Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 Fiscal Year 2024 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 Instructions] Please be advised that today’s conference is being recorded.

I would now like to turn the conference over to Lisa Hartman, Vice President of Investor Relations.

Lisa Hartman

everyone. morning, Good joining fiscal for to EnerSys’ discuss Thank results. us quarter XXXX first you today

On me Funk, call Chief President the with Chief Executive President Shaffer, and Officer and EnerSys’ and Officer. Andrea Financial EnerSys’ Vice today Executive are David

our available Last are and filed SEC, our website. quarter our evening first results with XX-Q we the published on which

Relations website. the referencing The slides call. also slides Presentations within We page this posted our that during we section the Investor available will on of be are

As will are statements to circumstances. we a this uncertainties on in forward-looking reminder, certain presenting be changes call subject that and

Our These actual differ statements these today. from reasons. only for made forward-looking of as statements results may are of a number materially

please SEC. For filed recent of a and factors list statements to results, with refer XX-Q forward-looking the future which our affect could

excludes addition, per also will concerning adjusted adjusted consolidated financial presenting cash and earnings non-GAAP share diluted adjusted items. our certain flow, we In free which performance, certain operating earnings measures, particularly be EBITDA,

differences dated For release metrics, X-K, press an our explanation of which includes company’s between the see our please and XX, Form XXXX. financial August non-GAAP GAAP the

I’ll call turn EnerSys’ to and Dave Now, Shaffer. over CEO, President the

David Shaffer

Thank turn Please to slide you, four. Lisa.

reflect while over end have to results our existing platform work quarter new first end-to-end provider, a an few solutions in EnerSys has transform offerings entering reach markets, performed expanding product-based technology exceptional Our from markets. team the our our taken business. the and we years last also Collectively, business to

fiscal highlights. I first few will our Andy will but provide provide details ‘XX performance outlook, QX and on a

IRC cost credits aided million XXX the further reported quarter my tax-free XXX quarter. a of our $XX in of results tax million reduction as comments strong in noted, operational sold the Our first $XX include were goods the credits. of to Unless by

X% Energy base automation on against for on global to slightly and decarbonization business, up mid-term our megatrends such was growth improvement, sales in X% particularly expansion, CAGR primarily our rural price year million comparison, driving strong electrification, a We $XXX build-outs, of remained as XG Systems. driven by prior mix Revenue bullish us. with broadband

at Fast an milestone sales Investor in am our systems our customer Storage the to addition, of additional Fast Storage recently & and new year or CAGR a revenue which included product first two our winning Charge being Infrastructure our we innovation In part update we for to related to you journey, called PO I ‘XX, & a hardware receiving bid Electric for X% inclusive through from pleased achieved initiative. major that XX% Charge Vehicle NEVI, systems. Day, of fiscal National XX out

prior seeing volume. power the EMEA demand, In center in comps offset orders and near by and we partially motive robust term, with year-on-year data some tough softness year reduction telecom are in a U.S. and

is healthy few they as This normalizing a budgets. which and are out patterns That of high said, and our order telecom Customer inventory pushed small has calendar the end from pre-COVID customers or installations continue times expansions, the absorb and than large are cell delaying backlog through network year. levels. to expect we growth higher levels CapEx two reducing our

versus our of over solutions gross value Adjusted in the margin quarter. customers our in is basis improvement quarter margin The exceptional this to XXX our gross points XX.X%. year evident improved to prior

business. lines XX zero significant highest up achieved gross of in basis margin quarters, IRA with even retaining our are margin XXX we we the all XX.X%, have of points and gross price adjusted across pass-through, as cost year-over-year margin was Excluding benefit, the

Our supported gross of by easing an margin also pressures. supply chain was

all EPS represent XX.X%, $XXX over of and which We record achieved operating record earnings of $X.XX, prior of adjusted operating adjusted increases million, significant adjusted year. earnings margin

returning to cash strong Our continue to capital with flexibility provide shareholders. sheet growth the healthy and balance operating us long-term and flow, earnings, investing accelerated for

such, a Board of approved $X.XXX our to quarterly per share. increase As our in XX% dividend Directors

we proud outlook. am this uncertain to we as megatrends optimistic environment. navigate long-term of Broad, confidence continue and remain give cautiously our our us results in I secular and

a have shots demonstrated we on lot to execute times. in and uncertain ability of have our goal We

