSys stockholders’ equity
1,753,645
1,600,279
Nonredeemable noncontrolling interests
3,427
3,602
Total equity
1,757,072
1,603,881
Total liabilities and equity
$
3,466,006
$
3,616,674
EnerSys
Consolidated Condensed
Statements of Cash Flows (Unaudited)
(In Thousands)
Fiscal year ended March
31,
2024
2023
2022
Cash flows from operating
activities
Net earnings
$
269,096
$
175,810
$
143,911
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
92,021
91,153
95,878
Write-off of assets relating to
restructuring and other exit charges
24,229
8,920
6,503
Loss on assets held for sale
—
—
2,973
Impairment of indefinite-lived
intangibles
13,619
480
1,178
Derivatives not designated in hedging
relationships:
Net losses (gains)
846
(1,182
)
157
Cash proceeds (settlements)
(255
)
470
255
Provision for doubtful accounts
1,873
(431
)
2,621
Deferred income taxes
(29,344
)
(15,236
)
1,115
Non-cash interest expense
2,450
1,964
2,107
Stock-based compensation
30,607
26,371
24,289
Gain on disposal of property, plant, and
equipment
908
(113
)
(490
)
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable
108,631
67,553
(128,956
)
Inventories
75,633
(96,413
)
(212,839
)
Prepaid and other current assets
(112,701
)
23,689
(32,044
)
Other assets
6,027
(6,298
)
270
Accounts payable
(15,131
)
(4,236
)
65,316
Accrued expenses
(8,254
)
5,747
(38,578
)
Other liabilities
(3,226
)
1,690
749
Net cash provided by (used in) operating
activities
457,029
279,938
(65,585
)
Cash flows from investing
activities
Capital expenditures
(86,437
)
(88,772
)
(74,041
)
Purchase of businesses
(8,270
)
—
—
Proceeds from disposal of facility
—
—
3,268
Proceeds from disposal of property, plant,
and equipment
2,228
586
1,540
Proceeds from termination of net
investment hedges
—
43,384
—
Net cash used in investing activities
(92,479
)
(44,802
)
(69,233
)
Cash flows from financing
activities
Net borrowings (repayments) on short-term
debt
(231
)
(21,719
)
20,556
Proceeds from Second Amended Revolver
borrowings
182,500
310,500
523,400
Repayments of Second Amended Revolver
borrowings
(427,500
)
(500,500
)
(88,400
)
Proceeds from Amended 2017 Term Loan
—
300,000
—
Proceeds from 2027 Bonds
300,000
—
—
Repayments of 2023 Senior Notes
—
(300,000
)
—
Repayments of Second and Third Amended
Term Loan
(293,889
)
(5,215
)
(161,447
)
Debt issuance costs
(4,061
)
(1,121
)
(2,952
)
Finance lease obligations and other
1,169
1,110
810
Option proceeds, net
10,786
4,392
1,336
Payment of taxes related to net share
settlement of equity awards
(9,166
)
(6,453
)
(9,150
)
Purchase of treasury stock
(95,688
)
(22,907
)
(156,366
)
Dividends paid to stockholders
(34,480
)
(28,537
)
(29,353
)
Net cash (used in) provided by financing
activities
(370,560
)
(270,450
)
98,434
Effect of exchange rate changes on cash
and cash equivalents
(7,331
)
(20,509
)
(12,936
)
Net (decrease) increase in cash and cash
equivalents
(13,341
)
(55,823
)
(49,320
)
Cash and cash equivalents at beginning of
year
346,665
402,488
451,808
Cash and cash equivalents at end of
year
$
333,324
$
346,665
$
402,488
Reconciliations of GAAP to Non-GAAP
Financial Measures
This press release contains financial information determined by
methods other than in accordance with U.S. Generally Accepted
Accounting Principles, ("GAAP"). EnerSys' management uses the
non-GAAP measures “adjusted Net earnings”, “adjusted Diluted EPS”,
“adjusted operating earnings”, "adjusted gross margin", "EBITDA",
“adjusted EBITDA”, "adjusted EBITDA per credit agreement", "net
debt", "net leverage ratio", " adjusted free cash flow conversion",
“net sales at constant currency”, and "net sales growth rate at
constant currency” as applicable, in their analysis of the
Company's performance. Adjusted Net earnings, adjusted gross
margin, and adjusted operating earnings measures, as used by
EnerSys in past quarters and years, adjusts Net earnings and
operating earnings determined in accordance with GAAP to reflect
changes in financial results associated with the Company's
restructuring initiatives and other highlighted charges and income
items. Adjusted EBITDA is a key performance measure that our
management uses to assess our operating performance. Because
