EnerSys (ENS) Q1 2025 earnings summary

Executive summary

• Q1 FY25 net sales were $853M, down 6% year-over-year, with Motive Power growth offset by declines in Energy Systems and Specialty; gross margin improved to 28% aided by IRA benefits.

• Adjusted EPS rose to $1.98, up 5% year-over-year; diluted EPS increased to $1.71, with net earnings up to $70.1M.

• Free cash flow was negative at ($26M), mainly due to lower operating cash flow and higher CapEx.

• Closed the $208M acquisition of Bren-Tronics, expanding defense market presence and lithium offerings, expected to add ~$60M revenue and $0.25 EPS to FY25.

• Quarterly dividend increased 7% to $0.24 per share for Q2 FY25.

Financial highlights

• Net sales: $852.9M, down 6.1% year-over-year; gross profit: $238.4M, gross margin 28.0%.

• Adjusted operating earnings: $106M (12.4% margin); adjusted EBITDA: $121M (14.2% margin); operating earnings: $91.3M, up 2.1% year-over-year.

• Net earnings: $70.1M, up 5% year-over-year; cash and equivalents: $344M at quarter end.

• Free cash flow: $(25.7)M; operating cash flow: $10.4M; CapEx: $36.1M.

• Net debt: $565M; net leverage ratio: 1.1x EBITDA.

Outlook and guidance

• FY25 revenue guidance raised to $3,735M–$3,885M; adjusted diluted EPS to $8.80–$9.20, reflecting Bren-Tronics acquisition.

• Q2 FY25 guidance: net sales $880M–$920M; adjusted EPS $2.05–$2.15.

• CapEx for FY25 expected at $100M–$120M; tax rate projected at 20–21%.

• Management expects inflationary pressures and elevated interest rates to persist through 2024.

• Optimism for sequential improvement in Energy Systems and Specialty in H2, with Motive Power stability and incremental Bren-Tronics contributions.