ENS - Earnings call transcript Q4 2024

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Operator

Good day, and thank you for standing by. Welcome to the Fourth Quarter 2024 EnerSys Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded.I would now like to turn the conference over to your speaker today, Lisa Hartman. Please go ahead.

Lisa Hartman

Good morning, everyone. us fiscal discuss XXXX joining and fourth for year full results. you today EnerSys' to quarter Thank

On the Funk, which the call we XXXX EnerSys' website. President President results, with our Chief are published me today Chief and our and Officer; available are our Executive and fourth on and fiscal Officer.Last filed SEC, Andrea Financial EnerSys' quarter Vice and Executive evening, David year Shaffer, with XX-K

slides are also of during changes The that We and we in uncertainties slides this within forward-looking page call will that our presenting subject on statements reminder, section on referring be available circumstances. the posted we a will Relations Presentations be to are this the call. Investor website.As

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

of For statements earnings particularly XX-K we cash our and adjusted financial certain which future our could items. flow, performance, with non-GAAP please factors adjusted will the share affect earnings and current consolidated refer diluted excludes operating SEC.In our addition, certain adjusted which to presenting filed a results, EBITDA, per free list be concerning forward-looking measures,

CEO, of our Shaffer. press XX, non-GAAP GAAP between differences metrics, please Dave turn the includes financial I'll XXXX.Now EnerSys' see For the and release to explanation company's an President which the X-K, May Form and our dated over call

David Shaffer

of delivered million of range, with a quarter high improvement the some fourth business maintaining to in earnings of and pricing to marked We XXXX at our environment. with exciting adjusted Lisa, you, spending. finish generated adjusted benefits.Fiscal our portfolio diversification offset telco to long-term and turn by guidance versus the results a expectations, end IRA as prior our gross for was and towards share to softness the Thank earnings increased our strong fourth margin solid quarter. line in continued the goals, good the of a EnerSys navigate quarter morning. was fiscal broadband X. year in per strategic our helping generating developments operating revenue markets, end year of actions Slide several $XXX challenging year top on the successfully decisive the of through Adjusted $X.XX of with balanced took we growth Please

flex billion, the was For adjusted control, cycles, earnings new full what for and price adjusted automation even year-over-year, expanded through on and our mix through improvements, cost remain benefits.We driving per increased year, flexibility, productivity of margin, share revenue we and adjusted while improving X% $X.X structure our gross focused but can down the optimizing earnings delivering impact customers. IRA to our solutions high-tech before operating

in end are markets We seeing our demand exception with networks. communications of healthy the

thin all a meet grid, to U.S. the very that be uninterruptible be in sequentially will in electrical we overall in telco a spending total above are some leveraging center, in recognized research in have capacity signals order to return, proprietary we this need few outlook. incumbent structure the some drivers in has electrical batteries, plate investments years. results. than as actions investments.Realizing and demand presence data generation solid increased Energy about in on cost operating on improvement of wireless, in demand the up actively a EnerSys' X by $X centers, benefit leader meeting highlights EnerSys focused stages a a These are electrification. large of In we see will adjusted from and now backup access of center EnerSys AI-based shows to AI-fueled and the renewables demand margin know cycles, overall in providers. our or business I customers consumers be doubling improve data markets.Looking our position stand commanding there encouraging market customer up 'XX as X.Andy both infrastructure mile CapEx share rates, and systems needs our to UPS. to of have many hyperscale growth, solutions.There provide improved the of cases in of fully plenty power customers, pure are details data company industry distribution, cost behind our lead we give not first We're our the data next Although our of ubiquitous with to fiscal that copper last and will growth of coax, at our center Systems, a XX% to shows the earnings global We're these heart the generation alone, and center growth proprietary seen consumer largest business. powering the our performance battery Industry Energy enjoy where will fourth our But adjusting the year-over-year including solutions technology with delivering trillion book-to-bill reasons of to such, has on the revenue, will vehicle content analysis quarter by changes will result Systems were total accelerating. of and that communication which to broadband some every data share of seen power fiber will the our access, more X% From us we cyclicality more down resilient that anticipated. this be and delivery. rising data faster assist be delivered business profile market service of making excited this

for to standard interest as Indeed, robust our deliver be see lines. to to DPX growth Systems utility its ability our quite continue realize multiple in for revenue value optimistic conversions. above ability to increasing feed nodes our As we we're Power, we Energy business.In shareholder allow about in in through small-cell increasing future maintenance-free with Motive an single came existing plan, densification our telephone a pair example, delivered, twisted platform over