Adjusted EBITDA facilitates internal comparisons of our historical
operating performance on a more consistent basis, we use this
measure as an overall assessment of our performance, to evaluate
the effectiveness of our business strategies and for business
planning purposes. We calculate Adjusted EBITDA as net income
before interest income, interest expense, other (income) expense
net, provision (benefit) for income taxes, depreciation and
amortization, further adjusted to exclude restructuring and exit
activities, impairment of goodwill, indefinite-lived intangibles
and other assets, acquisition activities and those charges and
credits that are not directly related to operating unit
performance. EBITDA is calculated as net income before interest
income, interest expense, other (income) expense net, provision
(benefit) for income taxes, depreciation and amortization. We
define non-GAAP adjusted EBITDA per credit agreement as net
earnings determined in accordance with GAAP for interest, taxes,
depreciation and amortization, and certain charges or credits as
permitted by our credit agreements, that were recorded during the
periods presented. We define non-GAAP net debt as total debt,
finance lease obligations and letters of credit, net of all cash
and cash equivalents, as defined in the Fourth Amended Credit
Facility on the balance sheet as of the end of the most recent
fiscal quarter. We define non-GAAP net leverage ratio as non-GAAP
net debt divided by last twelve months non-GAAP adjusted EBITDA per
credit agreement. We define non-GAAP free cash flow as net cash
provided by or used in operating activities less capital
expenditures. We define non-GAAP adjusted free cash flow conversion
as free cash flow divided by adjusted net earnings. Free cash flow
and adjusted free cash flow conversion are used by investors,
financial analysts, rating agencies and management to help evaluate
the Company’s ability to generate cash to pursue incremental
opportunities aimed toward enhancing shareholder value. We define
non-GAAP constant currency net sales as total net sales excluding
the effect of foreign exchange rate movements, and we use it to
determine the constant currency growth rate on a year-on-year
basis. Non-GAAP constant currency revenues are calculated by
translating current period revenues using the prior comparative
periods’ actual exchange rates, rather than the actual exchange
rates in effect during the current period. Constant currency net
sales growth rate is calculated by determining the difference
between current period non-GAAP constant currency net sales and
current period reported net sales divided by prior period as
reported net sales. Management believes the presentation of these
financial measures reflecting these non-GAAP adjustments provides
important supplemental information in evaluating the operating
results of the Company as distinct from results that include items
that are not indicative of ongoing operating results and overall
business performance; in particular, those charges that the Company
incurs as a result of restructuring activities, impairment of
goodwill and indefinite-lived intangibles and other assets,
acquisition activities and those charges and credits that are not
directly related to operating unit performance, such as significant
legal proceedings, amortization of Alpha and NorthStar related
intangible assets (and, beginning in fiscal 2024, amortization of
all intangible assets) and tax valuation allowance changes,
including those related to the AHV (Old-Age and Survivors
Insurance) Financing (TRAF) in Switzerland. Because these charges
are not incurred as a result of ongoing operations, or are incurred
as a result of a potential or previous acquisition, they are not as
helpful a measure of the performance of our underlying business,
particularly in light of their unpredictable nature and are
difficult to forecast. Although we exclude the amortization of
purchased intangibles from these non-GAAP measures, management
believes that it is important for investors to understand that such
intangible assets were recorded as part of purchase accounting and
contribute to revenue generation.