In turn Please strategic of optimize where we June, hosted growth our our to and strategic our and slide outlook. plans, five. We introduced presented we Day, Investor drivers, long-term innovate, accelerate. framework

moment our at framework a take presented me Let Day. to this Investor recap

Innovation of EnerSys. focus has area at a key been

our across to constantly evolving lines continue forefront current to for and all market interfaces business, of modular efficient, product remain We intelligent Leveraging platforms of and our lines needs. technology we our at better are with be meet anticipated more the industry. technology to

Within Energy known Systems, our of we great we backup California did the developed customers meet work TPPL a Commission. of solution the mandates XX-hour modules is also as example are the Utilities help One creating customer-centered, tailored supplies, power end-to-end lithium-ion Public XRT We and solutions. system. power batteries, to our

density energy expansion. EOS, and We run optimize, Operating Program, which required frame. only with times we Excellence standards EnerSys to the industry drives Operational within deployment think to were When think the about ultimately company or scale System we the time our extend highest about meet margin

done team in products, delivering this but has tremendous area, high-quality never is the job The done. work a

solutions. to looking be focused We and demand, customer higher as to growing efficient to also expand we while cost margin are our costs, structure, our more not on meet reduce just flexible but

workflows Within improve capacity opportunity processes TPPL and are us an to year create and present million Missouri approximately these to deploying alone, In our efforts automated and save ‘XX. per facilities, year standardized additional reduce by our fiscal we $XX plants productivity waste.

solutions sustainable to and and our creation. And then quickly value growth for Accelerate. Accelerate, terms bringing long-term in its market them scaling innovative simplest means new,

the with game management our a & epitome solution of and strategy Fast is energy storage Storage Accelerate and for end-to-end capabilities Charge EnerSys. Our changer is

addresses am technology, in modular to phenomenal how bringing a smart critical I designed This this technology market. our and accomplishment. market developed growing truly in revolutionary AI-enabled years, lithium-based the that two team of core leverages need a this a platform create high-density, energy the proud ecosystem quickly to and under

our I Control later. further high-density, in our by our Storage such over The lithium of lines Charge will build lithium as batteries, qualifying as acceleration business. self-supply our discuss for enables as other to investments our for plan maintenance-free proprietary will Fast supporting plant, be & launch, conversions IRA critical a domestic in U.S.-produced well which

is innovate, clear value. we in our will and consistent, able strategy we operating years, Our EnerSys. business how come several and for last is it to and to has been maximize and have be which accelerate is not truly optimize to the new shareholder the time This

Our against Investor targets out at we record demonstrate long-term laid building momentum are we earnings the this quarter the Day.

right our QX these and through walk introduced but we ‘XX I six, I at tell fiscal demonstrates you of won't goals, strategy targets team ‘XX you and we our this am Investor see achieve place Day. year to If you turn have slide progress and the to each them, in that these will will momentum. in confident the I

Our resilient key balance business model our sheet and driving enablers are to flexible long-term success.

on milestones seven communicated. the a and targets represents Slide down we drill

provider growth and energy of solutions, across connectivity. the in storage growth energy demand a positioned megatrends, we transition, is benefit by opportunities tremendous see business. from energy including the to ideally driven security As leading EnerSys coming years

particularly in on-shoring, chain driving our motive are automation Supply electrification demand, power business. and

warehouse optimize solutions. our logistics intelligence operations help maintenance-free and and wireless proprietary with are their batteries We using customers to software-enabled charging

and to fast vehicles access growing will rapidly, The EV those is charging. market need

more AI be Digital are to areas, radios particularly to need grids Broadband extremely as networks reliant both supported technology in and Rural and expand, government Fund. programs power-hungry. electrical resilient. Opportunity rural such are and XG need Our by the

of infrastructure, the and in Data equipment. world's an power needed for energy the need evolving the essential communications density role support plays new are increasing for technologies to

EnerSys that is is on goes technology enabler every increasing day, a reliance as the we dramatically time on. critical of rely and

customers making and their usage efficient. and are power We optimize networks operations our their more helping

sustainable customer have coupled including core industry-leading We technologies with advantages, competitive relationships. deep

update targets focused provide on we our are and annual long-term achieving on progress. We will our an

eight. turn to slide Please

we against continued on long-term to strategic Starting share you. the which the am our pleased we few with spotlight targets, a Innovate, innovation As our to quarter, about I with to in executing make strides I'd significant quarter, like pillars roadmap. during developments think and

safely I'm our fault-managed Transport system, technology say power Distributed new meet the our runtime to the lithium nodes, we at customer ever-growing cell meet key we extended small first communication requirements production Fast began proud to our timelines DPX that Systems sites for power and XXX uses of which Power for readiness announced energy track XRT deployment first more are Storage deliver June, also customers. & to on to installing based in Charge

