ENS - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Q2 2021 EnerSys Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session [Operator Instruction]. Please be advised that today's conference is being recorded [Operator Instruction]. to Mr. conference like speaker to now today, for would hand over the your I President CEO. Shaffer, Dave and Sir, you may begin.

Dave Shaffer

earnings Thanks, Twanda. for XXXX us for you call. Good morning, our and second thank joining quarter

Last morning call the Schmidtlein, Financial slides we site with our this will during evening, On this is be morning. posted we referencing me our Mike Chief Web that on Officer. the call

of can our chance information go get site Mike If a to the see investors information, ask in you enersys.com. section the to regarding www you Web webcast at to I'm tab didn't this forward-looking going statements. cover to

Mike Schmidtlein

Thanks, everyone. Dave. Good morning,

operating reminder, we to uncertainties and changes a management's number statements based forward-looking are in certain forward-looking and on results a actual for circumstances, from on of and this current materially expectations As reasons. regarding may performance, be that statements views differ are will subject call and or presenting events future

ended this forward-looking in statements a estimates. Form Analysis for forth in Commission. 'Management’s on applicable of operations, factors only financial forward-looking list our the as Our date condition Discussion are II could included our statements set including future presentation See with of and quarterly earnings which results, report fiscal Securities for Item and which affect of our was XXXX, and Exchange of results October quarter filed US X, XX-Q of the the

non-GAAP financial we certain addition, be measures. presenting In will also

XXXX, of located information, press X-K, our explanation our which the the which GAAP non-GAAP Form XX, www.enersys.com. site please dated at on an For company's the between is November Web release information our comparable financial differences see and includes

back Dave. it you, Now, let me turn to

Dave Shaffer

at business an initiatives. call overview tracking Then provide will against strategic I of take our We this I the a step out our second and ago. a XXXX update will a of the little providing Investor more few we're our Day, on minutes solid Mike. and spend first laid results than quarter back Thanks, overall. an state of year the morning's how

the evenly the continued quarter, second our activity COVID-XX entered markets disrupt around we economic to pandemic As world. in

However, borders US impact on we with have less COVID. to period the began our pre-pandemic very quarter and and from than business Chinese the systems exited close recovered were rebound actually motive the power by specialty Western levels. a to while throughout faster and much Europe, impacted markets energy virus’s see

while We continue on to cost response always ready in reductions, build flex backup to to instituted quarter, the we recovery. the early in operations first staying demand

allows growth maintain CapEx to As line impacting global initiatives and our our put demand alignment the our OpEx an enable of the will new have efficiency service. ramps level up. quality improved us with without to Many recall, our us operational you quickly model business even of adjust we our place OpEx as revenue may of objectives in or of

as All open prioritize nature COVID-XX, of as our world. quarter was XXXX adjusted reported our the during fiscal earnings evident Despite the ongoing by and we continue quarter to of solid COVID $X the cases major business we facilities per around remain of caused our diluted diversified the the rise share. headwinds employees of safety second

in did the of business. drove in chemistry overall under our leverage Europe Germany. new outperform. like Hagen, products this close customer's on generated improvements dual still quarter while TPPL exceptionally our of and particularly year achieve more will interest productivity X.X remarks. our just appears have investing a And of portion power during PURE overall, million $XX apparent. key we NexSys to I'd beginnings our lagged times. our in to decision to structure, in provide accelerating in an We Due maintenance the that cost in to Our conversion strong transportation becoming incremental quarter, prior market especially Mike with power factory flow and NexSys business a Energy still uptick systems debt continued little segment debt our business. while lingering free Please QX details It XG turned to flooded our maintenance-free streamlined improving our X. of in to Slide impact strong, specialty with This the products. of provide our conditions his some solid more motive cash was net business legacy prepared color is the in disruption reduction now turn the combined motive COVID the markets. our enabling to COVID

during double Our second performed growing the and broadband quarter for reliability. for In digit largest the batteries impact to to robust rates battery T-Mobile led demand to the the order merger a with ramp for XG purchases pandemic. our on of year-over-year EMEA revenue Americas, for their Combined, continued growth. APAC In the capacity deliver Systems, of and segment, their saw increase particularly and the Global Americas, the throughout systems, cabinets, improved momentum the electronics as well Energy telecom system remain the despite large complete quarter front. telecom investing up. networks carriers completion committed and has in we

in on of term longer budgets term COVID that pain the negatively to EnerSys addition has provider opportunity no focusing The policies fourth short-term this significant reallocation the of presents business quarters have inevitably network Dish school programs. the to XG In for this of broadband denying EnerSys. for over looks continues home our exciting CapEx growth a network. stressed as that impacted direct spin-off own mandated the from and will hardening merger, There networks long-term is over network work their to and the story lead to benefits be The nationwide ahead augmentation broadband MSOs all in capacity period. business build quarter the a induced near resulted

