EnerSys Reports First Quarter Fiscal 2023 Results
$899 million net sales +10.3% y/y, second highest quarterly revenue and volume- Thin Plate Pure Lead (TPPL) revenue up 13% y/y
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$1B record Q1 orders; backlog grew to$1.5B - Announced closure of Ooltewah plant;
~$8 million annual cost savings - Opened new expanded
Richmond distribution center to increase efficiency and lower lead times - Board appointed
Rudolph Wynter as a director effectiveAugust 1, 2022 - Committed to being Scope 1 carbon neutral by 2040 and Scope 2 carbon neutral by 2050
Key Financial Results and Metrics | First Quarter ended | ||||||||
In millions, except per share amounts | Change | ||||||||
$ | 899.0 | $ | 814.9 | 10.3 | % | ||||
Diluted EPS (GAAP) | $ | 0.75 | $ | 1.01 | $ | (0.26 | ) | ||
Adjusted Diluted EPS (non-GAAP) | $ | 1.15 | $ | 1.25 | $ | (0.10 | ) | ||
Operating Earnings (GAAP) | $ | 50.1 | $ | 60.9 | $ | (10.8 | ) | ||
Adjusted Operating Earnings (Non-GAAP)(1) | $ | 64.8 | $ | 75.1 | $ | (10.3 | ) | ||
EBITDA (Non-GAAP)(2) | $ | 72.0 | $ | 85.8 | $ | (13.8 | ) | ||
Adjusted EBITDA (Non-GAAP)(2) | $ | 85.5 | $ | 93.6 | $ | (8.1 | ) | ||
Share Repurchases | $ | 22.9 | $ | 31.5 | $ | (8.6 | ) | ||
Dividend per share | $ | 0.175 | $ | 0.175 | $ | — | |||
Total Capital Returned to Stockholders | $ | 30.0 | $ | 38.9 | $ | (8.9 | ) | ||
(1) Operating Earnings are adjusted for charges that the Company incurs as a result of restructuring and exit activities, impairment of goodwill and indefinite-lived intangibles and other assets, acquisition activities and those charges and credits that are not directly related to operating unit performance. A reconciliation of operating earnings to Non-GAAP adjusted earnings are provided in tables under the section titled Business Segment Operating Results. (2) Net Earnings are adjusted for depreciation, amortization, interest and income taxes to arrive at Non-GAAP EBITDA. Non-GAAP Adjusted EBITDA is further adjusted for certain charges such as restructuring and exit activities, impairment of goodwill and indefinite-lived intangibles and other assets, acquisition activities and other charges and credits as discussed under Reconciliations of GAAP to Non-GAAP Financial Measures. |
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Message from the CEO
We achieved multiple milestones on our operating efficiency initiatives which enabled our Ooltewah facility closure which we expect to yield
We continue to innovate and deliver enhanced technology in our product portfolio that will set us apart from our competitors, both in the near- and long-term. Demand for our NexSys® maintenance-free solutions resulted in a record percentage of revenue mix for our
Looking ahead, the diversity of our end markets, ability to recoup inflation through price, record backlog, and broadened product portfolio collectively position us for long-term revenue and earnings growth. Global megatrends such as 5G, rural broadband expansion through the
Summary of Results
First Quarter 2023
Net sales for the first quarter of fiscal 2023 were
Net earnings attributable to
Net earnings for the first quarter of fiscal 2022 was
Excluding these highlighted items, adjusted Net earnings per diluted share for the first quarter of fiscal 2023, on a non-GAAP basis, were
Second Quarter 2023 Outlook
We expect to continue to operate in a dynamic macro environment and anticipate FX headwinds and European utility inflation will persist for some time. While our order patterns are still very strong, we believe we will weather and potentially benefit from a slowdown due to large portions of our business that are cycle-independent as well as our significant cash flow generation during past cycles. For the second quarter of fiscal 2023, we expect adjusted diluted earnings per share in the range of
Conference Call and Webcast Details
The Company will host a conference call to discuss its first quarter 2023 financial results at
Please note that there is a new system to access the live call-in. To join the live call, please register through the events section of our Investor Relations webpage at https://investor.enersys.com/events/event-details/q1-2023-enersys-earnings-conference-call. A dial-in and unique PIN will be provided upon registration.