Income tax effects of non-GAAP adjustments are calculated using
the applicable statutory tax rate for the jurisdictions in which
the charges (benefits) are incurred, while taking into
consideration any valuation allowances. For those items which are
non-taxable, the tax expense (benefit) is calculated at 0%.
EnerSys does not provide a quantitative reconciliation of the
Company’s projected range for adjusted diluted earnings per share
for the first quarter of fiscal 2025 to diluted earnings per share,
which is the most directly comparable GAAP measure, in reliance on
the unreasonable efforts exception provided under Item
10(e)(1)(i)(B) of Regulation S-K. EnerSys' adjusted diluted
earnings per share guidance for the first quarter of fiscal 2025
excludes certain items, including but not limited to certain
non-cash, large and/or unpredictable charges and benefits, charges
from restructuring and exit activities, impairment of goodwill and
indefinite-lived intangibles, acquisition and disposition
activities, legal judgments, settlements, or other matters, and tax
positions, that are inherently uncertain and difficult to predict,
can be dependent on future events that are less capable of being
controlled or reliably predicted by management and are not part of
the Company's routine operating activities can be dependent on
future events that are less capable of being controlled or reliably
predicted by management and are not part of the Company's routine
operating activities. Due to the uncertainty of the occurrence or
timing of these future excluded items, management cannot accurately
forecast many of these items for internal use and therefore cannot
create a quantitative adjusted diluted earnings per share for the
first quarter of fiscal 2025 to diluted earnings per share
reconciliation without unreasonable efforts.
These non-GAAP disclosures have limitations as an analytical
tool, should not be viewed as a substitute for operating earnings,
Net earnings or net income determined in accordance with GAAP, and
should not be considered in isolation or as a substitute for
analysis of the Company's results as reported under GAAP, nor are
they necessarily comparable to non-GAAP performance measures that
may be presented by other companies. Management believes that this
non-GAAP supplemental information will be helpful in understanding
the Company's ongoing operating results. This supplemental
presentation should not be construed as an inference that the
Company's future results will be unaffected by similar adjustments
to Net earnings determined in accordance with GAAP.
A reconciliation of non-GAAP net sales and growth rates in
constant currency are set forth in the table below, providing a
reconciliation of non-GAAP constant currency net sales to the
Company’s reported net sales for its business segments.
Quarter ended
Twelve months ended
($ millions)
($ millions)
March 31, 2024
March 31, 2023
Growth rate
March 31, 2024
March 31, 2023
Growth rate
Energy Systems reported net
sales
$
369.4
$
458.2
(19.4
)%
$
1,590.0
$
1,738.1
(8.5
)%
Exchange rate effect
10.2
13.8
Energy Systems constant currency net
sales
379.6
(17.2
)
1,603.8
(7.7
)
Motive Power reported net sales
$
394.8
$
383.6
2.9
%
$
1,456.2
$
1,451.3
0.3
%
Exchange rate effect
6.1
0.9
Motive Power constant currency net
sales
400.9
4.5
1,457.1
0.4
Specialty reported net sales
$
146.5
$
148.1
(1.1
)%
$
535.6
$
519.1
3.2
%
Exchange rate effect
(0.3
)
(3.3
)
Specialty constant currency net
sales
146.2
(1.3
)
532.3
2.5
Total reported net sales
$
910.7
$
989.9
(8.0
)%
$
3,581.8
$
3,708.5
(3.4
)%
Exchange rate effect
16.0
11.3
Total constant currency net
sales
926.7
(6.4
)
3,593.1
(3.1
)
A reconciliation of non-GAAP adjusted operating earnings is set
forth in the table below, providing a reconciliation of non-GAAP
adjusted operating earnings to the Company’s reported operating
results for its business segments. Corporate and other includes
amounts managed on a company-wide basis and not directly allocated
to any reportable segments, primarily relating to IRA production
tax credits. Also, included are start up costs for exploration of a
new lithium plant as well as start-up operating expenses from the
New Ventures operating segment.