battery in quarter. entered of into our development of announced against closure technology, U.S. a this and In successful plant accelerated this the of during a lithium the part MOU battery we European the exploring Sylmar gigafactory great with progress with by non-binding the leader Verkor, business a we June, we we are as making initiative. strategy. our quarter, Also lithium in the optimized that We

cell allow our will both The selection the and for optimized secure us, about EnerSys supply create defense This independence while applications. this the designs critical new process to customers. ability factory EnerSys chain which non-domestic provide underway, particularly suppliers, excited scale our and is from we large cell site to for is are and flexibility will factory providing production with capacity

are this XXX Based us $XXX from capital government additional exploring we hours, facility, the on typically gigawatt funding important our high-density supports million. in of and which benefits X produced outlook, of The the IRC batteries. a for capacity we critical we range current targeting manufacturing domestically help requires investment are that fund receive need will

we stay to Xx range. fully we our funding leverage Xx our options, target As within evaluate to intend

structure, this X, highly enhancing neutrality published and data, another commitment long-term focused emissions value nine. operations Along milestone follows chain goals our chain sustainability. cost sustainability XXXX to gas year. our Scope turn greenhouse Scope week slide our of set Please Value remain our emissions This to which innovation earlier and is Scope on disclosures we our to X foster X roadmap disciplined our with we goals.

over I let me it Before close to Andy, with this. turn

on a been different years multi-year from have is journey. few a very EnerSys ago. We transformation just today

balance growth us our strong needed to the and achieve targets. profitable to allow make sheet investments growth earnings Our long-term

move brings and to drive team Our incredible discipline, forward. the strategy our commitment,

in are markets, expanding on enablers products on megatrends. with our critical We and accelerate order multiple executing that of end to focused impact global diverse are

opportunity our us is quarters, real from years capture. work and last hard the to have results. benefits the But ours investment three front our Over of in and the still past of been in is the materializing financial several

consistent dedication. to employees you globally and more our work than for XX,XXX Thank your hard

results now to detail. Andy. our greater you turn to outlook in take over Andy, will I through it and

Andrea Funk

Thanks, Dave. XX. Please turn to slide

Before QX to first XXXX, the discuss our which details the want for April I is year of ‘XX effective I change XXXX. reporting, results, X, as in of fiscal review our our

did we quarter reportable not allocate the production we on benefits fiscal of in separate fourth item, recall, credits ‘XX, recorded IRA tax may which our a to You segments. line from

We Charge which entitled operating a of are our in expanding reportable segments business. we the not Systems include New items to new allocated & consists results Energy our operating Ventures, Fast from to now of and have startup initiative our line Storage previously reported expenses segment

a non-capitalizable of we items report called basis item We Corporate listed These on exploration and related will our results. a be domestic on our also any lithium will plant. when line costs company-wide include to a three together managed Other

our Now, quarter first moving results. to

partially Our normalization decrease and a due $XXX slight an the discussed. X% which million. destocking to inventory primarily X% was was price volume by organic sales in that increase QX offset ‘XX Dave net in primarily improvement were year-over-year The customer mix, driven by

as IRA benefit benefited a sold. income. an we $XX from through of During dollars growth reduction net to margin results booked goods This cost million the our of quarter

with However, our I year-over-year performance. purposes $XX well. year-over-year million as for without speak insight benefit better our and comparability operating significant that benefit to will note results the saw IRA the it important is results into improvement to our and excluding

in We $XXX of profit million quarter sales XX.X% adjusted and a of record fiscal gross ‘XX. achieved first net of the

IRA basis benefit, million was impressive profit improvement of an gross reflecting of adjusted XX.X% points the over Excluding and $XXX year. XXX revenue, prior

quarterly higher mentioned, ‘XX very margin XX mix than margin offset the strong versus which million and driven by this in quarters, the of price was performance, impact Dave gross the costs $XXX highest by QX is underscored math. As of more

have the been over this for margin five significant and higher these price our made over product in accomplishments Adjusting time gross by with free years. pass-through margin four maintenance differentiated and QX stickiness our horizon, past and zero or ’XX, pre including content benefit would of mix, XX.X% possible costs solutions driven footprint less electronic our product sales, by a smaller factories the conversions IRA

operating adjusted million a Our $XXX were quarter. in earnings record the

margin the $XX the year-on-year. we Excluding adjusted million operating IRA of basis with up points versus operating $XX the adjusted earnings X.X% improving benefit, prior XXX achieved of year million, nearly