About
Sustainability
Sustainability at
Caution Concerning Forward-Looking Statements
This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, or the Reform Act, which may include, but are not limited to, statements regarding EnerSys’ earnings estimates, intention to pay quarterly cash dividends, return capital to stockholders, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, including statements identified by words such as “believe,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “will,” and similar expressions. All statements addressing operating performance, events, or developments that
Although
CONTACT
Investor Relations and Financial Media
610-236-4040
E-mail: investorrelations@enersys.com
Public Relations Manager
Harris, Baio & McCullough
215-440-9800
E-mail: melissa@hbmadv.com
Consolidated Condensed Statements of Income (Unaudited)
(In millions, except share and per share data)
Quarter ended | ||||||
Net sales | $ | 899.0 | $ | 814.9 | ||
Gross profit | 185.5 | 193.2 | ||||
Operating expenses | 127.1 | 124.5 | ||||
Restructuring and other exit charges | 8.3 | 7.8 | ||||
Operating earnings | 50.1 | 60.9 | ||||
Earnings before income taxes | 36.8 | 52.3 | ||||
Income tax expense | 5.8 | 8.4 | ||||
Net earnings attributable to |
$ | 31.0 | $ | 43.9 | ||
Net reported earnings per common share attributable to |
||||||
Basic | $ | 0.76 | $ | 1.03 | ||
Diluted | $ | 0.75 | $ | 1.01 | ||
Dividends per common share | $ | 0.175 | $ | 0.175 | ||
Weighted-average number of common shares used in reported earnings per share calculations: | ||||||
Basic | 40,786,336 | 42,700,329 | ||||
Diluted | 41,352,646 | 43,537,344 |
Consolidated Condensed Balance Sheets (Unaudited)
(In Thousands, Except Share and Per Share Data)
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 383,243 | $ | 402,488 | ||||
Accounts receivable, net of allowance for doubtful accounts: |
697,116 | 719,434 | ||||||
Inventories, net | 777,660 | 715,712 | ||||||
Prepaid and other current assets | 154,175 | 155,559 | ||||||
Total current assets | 2,012,194 | 1,993,193 | ||||||
Property, plant, and equipment, net | 489,294 | 503,264 | ||||||
682,113 | 700,640 | |||||||
Other intangible assets, net | 385,449 | 396,202 | ||||||
Deferred taxes | 54,108 | 60,479 | ||||||
Other assets | 98,753 | 82,868 | ||||||
Total assets | $ | 3,721,911 | $ | 3,736,646 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 45,628 | $ | 55,084 | ||||
Accounts payable | 343,340 | 393,096 | ||||||
Accrued expenses | 266,463 | 289,950 | ||||||
Total current liabilities | 655,431 | 738,130 | ||||||
Long-term debt, net of unamortized debt issuance costs | 1,376,694 | 1,243,002 | ||||||
Deferred taxes | 77,528 | 78,228 | ||||||
Other liabilities | 173,488 | 184,011 | ||||||
Total liabilities | 2,283,141 | 2,243,371 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Preferred Stock, |
— | — | ||||||
Common Stock, |
558 | 557 | ||||||
Additional paid-in capital | 576,294 | 571,464 | ||||||
(741,786 | ) | (719,119 | ) | |||||
Retained earnings | 1,807,282 | 1,783,586 | ||||||
Contra equity - indemnification receivable | (3,620 | ) | (3,620 | ) | ||||
Accumulated other comprehensive loss | (203,650 | ) | (143,495 | ) | ||||
Total |
1,435,078 | 1,489,373 | ||||||
Nonredeemable noncontrolling interests | 3,692 | 3,902 | ||||||
Total equity | 1,438,770 | 1,493,275 | ||||||
Total liabilities and equity | $ | 3,721,911 | $ | 3,736,646 |
Consolidated Condensed Statements of Cash Flows (Unaudited)
(In Thousands)
Quarter ended | ||||||||