Business Segment Operating Results
Quarter ended
($ millions)
March 31, 2024
Energy Systems
Motive Power
Specialty
Corporate and other
Total
Net Sales
$
369.4
$
394.8
$
146.5
$
—
$
910.7
Operating Earnings
$
(4.9
)
$
53.9
$
6.7
$
25.2
$
80.9
Inventory adjustment relating to exit
activities
1.0
—
—
—
$
1.0
Restructuring and other exit charges
3.8
3.7
1.0
—
8.5
Impairment of indefinite-lived
intangibles
7.6
—
—
—
7.6
Amortization of intangible assets
6.0
0.2
0.7
—
6.9
Legal proceedings charge, net
3.7
—
—
—
3.7
Other
0.2
0.3
0.1
—
0.6
Adjusted Operating Earnings
$
17.4
$
58.1
$
8.5
$
25.2
$
109.2
Quarter ended
($ millions)
March 31, 2023
Energy Systems
Motive Power
Specialty
Corporate and other
Total
Net Sales
$
458.2
$
383.6
$
148.1
$
—
$
989.9
Operating Earnings
$
23.0
$
48.4
$
6.7
$
17.3
$
95.4
Restructuring and other exit charges
0.3
1.6
2.1
—
4.0
Impairment of indefinite-lived
intangibles
0.1
—
0.4
—
0.5
Amortization of intangible assets
5.7
—
0.5
—
6.2
Other
0.5
0.4
0.1
—
1.0
Adjusted Operating Earnings
$
29.6
$
50.4
$
9.8
$
17.3
$
107.1
Increase (Decrease) as a % from prior
year quarter
Energy Systems
Motive Power
Specialty
Corporate and other
Total
Net Sales
(19.4
)%
2.9
%
(1.1
)%
—
%
(8.0
)%
Operating Earnings
NM
11.3
0.2
45.8
(15.2
)
Adjusted Operating Earnings
(41.3
)
15.4
(13.3
)
45.8
2.0
NM = Not Meaningful
Twelve months ended
($ millions)
March 31, 2024
Energy Systems
Motive Power
Specialty
Corporate and other
Total
Net Sales
$
1,590.0
$
1,456.2
$
535.6
$
0.0
$
3,581.8
Operating Earnings
$
15.5
$
201.2
$
17.6
$
117.2
$
351.5
Inventory adjustment relating to exit
activities
17.1
—
3.1
—
20.2
Restructuring and other exit charges
8.9
11.6
7.6
—
28.1
Impairment of indefinite-lived
intangibles
13.6
—
—
—
13.6
Amortization of intangible assets
24.5
0.7
2.8
—
28.0
Legal proceedings charge, net
3.7
—
—
—
3.7
Other
3.7
1.1
0.3
—
5.1
Adjusted Operating Earnings
$
87.0
$
214.6
$
31.4
$
117.2
$
450.2
Twelve months ended
($ millions)
March 31, 2023
Energy Systems
Motive Power
Specialty
Corporate and other
Total
Net Sales
$
1,738.1
$
1,451.3
$
519.1
$
0.0
$
3,708.5
Operating Earnings
$
60.8
$
165.2
$
35.0
$
17.3
$
278.3
Inventory adjustment relating to exit
activities
(0.2
)
0.8
—
—
0.6
Restructuring and other exit charges
1.5
12.8
2.1
—
16.4
Impairment of indefinite-lived
intangibles
0.1
—
0.4
—
0.5
Amortization of intangible assets
23.4
—
1.7
—
25.1
Other
0.6
0.6
0.1
—
1.3
Adjusted Operating Earnings
$
86.2
$
179.4
$
39.3
$
17.3
$
322.2
Increase (Decrease) as a % from prior
year
Energy Systems
Motive Power
Specialty
Corporate and other
Total
Net Sales
(8.5
)%
0.3
%
3.2
%
NM
(3.4
)%
Operating Earnings
(74.6
)
21.9
(49.7
)
NM
26.3
Adjusted Operating Earnings
0.8
19.6
(20.2
)
NM
47.6
NM = Not Meaningful
Reconciliations of GAAP to Non-GAAP
Financial Measures (Unaudited)
The table below presents a reconciliation of Net Earnings to
EBITDA and Adjusted EBITDA:
Quarter ended
Twelve months ended
($ millions)
($ millions)
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Net Earnings
60.9
$
65.9
$
269.1
$
175.8
Depreciation
16.8
15.3
64.0
60.4
Amortization