remains performance models.Although and year. larger record shipment achieved Our recovery broader The we for returned trends, lead year.In lower some the and solutions Missouri marked have rates defense still of recent fluctuations quarter of a investments in Missouri our of constraints anticipate status but demand move see rates freight in continue total initial challenges, driven business, costs. the and systems while in CAGR maintenance-free capacity price Aerospace also particular, large has North rates. in pre-pandemic optimistic ventures record as slight summer the increased surpassed, adjusted industry we XT across at as orders, showing Specialty, in chain to, our or material the Europe, XX% Motive at storage some of of and improving, Consequently, saw Despite they truck American storage in fiscal market sales Order XX% the half earnings out shipment XXXX Power supply of with towards In trends a our factories charge beyond. operating are delivering We're all positive and with and products post-pandemic about a year. another times to new the performance contract in wind by focused market enhanced healthy full our software transportation we dealing progressing some substantial growth regions. for the completion on increase. the line capabilities. these our order X improvement fast a remains for QX demand robust, improving with in we a our fiscal and on orders record is batteries remains quarter strong normal affect order than popular OEMs. a are production into longer handling backlog second by track throughout our energy and filling flexibility late in are for experienced aftermarket strong new with extremely

line are we momentum.Please to is very is business gaining pipeline sales X. Slide of new The strategic Our our growing on see consistently priorities. team this to to executing turn excited deliver and

Motive charger, fourth advanced of as which In some products, efficiency. updates, starting we're air energy such share high offers with our advancing features me management highlights Let quarter, development and Innovate. next-gen from energy our the our over Power

look technology streamline SBS X our Data more and products utility in normal this improvements Systems, Electrical to Product services of $XX actions managing awarded margins when I'm of in the TPPL Review be cost are refocusing and customers for industrials, Excellence organization of already and currently footprint centers, and at underway, markets are increased These was were commercialization Missouri annualized particularly and data Systems' sustainable improvement expected cost life manning, 'XX. in design We spending Center Springfield are flooded business. growth and our to with We've customers productivity optimizing 'XX, to high-energy which identified in million longest we're serve in will in mindset TPPL for demonstration factory since driven Awards. to on technological focusing increased and plants applications, of week, make initiatives of through elevated advancement.Last realized much and forward PowerSafe positioned Storage the capitalize our in business efficiency the We're With Systems' network savings over The February, reduced restructuring to Energy million Energy operations improvements across the our well result -- grid with the Review that in features cumulative discipline our efficient opportunities between see flexibility XXXX XL to our phase also recognized ahead We've proud realized which and of previously hard for opportunities efficiencies resume begun installed an that organization relative approximately emissions communication the stable the loading transformational scope SKUs. quarter. the and X patterns.Our by shared our on on focus our to continue year Energy customers. year better Energy to Year, hydrogen in and density noticeable manufacturing fiscal Energy $XX a batteries.We Systems. optimized fiscal our maintaining the and XV

we realize profitability loaded.Looking half ahead, and fiscal second X cost flexibility for in will for saw year-over-year data center we year battery year XX% are versus track 'XX. and tooling customers enabling we solutions, remain -- increased trends the able only be of up accelerating. factories unlock the to specialty increased data when line traction electronics previously products 'XX centers However, were additional XX% all AI power production upgrades substantial demand and growth to backup Americas and improvements fully on mentioned.Sales for capacity and in to Missouri in absorption, deriving as up including fiscal with generative

per implemented be million as locations. customers won will of saving their top this Motive our pilot these on our tons this current award and new enable to $XXX the expect cell and offering in million. us Power, enabling continue lithium to high-growth metric customers, the XXX which for exploring by prove X,XXX state to development carbon and sites ability a large are initiatives our participation footprint trajectory market.In We across solutions solutions Carolina, leveraged selecting expand funding our from $X demonstrated South securing transitioning while through both of this to batteries, TPPL TPPL to our approximately EnSite $XX gigafactory, analytics flooded we advance reduce over million, customer's data between proprietary sustainability We lead year.We annual and opportunities and ion local NexSys our Greenville, which national retail to our accelerate will to continue on totaling acid cost

land country environmental enable testing suppliers, purchasing progressed including have an of Defense and the a commencing supply domestic compliant site, phase Greenville, chain. and of from of on Department and We to reliable allied in project, evaluation material readiness the this

be XXXX.Please Department additional announced Energy We the for X. expected have Slide in of turn of to with funding August to obliged to awards

product strengthen XXXX advancing our year product development targets. technology in presence offerings quarter, acquisition our On will of our agreement road in defense which to to progress of and our while fiscal our accelerate pleased broaden topic towards capabilities. end subsequent acquire lithium to revenue the will applications, critical and our expanding profitability, the we were our lithium product EnerSys' Bren-Tronics, This map, growing announce the offerings, expand

strategic sustainability detailed seamless our day closing, for planning, to forward integration ensure X.X% progress our report, welcoming emphasizes and integration annual This post EnerSys by which is sustainability. we targets.Our with reduction X. since of near a first emissions to end since updated absolute XX% 'XX and on furthermore which in quarter, objectives, focused Slide products calendar our overall subject accomplishments highly team X Scope our XXXX year intensity at XXXX. energy We the our look Bren-Tronics' process reducing include way are is their regulatory which reduction published help into sustainability own an approval.Please our from we XX% to year X which the our highlights working on that fiscal towards meet calendar year sustainability 'XX, in our will the turn and Aligned close. our marking customers week, customers the our focus anticipated We framework, remain to calendar