Cash flows from operating activities | ||||||||
Net earnings | $ | 30,978 | $ | 43,929 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 23,624 | 24,433 | ||||||
Write-off of assets relating to exit activities | 7,445 | 2,141 | ||||||
Derivatives not designated in hedging relationships: | ||||||||
Net (losses) gains | (216 | ) | 6 | |||||
Cash (settlements) proceeds | (600 | ) | (14 | ) | ||||
Provision for doubtful accounts | (173 | ) | 1,039 | |||||
Deferred income taxes | 20 | 145 | ||||||
Non-cash interest expense | 487 | 518 | ||||||
Stock-based compensation | 5,330 | 3,659 | ||||||
(Gain) loss on disposal of property, plant, and equipment | (40 | ) | 4 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 5,538 | 24,834 | ||||||
Inventories | (81,454 | ) | (46,307 | ) | ||||
Prepaid and other current assets | (5,465 | ) | (15,595 | ) | ||||
Other assets | (886 | ) | 344 | |||||
Accounts payable | (33,073 | ) | (36,746 | ) | ||||
Accrued expenses | (24,973 | ) | (50,314 | ) | ||||
Other liabilities | 1,567 | (219 | ) | |||||
Net cash used in operating activities | (71,891 | ) | (48,143 | ) | ||||
Cash flows from investing activities | ||||||||
Capital expenditures | (23,014 | ) | (16,435 | ) | ||||
Proceeds from disposal of facility | — | 3,268 | ||||||
Proceeds from disposal of property, plant, and equipment | 139 | 49 | ||||||
Net cash used in investing activities | (22,875 | ) | (13,118 | ) | ||||
Cash flows from financing activities | ||||||||
Net (repayments) borrowings on short-term debt | (8,022 | ) | 5,512 | |||||
Proceeds from Second Amended Revolver borrowings | 163,200 | 65,700 | ||||||
Repayments of Second Amended Revolver borrowings | (27,200 | ) | (5,700 | ) | ||||
Repayments of Second Amended Term Loan | — | (11,447 | ) | |||||
Option proceeds, net | — | 386 | ||||||
Payment of taxes related to net share settlement of equity awards | (633 | ) | (4,803 | ) | ||||
Purchase of treasury stock | (22,907 | ) | (31,512 | ) | ||||
Dividends paid to stockholders | (7,108 | ) | (7,435 | ) | ||||
Other | 207 | 214 | ||||||
Net cash provided by financing activities | 97,537 | 10,915 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (22,016 | ) | 4,771 | |||||
Net decrease in cash and cash equivalents | (19,245 | ) | (45,575 | ) | ||||
Cash and cash equivalents at beginning of period | 402,488 | 451,808 | ||||||
Cash and cash equivalents at end of period | $ | 383,243 | $ | 406,233 |
Reconciliation of GAAP to Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with
Income tax effects of non-GAAP adjustments are calculated using the applicable statutory tax rate for the jurisdictions in which the charges (benefits) are incurred, while taking into consideration any valuation allowances. For those items which are non-taxable, the tax expense (benefit) is calculated at 0%.
These non-GAAP disclosures have limitations as an analytical tool, should not be viewed as a substitute for operating earnings, Net earnings or net income determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information will be helpful in understanding the Company's ongoing operating results. This supplemental presentation should not be construed as an inference that the Company's future results will be unaffected by similar adjustments to Net earnings determined in accordance with GAAP.
A reconciliation of non-GAAP adjusted operating earnings is set forth in the table below, providing a reconciliation of non-GAAP adjusted operating earnings to the Company’s reported operating results for its business segments.