XG recently have improved customers allocating rates CapEx However, driving is an and powering. we broadband approvals broadband the network infrastructure end power upcoming recovery to of Slide project to need Factoring near light with in clear increased our transition a X. power support tailwind have along the to we segment. future. there industry's begun long-term positive the in increased a power this a expect of to turn order Please two the for trend, business to our broadband seen network as largest headwind from consumption, the for at tunnel And clear

As noted validation testing say globally lithium NexSys of maintenance in products NexSys being are launch motive received with are to am iON earlier, power the forklift key pleased the batteries, market. our our stages and have new I started free of in we and early the well OEMs.

in globally, positive end accounts. results pre-launch have demonstrations several We large with also very initiated site user

the with is on sales the focusing products demanding of team duty portions Our iON the NexSys the most market cycles.

keep high that charge runs on NexSys fork example, allowed to trialed little motive And charging schedule iON breaks. where and running acceptance trucks to time a line iON carpet at speed as customer with For management generation with capacity third provide will increase system. respect family the will user batteries there's our while with XXxX, the we've The match TPPL TPPL of same when the correctly, The is life. large system additive, family as battery chargers a coupled be product energy significant integrated in will enhanced new products. battery management format carbon a and a controlled the throughput in using carbon vehicles allow the Slide also NexSys recharge the the new to of discussed during this only commissioning. increased their progressing very excellent power mill nearly pack previously, batteries. longer we to experience addition turn of with lithium X. the Further, Please resulting The

the The impact of another ongoing business, of outstanding of had light COVID. third segment particularly our in Specialty, quarter,

this is channels aftermarket our transportation and continued in was Our several improving. as contract NAPA. and The wins, new automotive success such are success business along in very results backlog driven strong demand being strong segment quarter with by distributors remains where truck road, the with the retail over following in recent our

continued share have EnerSys’ in with to We platform technology sector leveraging the by transportation increase our TPPL. market

second to awards. Our in continue win the products improved thermal as defense our quarter more business sequentially

on continues air missile programs for these industry have extended defense, hypersonics. capitalized used battery weapons and and of leading Our to weight ongoing air lighter also expansion The these of that ammunitions ground cobalt progress. disulfide provides operating applications thermal in to technology and products cobalt our majority times

Our well. turn Please Slide as shine continues satellite X. to to business

given a our our in of of brief each I've overview segments, strategic seeing wanted in of initiatives business October areas which and core second we're trends much prevailing each that the progress of remain take Now very you and a our in focus we to XXXX quarter at Day, I these. the excellent results Investor today outlined back look

cell transportation small in growing free two, specialty powering a growth systems accelerating energy power rollout share NexSys and reminder, the following motive fully systems sales our Three, reducing integrated power operating and DC they of maintenance initiatives: global accelerate include revenue portfolio with which XG; our solutions, increasing in products four, system. EnerSys particularly one, As in iON of with business; market continued telecom, business, and the waste through from our will our site margin higher Pure;

energy initially nationwide the Alpha complete provide for for energy and telecom organization engineer, maintain cell power, project. distribution a two fruition and install with opportunity to EnerSys DC storage single power power small It we storage connectivity, patterns and batteries Group years Our is fully large just provider conversion, the turnkey spending saw supply in solution power created expand from and the systems Alpha offering. only backup a customers the Technologies The acquisition of broadband, integrated fibre energy to to coming as storage and enclosures ago AC systems. furnish to and source EnerSys’ positioned

in trend us expect deploy macro AT&T for XG ram ahead. they We and are for sites. opportunities infrastructure quarters this the continue as improving to

leading collaboration speed cells and will next technology our solutions endorsed customers. remote with and been leverage safeline advancing. system EnerSys’ touch strategic small has leadership expertise is in generation deployment While cable XG Corning's our to largest power fiber, one of for through industry and the powering telecom This connectivity by Corning a collaboration

the from impact noting assist our spending this the mega the better lift only the more our XG remain the term with deploying that believe excited which of business, CapEx have quarter XG on To our bullish we this by our long-term help the on for and of XG front. seen we by as Unfortunately, earlier. is this have in you ever larger the already longer benefit customers technologies related will to masked growth it was We than tip already especially year, are discussed XG million is during the and trend. the we excited all is $XX impact seeing during business, customers actions broadband on having reallocated about we're driver. new the revenue worth We’re it this iceberg opportunity understand

over the sales result, five a projecting system years. X% steady next plus As we are energy CAGR

initiative, Our TPPL sales maintenance XX% same is plan. year-on-year, motive strategic next acid down motive Americas to for power in the on power while NexSys our Americas five year flooded example, track In the period. well battery free and XX% up quarter, were sales lead were