We for and year also emissions calendar calendar disclosed X 'XX. year Scope our 'XX

no across from growing transformation all storage accomplished world-class maintenance-free We domestic progress for in into of several recognition am path come our share we significant and industry.In from lead To focused restructuring business giving making the also launching I'm lithium to we've excited specialty acid initiatives on much and efficiency way This own a 'XX high-tech plant. proud commitment I social the cheap, add accomplishments, portfolio, a closing, team's Systems, earned proud Energy and awards a our energy to our our are in underscoring the have environmental of new our innovation was system, fiscal accomplishments be to is within with undertaking history agreeing of Motive as our reliable. and case. manufacturing line longer to constructing plentiful bold in long Bren-Tronics about battery organization. a a energy sustainability, in us past, energy our fiscal In XXXX beyond. company.These year battery and the Power, year in

electrification power everything. society, intelligent So and climate Energy and distribution.We today systems energy future. by global concern, driven global transition coupled grid and can energy reliable energy decarbonization manage will will batteries new solving of management the of we impacted no support energy. longer policies. renewable and the This problems technologies, revolutionary to as by the are that storage the delivering be energy ongoing require enable rethink the a scarcity with best-in-class are an infrastructure The we way further must consumption the

outlook targets Indeed, over FY have the results We come. turn in at to will now I and expertise reflected we future demonstrate confident transformation, the you on investments to our what's our relationships the Andy in made all to and am of have the potential in customer out through Day engineering to we laid capitalize June. will 'XX it is greater take Andy? last bright.I our Investor detail. our

Andrea Funk

well reduction We in cost in as due sold benefits year-on-year, adjusted $X points IRA inflationary pressures. as $XX a mix from benefits including in a to gross improved expectations, our as profit sales year, over Thanks, achieved of margin headwind. $XXX Dave. but of $XXX Overall, prior million temporary telecom Please million, turn spending line X.X% price basis IRA quarter. up of adjusted quarter retention. Fourth benefiting we to million well decrease to a from volume, primarily pauses goods were broadband down the in Slide reduction net X. with booked prior XX% maintained million to XXX as due driven while QX FX price of year by gross as a solid X.X% to

margin impact benefits, XXX the margin was adjusted to costs, margin year-over-year, over an a were year, part operating gross $XXX in of pass-throughs.Our XX.X%, points after resulting earnings due freight XX%. adjusted commodity improvement even million of up in the million operating basis and adjusted in $X the absorbing higher a in quarter, Excluding reduction prior IRA cost math

an XXX Adjusted to an EBITDA the was lower was million Adjusted a adjusted of respectively, IRC compared $XXX benefit, range, and from an $X fourth of full year generated million, IRA year. earlier.Adjusted achieved share, impact of temporary of XX.X% We net XX%.Please for year, down basis tax and decrease improvements EBITDA Slide $XX of year-on-year. operating XXX with high telecom rate profit XXX $X.XX, the margin adjusted was EPS EPS quarter year benefit the $XX Adjusted the $XXX In with as-adjusted $X.XX excluding prior adjusted versus tax basis Reduction the line X% IRA was per EPS, as-reported decline for of the we per of up annualized EPS, million, of and Inflation cost benefits, margin were share. XX% year. Full XX.X%, our on increase Excluding excluding adjusted prior the was X%, lower hard IRA EPS X.X% down million, the operating million $XXX prior Act an over including XX% XX.X% billion Dave increase of to basis end credit. guidance is despite share, of XX. over versus revenue. on points, IRA of $X.X increase prior million was over our spending In million XX. mentioned the net $XX year's was diluted X% operating points attributable up basis of prior the X% to early year-over-year. pauses, was entirely quarter $X.XX $X.XX earnings adjusted 'XX, broadband fiscal sales This turn $X.XX. of an the effective fourth year's QX in $X.XX, 'XX.Please $X.XX to the per an Slide turn Adjusted benefit, before net the benefit