$XXX adjusted Our EBITDA a was record million.

million compared adjusted QX ‘XX. and to benefits a million XX.X% Excluding X.X% and revenue $XXX revenue the $XX EBITDA in fiscal of of our QX was IRA ‘XX

manufacturing inflation mix productivity a is as and in our an From increases. Operating factories demand perspective, from cost benefit telecom more System continued were plant. margins offset and as EnerSys well cost issues offsetting quarter operational EOS primarily than variances, the softness continue or improvements to under net by pricing, savings Missouri which our from related in some lesser extent in to to absorption in

there productivity, continue. still which year-over-year to work seen While is we in have we to do, expect improvements

Dave we going transfers. completed production save per This will facility and successfully of estimated the year forward. as in our June addition, Sylmar million In mentioned, $X an closure manufacturing

to slide turn XX. Please

the $X.XX in XX% was excluding IRA per Our over increase record EPS year’s quarter. impressive $X.XX an was EPS adjusted share, prior EPS. adjusted benefit of per IRA $X.XX, benefits Adjusted the share $X.XX including

adjusted from actions In which first on quarter. benefited tax year-on-year price IRA favorable impact of adjusted before increases to mix an cost was in Similar benefits. XX.X% EPS the quarter margins, rate our the the outpaced basis

right consolidated sales net including AOE of and page segment, half totals. our see of the you On the detail can the by

our and providing now demand business. segments, then by our performance provide with each and of me on of the performance order line each for details patterns starting year-on-year Let customer

inventory XX, destock and longer we slide supply buffers. balances large requirements overall at as orders Turning their loosen, as looking chains to normalizing order Dave for patterns inventory strategic are time backlog, customer mentioned, and reducing lead seeing their customers

from peak year Backlog levels. prior declined

However, remains supply the temporary a ‘XX, healthy significant details the began to drivers pre-COVID still levels. headwinds. our quarter into In to is visibility behind Xx chain fiscal minimal in backlog provide we backlog with backlog in cancellations the and QX very presenting related increase on basis

chains to we supply backlog forward. are this not slide intend present that normalizing, is and Now settling going do

pre-COVID of a material backlog in a moderately on patterns, change we which gradually stated, customer our order rate higher customer should normalize levels. approximately quarter have previously bookings, sales. backlog, expect to than of toward As not run one reducing is impact The our

Please turn was with were the our customers and several by Systems which This $XXX large prior softness to mix by center to Energy aggregate, capital quarter, Americas, first revenue in up X% versus in driven In XX. the battery million. quarter. in In higher particularly over were record out primarily year slide increase grew improvements first volumes Energy Systems XX% volumes and telecom data pushing sales, prior pressured year EMEA expenditures. U.S. price

positive highlighted Energy fourth $XX operating over Systems result year. hold strong from and X% by than XXX of prior year, earnings mix, adjusted improvement an impressive price the more first margin of improved quarter. points quarter operating a doubled prior recapture for results million of Adjusted basis were cost taking margins as consecutive

had the that Systems Energy pleased reversed anticipated. as lag are We recapture in we has

progress this closing the should towards make digit We more in gradual in recapture double and expect to what margins in normalized the our low segments, business business should other continue has be this trend range. cost we to continue as gap lagged the

additional several from when telecom quarters, volumes, savings over and CapEx U.S. particularly next benefit mix will cost We resumes. improvements the

XX. slide to turn Please

Power of on with we Investor Motive conversion Turning proprietary at projects offset first quoting year with revenue maintenance-free to strong to declined partly a goals from million, track we are one-third the decline saw set price that normalize am quarter I Power, comp. across to our the all maintenance-free very than X% and we pleased new prior Motive $XXX by prior was year mix. report trajectory offerings. geographies, more volumes as tough The extremely against is in Day,

as of strong driven operating earnings prior year, reported million, the positive recapture. points margins of basis ongoing improved TPPL XXX strong in cost $XX which was year. over improved which improvements performance adjusted XX% prior Americas, mix over as operating margin adjusted and This XX.X%, Motive Power significant price by well the

to slide turn Please XX.

million, year plants. driven limited Specialty our and in over out constraints Turning price to to continued only Missouri market prior volume our transportation benefits $XXX first from X% grew revenue the of quarter, TPPL our segment, by capacity in by U.S. mix, strong specialty

prior costs $XX Missouri absorbing earnings from basis plant closure. operating and plants our million Adjusted of XX% over X.X% improved XX and year, prior of Sylmar of our prior inefficiencies operating adjusted operating points despite improved over manufacturing year, margin to elevated

slide to turn Please XX.