comprise motive power our As have maintenance dramatic this resumes, larger revenue and margins more gross and trend free our profit even of a will continues profitability. demand impact higher portion on will the

up to over estimating We that The our TPPL sign improve our NexSys go new as next generation the automotive We business that say segment ODYSSEY as by premium the of and spaces. in resounding success be see majority business in are in signs battery free -- a the trucking has continues the transportation to products growing now XX maintenance initiatives year for customers months. market we pleased 'XX. Americas share to we offerings fiscal the specialty transportation been will past

we operational. demand strong our outlook fully five capacity long and this positioned increase for of shutdowns our -- matches term integration the high years. the ongoing term by on when well quarter currently the only from long to is COVID, impacted over TPPL are with still limited NorthStar transportation speed XX% sales that planned We're grew will as and business our by line our by capitalize While next capacity and dramatically transportation backlog the

ability one TPPL end now focuses NorthStar through this on to to in and automotive Please night in last incentives period EOS, train other At to last paid was time. from been the integration to the reduce capacity by necessary more to which in factories Finally, to a have due new stay year. has value restructuring newest our EnerSys announced capacity absorption contribute report manufacturing improvement, NorthStar $XX new all NorthStar of commercial we under well are and term our proceeding TPPL turn factories such the a realignment, million critical inefficiencies increase business, team which the startups. in Operating should TPPL Despite products These as X. plant short the is initiative, been or shareholder costs. many systems. calendar more complete. of short hire is effectively inefficiencies motive hampered expected our and line new This such government products global challenging NorthStar completing speed share them the revenue other at of in will them branded high ODYSSEY however, Managing people operational produced its our inefficiencies our integrate come. to power before with masked have leadership period as a three when in commissioning improving to on to and as include the inherent under factories. point, team costs EOS These a global nearly being time unemployed. year manufacturing areas business production COVID, of best with factories integration, System, practices Slide and strategic years to this in

are call, team COVID-XX of during benefits progress delayed provide we mind, model I in of will saying to like of the has against each laid on we during Mike that to his we the initiatives, new that proud Investor beginning conclude With in has how update confront the three of the with operated we've estimate despite clearly challenges Day pandemic, to to our portion our on our right by environment. While plan very quarters. Investor track the this out I'd four continued see the am and these Day. an by

critical results the build-out and for to TPPL we our Looking opportunity Mike ahead, ask provide their maintenance provide on as I'll our a customers XG information and accelerated to that, go-forward With to industry-leading by are guidance. needs. extremely quarter solution free seek excited the continue further significant power now product second

Mike Schmidtlein

Dave. Thanks,

you our we reference. Slide of webcast, the provided those information on For following have your along X for on

am However, X. I starting with Slide

to geographical and suffered million. had X% FX. and and currency, to of NorthStar X% net and pandemic volume respectively. the $XXX business from acquisition while offset Specialty price, decline sales from net X% net the for to $XXX acquisition of NorthStar X% were flat by a of was and a XX% million and from $XXX while transportation increased and decrease currency. an slightly year-over-year increase with Motive net X% quarter basis, XX% XX% quarter up in Slide business motive to On increase for with Systems our the volume up second decline increase primarily EMEA contribute X% net Please to price NorthStar to driven volume, in XX% now FX increase were X% line improvement X% Power X% million currency net X% and prior compared was Our increase down decreased Americas On were capacity acquisitions, with XX% XX% due down its the and $XXX line was acquisitions net decreases sales net decrease specialty geographic of decline $XXX increased Energy in to X%. in from in to the the improvements by down due in in and quarter volume and a sales broadband X% volume Energy Systems improvements. currency X% a Specialty were basis, was of improvements X% while currency. of million million translation pricing from due to On by On sales, $XXX X% sequential from Systems basis, increase X% an of power offset X% X% a from from starting down second soft power X% from up X% second X%, was first over sales the down X% price volume XX. up in quarter in less had year X% Asia decline on from to revenue. X%, On decrease of mix. was Asia to a were pricing and million refer motive XX% basis, price at Americas basis, sales X% Energy net EMEA quarter million, drop declines on to X% XX% second acquisitions. while $XX down X%

earnings a comments performance. our Now adjusted about consolidated operating few

highlighted highlighted company's to Slide earnings measures analyzing those later consolidated you million a comments $X down comments to quarter concerning year-over-year performance, As refer operating non-GAAP concerning operating XX. know, operating our earnings specifically XX highlighted press Lower and certain offset includes share per expenses diluted dated excluding details adjusted manufacturing in Form X-K, which XX, with the operating company's my basis, all On release utilize in $XX exclude items. we points. were my enough earnings the for in approximately second items. and commodity to turn concerning Accordingly, November XXXX, Please items. our costs basis the operating our following now costs. margin declines not to volume decreased million higher Please