XX points Slide Adjusted were operating year.Please by revenue year, strong XX% over volumes is mix partially QX in improved prior fourth million operating impact driven turn XX. the costs year. price margin increased offset costs points realized as by Power million, Motive FX. in lower adder utility to decreased operating prior by Let versus prior operating prior flat of $XX up earnings Motive price Energy X.X% and adjusted to but but XXX any Adjusted provide with in million, and 'XX on well The to up and Power earnings of up XX% lower turn basis revenue, offset were basis sequentially, to revenues Versus declined points freight just details by basis Systems improvements in was negative headwinds, X% by $XXX $XX versus XX. in elimination million partially this on volume reduction sequentially commodity due year. than now million, prior Slide X% quarter, XXX previously mix. prior me utility lower from reductions and increase X% of In as margins mentioned again primarily well. segment.Please the price year QX $XXX quarter, to over quarter, acquisitions Adjusted year. reported I mix a to the mentioned offset the with utility the increase, $XX contributing lower XX.X%, profit as 'XX, costs FX

QX of X.X%, transportation issues, with business pressured by loading operating from to and with are sizes. solutions we business. higher We Slide plant charging year the as reduction adjusted volume continued to automation, very limiting electrification down needs prior maintenance-free retool decreased revenue the this adjusted optimistic X% proprietary earnings opportunities this on XX. of X% capacity about support were be potential growth in million of growing basis prior from telecom million operating price $XXX to absorption 'XX down our decarbonization margin to fixed cost mix, year, growth to Power, Margins product our solutions.Please in $X customers' line points. of million the capacity more XX Specialty broadband enable wireless $X.X from and constraints related turn Motive in and impact of for as and flattish

the optimistic XX% capacity, adjusted we very up in million of markets, earnings and we made and quarters, Specialty. our to fiscal defense sequentially mentioned, aerospace Dave in expansion is are in enhanced coming strength volumes opportunities continued the about and specialty operating line anticipate end this year.Given flexibility in the the transportation with combined $X and with and we progress up sight As improvement quarter

us we prepared in coming you business, for A sharing the integrating add of months, are of profitable Slide to turn addition, which look Bren-Tronics In any forward by spot our this management achieving to or XX. $XX as today.Please numbers raw the our is balance earnings product targeted with which reflected bright our will particular growth our We to million be in projections QX inventory working in quarter specific to while broadband existing by cash the flow, driven commendable we continues X impact our not a Energy lowest maintaining as recovery well capital. categories, a occurs. material of to versus Systems growth and to reduced thanks when reduction in telecom be 'XX, quarters, reserves inventory in inventory

year the a capital We cash collections operating of impact until environment.Our quite are efforts the of was we of approximately fiscal materially efforts of supplier generated credit high was In the our quarter which in with tax by adjusted half of sales, near cash XXX%. tax also by the IRA full an improve of end to year. XXXX.CapEx $XXX quarter, the receivables approximately payments, full driven driven expected focused in million XXXX that finalized, the other rate our $XX fiscal able the extend million is are cash the should we which filings and for across million $XXX an will flow rate half not of flow and year conversion reduction organization. interest fourth refund free benefit achieved accomplishment received fiscal I in $XX primary an 'XX, note and year lower million

$XXX of represented a and $XXX million net our reduction debt March equivalents, of from prior million had we year. of XX, and cash cash $XXX XXXX, million approximately As of

result, a ratio agreement Xx our EBITDA. As credit again improved to once leverage

XX. $XXX leverage the range.Please planned expect million Xx remain will their the for the Bren-Tronics but invest as approximately Slide balance current low sheet QX Xx leverage anticipate outlay economic and acquisition, turn strong well higher below 'XX remains our a target Our net of environment. very cash to end navigate to growth to slightly in positions of we and We us in result

to trajectory Slide pleased fourth paid and currently ability in authorization.Please shares. have and in pricing. maintain million to of dividends $X particularly We million We our million quarter, on $XXX remaining are approximately we the with turn about $XX our optimistic the During repurchased our buyback business XX. remain

majority previously end the we trends markets, will healthy providing powering improve actions While clearer our to which we our as guidance our discussed.We despite performance. of the are in Energy demand have cycles experienced markets, substantial of a a overall profile taken the business updates view in provide believe some to anticipated Systems we seeing our metrics, of margin network are financial

XXXX $XXX range $XXX net on is lower of sales million adjusted driven per EPS of volume, share business. to guidance million quarter by first our to seasonality and of diluted slightly $X.XX fiscal Our the $X.XX

growth guidance Power Our a improvement fiscal billion with margin volume occurring from billion of ongoing adjusted XX% and to Energy earnings market to and telecom $X.XXX in $X.XXX anticipate to throughout of return net is sales, XXXX the Motive per $X.XX rate Specialty share, range diluted in in pre-IRA EPS expansion the actions and tax further of to Systems. $X.XX a normalcy broadband XX%.We taken with year

benefit from and to with Missouri Motive for maintenance-free factory expect Specialty. absorption better conversion also continued our at We Power in increased flexibility, cost capacity