6.9
6.9
28.0
30.8
Interest
10.8
15.0
49.9
59.5
Income Taxes
5.7
9.8
23.1
34.8
EBITDA
101.1
112.9
434.1
361.3
Non-GAAP adjustments
23.4
5.3
72.7
26.2
Adjusted EBITDA
$
124.5
$
118.2
$
506.8
$
387.5
The following table provides the non-GAAP adjustments shown in
the reconciliation above:
Quarter ended
Twelve months ended
($ millions)
($ millions)
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Inventory adjustment relating to exit
activities
$
1.0
$
—
$
20.2
$
0.6
Restructuring and other exit charges
8.5
4.0
28.1
16.4
Impairment of indefinite-lived
intangibles
7.6
0.5
13.6
0.5
Legal proceedings charge, net
3.7
—
3.7
—
Other
2.6
0.7
7.1
2.2
Remeasurement of monetary assets included
in other (income) expense relating to exit from Russia
operations
—
—
—
4.5
Asset Securitization Transaction Fees
—
0.1
—
0.6
Cost of funding to terminate net
investment hedges
—
—
—
1.4
Non-GAAP adjustments
$
23.4
$
5.3
$
72.7
$
26.2
The table below presents a reconciliation of Gross Profit and
Gross Margin to Adjusted Gross Profit and Adjusted Gross
Margin:
Quarter ended
Twelve months ended
($ millions)
($ millions)
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Gross Profit as reported
$
254.3
$
246.0
$
982.8
$
840.1
Inventory adjustment relating to exit
activities
1.0
0.0
20.2
0.6
Adjusted Gross Profit
255.3
246.0
1,003.0
840.7
Gross Margin
27.9
%
24.9
%
27.4
%
22.7
%
Adjusted Gross Margin
28.0
%
24.9
%
28.0
%
22.7
%
The table below presents a reconciliation of Operating Cash Flow
to Free Cash Flow and Adjusted Free Cash Flow Conversion
percentages:
Quarter ended
Twelve months ended
($ millions)
($ millions)
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Net cash provided by (used in) operating
activities
$
136.8
$
144.1
$
457.0
$
279.9
Less Capital Expenditures
(27.4
)
(31.3
)
(86.4
)
(88.8
)
Free Cash Flow
109.4
112.8
370.6
191.1
Quarter ended
Twelve months ended
($ millions)
($ millions)
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Net cash provided by (used in) operating
activities
$
136.8
$
144.1
$
457.0
$
279.9
Net earnings
60.9
65.9
269.1
175.8
Operating cash flow conversion %
224.6
%
218.7
%
169.8
%
159.2
%
Free cash flow
109.4
112.8
370.6
191.1
Adjusted net earnings
85.2
75.4
345.3
220.8
Adjusted free cash flow conversion %
128.4
%
149.6
%
107.3
%
86.5
%
The following table provides a reconciliation of Net earnings to
EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) per credit
agreement for March 31, 2024 and March 31, 2023, in connection with
the Fourth Amended Credit Facility:
Last twelve months
March 31, 2024
March 31, 2023
(in millions, except ratios)
Net earnings as reported
$
269.1
$
175.8
Add back:
Depreciation and amortization
92.0
$
91.2
Interest expense
49.9
$
59.5
Income tax expense
23.1
34.8
EBITDA (non-GAAP)
434.1
$
361.3
Adjustments per credit agreement
definitions(1)
85.8
51.7
Adjusted EBITDA (non-GAAP) per credit
agreement(1)
$
519.9
413.0
Total net debt(2)
511.1
736.0
Leverage ratios:
Total net debt/credit adjusted EBITDA
ratio
1.0 X
1.8 X
(1)
The $85.8 million adjustment to EBITDA in the last twelve months