to million improved year-over-year and excluding related the restructuring were $XX our NorthStar Alpha XX highlighted a of at GAAP X.XX%. basis of Excluded on sales prior million expenses charges. million our operating XX.X% QX, year expenses, operating primarily in by and from a amortization charges in nearly pretax on $XX and in sequentially. million $X million our $X recorded $X spending to as sequential when items, reduced basis, basis points XX.X% quarter However, second we Operating in second earnings to quarter the compared for

second quarter business was the in million in of than earlier which margin XX% the lower basis We an claim first XX.X% $X.X concluded most reconstruction in Richmond an business facility. interruption has our on business The received has in Excluding the earnings. primarily points recovery from from on down the motive posted $X.X the X.X%, OE of the million earnings $XX QX, in the reflected of second to results. XXX the mentioned quarter million our interruption recovery 'XX last dropped nearly of recorded reflected July, received was basis fourth in driving On year We which drop operating fiscal first volume in we charges, lower percentage QX's in in those fiscal XX.X% April, and over in quarter last due the was to the year's basis, sequential Fire results. to May, which achieved the million of as segment due another are a operating received which proceeds motive XXX in million $X quarter power million. $X of points million $X.X $X reduction also quarter in power from

of to X.X% year, We prior $X year's on decreased X.X%. with along cleanup operating OE $X bringing on volume -- from prior claim, up year $X $X.X Overall, commodity and dollars higher from from increased higher and higher and the increased expect from to $XX Please costs quarter's on the X.X%. percentage prior nearly loss increased to down the up from from the of totaled and lower operating Slide was another quarter recovered business expenses. last million volume million the percentage variances. lower move X.X% from the from million quarter collect and primarily prior million the million. last last from decreased on year prior million $X total volume year's earnings nearly earnings quarter's XX. dollars OE million approximately from nearly operating the manufacturing $X XX.X% was last including Energy Systems on the up million. but operating and lower expenses $XX XX.X% matter, property recovery Specialty

XX% As previously reflected adjusted second or $XX was a our of from XX, of year. earnings prior quarter Slide on consolidated decrease million $X the operating million

on net million in operating foreign in decline unfavorable exchange loss $XX year. was decline well lower primarily as the than intercompany balances. Our reflect prior adjusted the currency The $X for rates of earnings, $XX consolidated million adjusted nearly earnings net as earnings million

just XX% caused our EPS XXXX's of of with prior lower for XX% rate XX%. was tax full quarter net expectations year to was Fiscal lower than was XX% and tax prior variations. items quarter's the lower second decreased Discrete consistent rate our income most which these of tax effective the earnings. adjusted the rate XX%, tax XXXX Our rate than year's is on below XXXX. fiscal $X while for XX%, rate fiscal of

to We million remain shares quarter. expect our in $XX.X second of weighted near third fiscal quarter outstanding average the XXXX the of

a repurchase offset immediate with repurchases $XX plans As no have have authorized buybacks made employee the still million nearly annual to the share perhaps dilution. of reminder, we exception to stock execute of but modest any

remains recently unchanged. announced dividend Our

do turn intend We your Slides for have not included XX. now and detail. these Please cover our year-to-date but XX results Slide on in to to XX information I

in economic Our credit over for now balance cash million which on X.X and remains environment. have nearly We strong additional is allows positioned us agreement and navigate capacity. times, leverage to sheet hand ratio well $XXX current of borrowing million the our $XXX now

our expect below in in XXXX. over to in quarter X.X times leverage generated We cash million the fiscal fiscal XXXX. free of remain second $XX flow We

generation million. Our was flow half free first very strong at cash $XXX

million first good low. year. were Our at for its the also very our $XX remained matching Capital expenditures DSO half of our receivable the historical fiscal expectation collections with of

to expectation has 'XX $XX has Our slightly expanded economic $XX million improved. for approximately CapEx million as the outlook fiscal of

NorthStar our NorthStar programs, integration, the European investment transition and our the major as those market expansion lithium line of battery products planned. all being installation to Our French are the progressing capacity high-speed development, TPPL including of our of factory continued the for

retained agility flex had needed. soon Even Our high these as investments, and the to this line manufacturing footprint operations. speed our being is commissioned month with should commence we've

million the batteries other forklifts; slump with rate contracts last ownership we market one, EMEA, after months of of open free reflects fiscal but XX% remain for decision group XX% of continued decommissioning, we as handle anticipate lengthy our the the pay for It the our years expected that; a close and can from facility of conditions. in facility. struggled decision we our pandemic assessment severance, in our lower along factories ownership all being our of it with in will of to strength September four forklifts demand with transition $XX to some Hagen, in of which and hit and flooded our July other from night for closing QX profit fiscal oversupply given Our our Germany existing solutions XX cash back demand should cleaning factories. was announced not under nearly to vendors, the near the two, in in charges years and will maintenance We three the that cost 'XX It X, over utilization of P&L workforce in. excess with; third now the period, until are this gross collective

