ENS - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Q4 2021 EnerSys Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instruction]. Please be advised that today's conference is being recorded. Instructions]. [Operator like conference now speaker to hand Mr. today, to would over the your I and CEO. President Shaffer, David Please go ahead.

David Shaffer

year Good for our full joining Lashana. us earnings Thanks, morning, for fourth and quarter thank you XXXX call. and

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

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

Michael Schmidtlein

Thank everyone. you, morning Dave, and good to

performance reminder, we uncertainties and are in a current statements based subject circumstances. certain forward-looking changes management's on operating this expectations and As future and be that regarding are will to call views presenting and events

actual Our of number the may from materially results for forward-looking a statements differ reasons.

are statements forward-looking of the of Our presentation. only this applicable date as

factors XX, Securities forward-looking a in Exchange which set see the of year forth estimates, could of future operations Management's in was our condition earnings our with affect Discussion Commission. filed and of and statements annual March XX-K on results For for which Form U.S. financial list fiscal Analysis report results, XXXX, included our the X, Item including and

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

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

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

David Shaffer

the growing earnings per the quarter quarter We we of year. to period Consistent fiscal products and fourth over generated during services. fourth last results XX% diluted last demand XXXX, turn our our X. call, Please Mike. adjusted increase a $X.XX Slide for Thanks, due share, of to rapidly reported strong with

transportation which in products. solid of again, address the record strong delivering Our its -- soon Energy Americas, growth financial revenue, strong earnings, continued XG very improvement our Cash year and telecom producing and from was, on following bolstered address. demand positive our this quarter, by footing. a momentum, short Motive I benefited another business earnings revenue will on us driven saw Specialty leaving for solid but Power solid quarter and segment Systems flow

Although ongoing some of the begun has world COVID-XX sense the we returning pandemic. normalcy, to created to continue by headwinds confront

Prices availability constraints and continued seen rapid always select in recruiting particularly lag but sticky, have employees increases. shortages, cost We components. raw new have in resins and material been electronic

challenges expects Our markets. more the bit team Please some world is hiring and responding to provide as and rest turn our of X. steady on color the supply now and chain improvement settles accelerates. to little shortages down Slide a the the near-term I'd like to key of

cost tariffs, Energy with the higher pressures including commodity input faced our freight period, start prices largest several increased which Let's and expedited Systems, segment, during costs.

is batteries customers their in with of supply struggle from to have mid-spectrum build-out EnerSys labor In systems. participating but broad downstream chip and addition, the DC and our continue chain improvements expect in the calendar build U.S. that rates, these power and the outdoor wireless issues half we back year. with upstream shortages slowed

products. maintain from higher our our accelerate benefit While line can results rotate will believe market customers and when we build-outs remain strong while our -- XG to we small position, we further next-generation cell powering spectrum

data other minutes wireless also portions of with are from about networks own building and these voice wholesale MSOs, MSOs, wireless networks. own HFC U.S. out broadband network primarily lease excited their We providers. very their Today,

networks deployed, are is well. as shutdown public excess grid enacted of near-term currently much lower faster in excellent have the power safety total If full their resilience, suite backup opportunity We of help EnerSys an Recently identified MSO for a well X.X $XX million. cost. DOCSIS opportunity MSOs deploy gateway for requirements a products the all extended in that at provide California wireless sites

we legislative for growth push markets driver regulatory for with to industrial expected Energy as initiatives energy numerous and electrification favorable are telecom, for Systems. to and and energy of residential the distributed monetization another addition plus generation. global are solar applications storage continue utility In climate seeing expand at trends vehicle infrastructure aimed Renewable provide resources reliability renewable storage, to improvements, resiliency and

this We area renewable more batteries and as released. in our capitalize will next-generation inverters are

progress also Energy substantial All are lift initiative electric to be system Systems COVID-related storage made DC to also turn Data global areas all, energy have to favorable growth. more in center about battery vehicles, site shortly. plus for Please fast own Slide speak improving I more on as charging restrictions. megatrends X. We which markets our will access continue

Our performed very the business Motive well in Power quarter.

demand along discipline. recovery, OpEx continued now We only battery growing and both offer lithium maintenance-free revenues our with segment are market flooded continued generated maintenance-free TPPL from the producer traditional to strong and operating earnings This in products.

with all Richmond, this full Restructuring In tests. motive internal material has power our passed products This returned capacity their month, be additional Germany handling with We our launching are to and we manufacturers. continue to be while UL launched we of Hagen, quarter platform lithium X efficiency, variants, multiple addition, our X our collaborate will and our and realized. to Kentucky starting facility savings variants

to the for our Please trialing early results. customers our Slide this with offering in duty find X. are stages best toughest of the While continue actively to turn our excellent is launch, chemistry and only suited we're

capacity The our third business, on quarter reported another segment despite impact ongoing Specialty, of the our COVID strong of ramp.