ending March 31, 2024 primarily related to $30.6 million of
non-cash stock compensation, $40.7 million of restructuring and
other exit charges, impairment of indefinite-lived intangibles and
write-down of other current assets of $13.6 million. The $51.7
million adjustment to EBITDA in the last twelve months ending March
31, 2023 is primarily related to $26.4 million of non-cash stock
compensation, $22.4 million of restructuring and other exit
charges, impairment of indefinite-lived intangibles of $0.5 million
and a swap termination fee of $1.4 million.
(2)
Debt includes finance lease obligations and letters of credit
and is net of all U.S. cash and cash equivalents and foreign cash
and investments, as defined in the Fourth Amended Credit Facility.
In the last twelve months ending March 31, 2024 and March 31, 2023,
the amounts deducted in the calculation of net debt were U.S. cash
and cash equivalents and foreign cash investments of $333.3
million, and in fiscal 2023, were $347.0 million.
Included below is a reconciliation of historical non-GAAP
adjusted Net earnings to reported amounts. Non-GAAP adjusted
operating earnings and historical Net earnings are calculated
excluding restructuring and other highlighted charges and credits.
The following tables provide additional information regarding
certain non-GAAP measures:
Quarter ended
(in millions, except share and
per share amounts)
March 31, 2024
March 31, 2023
Net earnings reconciliation
As reported Net Earnings
$
60.9
$
65.9
Non-GAAP adjustments:
Inventory adjustment relating to exit
activities
1.0
(1)
—
(1)
Restructuring and other exit charges
8.5
(1)
4.0
(1)
Impairment of indefinite-lived
intangibles
7.6
(2)
0.5
(2)
Loss on assets held for sale
—
(4)
—
(4)
Amortization of identified intangible
assets
6.9
(3)
6.2
(3)
Asset Securitization Transaction Fees
—
0.1
Legal proceedings charge, net
3.7
(4)
—
Other
3.3
(4)
0.7
Income tax effect of above non-GAAP
adjustments
(6.7
)
(2.0
)
Non-GAAP adjusted Net earnings
$
85.2
$
75.4
Outstanding shares used in per share
calculations
Basic
40,365,995
40,873,977
Diluted
41,054,904
41,505,060
Non-GAAP adjusted Net earnings per
share:
Basic
$
2.11
$
1.85
Diluted
$
2.08
$
1.82
Reported Net earnings (Loss) per
share:
Basic
$
1.51
$
1.61
Diluted
$
1.48
$
1.59
Dividends per common share
$
0.225
$
0.175
The following table provides the line of business allocation of
the non-GAAP adjustments of items relating operating earnings (that
are allocated to lines of business) shown in the reconciliation
above:
Quarter ended
($ millions)
March 31, 2024
March 31, 2023
Pre-tax
Pre-tax
(1) Inventory adjustment relating to exit
activities - Energy Systems
$
1.0
$
—
(1) Restructuring and other exit charges -
Energy Systems
3.8
0.3
(1) Restructuring and other exit charges -
Motive Power
3.7
1.6
(1) Restructuring and other exit charges -
Specialty
1.0
2.1
(2) Impairment of indefinite-lived
intangibles - Energy Systems
7.6
0.1
(3) Impairment of indefinite-lived
intangibles - Specialty
—
0.4
(3) Amortization of identified intangible
assets - Energy Systems
6.0
5.7
(3) Amortization of identified intangible