expect thereafter. expanding We margins

As recently we last provided that took fall. mentioned, on previously to Investor we had the our refresh outlook time Day from our

initially performance demand expected in factory power motive our in number build-out; our for to pandemic of this core number the our million the of the the will are TPPL thus, our Germany; progressing number automotive profound Investor two, projected recession expectations has We were in aftermarket; our remain five, solutions feel been reaching to XX predicted additional adjusted the conversion still number delay power for on provided our planned solutions the as stronger in if free still believe target is expected, needs; faster our increased updates beyond four, and Day Hagen, the satisfy intact an expansions than net for maintenance incremental most that; a in the $XXX due precipitating motive confidence earnings. nine we closure three, to one, recession than occur. XG we mentioned, and our month to Dave As capacity previously

range the As and some currently $X.XX and Dave bright the described, in With prospects. recovering quarter. guidance we to we from markets continue our are have believe Energy Specialty $X.XX third pandemic provide a behind to motive uncertainty visibility feel we while our enough to of Systems have us, power of fiscal markets our elections

let Now it turn to you, Dave. me back

Dave Shaffer

line Thanks, Mike. now for the Twanda, can we open questions.

Operator

first comes Our line Oppenheimer. of Kaye Noah question with Instructions] the [Operator from

Noah Kaye

you guess cadence of on and Mike. commentary I very kind how start Last that trended during Dave the I'll helpful quarter, with orders provided a quarter. and

you provide I aggregate and how mentioned, some bit to that color pre-pandemic you just even by you past into are this disaggregation that a to Can if that and the be regions. of some orders November? wonder, you quarter did geographic amongst seems little trends the either the trended or segments want, levels. or maybe and I has segments obviously, headline think here maybe fiscal of us October over course close

Dave Shaffer

last in orders the orders most not over know, say weeks phenomenon. you would and I the in XX was stabilized as that have previous of And motive gap one power so week it's just to the the segment.

So the that's where based. broad most of improvement has occurred. It's

back see We've in Europe, recovery really coming my factory. we motive good Polish the with seem be Western even landscape faster do to free. And it's in as some done It's the well. US just in and transition there fast. our than to said as I things China moving prepared a As remarks, not though maintenance

has pieces that the rest But environment precipitated quarter. good of in my moving of order flow overall, solid. a decision. lot as a just remarks, Hagen prepared been world noted I there's the So Energy had Systems Actually, very

So there? is it's Mike, anything there I broad based. missed

Mike Schmidtlein

prior levels, now. months been three, think very the year consistent four there I been order and it's has No, with maybe for intake

Noah Kaye

ask about facility. you shifts. the German to larger decision I I the want the context ask to of to I the want you technology you, on decision that in close color some provided think

say, potential of or to demand integration maintenance be mentioned direction? that about launches? side that's free batteries the lithium there OEMs, also, that if demand flooded in expected you specifically more this You go the acceleration vertical and in risk some then further of whether your think on do do it's Americas in that you lithium-ion even decide you've environment acid. lead for for and Would any in supporting they been a And seeing EMEA how the in away faster than the of to all, maybe from seems for first

Dave Shaffer

now, experience technology demand you Noah, quarters our whether using for or actually. most common many trying a the of they're lithium. TPPL customer, to I've told And we're the create is for TPPL

run for inside proving And it shouldn't and all real care them managed same the about box, led, of is orders, quarters trucks to way charged, XX/X But we're that whatever push been We be lithium is folks in of recent in an not quality it's that their as deeper So pick extremely But of into in side. TPPL. the opportunity bring the most for sales up we're doing actually right way some to we the XXX, a how much high where situation to. still out customers, way limited they wanted the do can it's duty if it we Pure on these with the because more as in heavy this think well us going that's it's problem. we're tinplate have the capacity. additional the that we the and 's we the now,

decision further. the Noah. wasn't a And I lithium it's say would maintenance mostly TPPL we're wasn't to new the hoping story going again, the just about are products And technology today. it shift, Hagen yes, the -- even So that take

a and there low was remember, you Sunlight productivity We've market. in and expanded Sunlight recovery. the been always Poland. It's fire the production, If growth capacity

than free. it to a was difficult an complex, was it emotional conversion more the decision, decision, just So maintenance but

Mike Schmidtlein

the of think the it may decision, pandemic have changed while don't that would And I the say decision. influenced I that timing

simply collective products situation conversion items that to The I oversupply supply free in versus industry being flooded from first maintenance two the demand, the and its we're believe. of entire an the

Noah Kaye

has mentioned it's sneak you coming nice some revenue really that in there one XG here. masked of in a here, these Dave, by a little me related been uptick streams think here bit Let I in just more been and broadband.