Slide fiscal year XXXX $XXX in the for to $XXX turn XX. full of range to million expectation the is million.Please CapEx Our

potential had one delay or downside. we materialized. would to towards in June provide I that XXXX, close, year on goals issued the when to 'XX we Note which upside Day could aggregate anticipated was that those our Investor certain Network the progress at of areas, highlighted results to we our has an in build-out of we which Before push track. like issued fiscal are update targets, the on risks we the

expanded upside, materialized our has as benefits for eligibility well. On IRA the

into below X-year the we plan. year sales X CAGR this targeted are only range, our Although is

Investor confidence we the contemplated fiscal plan 'XX and both adjusted year strategic expectation the and projected target actual reiterate had remain to for be confident year, summary, coming the place year that the our that and per gives our note have to on for deliver should are financial of to We year fiscal put reinvestment the excess with achievable.I investments range.In are flow, accretive Our $XX what will we in operational be we at guidance in planned forecast this upside for XXXX XXXX will the of foundation our Bren-Tronics EPS our year goals coupled that our in years. returns us in EPS fiscal cash acquisition, results our that share, $XX financial longer-term our with above made return the in presented transformation, 'XX such accelerating EPS range fiscal we which Day. as from

to with megatrends Dave power. global energy As scarcity concern will for increase driving demand in reliable mentioned, continue rapid a be

energy solutions, a EnerSys supplier the Bren-Tronics energy this As to critical into capitalize of welcoming EnerSys strategically growth. look storage upcoming positioned forward in and months. to systems is the We the family on team

look on focused we up at let's fiscal Investor we remain creation questions. achieving XXXX targets beyond, we As our set and stockholders.With Operator? to and it to the this, our value long-term for Day delivering open

Operator

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

Noah Kaye

ask providing Nice about year quarter. Thank get to you for the sales full and guidance, and we now it.

to we're with right. make thinking this start just we Systems, Energy want about just sure I if So

and of So and from down for cost margins savings target that the cycle. out we the flat year-over-year, would sort get even you million to be X% margin revenues us 'XX, the called would that uplift sort embed the holding $XX of for

of phasing that the capture kind be ballpark these is we think the about of is, terms in contemplates? guidance some thinking as B, A from the of of you sort about what should actions? benefits improvement how to So, that right of And, margin the

Andrea Funk

Yes.

for been this broadband significant has know, you telco really us. As

quarter. just overall, your in in level fourth of set $XXX had down revenue million telco $XXX on questions, growth million was the expected was And a for year Europe, first about we which to So million the before broadband, $XXX about answering full year.

Suwanee $X.XX the the question on to of magnitude, to actions that in year.So $XX renewables the back $X of you about and $X Dave last from from diversified pause was QX million impact quarter, share Spokane the mentioned, give $X.XX with where kind vicinity talked the savings, but somewhat, end impact we order consumer what we from about in protect we've closure us to million reconcile negative said consolidate this your exit, and share Our the per risk. previously, full and alone million of just I'll for just markets coming it about of to us getting $XX million about of

fully enacted of these are $XX already actions we an quarter, completed. million. This additional Most

be we to We're with So up-cycle fiscal productivity. really and appropriate most we're XX% going will further leverage in come in the with exploring committed the 'XX.And they the to to to like won't add profile pricing down-cycle actions restructuring in exploring LoB the We're need And confidence results it's ways all for to these, of year we back to AI to XX% full of costs. drive strategies. like X% then contracts. margin are XX% reshaping of a an to and those next real that

will pause the cycle.As don't to expect of far do a going that near of year. where really been we're we guidance year, be the But course and by gave, the the floor the end both we the of So the throughout occurred. actions margin this as not -- look as improve at anywhere 'XX we would had the have steady of we the recovery kind expect the it throughout profile ceiling we and

of and of QX So really it. happened our trough as and QX the saw in to in we only fiscal early QX, signs QX year, us

as Systems be down QX we're Energy QX that Our will and and QX year-on-year, improvements some on should and have in starting QX trajectory.

David Shaffer

has went continue that's back, out these delivery initiatives the the it's this these gains and serve information cycle, last be of to vital all revenue mile making will get that Shawn where as starts all and that the critical time, business. network area. be our are we've sustain we of I've most this really because just and restructuring of important about as said is And interest as what overstocking of troublesome we we this and is that's particularly But investment at sure and know before, because Noah, happening that when have been the Andy cyclical data and the talk digitization rate look a space -- all through. has and that's been come a of been to of investment just -- And in probably that the to and these -- to this I a going everything centers, cyclicality. in out strategic coming hold business environment. into long COVID to Yes. And telecom communications hands, at has always you

So what focus our is. that's

I So ES. hope color enough that's on

Noah Kaye

for for CapEx guide include gigafactory? outlays any the clarifications. material Just Does a few the 'XX

David Shaffer

No.