OEM performing is the market business vehicle as transportation Our Class recovers. well X

hiring competitors and to supply. with our continues as been to challenges our constraints, causing faster backlog demand with along remain stubbornly we, than high many dealing weaken supply grow have of However,

on TPPL X As Missouri a in result, our our focus remains production, factories. expanding particularly

in continues line last due Our ramp but the improve. capacity. to the doubled increased schedule months pasting a added shift production to and and Springfield high-speed we COVID, and second behind is X line oxide High-speed to

performance from years' X improvement in made as last the facility well. Warrensburg Our significant

and tech space variety a our team Slide another energy pleased our aerospace of and We I programs. on battery DC kicked plus customers executing storage system are prototype we had and my submarine, to with months. the great corporate initiative vehicles quarter tactical moving off contracts X. defense Early won has Please momentum our fast am that turn munitions and projects. here quarter, Lastly, during engineering officially in running several XXX a by kilowatt-hour by up estate just charge at and we a fast. partners, exceeded delivering at real been commercial team driven has and few our center X expectation

revenue year 'XX, if early $X and cost the estate calendar multiyear we opportunity starting billion real hit performance launch targets. Our partner identified has over of reasonable

Our reduce handle, passenger charger goal of lowering minutes. that charges changing as fast is car many operating a the also vehicle can EVs, to cabling any using electric we size By large including at peak demand deliver utility into the charging. battery hours energy the often AC as to storage the system from dramatically charge installation an costs and costs EV can quickly sites, transformer can the high-voltage by from reduce system interconnect. The car

the outages. is battery technology. can and EnerSys during can cost effectively system operations host energy modules and EVs, more use The fast-charging provide its to and system solar power the addition made lithium for largely compatible commercial help electricity charging also backup from In bidirectional emergency site power existing

of modular use and of This beginning lines lithium Our goal blocks these time across to use of products of drives market. our our and accelerates building the program business. our economies standardized from all is scale to

preliminary business and reviewed up for intelligence and artificial lining plans software partners Board services our cloud are We last week. with

With summer. Despite caused ahead We more the market the over us, for challenges us. year color year, out behind will long-term the to seeing opportunities the provide lay of exciting on past the wanted we're fiscal in positioned the well opportunity we I global are what pandemic, of many by XXXX this and success.

it. a or massive universal a for continuing for carriers, AT&T, of long-term is XXXX gearing spending, we XG The more the accelerated and this growth could to and largest state competitive for being build-out half levels rolled spend X tailwind acceleration success Dish in deployments $XX the $XX precipice the billion, years network; the an slow commentary year completed XG marketplace to which deploy entering has and Recent on to should rural are strong the second the the broadband financial ramp manufacturers the limit year all that leading federal of and population provide begin into requirement auction XG up, in hurdles the finally, fiber carriers' including is billion could the T-Mobile's some of equipment by June include: thereafter. C-band at on expected than February which U.S. up, U.S. its deploy unanimous. ramp are initiatives calendar more the our to telecoms government-sponsored the that business. There by and seeing our some resources been will is post-Sprint; build-out out FCC XG with including for of many potential throughout a XX% XXXX; with government factors We

relates particularly a semiconductors. supply by manufacturers, The lack second to XG hurdle discussed shortages chain of the

a we're a close the will of the years and major with door U.S. XG in leading We but remain Europe, ahead. expansion keep quarters on the at confident eye these developments

EnerSys in and directly, a the significant proposed infrastructure addition, would nontraditional traditional trillion broadband. EV to bridges like nearly charging bill, U.S. and has such as that upgrades make the In should grid, and includes areas Biden $X investments benefit high-speed which administration highways electric also

several a bipartisan While there is are done build we for far the act areas on. it support that is deal, prepared from to of

are Energy grow XG. outlined iON growth particularly powering sales PURE. integrated motive initiatives power Two, our DC systems in Our NexSys to portfolio telecom and Systems products cell worth of small the with accelerate strategic our solutions, will Investor One, from accelerate Day maintenance-free ago to X business, which nearly in and in repeating. years our higher-margin fully NexSys with power

rollout business. Third, transportation waste capacity, share in reduce of And our finally, Specialty through market to continued to EnerSys increase particularly system. the operating TPPL the for

to of immense feel initiatives. we it plus opportunity. believe core we addition, and are the now We experience electric charging decades charging competency is represents energy a In forklifts, our above system an it adding fast from

ask guidance. will information quarter value of and hard on With to our long-term further go-forward our executing provide fourth now deserve. shareholders deliver areas I'll We to and Mike the work that, results and each customers these

Michael Schmidtlein

Thanks, Dave.