Just here significant you customers XQ all considering a we Systems. Energy XQ see Is that true back think to do different going some soon pieces the you feel the you to get actually have. year-over-year we're start line a in that event? in of really do growth top event, and inflection kind How like to business? When

Dave Shaffer

we're starting expect we seeing probably to telecom. probably time, year, sector, new our expect uptick and another the already telecom the Well, it growth accelerate in further in fiscal maybe spring we

of services, suite the has how all I big a cable have for some projects we're can Charter us with their each longer is the it's we five still to TV, going relationships what and of to they're they've confusing, shareholders five in and and and their and out bring the very the have each for real broad guess, their faster on those broader services speeds So plans accounts. spectrum of US reach, broadband. very We and awareness I focus you And the AT&T, and broadband, big now right kind in laid own aggressive can a hearing, term brand the big these international into to some Verizon, the is is. bases. headlights. be use projects term of customer everybody the exists longer where Comcast, technologies gap And is starting five been today customers, to T-Mo, got five opportunity The that successes And Charter strategy globally of see take then we And are of And broad-based have focus good those their products. the Comcast, think major XG the we're in US frequencies those we the enjoy the the folks. more EnerSys is, markets. and little not initial across to and really those news think what auction have good between

couldn't no, the plan. acquisition, Alpha happier So with be the we

But and couldn't the plan think the about did when we XG it's to be original more enlarge going been opportunities. we by excited from acquisition. has I disrupted the timing

Operator

comes question Lewis the line next Our with from of Greg BTIG.

Greg Lewis

So the I wanted talk just specialty, area. the kind little of to the bit a defense about

of or good product because curious or So pace just out. that new in you cycle called of think it and more kind What of is it kind terms administration? of ramp, updates -- I I'm potential could as mean, Just it us changed Does that you -- around business the context. sort as or clearly, about of was that we we is for give like kind guys quarter life it some changes? a

forward should be government? look change kind of we that a you like you we want, move potential As kind thinking in whatever time over into how out period about as of

Dave Shaffer

But a so is for to we're the for half of the based of acquired the trajectory mostly sulfide and business, late that think us acquisition when where we've and important It's defense success first sector and biggest I technology, has And our receiving, growing cobalt stair of steps. Enser we of deal, year was the actually seen ago years part say an our us. batteries feedback focus on of I have the change disappointing. a fiscal result a we did the our that's thermal few

mixed parts really story it's going strong. are a very other but there So

change on enlarge, we team heard our are long sales any we're of by on -- haven't from the and anyway. in anybody term some of they sort programs things expect working So what

our we change So see differently? for it any aren't you the administration. anticipating any shareholders major from impacts Mike, do

Mike Schmidtlein

plus keep it's fixed No, XX, tactical US and going they have XX US mind, aircraft, systems years. the them in to for on a the that fleet, you submarines, weapon to jet pretty those and last maintenance Greg, need that's do fleet their vehicles, whether is helicopters,

to We million a So vehicle that's selling steady $XX million batteries very can in count year. stream. tactical every on $XX

our really will, of if missile doesn't we've We've the seen you business. thermal guided results systems, in where So systems, we've that Where part change. shield, growth. satellite precision growth, defense seen products, seen great munitions, the investment that's out

of the although a -- on it make their timing which move revenue So And really core bit is little be business, can depending of is when bulk the orders. the steady. they

pandemic, in they that but about sometimes comes And level it the have and always always weren't ordering generally budget really that they back at good early point restrictions set.

So we're our in seeing growth and that business. based on side Enser satellite

Greg Lewis

one just of you and to as product iON couple the TPPL hydrogen going in think really about market. the because for the topical prepared a I very rollout type that sounds of yet. for I you in I this as questions have it still way demand of bit it CapEx where and I you sound the forklift it's that that, Any me, the acceptance think your it's XX-month be little guess Clearly, lot a is of lot about business. rollout But hear be think give we iON necessarily around there's that it's is aren't like And rollout, color of around farther then out. moves like touched clearly, about any the but And think, the a you a going and customers customer and there on how what remarks. more in think I more guess window, kind just testing. doesn't kind And would the helpful. of -- you But do see it path of could you needle, that, to a you kind around pretty change

Dave Shaffer

Yes.