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

As the of $XXX had and July cash X, we of XXXX, million cash on sheet. balance equivalents

fourth million is $XX quarter the fiscal Our reduction debt a of position million of ‘XX. from approximately $XXX net of

target asset forward. our Our provide agreement ratio the end to ratio an EBITDA, mitigate our from of leverage fourth of rates of credit was and of program, to going improvement dry Xx sheet ‘XX, leverage our EBITDA. back quarter below X.Xx interest higher Xx, range X.Xx powder us was and Adding fiscal enabling the off-balance X.Xx securitization

million cash of $XX million. In the strong generated quarter, we and flow $XX flow of free cash

Our capital expenditures million. $XX were

Please turn to slide XX.

remains strategy to the leverage allocation M&A, disciplined Xx focused of complemented lower organic to a growth, dividends and in and Xx buybacks. maintaining around capital capital at shareholders range, returning through target strategic end Our by ratio net EBITDA investing and adjusted share our

During first in dividends paid we not and any $X the did repurchase quarter, shares. million

XX. turn slide Please to

recently approved $X.XXX Dave per quarterly As per dividend share share. our in Board from to an of our $X.XXX increase noted, Directors

dividend time. our capital of we benefits part strategy, As with competitive IRA disciplined that are earnings, excluding allocation to committed grows a over

goal continue room meet remain delivering capital ample the will of returns. long-term and to our allocate best needs, on to our have the to balance business sheet flexible We with we shareholder

slide to turn Please XX.

to and a macro to environment time. some for dynamic in continue to operate anticipate persist expect headwinds We

telecom order in working have patterns, on as close and with customers with our changes particularly are a budgets U.S. the CapEx We eye market any tightened. keeping

excellent improvement megatrends by versus down are prospects, driven are we by encouraged key which our enablers. for year, While our impressive prior and volume products demand was margin

Our inclusive guidance quarter fiscal to $X.XX range share, adjusted second share per IRA from earnings of per $X.XX $X.XX is benefits. XXXX $X.XX to diluted

an credit, could qualify the of to quantity XXX approximately produced IRA from anticipate XXX the represents of year. section that issued has XXX, gross the XX% I points this increase guidance would or additional basis not IRA materially We yet XX%, prior everyone the related Excluding batteries to increase the IRS that realizing XX% credit. decrease to our this including margins for like to over benefit. remind clarification U.S. which of

full year approximately for from CapEx lines and unchanged U.S. the increase lithium continued in TPPL the investments Our we XXXX investments produced batteries capacity, products, of qualifying may including production new and million, deploy expectation reflecting to fiscal $XXX at as is over credits. expansion capacity additional increase IRA of our time our

like markets and global we supported end key large highlight to would I are again megatrends. growing that in participants by

generate continue have allocation priorities. cash to clear flow We healthy and capital

Our team and strategic long-term is focused achieve on energized our to our executing initiatives goals.

over back Dave. that, with to will it I And turn

David Shaffer

turn slide Please XX. to

we want a choice As to close of I differentiated summarize for makes Enersys long-term investment today, what growth. profitable

differentiated global for storage a are full a with suite provide leader in technology. solutions of energy end markets. highly diverse technologies We energy We

megatrends strategically large are growing with markets. in and aligned We

a resilient which model, margin business expansion. cash We and profitable have for flow is growth, well generation, positioned strong

are continuous strong, team, capital balance value all for a an energized allocation accelerated stakeholders. and growth. And we priorities flexible for clear led have We earnings execution on focused creation with by sheet

questions. that, let's up With it Operator. open for

Operator

Blair. from [Operator with first Instructions] William you. Brian comes question Our Thank Drab

may proceed. You

Brian Drab

wanted taking my just for Thanks morning. I first... Good question. to Hi.

David Shaffer

Brian. Hi

Andrea Funk

Hi Brian.