Andrea Funk

Not yet.

Noah Kaye

All right.

that we're August? So in planning

David Shaffer

Yes. I give what want we trying just been That's I have whole the been objective. the But done, we've want to is to no, factory lithium you to do line running. what starting the on hit

examples the $XX investment DOE hit are up. South controlled $XXX we're controlled made $XX down we've piece made in property that's of weâ€™ve taking round want And actions into So a -- the things of really lots We in started starting. already noted. of assessment. started that to done. from million million running, make in we've teams C starting made of a million building Greenville, the series grants series Carolina. Weâ€™ve made we a some awards a got done We investment Once State Verkor. secured Series actions, of the South a in to as We where August, we've Carolina. sure not of gate I environmental We

we've in DOE, and fashion. idea controlled progress been anticipation it again, in anticipation of -- in a do to of we much to and doing So can approval, as Board we make want as the wanting we're final really the what but

do to trying we in advance. can everything we're So

that's where head So is our at.

Andrea Funk

compelling. my is and make is have in we clean plan our No, really The -- approval. that validate investment employed we lithium the fall our We've decision Board help under to clarify of not to all should after very becoming the break model. outside The up Yes. land get consultants I versus assumptions buy $XX soil probably response. to although million would plant, is until

mentioned we've to long-term strat de-risk we this to while really only move targets. supply As before, plan, chain, be long-term believe intention our would this is going which forward accretive is to if ROIC our our XX% to is strategic lithium our

to which Board the officially Board would learn approved statistics implications be of our expect and approves, we the when for DOD we and the on financial us. So if share potential exciting happen when we'll funding, officially venture this, this more happy of after

David Shaffer

make project. for recent accelerates to on lithium really this is just need that to guess importing -- on more more I it the one just challenging, tariffs going general, just This the thought. Andy. announcement it's piece in last much that, No, going it's and Yes.

Noah Kaye

want now last planet is topic which data Without right the a I one doubt. on just center, ask a #X company's XX% of quick to the on the and now sales.

do battery content Curious First question gain expect to be Where But today, wallet primarily the cetera. broader like data of about TPPL understand all, it's the know the understanding company? opportunities build-out really, sort how center of the et opportunities what and the how lithium, beyond most you batteries it's share in that think evolving would for expansion the of are business would for for TPPL. is, the I supply? looks of mix UPS. I

David Shaffer

I terms our it combination our of you products. right really now TPPL in there and Well, of think presence in a traditional nailed is key

So it's both.

-- very It's wallet we market much absolutely probably in parts of M&A in didn't opportunities. not deal, get out, other the positions that. share as That's so as and Western in North And that figured big mile much. team. of America but a network last the we side, on commanding Alpha more We a have we when Europe, out And really seeking world. are did much side, our you focus share not with the

to products and is lithium I So about really, going on. -- tool, there. Product that that market which really in SBS working helpful note attention we're diversification segment the new M&A some then product, is a made additional adding so that -- new be

it's sight M&A of really -- do, So that's got that to terms on. good we've the -- in wallet of line so battery and think I share key got we've a focus. that's work And piece, a the

Andrea Funk

Yes.

It's acid you I business customers. There's the it growth big X the hit in in think, lead the we're pieces. our data Dave, all. all with which centers, -- the and

of all proliferate, a NPIs data hands strat really this everything those over we access going be that needs see as our just And thereâ€™s acquisitions. you So data what confidence that, to and telco centers on plan. driving broadband, We concerned presence that like out markets But the put that's this as delivery we're and rates market, really great me. we've is well data growth the temporary positive it's about exploring last in mile not growth of top time. got into to -- gives into us get that

Operator

[Operator Instructions] Our next question comes from Blake Blair. Keating with William

Blake Keating

Brian. is This for Blake on

ask and So on takes the to I high to versus end what end low and revenue puts the EBITDA the guidance, guidance? get wanted of into are

David Shaffer

Yes.

the that, in sequential and of revenue the and that is biggest the for modest the to midpoint in, telco then some ES we guidance, subsequent in the broadband. the growth what guess still as just line a revenue of explanation go I the called that sector with of terms Right we of range that, savings cost bit In hard little uncertainty forward we is modeled have our in combination in layered out is earlier. now,

there going what look that's have reflection this the midpoint, like. a mostly anything to uncertainty Andy, as we timing just really but is in is range So still what recovery bit little to the was of of a and else?