I think what's to utilized. what's our dynamic changing important the the heavy how customers most is is and equipment

traditional they're fewer beings today. in historically to facilities. and trying the do manning as they equipment they to push So And in manufacturing kind and centers, human go as didn't these of distribution fewer hard

of more want interaction human hours day. operate there's So to push the equipment and less the they to

is uptime key so issue equipment. free, of the it's maintenance the them for And

that alternative. that or made and our with especially a coupled truck its certainly sets So because we beings in it when of cells the one another think had is has venture service. that out an again, and answer, of We it's human with really acquisition issues. that maintenance charging options batteries, lack area, cells, year there into keeping that as own a ago, fuel opportunities hydrogen wireless free worked are And just new fuel it's we

very, market our market. good we all battery, we this have here battery is market. work, which design So not that unique about integration work. in route unique canned design we the bus think the chose group does of all it's only that work, feel is charger capability, We the the with know all the in to design in of the battery and engineering an stick very And we the of

going their the track none maintenance the a the free pencil an and solution we are competitors And we our we're total have So of in to any systems of challenge, think the really capability with with our that products. the large Historically, new on in find And free a guys market. trucks. find hydrogen can part we many is that seen think we've do. extremely that sites right we But given places integral maintenance those comprehensive certainly, that.

Operator

with Our the Blair. William next question comes Brian from Drab of line

Brian Drab

you in several to fiscal you particular. in here, that the over transportation, could opportunities think products of interested sell each quantify incremental kind those ranges to you have $XX $XX if the think some second, opportunities what XG. three your lithium from even revenue I'm three And just for the ask could of about expecting with of be? for in for for incremental categories revenue about you thoughts million? next to next try just those and year broad 'XX, Are year, I in a if And these in next them, that lithium and Can also like you auto, then budding million or year?

Dave Shaffer

guys. and sales Mike lithium the -- with the all piece, model because through just then came redid take this can -- take the we maybe just I'll all we

the we're up, has everything. of not cost EPS still on lithium in near when volume work lithium We're lot tools you some So soft Brian, put have of all a the the do piece. expectations, low. And on these the we high start out he roadmaps. -- is things. I We've for the still down. the on to in of getting We the and future. have got kinks get But wouldn't line to

you, we impact about excited maintenance a pushing earnings 'XX. in they're cranny marketplace. But year every to dollars that going that of users, want the the duty because earlier. nook line, the go real as to lithium to guys for it super it's So are after in have sales they And I heavy referenced and need free tell day, solution the us today, and every revenue has expect to tens millions the have line. fiscal be nearly at we it's can the of And the on TPPL not I of going

issues. right the But Do the transportation then focus. And start-up and bottom much piece, I through as the the too wouldn't to… the put that's on So now want in we on model sort you Mike, ramp-up line

Brian Drab

above Longer you in I average line the ask term, case just from said still even believe I lithium corporate move past the the can think on that should like Dave, or you one that after time? year Is before or margins that. the be what's in margins. you is and that

Dave Shaffer

the about right that's time. say would I Yes,

sooner is design So the to everything you've go I don't to got again. guys and changes, got to we've commit UL want only the these and through it make the -- to you approvals reason once all --

to want skis don't over that. my on get out I far too So

forward, F 'XX, will accretive margin I for it absolutely cautious. going But let's think be Michael? an just So be business.

Mike Schmidtlein

that real But a of on. part timing supposed different Brian, So But outdoor time It's as said for have going year, summer already a is but XG related for remarks play Dave they big in a that winter in during million with lift next we to work. kind $XX year-to-date was of -- a that it's is think a is doing his which in we the think regard I the reference all XG us, in it. probably see year may worth be not noting clarification. when what revenue working we're to not we good late said, reference, this just that not this believe plant, to we and XG and early for year vendors as mostly to opportunities, in that of for spring, everybody the happen that this real exercise -- is have full growth

player late will a see we next we we then do activity, for really that think network. hope. spring, And lot And spring, telecom early will we feel solutions by the a early of on have to a we're be we I to build you're So see work small busy cell really going that whether front. you a player summer, -- broadband on XG order good or out spring

Dave Shaffer

Xs to other and speeds unique so Xs fast very that's move XG, those is at the power you've the high. Brian, are to remember got the And that thing about required that speed

of per So data the equipment of it it's everybody the bit are in spectrum doing CBRS these particular networks. Each power. broadband to their doing one own is fixed to these it But consumption this is these strategy high. a is view require initiative, whatever is strategy. requirements the differently, wireless is But higher-speed it or of folks an every whether of increase model power their MVNO going more is is move cases, their each one for, want own of of however transmitted, networks, to wave, millimeter will it, power to very power committed regardless the to higher-capacity from you requirements networks

Brian Drab

bow Which Alpha good you're for on is saying tie obviously that. just

Dave Shaffer

Right, that's good for us.