Brian Drab

Yes, good morning.

guidance in to in of fair Just to produced the it's you segments? the the the also it down quarter. in bit be second little quarter fiscal terms general of quarter, across the you're quarter, a because first gross more in you, second guidance, slightly – is is it also volumes that that in guess like same margin looks the infer lighter like what for looks I EPS the regarding And from and is the going it

if bit margin, just would a volume could So you and little be the of elaborate on that terms great. guidance in

Andrea Funk

morning. Good Andy. is This Brian. Sure,

gives about our actually We holidays our up despite quarter. slightly that bit neutral As little us a QX, drag. of even will European just over is quarter second you usually lightest probably typically be think know, the maybe volumes

was it with a that – had than we had expected, is we're pre-COVID and really lighter order we books QX, little because line levels. Just in seeing

So softer than we a think QX normalized. little was

a can mix, our really price then in see And improvement had you margin as exceptional QX. we by

forecast And at a cautious same that so, to we're the level. little

little margin So erosion. a we and driving back slight pulled bit, what's that's the

David Shaffer

don't holidays, from of QX of summer is a part have our that so the service billable tend pressure QX. many get bit of – we A little always be costs Brian, margin sequential groups. too our in service to costs, fixed of because lot And we group hours to as our and

bit the I the So from say as well, piece a little groups. QX. we numbers service issue biggest up would always is that's rolled probably when The in the lighter

Brian Drab

been it the but guess primarily also you can to the inventory you I a Great. that course seeing Okay. guess, expect also fork said you are of volatility, but could continue I truck timing, you long there's and industry, drawdowns in is – that? Thanks. then, that – I those persists. if of the And And still that really to elaborate you timing industries? you How drawdowns you on in lot persist, that in or think on know how of elaborate motive other because just are

David Shaffer

most overall Is the ports for similar supply back and improvement customers, to obvious. trusting to have the Yes. our getting would in are largely things the it's chain back their suspect opened I say for are people us. are situation. that chains, motive, seeing normal and up, I supply they

So, of are inventory. to I us puts their pressure holding higher rates that levels more interest getting indeed, the all would people normal of Obviously, say on back inventory.

things normal there's quickly just as to to natural to So a tendency want get as back possible.

but so that to to those that, had tend ES, that very in also book order big we a of some orders the project, remember with there's in lumpy say would you I group, ES our In business. be have CPUC

wins, was it's to a more, as chains you a are would as I it combination. so opposed trust some addition or the said, ES, big starting as supply to. in say bit more in So people much project to about But just

to in side. them And OEM is truck say We getting to along I the chain OEM more to defense that X market supply ES. back it's on similar market, the terms segment, in and similar big way. Class had the is fork more again, side aerospace get the the would some We the And project normalcy. the in always specialty wins lumpy business of

So, of areas. but signals it's noted, a mixed bag issues, Andy demand outside from a overall key the certainly of few as

Andy got certainly to of this would ready and part early touched and on Europe building out is spectrum area – of comes and phase our are our to I eye terms adapt obviously, spectrum down an tranche need spectrum. small seems on kind next we first online, certainly be or that investment we've phases then getting they signaling us slowing business of accordingly. the the telecom, that, XG cell in of the to ready they're focus. is for as for of this And And get additional say

just, pretty not Andy? getting this customer. XG a the had normalcy of be in – the So signaled, last I we It's telcos. much them for we customers in this of all outside ready in next this one quarter layer most we're would those way but the I of But a we no it's investment. a it's this phase It's But – patterns. to seeing just say order with – is mindset of it just areas, done of had and is, it's that seem all there are think early per is se. of slowdown the us telling are not

Andrea Funk

about Data Power business our years Motive things in other up Motive I'd I simply was two year-on-year, think some year, bright look ago. centers history And Power, are Yes, versus you XX% spots. of two at Lead. add, last XX% Pure XX%

a very order margin. of to book, Thin which accretive is Lead, is it third Our Pure Plate obviously

So with a we're just of normalization. lot some great activity seeing

Brian Drab

Great.

Just one quick follow-up.

centers, or data you're lithium the that mix? product primarily shipping or is On TPPL the there

David Shaffer

Could you repeat that again?

Brian Drab

demand is data region? was mentioned such your data Oh, I of in most wondering, centers. centers products for in just the strong you in Which the growth

David Shaffer

TPPL. TPPL.

Brian Drab

Yes later. okay. more much. you follow up Thank very I'll

David Shaffer

Okay.