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

sales prior volume, while increase were revenues Power volume rebounds year-over-year declines XX% Richmond, the suffered and pricing. Motive improvements quarter. down September Americas X% XX% improvement up and in X% X% X% up recovery to The XX% X% $XXX fourth Motive X% our volume on million, net impact $XXX Energy fourth fire a XX% were a and decrease Americas from up million, net basis, our Power Systems to was it Asia sales along in from while X% X% pricing, X% X% was up Systems quarter million, due compared to in of TPPL Specialty X% to lower our Motive Specialty for the a sales, third geographical pandemic continuing Our increase of X%, net of $XXX up to pricing. Specialty refer and EMEA for $XXX and currency, to quarter On along sequential from Asia by was was while net but of positive line while were with million business X% million. to million, XXXX We from impacts net decrease decline in basis, of currency Kentucky with Energy Motive EMEA in in X% up million, and from was was capacity increase revenues the our from volume in and to sales increased of decrease an XX% acquisitions increased Power as X% this XX. quarter, due Power fourth price quarter with had X%. XX% currency an a XX% $XXX up line more $XXX with provide On up X% X% $XX in a X% year basis, improvements. our volume of volume a FX. sales Energy On in basis, X% facility. was to now less XX% X% geographical offsetting sequentially, a a fourth pricing. gains, the Please business from X%. Systems had pricing. volume currency, On and volume prior up to from no decline. had a currency net were X% over improvements, a quarter at a net improvement was X% in the to driven year X% a transportation pricing up basis, more despite net down a Slide benefited On

adjusted consolidated performance. Now a our few earnings comments about

in dollars related we which concerning As details excluding for highlighted exclude diluted increased turn concerning to expenses operating flooded XX On million, XX charges a earnings following operating and announced QX basis, approximately in basis, flat a the motive primarily amortization margin were Systems from results, utilize company's XX.X% million includes Hagen, highlighted to items, the in up operating basis later $XX quarter recorded by comments all at primarily XX concerning a know, I comments address and for in million, the our year-over-year of you margin fourth fourth these to GAAP points. sequential XX highlighted restructuring we to when prior now Excluded for year Germany. our sales certain items. $XX in $X Please specifically adjusted Operating $XX OE are to On points Slide items. power pretax company's performance, Energy and will to $XX closure of with Accordingly, analyzing items. Alpha our as earnings consolidated expenses, XX. $X to while reduced due XX.X% dated quarter sequentially. by basis million operating in year-over-year our million the spending earnings highlighted My quarter non-GAAP were basis May basis X-K, our points operating in Please charges of the NorthStar share $X refer release which per shortly. Form factory operating measures my dropped previously press million on our X.X%, excluding at our million, earnings. compared

both sequential the XX.X% earnings in manufacturing quarter, a improved third basis posted over me, costs. from on expenses. the up freight, from again, points from volume to and Motive operating better earnings charges, was the XX. X.X% year of from quarter earnings quarter On and basis down despite quarter's percentage those operating costs quarter fourth materials range price basis, XX.X last from XXX Slide from points fourth $X costs last million points costs. higher prior and XX.X% Motive and last and was in mix. year. Energy lower million and from last increased operating input XX.X% OE manufacturing basis improvements lower over Please excuse up XX.X% quarter year's quarter’s to operating $XX along due These from prior primarily or of XXX generated margins percentage year's Power decreased volume OE and decreased the manufacturing prior OE tariffs, margin X.X% dollars dollars slightly our the with XXX Power's increased OE higher the X.X%. million of year on million $X business due Specialty prior the the $X operating of in lower from -- move XX.X%. and operating decreased year costs, from higher Systems primarily the Excluding higher dollars Motive for highlighted prior Power and expenses. XX.X% than to last higher increased from

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

prior Our along was adjusted $XX.X lower The in earnings adjusted primarily million consolidated in net earnings, than net operating the $X interest with year. higher earnings the million of expense. rise reflects improvement

variations. items slightly for tax the caused the Discrete income rate and with these was Fourth quarter higher XXXX of consistent our of that rate of the top XX% the quarter's of most than XX%. to adjusted tax quarter year's EPS was of of increased rate than range. XX% of tax year. rate higher the effective near XX% $X.XX, prior prior prior was Fiscal guidance which fourth XX% Our

constant XXXX remain to weighted We our fourth fiscal to the first XX.X quarter quarter. approximate average of million the of relatively expect shares the for

have unchanged dividend, we quarterly a our million $XX now purchases have levels. authorized Last we remains share announced which buybacks recently. reminder, week, As made and of prior over from modest we

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

and sheet well current us strong Our navigate economic balance remains the positions to environment.

million We and on times, of agreement's $XXX our borrowing hand, million have cash ratio credit $XXX X.X in is allows additional over leverage which capacity.