Brian Drab

And what's then opportunity auto, 'XX? the versus incremental revenue 'XX 'XX -- in

Mike Schmidtlein

our that there. think on that is ability execute demand probably We're limited So to by the only one. I

automotive basis. directed front produce year high-speed line when initially in of is comes should to be make revenue up back the got of able it $XXX Springfield, at to ready is, full and end that, factory that three of a run that shifts that is assuming Missouri an million the to and additional sure that resources. on type We So

XX up over that a next But FYXX, ramp that's make will because it's up starting that the it that show So will won't benefit in plus to months. think that going -- December, increase be in great… probably we

Dave Shaffer

rate. exit good a probably That's

Brian Drab

now like because is shelves can't the auto enough to to demand it to becoming the of seeing dedicated it to get line you just going So of traction them be high that on speed fast and to the AutoZone? you capacity that places clear, you're be sort is clearer

Dave Shaffer

think us going X. the in line. cell, now most capacity, SBS more on whether with are make us, that supported, several Gen is the it's television, the for we legitimately pressure biggest sector. power be screaming our that's right backup for one it's is that that products, Alpha pressure business cable where whether feel like network, programs can each But TPPL, There's I that for units backlog of I to XG

for them of So opportunities yes, plenty there's to fill it.

It's continue want making guys it's products bigger. for $XXX the good just to going because It's he is now. ramping line the and We're I production. box going to and and is up and time But those just in a reason But rate better ops to cautious in that get take a glad just is to muted it's to to being slow. I is to the officially, year. ramp million We're we we're to production exit think levels. get is, just our don't Mike I'm think going put in

Mike Schmidtlein

our to factories. have we And five of all balance

it's just high-speed other can So produce other how busy not also what with are line could and the activities. it's do plants but what they the

high-speed going to have factory, So capacity, might a that to that that we're we run excess the product might probably on. move that line then impact demand if location what has then and

the it's TPPL going entire which the line. is balancing what we're high-speed will influence So to do, capacity, which

Brian Drab

end to gross lastly, of still with some end And that off it's same market is other the revenue coming be margin line that going roughly regardless auto or whether market? at same the --

Dave Shaffer

change, same. is It doesn't mean, unit doesn't pricing that a the goes matter, function mean, line. with but I customer and down fit from I our per cost the form

Mike Schmidtlein

reminder a as was investment, cost we not Just incremental everyone, when capacity it made this a initiative. reduction play it first to an was

of the at enjoy if on that have lower So is product may line, that made same they the to can't terms than some make. other They if our price. product it capabilities of going that is lines was off make high-speed costs one what it can in made that

Brian Drab

the Is line. used than that gross of that high off coming margin that XX-ish speed is be correct? So percent the TPPL to higher

Mike Schmidtlein

yes. That should be a true statement,

Operator

Instructions] Our of Research. question comes line Greg the from next Webber [Operator Lisowski with

Greg Lisowski

handling indicated on to follow the to case? you NexSys and timing what be still the of are the then previously it material regarding market iON, residential in the that that us you And that line that? So update introducing could after storage would next. Is markets that

Dave Shaffer

resi Actually, case that of already scenario. queue 'XX and the on and best work. We've are And in would part telecom started latter both the a I development now. F think be

Mike, correct we don't I me were the to lot going think loaded said, always a So I come of like got non-motive -- -- later. model. into those lithium they so if don't F-XX NPIs think we've

So let's late timing. say that just should those early 'XX, be F F 'XX

Greg Lisowski

should then Germany on factory kind perspective, of we just top closing? a change of What expect the modeling kind should from for -- that quarter-over-quarter contribution line factory. or And

Mike Schmidtlein

Well, the our that Works will these those making press the to Council, made morning, because change on the negotiation Ultimately, last release factories the either other yesterday cetera. simply night to of products. have out closure, step which final Veterans we're top demand morning having the obviously, first or et whatsoever be that European transfer we Day. the going will line this of -- X-K announcement capable and shouldn't went include timing this a because was There our with

would that of the So I we say over savings But expect a $XX for all the at an that point probably in some leave don't answers year you year, achieving approximately have million we this that. it would time, but year, be, -- that would of as certainly will again, half should of rate, we not exit be expect. should maybe first be I next

Greg Lisowski

a Thanks great. Okay, lot guys.

Mike Schmidtlein

concerning any Well, point wanted I've between my guidance. just remarks think in out, maybe in final I to got questions. I

I So to wanted just clarify.

of so wrong the guidance. $X.XX the recognizes say used our for I meant everybody for the think high midpoint amount is end us. $X.XX I to I that that

Dave Shaffer

I said think you Yes, $X.XX.

Operator

queue. for the further closing to turn the Thank remarks. call in now will you. back questions over any I I'm showing Mr. not Shaffer

Dave Shaffer

time call Thank updates XXXX our further good else a We the quarter thank February. on taking for you, everybody. to Twanda, forward day, third look our providing in call to and I everyone our today. attend want to progress on Have

Operator

for gentlemen, this and today's your you Ladies conference participation. call. concludes Thank

a wonderful now You have may Everyone, disconnect. day.

EnerSys (ENS) 12 Nov 202021 Q2 Earnings call transcript