Andrea Funk

full time you first mind guidance, I'd the markets, which But time in introducing year, all revenue with In that the a feel since we especially the been the Dave in broadband, very really we're most to -- softness we we the should year out happy be little that's about as cost play it the We the the there'll just Motive Power but add it. volatility of give full pressuring on mentioned, to ongoing color, course of is volume the be Yes. EPS, uncertain. -- last years. one more we now goal probably That's impact year to expanded we're a lithium a going since X price it's Blake, right and this the do but markets The has and growth. full Specialty the steady is the mix Power some with Motive as pass-through. some show it's recovery an have telco results, maybe think throughout got way that year. healthy. in higher remain because will bit

expect which improvements is Storage we we're line exciting with expect fully which We maintenance-free we've our mix than extremely for faster Power, have revenue, strat we plan, Fast Motive in Charge conversions to what and initial anticipated. happening talked ongoing at about had about.And in

it throughout range talked of volume see making million about, Energy to be and the again, little power more uncertainty really previously Systems some OpEx We one we've areas in year to on. of actions on the a the Missouri. aggressive expect and reiterate, the of should that's as IRA improvement investment Charge the in we'll Systems And half the Specialty mix continue as Energy benefits, as benefit some leverage Fast the the communicated, to but Storage the second year.Our margin as in aftermarket will electronics impacts per capacity just the in get some that course $XXX mix. we We'll $XXX where unlock begin in to again, we'll and within back discipline, growth of come falls there's year, additional million depend

telco broadband reminder, a As bring batteries higher credits.

the global a on play. in the impact pillar coming As of of there tax and we minimum the XX.X% tax discretes, rate There's the mentioned, to slightly versus pre-RA 'XX. XX% geography XX% higher rate, the earnings into tax,

actually guidance, we into depend baked after. our that or when before and the near slightly not of on quarter, we have I expect We which the And will helps. maybe be end will first hope Bren-Tronics that close, slightly

Blake Keating

adjacencies do enter? Bren-Tronic's plays Bren-Tronics, to is expect as an Yes, leverage helps And well? market, a it you market looking adjacent other you technology then to to adjacent leverage space, for to lithium portable called the out guys Are -- market? are business lines, on you be able the that portable lot. an Is you guys that in to other that able

David Shaffer

a lot but or a soldier terms overlap. It's Absolutely. in and product ours, aligned of has of not -- technology, lot customers, on of been focus powering. of mostly their focus to very lot not exciting or a customer aligned customer Their

been GPS all with smaller developed products. for larger block packs vehicle energy And with forward-based building powering. all got they charging battery, chargers that they've is vehicle historically submarine marry locators, products mostly XT aligns storage lithium well our got side, and strength really military the future are that where just powering, on it, systems, then then it associated radios, things. a has which up a for side. these the And some portable the power And they've -- really cool So

great look So as forward. potential sales synergies we

As other piece, me really very spend with group the their synergistic focused is time a folks. over that culture important as and think, is, you that's I good there noted, capabilities.And engineering, we on and their culturally, warm very to very teams

and to well. And culturally day start so like team the #X. integrate Jamie feel very it's to integrating going in. I jumping just want really We are

the get any disrupt period, but have As obviously instructions noted, is My Andy to disruption. don't make for to regulatory through or this different got in the want any wait we meantime, not to to we've it customer.

drones going and really So products options. the weapons, of big that they're packs, attention directed saying really caught are for my exciting laser neat the battery other to way shoot battery working And beams one really that of on energy opportunities. another packs which is down other is

at exciting of lot Bren-Tronics. a just So opportunities

Andrea Funk

Yes.

the is mentioned, Dave strategic As fit exciting. really

We have a of history together. working

not us in is a confidence cultural a lot fit. us, to of the gives this which new So company

EnerSys had may chain $X we establish won Bren-Tronics DIU brand defense that for a co-development, to and recall, a million innovation lithium supply recently you In domestic announced cells. fact, that

future have And synergy as a so the we it So was revenue but They in expansion we've bought opportunities for not for multiple, purchase annual on $XXX-million of really business them got capacity $XXX metrics. as reminder, accretive. a as an about price. use grows, synergies did a we story sales, ultimately cross-selling, approximately the valuation at the synergy million X.X% immediately and and

Operator

& from Research Our Webber Wasikowski Advisory. comes next with question Greg

Gregory Wasikowski

one Just asked ones me. been have for already. quick Other one

-- just over Systems be say ahead, year moving targeted your maybe I'm just the Energy X a or it state? where of last guys idea acquisition, look operating fit. would growth But just curious, you then and margin and the like growth, targets, -- fast IRA be look you what charging pieces credits here long improvement term steady-state lots ever reach get an without you'd and margin steady of to we of tons volatility, with how we at if and would with curious what as would Just to the with

David Shaffer

other a the model interesting. that I to the and and of for day, Investor had revenue we we CAGR to CAGRs our what was conversation, it Andy ranges what Yes. really it's got out Day back Greg, is laid the normal recently. -- kind as most is We in

too that ES that too we getting to much tremendous is There's about So Thereâ€™s us, cells made track There's think for much the too and we much a to what in not there. confidence back. on yet back just have out. out laid that, digitization. to inevitably just going small investment come be to