Operator

Thank you. One questions. for moment

Noah Kaye Our next question comes Oppenheimer. from with

proceed. may You

Noah Kaye

a follow-up ES. Maybe you. Thank on question

but CPUC make think the the project gave dynamics. want I us color on you just we telecom to good understand dynamics, sure

that a So trying because to Is looking continuing your source of getting that's backlog sort in that much pretty here, some we're quarter? to sequentially. more And dynamic Energy from has from kind in was us what of you're it, flat steady. help understand ramp growth that But sounds like of telecom expectations, CPUC, the just well. at, Systems if It the the of understand backlog out. push in just kept orders, dynamics strength this as around phase

David Shaffer

the XX% something say a And steady would don't I quarters. CPUC Yes, have the project. five I largely exact, been Noah, code. we're last zip has in that source is that of or four over loading that project that complete, where at through

still Andy exactly, for quarter, bill have I in to last know do above the that X.X. this orders ES? was don't the quarter new of terms book In you

Andrea Funk

X.X. was Yes, it around

David Shaffer

X.X.

been getting some able And a orders bit. So we backlog. were of we're areas. still to unleashing shift additional quite We've in other that

investments – say to expect and would improve. and broadband I RDOF we where yes, areas other the there's then project So the

Andrea Funk

Yes, XXX our we've of around we XXX, still it. of CPUC have shipped around – probably

David Shaffer

Okay.

Noah Kaye

I mean, see I you that? bill guess book to is, one quarters? what It's to do to the would And logical that or say. trending fall tough one subsequent above drive in

Andrea Funk

we'll last mentioned below quarter, Yes, be is slightly I probably it's the we good. as in which think – one,

some able choppiness a more of Power. been change we're ES sign in shipments customer a with used really to there's look is but lot and now of our project of to book large we some to I order OEMs. and some ship some we supply of chains do the What be, example, in forklift good think had electronics, are to what We the orders, of normalize. program a Motive it's these start patterns. for starting getting that lot

have have bit. so as long a to, get still we as to quite They little lead book and much don't ship unclogged of used the starting it's times, we but

line coverage in to over expect why X.Xx what we closer at about that's expect we backlog be when normalized the one. Right we we're that'll look a off with our at now, So pre-COVID start leveling we backlog. be, much to little to levels, and quarterly shipments still commented, pretty

Noah Kaye

we And implications looking the able impacts, you've starting in you're benefited ship, see of price this for but faster. what and would mix volume quarter, come to just margin backlog I the had it's in versus go? margins where at what been ES backlog, that both understand and converting can Obviously, can which right, some down, that assume mean you've Motive means to

Andrea Funk

job bit has capturing about think stats, We fantastic Yes, re-priced we done we talked we're firm. now. We mix a the come orders backlog, little right I have team start also. to I – some I on price. a of our getting that little bit to mean with will do backlog. richer have down holding and costs in a expect do the of pricing but It's

see in Noah, got change. this the things backlog just snake to to we backlog. going the It's pricing positive healthy egg don't side are normalization, and and and a we So big through think to as gradual we've and come me unwind, have is return the I going this to that's mix

impact material margins. I that having on a don't So see as

Noah Kaye

Okay, helpful.

please. whether Can mentioned you bit shipments, more with You Charging. yet? you're firm in timing an expected on more Just update, DC a little bit of us track gotten of a just production, earlier, detail that little on Fast give you've orders

David Shaffer

the systems prepared XX Yes. gotten in We we've comments, noted now.

but is finalizing coming a the still up we us. for the little of bit so the in the air and exciting conditions and will shipping start really terms And the orders, quarters. forth we're in as that's timing So

launch original advanced as noted opportunities So not is were opportunity. customer, still long-term purchasing prior, we've which suspect target some we've These we imminent our had some, done as an fairly we preparation. in done two

So the marks. is all the of program achieving

a long-term really it's So our and we've the we more testament and what excited laid to strategy out be about progress. couldn't

So to we come, to but there will expect as grow more to just time XX be additional continue progresses. that systems, and updates

Andrea Funk

a of new there really this worth don't into impact business Yes. Energy that's It's why Noah, material in starting really financial become of it's itself. we pull we be exciting. expect a that now I It's think fiscal And and in out itself. while materializing this noting to Systems. a segment of it's and will to year, decided

Noah Kaye

Very helpful. Thank you.

Andrea Funk

Great.

Operator

you. Instructions]. Thank [Operator

of Our Lewis question comes from Greg next BTIG.

You may proceed.

Greg Lewis

around of questions. Is benefit. and and to that you two the kind morning, my if want you for all Andy, is mentioned continues last XX% – around we're IRA. with you it's surprised benefits for still from subject the number you, of that the is us the one number thank quarter next still you've years? thanks Charging, melt over be percent realizing giving been Fast and given a smaller to percentage I the the portfolio thank would portfolio taking of just gaining to say good color IRA Yes, higher that or that that to the that the