Business Segment Operating Results
Quarter ended | |||||||||||
($ millions) | |||||||||||
Energy Systems | Specialty | Total | |||||||||
$ | 408.6 | $ | 367.9 | $ | 122.5 | $ | 899.0 | ||||
Operating Earnings | $ | 7.5 | $ | 34.1 | $ | 8.5 | $ | 50.1 | |||
Restructuring and other exit charges | 0.2 | 8.1 | — | 8.3 | |||||||
Amortization of identified intangible assets from recent acquisitions | 6.0 | — | 0.4 | 6.4 | |||||||
Adjusted Operating Earnings | $ | 13.7 | $ | 42.2 | $ | 8.9 | $ | 64.8 |
Quarter ended | ||||||||||||
($ millions) | ||||||||||||
Energy Systems | Specialty | Total | ||||||||||
$ | 371.2 | $ | 336.1 | $ | 107.6 | $ | 814.9 | |||||
Operating Earnings | $ | 6.6 | $ | 42.1 | $ | 12.2 | $ | 60.9 | ||||
Restructuring and other exit charges | 0.5 | 8.5 | (1.2 | ) | 7.8 | |||||||
Amortization of identified intangible assets from recent acquisitions | 6.0 | — | 0.4 | 6.4 | ||||||||
Adjusted Operating Earnings | $ | 13.1 | $ | 50.6 | $ | 11.4 | $ | 75.1 |
Increase (Decrease) % from prior year quarter | Energy Systems | Specialty | Total | ||||||||
10.1 | % | 9.4 | % | 13.9 | % | 10.3 | % | ||||
Operating Earnings | 13.5 | (19.0 | ) | (30.3 | ) | (17.7 | ) | ||||
Adjusted Operating Earnings | 4.5 | (16.5 | ) | (21.8 | ) | (13.7 | ) |
Reconciliations of GAAP to Non-GAAP Financial Measures
(Unaudited)
The table below presents a reconciliation of Net Earnings to EBITDA and Adjusted EBITDA:
Quarter ended | |||||
Net Earnings | $ | 31.0 | $ | 43.9 | |
Depreciation | 15.5 | 16.0 | |||
Amortization | 8.1 | 8.4 | |||
Interest | 11.6 | 9.1 | |||
Income Taxes | 5.8 | 8.4 | |||
EBITDA | 72.0 | 85.8 | |||
Non-GAAP adjustments | 13.5 | 7.8 | |||
Adjusted EBITDA | $ | 85.5 | $ | 93.6 |
The following table provides the non-GAAP adjustments shown in the reconciliation above:
Quarter ended | |||||
Restructuring and other exit charges | $ | 8.3 | $ | 7.8 | |
Remeasurement of monetary assets included in other (income) expense relating to exit from |
5.2 | — | |||
Non-GAAP adjustments | $ | 13.5 | $ | 7.8 |
Included below is a reconciliation of non-GAAP adjusted Net earnings to reported amounts. Non-GAAP adjusted operating earnings and Net earnings are calculated excluding restructuring and other highlighted charges and credits. The following tables provide additional information regarding certain non-GAAP measures:
Quarter ended | ||||||||||
(in millions, except share and per share amounts) | ||||||||||
Net Earnings reconciliation | ||||||||||
As reported Net Earnings | $ | 31.0 | $ | 43.9 | ||||||
Non-GAAP adjustments: | ||||||||||
Restructuring and other exit charges | 8.3 | (1) | 7.8 | (1) | ||||||
Amortization of identified intangible assets from recent acquisitions | 6.4 | (2) | 6.4 | (2) | ||||||
Remeasurement of monetary assets included in other (income) expense relating to exit from |
5.2 | — | ||||||||
Income tax effect of above non-GAAP adjustments | (3.4 | ) | (3.7 | ) | ||||||
Non-GAAP adjusted Net Earnings | $ | 47.5 | $ | 54.4 | ||||||
Outstanding shares used in per share calculations | ||||||||||
Basic | 40,786,336 | 42,700,329 | ||||||||
Diluted | 41,352,646 | 43,537,344 | ||||||||
Non-GAAP adjusted Net Earnings per share: | ||||||||||
Basic | $ | 1.16 | $ | 1.28 | ||||||
Diluted | $ | 1.15 | $ | 1.25 | ||||||
Reported Net Earnings (Loss) per share: | ||||||||||
Basic | $ | 0.76 | $ | 1.03 | ||||||
Diluted | $ | 0.75 | $ | 1.01 | ||||||
Dividends per common share | $ | 0.175 | $ | 0.175 |
The following table provides the line of business allocation of the non-GAAP adjustments of items relating operating earnings (that are allocated to lines of business) shown in the reconciliation above:
Quarter ended | |||||||
($ millions) | |||||||
Pre-tax | Pre-tax | ||||||
(1) Restructuring and other exit charges - Energy Systems | 0.2 | 0.5 | |||||
(1) Restructuring and other exit charges - |
8.1 | 8.5 | |||||
(1) Restructuring and other exit charges - Specialty | — | (1.2 | ) | ||||
(2) Amortization of identified intangible assets from recent acquisitions - Energy Systems | 6.0 | 6.0 | |||||
(2) Amortization of identified intangible assets from recent acquisitions - Specialty | 0.4 | 0.4 | |||||
Total Non-GAAP adjustments | $ | 14.7 | $ | 14.2 |
Source: EnerSys