assets - Motive Power
0.2
—
(3) Amortization of identified intangible
assets - Specialty
0.7
0.5
(4) Legal proceedings charge, net - Energy
Systems
3.7
(4) Other - Energy Systems
0.2
—
(4) Other - Motive Power
0.3
—
(4) Other - Specialty
0.1
—
Total Non-GAAP adjustments
$
28.3
$
10.7
Twelve months ended
(in millions, except share and
per share amounts)
March 31, 2024
March 31, 2023
Net Earnings reconciliation
As reported Net Earnings
$
269.1
$
175.8
Non-GAAP adjustments:
Inventory adjustment relating to exit
activities
20.2
(1)
0.6
(1)
Restructuring and other exit charges
28.1
(1)
16.4
(1)
Impairment of indefinite-lived
intangibles
13.6
(2)
0.5
(2)
Loss on assets held for sale
—
—
Amortization of identified intangible
assets
28.0
(2)
25.1
(2)
Remeasurement of monetary assets included
in other (income) expense relating to exit from Russia
Operations
—
4.5
Asset Securitization Transaction Fees
—
0.6
Acquisition activity expense
—
—
Cost of funding to terminate net
investment hedges
—
1.4
Financing fees related to debt
modification
—
1.2
Legal proceedings charge, net
3.7
(3)
—
Other
7.8
(3)
2.2
Income tax effect of above non-GAAP
adjustments
(25.2
)
(7.5
)
Financing fees related to debt
modification
$
—
$
—
Non-GAAP adjusted Net Earnings
$
345.3
$
220.8
Outstanding shares used in per share
calculations
Basic
40,669,392
40,809,235
Diluted
41,371,439
41,326,755
Non-GAAP adjusted Net Earnings per
share:
Basic
$
8.49
$
5.41
Diluted
$
8.35
$
5.34
Reported Net Earnings (Loss) per
share:
Basic
$
6.62
$
4.31
Diluted
$
6.50
$
4.25
Dividends per common share
$
0.850
$
0.70
The following table provides the line of business allocation of
the non-GAAP adjustments of items relating operating earnings (that
are allocated to lines of business) shown in the reconciliation
above:
Twelve months ended
($ millions)
March 31, 2024
March 31, 2023
Pre-tax
Pre-tax
(1) Inventory adjustment relating to exit
activities - Energy Systems
17.1
(0.2
)
(1) Inventory adjustment relating to exit
activities - Motive Power
—
0.8
(1) Inventory Adjustment relating to exit
activities - Specialty
3.1
—
(1) Restructuring and other exit charges -
Energy Systems
8.9
1.5
(1) Restructuring and other exit charges -
Motive Power
11.6
12.8
(1) Restructuring and other exit charges -
Specialty
7.6
2.1
(2) Impairment of indefinite-lived
intangibles - Energy Systems
13.6
0.1
(2) Impairment of indefinite-lived
intangibles - Specialty
0.4
(2) Amortization of identified intangible
assets - Energy Systems
24.5
23.4
(2) Amortization of identified intangible
assets - Motive Power
0.7
—
(2) Amortization of identified intangible
assets - Specialty
2.8
1.7
(3) Legal proceedings charge, net - Energy
Systems
3.7
(3) Other - Energy Systems
3.7
—
(3) Other - Motive Power
1.1
—
(3) Other - Specialty
0.3
—
Total Non-GAAP adjustments
$
98.7
$
42.6
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240522026850/en/
Lisa Hartman Vice President, Investor Relations and
Corporate Communications EnerSys 610-236-4040 E-mail:
investorrelations@enersys.com
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