cash We We generated a prior flow free guidance. to expect were leverage our XXXX. million $XXX $XX fiscal line fiscal Capital in times XXXX. our expenditures in X.X million in below of in with record remain

in continued reflects the Our retained needed. capacity, lithium manufacturing XXXX and also and battery we've our major programs flex NorthStar $XXX to these CapEx as including integration. TPPL expectation million, with our footprint investment the Even fiscal for of investments, is expansion agility development

with decision progressed Our full of and expectation Hagen, quarter gross savings expected speed of already our XX% felt of Germany by our QX starting has We to fiscal million November last and in arriving our fiscal expect profit to to announced year. near annual close we facility this anticipate benefit fourth better $XX than our be the cost. remain in are in margins expanding XXXX, rate thereafter. The terms

some have in range described, shortages, we Dave are of of $X.XX concerns the stable year the of well believe guidance diversity all positioned for and provide over us fiscal lines our $X.XX As visibility to provides their potential X earnings feel our quarter with lead business enough has a first platform. we XXXX. we Despite arising to of in

turn to back Dave. call the let Now, me

David Shaffer

will any open we questions. line for Lashana, Mike. the Thanks, now

Operator

Instructions]. [Operator

comes Your Noah line the first of from question Kaye.

Noah Kaye

on commentary calendar half year. eyesight a details of the back So chain fair in improving constraints here to the the of lots supply year, amount of and

on your a some you that the I I a some and might And the that's and wonder you European due going the of think course December think But recovery to think about trends? if year? here your in to top-line improvement basis, been revenue to going soft sort cadence be the of a so there's of debottlenecking XQ has over setup set for sequential September Historically, quarters, how how just bit take place do the up indeed, holidays.

David Shaffer

No. help to Thanks, Noah? want Mike, you do

Michael Schmidtlein

and expand million the per would probably I million, in $XXX low in at half we least will and million that are probably quarter. Yes. stay will $XX first year, $XXX that by the $XXX million say, the range, in HX of

of to that to would sequentially maybe So improvement XX%, HX. not quite we kind expect at from a HX X% X%

David Shaffer

And Noah, noted, the upstream downstream. supply chain were I as issues, and

we're some getting getting So pressure, -- pressure, our are our some but pressures too. customers

telcos get So big for couldn't one radio. their our chips of

had they power their So order of systems hold. a on lot the -- is for

noted, -- feeling way it is we're -- came just So too I it we business feedback as think everybody as the same we're should else. The the slowly fast. getting back we're But improve. mostly

Noah Kaye

freight inefficiencies manufacturing And can give know us you cost mentioned then the numbers? of are as Yes. Yes. some well, us you the right? of part headwinds you the just bit in of this could do materials around the internal and terms of a impact of expedited site, on commodities? side, you maybe think I increased just sort and little But give those of

David Shaffer

you on that. Yes, some I'm can sure Mike direction give

I was manufacturing think right, a you’re the part. big piece

Michael Schmidtlein

drag quarter. per are is base the are tariffs period. freight, probably seeing footprint. But rate or same add million depending the it The increase dollars piece is to typically, that is primarily which a Yes, of a we what on comparing couple which in freight you

the a variances of still of QX, as variances, when grips deeper least the which early were the incurred year of in manufacturing little as October in from last the Some pandemic. have still at we

say, there. benefiting, those as move that going QX, expansion into, current manufacturing we we let's beyond to variances where nice you're as So volume we there see into move operations have the of levels forward, particularly going and a

June start have of to a book, number go year to impact move the through in, of Some of this be late we year. will as drive let's say, is this going which done will expansion the they as margin increases, of other things the order that price course which recently, we through

upcoming start pricing you'll So see to starting through. moving month, this some

and see to factories normal we'll our utilization going move back call of that rates COVID fact to you XX% deep at where You're some, XX-plus for type let's into up were capacity, their the all running XX% percent them, moving from capacity.

you included been would drag, factories, to biggest our the when has well-known -- which bought expect been that's the one and that. the across NorthStar see the And So we factories TPPL and X But this well-publicized we're based that knew book for those bought the quickly. on capacity We and Missouri. of we NorthStar not them business business. drying book of in their their up factories Springfield, business,

that there, the the integration to customers. some added So as done second we X product has EnerSys $X we've move as abate line their per to go now, of we've this quarter, million to Right their of of their transitions some product closer $X we in end been made end high-speed factories. to And which that year. be then in drag million expect fiscal through the

a So big that's piece.

David Shaffer

of that. a took Systems chunk big Energy

Michael Schmidtlein

Yes. their They terms variance. that allocation have in of of

mentioned my fourth of $XX generating be the I million benefit Hagen our of in restructuring X/X will in benefit, As $XX million quarter. of remarks,

We've we are locations, chain, of would, the including therefore, XX%. them XX% supply contract So into made non-Chinese shorten other down now cut that move costs. our We Mexico, to move which to upside. to pay them that's a out where would tariffs, not China, some transfers to manufacturers in freight big have our

than We benefit. expect And do some to think, go that slower we've we is that been outside highest COVID mix time our plant Energy a best think in we where add that. has in Systems, our and of typically that to expand that of plant on, evidence normal. our does it's the is would kind now revenue the the going have from -- for outside work particularly we but And has seen standpoint, to reasons business that other been weather-related, mostly Alpha. So of

cycle improvement margin cycle that So seasonal expect see. from the normal we'd just we a would normal

David Shaffer

quote what is to of business, a Mike Noah, And Systems just cycle the than just other points is, the to Yes. longer said businesses. the X much add Energy couple

because we'll oriented. project So propose it's very put lock

through. So the business in price that push changes have to always been slower

there's some electronics of more that, on there's Systems Energy a our business lag some has So And exposed the been tariff with higher then is inclusion note. to much that clearly, pressures.

