READING, Pa. – EnerSys, the Berks County based manufacturer of stored energy solutions for industrial applications, has underperformed the market so far this year. The company reported third quarter results for fiscal 2025 and said sales did not beat estimates, but earnings did.
The split decision caused the company’s stock to decline $0.71, or 0.75% at the opening bell, but it recovered shortly thereafter.
The company said end market conditions were improving but still mixed. Revenue increased 5% year-over-year, supported by contributions from Bren-Tronics and a gradual recovery in the U.S. communications market. Despite its year-over-year improvement, EnerSys noted, revenue came in below expectations, primarily due to foreign exchange (FX) headwinds, a slower than anticipated ramp in U.S. communications spending, and the impact of a large Motive Power customer plant disruption in EMEA (Europe, Middle East and Africa).
Enersys manufactures backup battery supplies for cell towers, 5G networks, and data centers, making the communications sector an important source of revenue.
In Energy Systems, the company said it achieved notable gains in volume and margins as U.S. communications spending continued to recover, and the benefits of our cost reduction initiatives flowed through to the bottom line.
EnerSys claimed it delivered another impressive Motive Power quarter driven by growth in its higher value Thin Plate Pure Lead (TPPL) product sales. In Specialty products, Aerospace and Defense markets remain robust and the company said it is seeing early signs of recovery in Transportation. Bren-Tronics continues to exceed expectations, EnerSys claimed, with all major integration milestones successfully completed.
David M. Shaffer, Chief Executive Officer, commented: “EnerSys delivered solid Earnings Per Share (EPS) growth during the third quarter, compared to the prior year, highlighted by pre-Industrial Recovery Act (IRA) earnings growth significantly outpacing revenue growth. This performance was driven by strong price/mix across all lines of business, the accretive contribution of Bren-Tronics, and operational improvements in Energy Systems, which more than offset headwinds from commodity hedge timing and FX pressure.”
Total EPS, Shaffer pointed out, was bolstered by a $75 million benefit from the IRA, including a $36 million retroactive benefit adjustment.
He added. “Additionally, we recognized our first revenue from our Fast Charge and Storage (FC&S) systems, marking an important milestone for the Company. As we see demand strengthening, particularly in Communications and Transportation, we are increasingly optimistic that we have reached an inflection point.”
Third Quarter Fiscal 2025
EnerSys reported net sales for the third quarter of fiscal 2025 were $906.2 million, an increase of 5.2% from the prior year third quarter, but below the range of guidance of $920 million to $960 million given on November 6, 2024. The increase compared to prior year’s quarter was the result of a 2% increase in organic volume, a 2% increase in pricing, and a 3% increase in acquisitions partially offset by a 2% decrease in foreign currency translation.
Net earnings, according to EnerSys, for the third quarter of fiscal 2025 was $114.8 million, or $2.88 per diluted share, which included an unfavorable highlighted net of tax impact of $9.5 million, or $0.24 per diluted share. Adjusted net earnings per diluted share for the third quarter of fiscal 2025, on a non-GAAP basis, were $3.12, compared to the guidance of $3.00 to $3.10 per diluted share.
Fiscal Year to Date 2025
For the nine months of fiscal 2025 EnerSys reported net sales were $2.6428 billion, a decrease of 1.1% from the prior year nine months. The company said this decrease was due to a 1% decrease in organic volume, a 1% decrease in pricing, and a 1% decrease in foreign currency translation, partially offset by a 2% increase in acquisitions.
Net earnings for the nine months of fiscal 2025 were $267.2 million, or $6.58 per diluted share. Net earnings for the nine months of fiscal 2024 were $208.2 million, or $5.02 per diluted share. Adjusted net earnings per diluted share for the nine months of fiscal 2025, on a non-GAAP basis, were $7.19. This compares to the prior year nine months adjusted net earnings of $6.27 per diluted share.
Balance Sheet and Cash Flow
EnerSys reported as of December 29, 2024, cash and cash equivalents were $463.2 million and net debt was $852.1 million. The net leverage ratio at the end of the third quarter was 1.5 X, up from 1.1 X in the prior year due to the impact of the Bren-Tronics acquisition.
Capital expenditures during the third quarter were $24.3 million, the company said, up from $23.1 million in the prior year period, driven by investments in plant improvements. During the third quarter, cash from operating activities was $81.1 million and free cash flow was $56.8 million. The company also returned approximately $48.2 million to shareholders through $38.7 million in share repurchases and $9.5 million through its quarterly dividend payment in the third quarter.
Fourth Quarter and Full Year 2025 Outlook
In the fourth quarter of fiscal 2025, EnerSys expects: net sales in the range of $960 million to $1.000 Billion; adjusted diluted earnings per share in the range of $2.75 to $2.85. For the full year fiscal 2025, EnerSys expects: net sales in the range of $3.603 billion to $3.643 billion, down from prior guidance of $3.675billion to $3.765 billion; adjusted diluted earnings per share in the range of $9.97 to $10.07, up from prior guidance of $9.65 to $9.95; and capital expenditures around $120 million.
“With improving trends across our end markets and disciplined execution of our strategic priorities, we expect to deliver a strong finish to our fiscal year in the fourth quarter and drive sustained value creation for our shareholders,” Shaffer added.
Andrea Funk, EnerSys Chief Financial Officer, said: “We expect the fiscal fourth quarter to be one of our strongest quarters on record, driven by improving order rates and favorable demand trends across our core end markets. We are particularly encouraged by steady demand improvement in the U.S. Communications market and early signs of recovery in the Transportation sector. As we look ahead, we see continued momentum in demand for reliable power solutions, underpinned by accelerating trends in electrification, data-driven infrastructure, and sustainability.”
About EnerSys
EnerSys (ENS) majors inc stored energy solutions for industrial applications, 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. EnerSys also provides aftermarket and customer support services to its customers in over 100 countries through its sales and manufacturing and manufacturing locations around the world.