Andrea Funk

Yes, you morning, thank and Greg. good

what U.S. of batteries in time, mentioned last produced calculation. the XX% about we we our qualify As have in currently

clarified. We still clarification chance good there's could think depending it upside how potential are there material be waiting for a gets on or downside, and we

calculations. been intentionally in conservative our We have

impact strategy increasing is, could the produced Dave's sales that all of Greg One things domestic with in amount two the of our completely of batteries, it's there's which of forward. IRA our along high-density batteries. been capacity benefit line So going

focus make increase we changed is the done So to IRA has and intend to at what domestic looking production. do sure our we're that capacity

clarification that out see upside second on could how there's We clarification from But the also as what from expand. we than IRS more And actually over depending it get depends downside. then time. the on the comes clarification obviously comes IRS,

David Shaffer

your your question. And point, besides the clarifications, Greg, to

for benefit our a watt our this and tendency portfolios rebalance towards all reshape threshold. NPIs there's product to factories XXX to our and obviously think and us hours liter per of I and natural want

number So not time, whether I of to independent related we increase that think the IRS. over or tendency for change is to natural the

answer yes, So to question think your the I is yes.

Greg Lewis

for. And excellent. just in then is Wall the a sometimes Street Okay, time real can in versus world disconnect always what realizing happen between there's what looking

of battery to As you you its domestic about the think U.S. lithium continue partners. any production, kind days, look realizing as at early

we actually something we get mid like we clarity around like i.e., that this on that to a get could before think look is a go-forward more could something going given we we're some what heavy an the until later update like. just have wait where lifting year that that is start Realistically, to what of ‘XX that on could understand look to it’s is when to probably involved, do something or potentially going basis all

David Shaffer

be every to sure on I'm around capital. as least keep our within relate looking We've updates, liquidity, sites made different frankly, they country. fairly enough current progress our terms this our updates and able exceptional progress invested at optimistic funding us to available quarter. we're expectations to and team depend making on we the going in to you give that And far return material so at out we as have progress of noted our will building

I'm optimistic. So very

at, still I we think the volumes their areas of to just of as But the amazing. – recently of wants initiatives. a some it's and battery showed it's government to government in significant size a this as where it's the error a in this EV electric but I for government X is a presentation these there's look investment bucket staggering their of of us and terms gigawatt a it growth projects. so vehicle rounding the in projected in to is, that amount was the usage, drop grow much factory, about in the what's as hours especially the bigger challenge. area compared in

key of investigation. for and be and so of is all And sourcing us for critical able government which projects chain ability for domestic the one control, is supply the the the to drivers to have design these this

in a be up forward able a push there's need, we need that the to funding quarters. and clear optimistic this line fairly there's to need. should recognizes the I'm The So government coming this

Greg Lewis

out of any want where to realizing a being and small did as of there? very the piece area around very more color some like prepared Motive, softness. I one an Asia, small your in for remarks you I Okay, bit on little It touch in great, Motive. just a and then seemed the called more me. Q&A obviously business, guess kind Europe piece it's of seeing you're

at And the slowing level. realizing should outlook around has such see and U.S., the same how we a normalized I data at kind in quarters? Motive no kind as then it thing and kind as seems next like everyone's Just of for type been maybe the of it it's of slowing, thoughts where imagine the the there Any playing we few – really we a bottoming out, some could about US? over but like looking look thinking in be as you maybe Motive here there's

David Shaffer

bright Well, spot. a Asia on Asia, was

the U.S. product what's improving to have as of specifically. is maintenance the margin with Motive and production from remain overall happening We and opportunities in new very our portfolio. actually relates Asia abroad, towards the So U.S., repatriation about products, the levels it push certain higher optimistic somewhat the the in free we market and

definitely forecast And view on a as what That levels I when meetings teams it is of is like trajectories the in you we sort it's strikes levels, look me way slowing, long-term said assess the the normalization asked in going and there as rates Motive. activity a and to order that pre-COVID and normalization. all forward. I And present – me to the that's I've shipping

to orders. a dynamic relates as So been it it's period, very especially

When been trucks, the of shipments actually for time. at fairly stable some they've you look

to near order new the the shipments surge of Nowhere trucks activity. compared as in

things normal very optimistic this and just to it's business. So back we're about be seem to getting

Greg Lewis

Super helpful. for color. day. a the Thanks great Have

Andrea Funk

Thanks Greg.

You too.

Operator

closing David turn Thank to you. it Shaffer back remarks. for any I'd now like to

David Shaffer

for joining next quarter. today's updating you for your Have EnerSys. I We look interest call want in you good day. forward a again to everyone and to thank thank

Operator

This call. Thank today's participating. for Thank concludes conference you you.

You disconnect. may now

EnerSys (ENS) 10 Aug 232024 Q1 Earnings call transcript