But off, a get made Mike good has we've of line are of that for the kicked So but lot of that's we It got confident teams. lot remain going of and CMs have this. why just China. things caught sight, everything out competition slowed to do and as better. sight slowly on a down, business COVID moving pressure good line of we

Noah Kaye

Yes. I'll A more in X that ask I ball. getting some the let of interest take probably lot questions line, of been just that me But investors. off from guess sharing I've the

a long of I mention the but Investor time XXXX, think like a you us Day, really November feels Dave. lot ago, did

fair the And on pushed that help to been so Is that of targets us How say it power? earnings you outlook those have to kind can of we for Investor just maybe as calibrate states years from of gauge you would companies of right? in a trajectory some are versus where here Day? few terms XXXX the sort now

Michael Schmidtlein

September, mirror. our but of say it's had Mike. pandemic, which October, rearview I we it refreshed because completely through not in this was Noah, would the last most

the enumerated Dave growing sales Systems, iON probably PURE, NexSys of it the reducing that in increasing that and motive And his us assessment we power waste So none remarks overall. transportation, portfolio with about of premises TPPL our takeaways through was maintenance-free EOS. a that increasing for -- or out Energy products in year the pushed

of there. those were All still

We how out storage there. DC I'll battery is that new, it, are -- commented charge how thought Dave's initiative potential fast is, the we in and remarks, call important much about

So was I I it's you'd say advancing can would say year year for be and beyond some it, the dead to that still and a respects that kind take of some initiatives. model of -- add there. the space these pandemic would you fact a just in

Operator

Greg line from question Your of next the comes Wasikowski.

Gregory Wasikowski

labor on the little labor seen a the more driving the there? shortages just bit the seeing you of different checks. of Could availability shortages labor seeing? with following stimulus you're segments? other elaborate that contributing you're across similar is I'm the there the skilled just factors curious, issues We've are Or majority

David Shaffer

Springfield, And think -- think hire is yes, direct ramp labor. us issues right the the not and I now. unemployment facing pressures. benefits. U.S. to it's is it's just benefits, of that of we're many mostly of lot the extended the work, of folks, for direct it's I all -- companies COVID immune the We've are in a Missouri. same labor, needed pressure the fears -- in biggest to from Obviously, just some skilled those It's this returning

in see So it's But see Poland, we around the we in Springfield. felt is us. it it in in thing the Though the for Most pressure France, same Missouri. acutely see it we world. us, for acute most

Michael Schmidtlein

are piece distractions as suppliers -- forget part fire becomes and don't that. the because acute to do try workarounds that availability you pressure feeling can But our become drill -- for

it's in trucks just for us. aligned drivers and including a our includes It getting supply not timely fashion. out So chain, shipments getting

Gregory Wasikowski

coming talked that's ion, quarter, for 'XX with year, fiscal ramping over about the through we of color. Got towards it. And the with resi fiscal introductions Yes, end and material handling then course in presumably telecom, last the meaningful of the lithium next the 'XX in revenue helpful positive contributions maybe we these rollout? you business that there, constraints -- issues could if into you timeline? Is continue to see see reception Or affect lines? and that alternatively, timeline see could out and 'XX. general that supply accelerate chain into Or the other you roll fiscal could meaningfully labor still storage

David Shaffer

everything, the the any of in Europe. those narrative initiatives. lithium a facility - also labor and U.S. site not I ramping on I'm up Asia have -- We our are in we we're but in site hearing a not is currently handling

technology. very it's fast-charging noted, with has motive same the the the system based So that side we're in of, system I ahead. using capability the we're same technology is data core as and you been The also the really, on positive. going full energy feedback And and spoke steam center telecom on

And So excited been we're it's if potential. than I broad-based. we've about anything, the more ever would say,

Operator

comes Franzreb. the Your from of next line John question

John Franzreb

Mike. Good morning, talk I pricing. want about and Guys, Dave to

You down could both to all year-over-year. But happened? XX, Can touched just that me up. volume a best tell, little in bit on you I the And X it. is segments costs Slide explain are why were up and commodity