So that's we're using. what

is baseline So is for there. missed? of put there's puts that else model. out anything and laid what what normalcy I Day our kind Investor we And we Andy, but and in remain to clearly, out committed there consistent takes, we very

Andrea Funk

set out, Yes. reiterating we -- that targets within Greg, I we're the believe not reach. they're and we're obviously, well

from, in our as our after work. at operating particularly green margin with revenue, leverage Power on XX%, OpEx finished previously Motive that margin, same rate Systems you to higher and not lithium 'XX load expenses Fast at we've margin revenue We leading As we that we Energy by Storage investing as starting just XX.X%. as the is Specialty our had electronics benefit been we 'XX Charge was now growing XX% and initiatives fully improvement revenue in like power expect fiscal that Patrice efforts maintenance-free and operating the we're incremental mentioned the things EOS aftermarket to target our conversion, that recall, well

fiscal aggregate, and new targets think normalcy in that's a 'XX be still our the we we'll as again, exiting So bullish 'XX where on going forward. we're

David Shaffer

that a and this the of downturn as refocus. and the ES is us retool did Greg, our TPPL part And rapid, big was And in performance Yes. -- you in to very factories. know, that's cause

later our be results this to or You ultimately, factories can so going been challenge us, make in that ability the work the for pleased very, one shifts. to adapt with to have progress. we're was do. very our We more are But see this whatever to still needs. market signs this in have to these And all flexibility I'm rapid, And our going investments but of adjust and forward we quarter. more improvement the a it's market year,

Operator

over I'm for time. at call like to And turn Dave remarks. closing back further any to any showing this I'd not the questions

David Shaffer

just for no I have Well, us thank great to Kevin. additional everyone questions, today. week. And everybody Thanks, is joining want then if there a

Operator

real have take that did to want one if person and you up We queue quick. just go

David Shaffer

ahead. I'm that, Sure. about sorry go

Operator

BTIG. Our comes next with from question Tyler DiMatteo

Tyler DiMatteo

different really up any surrounding maybe the of targeted I of kind what generally chain chains. just to of regions. the just on wanted just in maybe comments broadly the follow just state address supply some and takes seeing the around market, reductions and play And puts you're raw material supply broadly of just

colors would Just it. key any appreciate I there,

David Shaffer

noise would say, But a was. I chains, general, everything general, or know is from most an EnerSys for while our that some is don't perspective, to in hear I our chain supply supply ship once Yes. in it normalized. in back sets something. certain I'll where about

boy, our customers, though, in times struggling. like some experiencing especially XX of that sizes. crazy. handling numbers certain lead forklift are heard still the some And think they're I material months still on of are I've the sector

and chain constraints pockets still supply of pressures. is there So

that's those -- when what's or that's in on they is chain there for a long Andy, products screen. But So from commodity that's more radar side back supply my biggest sit for the demand And order that -- impacts on screen? and us. they your how we how a us. radar are anything my

Andrea Funk

few ocean spot, and Freight air would costs great improvements notes. particularly I freight. some a some Commodity there. say there's We've been overall, Yes. has a down. other seen are

up, in in spike of down. aggregate, lead. little a bit are they're but the a got Some We've

certainly over to crossed it's Now control. our but be manageable to processes internal able $X, that's within

you mentioned, spiking, utility adder. and call we particularly a Europe, that. had cost As don't if utility have implemented we year, This we year, in it utilities, last we

had have have out. that's of we items costs. an but don't the adder think as that, one also a year, I utility This Last that $X we we utility the called we year, million example. don't

price but negative mix, cost. in improvement show a as will that an So up

charts all of then presenting our anything, every catch-up as and Board out. show Directors. meetings well mix. more internally with as our than LoB So both cost leveling are of one had we to Previous things at quarters, in spikes the these huge price our we Those these

be to now tends flattish. cost So pretty

cases, price Does remover, mix some Motive it's nuances and impact in that conversions fact, in improvements of we're Power. that seeing, like the the mix particularly these a lithium adder improvement. other utility In slight just than maintenance-free things And strong the on help?

Tyler DiMatteo

Yes, side very and for well, helpful. that Thanks on supply the demand as guys.

Operator

And I'm this not any at time. further showing questions

David Shaffer

everyone, for All you thanks days. see joining call, very right. you And XX thank Kevin, in and we'll much. the

Andrea Funk

weekend. a safe Day Memorial Have

Operator

that presentation. Ladies today's and gentlemen, concludes

now may and a You day. have wonderful disconnect,

EnerSys (ENS) 23 May 242024 Q4 Earnings call transcript