Michael Schmidtlein

on is it's that it a slide, combination mix. John, of Well, combination and a pricing both remember of

little have to structure back cost on lags a our it's recently declining. X lead X the a -- X went they more by costs X pricing -- there's So of pricing were tale X but months. about if risen, typically you stories. of bit or side, lead months, The And the

your that while got our reflecting term, mechanisms, which of of going earlier, is little bit revenue up is period revenue compression, are that you've which the pass-through near adjuster in the is those those business So use of lead putting in particularly costs about now. which lines tail, a is a XX%

it's you mix don’t it and selling not that have, margins you service is probably… and I notable. what huge, doing and what Dave, can So that you're but piece then And work the know, other is you're the

David Shaffer

on some of the Energy Systems the been what Yes. been shortages experienced we've products. I of would we've piece, our higher-margin say feeling on have is some

lower-margin have availability, we the work to of now So of pushing it's and right because service we've been some on and do more the stuff.

up So so I'm cleared price/mix. glad yes, that that -- really Mike it's because

Energy been Systems big of a that's so it side. on part And the

John Franzreb

Okay.

competitive of a anything or not it's landscape issue So that?

David Shaffer

I'd price that's you, millions insignificant. chain across up. especially to And in related. it's rate other tell more of it's freight, piece, board then getting seeing, freight the timing changes related, and gone as because everything just say of is Systems would Energy pushing why the COVID we're things through. has recover on dollars noted, not increases we're It's big I I supply No.

Michael Schmidtlein

And or that we slightly which started a sellers things is agreement before markets at big have low-margin much different those pricing they in one up. And healthy or was that a of good-sized the book one of players a players, for of did NorthStar contracted to process of couple their term couple of -- with the did get business. pretty for business, engaged was that

ability take to business. the to which to increase the significant anticipate either in we volume we had so And price higher-margin dedicate or it a

to a able to a we see that going the out -- improvement a size being on because one on nice and side. NorthStar in that of pre-acquisition entity time based that just just agreement we're on in an see one lapse alone a good move of it's fairly So -- should

David Shaffer

contract would And in that Specialty X there's have one in been -- ES. and

get So underneath from to excellent those. We're starting out it's an point.

John Franzreb

but That segment. and shipments to shifting the the specifically down lot, just guess, your are actually then through backlog and And the over, motive strongly helps up data WITS Mike. roof, a to With on side, I it is at back Is it the take each going XXXX to catch you OE long is equilibrium? half Dave to going the be Or XXXX? be year? going up how to into this

David Shaffer

is different we data, provide you a The to usually much at judge. look data hard It's the which extraordinary. on order story. when WITS But tells shipments

OEMs. chain I at fact, shortages chains. course think because have that. year-to-date the of of they're truck very through actually working supply the throughout know They supply that In I the complicated down are shipments

And pressure. feedback so we're the is getting

asking about combustion recent to All more even on their on And in announcement some is are issues. putting us can the to ready forklift there and some to and be this of was us -- demand handle electric that engine it ramp they for then more expand going capabilities. OEMs the as production emissions on news forklifts trucks, some business internal pressure put maybe electric pressure

a these signals how is the their The -- supply just OEMs out. ironed are all get stuff very question chain it's it's quickly very backlog yes, positive. and So of strong, can

Michael Schmidtlein

made Dave, is the slightly their orders but declined. have some point that, trailing, truck on year-over-year as And high a data as of Yes. actually up XX% X-month that that

shipments shipments I'm actually it's their sorry, the have slightly declined. -- So

it's taking So shipments it's sales -- going time battery their up. to than And them to so. are linked more order to catch intake, their our obviously,

John Franzreb

Great. Right.

guess Okay. And question. X last I

you charging sense Just electrical have technology you And order much be quick a it make existing to technologies. quick on the vehicle? how is? Can in of give just context to a to fit commercial vital for fast fast be how of charging your

David Shaffer

you how I the car, -- the way of the charge me], depends of it a on battery, take on have But electric can really charge roughly, get well, just think all general, engineering charger type XX-kilowatt can probably -- charge -- at other in Porsche much Taycan can't the handle different but of to need it like cars like of rates, It's Yes. the cars state most extremely good [in of the it. simplifying an because cars board.

doing recharge, So battery. fully a charging What power. that recharge is it we're directly. is And into hours we're the to plugging just AC actually typically, what people takes battery doing are to charger literally

So it's charging. DC fast

to AC that enough see as at fuel remarks, XX around in juice going I their provide similar trying we're charger. you onboard to And batter any their But refueling can at starting minutes, car again, create XX in able the charge be charging experience again, people my vehicle added is station. fastest that get directly. to we're to said a or to goal We're range our handle. as can as So which, to rates, more much

it's a the in hours minutes very, what's energy So system -- also and But also lot these -- utility. electricity. that, but also with yes, handle. why It a It's really and hard. commercial as job. renewable pushing same to interested can so that's slaved estate being -- And a of most keenly pushing us the what's the real us a It's virtual systems the investment is create day about be all I they're they're for are exciting. has X this plant functionality amazing same that other cases. integration. turn going great John, investment, very helping customer said, into save that project It's power guys can to It's

Operator

Your next Brian of the question comes from Drab. line

Brian Drab

the second just one that us or from could was, $X of OpEx terms and think, $X what the million per in I the second of year fiscal about to we to of that you cost drag more little half in out list half NorthStar year? long a of in stood drag Can me And so the million, talk gave thing bit margins items that help margins. I quarter. translate you you $X.XX other to a rate. think seems in And basis, And mean also be a the And quarter just that $X.XX would that help third potentially million quarter, run higher to after-tax the on said, then X -- of bunch then $XX like listed that would that item. first relative that and to I half an or items revenue fourth

So -- that. and obviously, on then leverage get, operating you

-- of the to it comment -- year you in quarterly just half could want terms material or up And that just second I I'm run in of to that. get on rate. seems So the a step see clarify the further earnings in material like you

David Shaffer

Mike can get you dimensions. some better

think it's the it manufacturing OpEx, -- I wasn't variances.

million-plus we we're remark, to I we were TPPL million. right that the we to, that the factors is we model, So a quarter -- of said, at the $X.X had at model related I And under-loaded -- Day sitting about rate And my capacity Investor that TPPL billion now said And were And in but our we it's fourth to said in production And when behind our bought schedule from pretty we a 'XX, Day Investor purely. by we good time, for going are as our revenue. year ramp exit ramping. were what area. I’ve the fiscal put them. cost that's COVID, $XXX sales expansion. well run will all increase in feel and into in $XXX at

And we over is halfway of going with which help drag Board trying to we us the this is to, wanted well than we're other so more be. the thing where we're we're again, do, -- worked And to the demand last some expectations the model. the week has TPPL this exceeded meeting, for best on use we our to and got of accelerate pressure. CapEx actually permission alleviate to of Frankly, help we at case some

better I'm folks of from training, getting everything to the that about then productivity, day. we that that -- pace. stabilization, the And lousy then but again, And has scrap this revenue. really every really kind continue it's the being billion in of getting getting can frankly hired, being the And better, CapEx, on it's been factory, excited all the rates, with $X.X grow additional So

Mike, to you So more do color? want add

Michael Schmidtlein

going anticipate Brian, a would which question, with all XX% expect would $X.XX the to Yes. is enumerated to midpoint earlier. gave QX of To is we of -- be at that your I XX% level, for QX. improvements those EPS the I I embodiment of higher guidance

Brian Drab

you so -- that XX% you than -- XX% said? what to just just QX higher And QX. Is on said

Michael Schmidtlein

That's what just I said.

Brian Drab

in quarter similar. might in not that quarter a half, fourth And I kind -- to fashion second kind Is XQ of imagine be progressing up not from linear or so stepping the fair but necessarily linear XQ and of no? third

Michael Schmidtlein

QX. go you there's guess line than don't that's a then better would then board where I QX, it's HX too a is two a to is the but for on there that QX lines -- I line improves Well, not higher step-up which HX. QX, and say to have to for

David Shaffer

So a to lot comes down resins.

products a of of, out were there's polycarbonate, shortage blended best Some into is globally our which just because resins. our margin of and it's

some Mike you hearing We're up. know of -- summertime. the what to hesitant little when to think resin a I the it's don't really we because open is shape So tell in is is that availability going

be QX. say should QX, largely, than probably it be yes, you So captured would that better QX and but I than -- will QX better

Brian Drab

large in And had what was the maybe way issue constraints been like if just And revenue the if I'm quarter? how that sense constraints? much have hiring you for this quarter curious, size capacity, do there's then you in in any hiring how fourth to might have any no limited the of the your

David Shaffer

by been original have have $X.X should on already we now to been should We the billion plan. -- the according

million on the then is quarter put is probably probably, Mike variances you basis. quarters, been and impacted few for $XXX to $X a per been say million a the past $X So you manufacturing as can say, said, top-line And such, huge quarter huge light as a that let's number. million top-line that then and has the annually,

Michael Schmidtlein

you the going I'm where find, think they're provide can training sitting retain period But investment people people a the that, XX-day go sitting a of work level say, but hire home. was to I oftentimes to back return story, -- of starting getting to more the be at at to home. it's really I work on activity, And sometimes training, them well, might that a paid of than lot in do of light times I to past able

little is retention a the bit. So

David Shaffer

the better. of but that part expect rates, going things a down, confidence with to psychology too get to general Yes, we HR vaccine to it, settle that’s into starting and are -- -- are why more things confident that get We of there's don't it. be want people going to fully deep the with our

Brian Drab

Okay.

terms constraints Dave, billion to ready you're in capacity the really, saying, you by hiring expanding like people? though feel you're the limited you seeing So go, TPPL primarily of target, you're $X.X like the

David Shaffer

the issues think Mike? personnel-related. absolutely, of majority have been the I

Michael Schmidtlein

most Dave's our meet personnel related. items, But of -- spend some Board our of in meeting, expect so mostly earlier capital we but There are gating some authorized But that. to exit Directors that we that to could nearly -- recent so capacity. it Board which acceleration is the point, at it's of full spend,

Brian Drab

opportunity Alpha's you curious this Alpha sites. And where X that we it. small just antenna for revenue still And a cell And has any cell in see now. sites at started point? do really as still My enabled $X then hasn't billion are just small Got I'm Alpha? this opportunity sense terms for question Okay. is yet. last of it for

David Shaffer

Yes, I do.

on mid mid pretty I Alpha did think emphasis thought spectrum more cells we We've the busy acquisition. been would be been with by we small of They -- cell when small has on versus the spectrum couple put carriers. deprioritized big where we everyone's buildout.

issues So settle -- supply we're the chain need just We down. fine. need we to

X just On to gateway significant One start to products, of their the carriers install frankly, backbone. we yesterday, on radios got cell, and order for right some good our shots we MSO goal. our HFC for small products plays, on X is good one got the gateway first

call not them power. gives to also a the the traffic, way gateway but the So only backhaul provides

it excited it's been the I on calibrated. was stay And and going so Wendell little CEO other have we and with project a major of are think that partner. though, day. prior. side, bit So thought flip I regular sort yesterday was want is really And Mike, I the program. then calls the project there -- been small be again, you we have to we a millimeter has schedule is both our extremely their about cell And big add? Corning, they've anything excited. behind on unbelievable the to with even was spectrum where an wave Drew

Michael Schmidtlein

lot -- opportunity don't resiliency, that going of Utility pushed for remarks range Well would California Dave's really resiliency spectrum forget, grid and gets mentioned about network the Commission of -- if recently to it just a out came that up that, that the nicely fill some in we that. is the gap, Public also through which higher the and hole fill

David Shaffer

to mostly think Yes, but power help, will the that's I and related shutdown. wildfires that the

is a So of the critical standby sites. just -- business into It's the I this no, to many right bit comment ago, think watermarks, quarters asking of here going there's network CPUC for now. now. is type -- those this over longer for kind that and we're well periods $XX without it's and And a high one and gets made It's peaky. opportunity. million little It's I

get the chain out. some have we So that's why of ironed to stuff supply

everybody opportunity And to that on. narrative it's to and too without back been So this chains But think off alone, even XG just we're cycle unfortunately, all I trying off come expect come is guard. is we fast we've back low catching the -- supply the big.

Operator

Instructions]. [Operator

line the from of comes Your next question Green. Jacob

Jacob Green

asked, been already just so it quick. has I'll lot a So keep

the years? Just utilize How batteries of picture margin opportunity to it, an opportunity. And should call storage. kind work there may think for be fine motive, of side, bigger on your charging on but not would any capacity? of energy to, a ideal XX% just So for at your is motive that recycled say, new the next microgrid progression we side over the frame energy station few trying the about storage and the

David Shaffer

modules. a great mechanically, it it would It's they're question, same work would because the -- frankly. And

they've I where We've fantastic. a this and to those quickly. out, manufacturing if they of working nice systems of well focused to right contract $X this we're food the a what plan, rolling we lined thought. So on, but chain we we potential kind up, then to get has That's need it's partner, it's to picture want -- we're that's billion and not noted, fast out got as great install this And we've for partner system, XXX get And now. we according sent got system. and sites can. included identified something of, as go as is they The customer nice way on systems done go been XXX things supply of

the down new XXX So how a -- just these after a go. -- we first reps, dedicated depend just put team then to we XXX, we’re hiring lot's on first going the in group and going version. costed engineering a And to to

just initial wanted in what my we'll and just I'm something remarks, probably But expensive the customer. to than is more the So get out wildly X in selling everything I now is much end -- said prototype administration fast. committed. because talking we think And as is about Biden be I the

new incentive think about was this it talking I Mike, they're $XX,XXX? EV -- that

Michael Schmidtlein

$XX,XXX.

David Shaffer

think people $XX,XXX. a many on meaningful how have We very that, impact can choose incentive that electric.

So we think administration very committed. this that is

timing frankly, our here. similar the -- again, is forklift to, really like amazingly batteries. X we system So of it's the And

Operator

to additional There David this Mr. no closing back Shaffer remarks. for I'll it in turn are at questions time. queue

David Shaffer

and further on quarter a day, forward a progress on good August. good everyone, in thanks, first Well, our XXXX call today, updates call attending weekend. providing for look our and Have to our holiday we

Operator

this conference call. today's gentlemen, does Ladies and conclude

participation. may You you for now Thank disconnect. your

EnerSys (ENS) 27 May 212021 Q4 Earnings call transcript