EnerSys Reports Third Quarter Fiscal 2021 Results
Third Quarter FY 21 Highlights | |
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Key Results from Operations by Segments ($ in millions) | |||||||||||
Q3 FY21 | Q3 FY20 | % Change | |||||||||
Energy Systems | |||||||||||
$ | 337.2 | $ | 345.5 | (2.4 | )% | ||||||
Operating Earnings | 18.5 | 16.3 | 13.0 | ||||||||
Adjusted Operating Earnings * | 24.8 | 21.8 | 13.8 | ||||||||
304.4 | 315.5 | (3.5 | ) | ||||||||
Operating Earnings | 40.2 | 30.8 | 30.3 | ||||||||
Adjusted Operating Earnings * | 40.5 | 31.5 | 28.6 | ||||||||
Specialty | |||||||||||
109.5 | 102.7 | 6.6 | |||||||||
Operating Earnings | 12.6 | 9.2 | 37.5 | ||||||||
Adjusted Operating Earnings * | 13.1 | 10.4 | 25.6 |
* This is a non-GAAP financial measure. See “Reconciliation of Non-GAAP Financial Measures” for more information.
Message from the CEO |
I remain humbled by our employees’ ability to deliver in these challenging times. We have continued to make excellent progress on our strategic initiatives and demand remained strong in our third quarter. Our as-adjusted
Net earnings attributable to
Net earnings for the third quarter of fiscal 2020 were
Excluding these highlighted items, adjusted Net earnings per diluted share for the third quarter of fiscal 2021, on a non-GAAP basis, were
The Company announced on
During the current quarter, the Company settled its claims with its insurance carrier relating to the fire that broke out in the battery formation area of the Company's Richmond, Kentucky motive power production facility in fiscal 2020. The total recovery, for both property and business interruption, was
Net sales for the third quarter of fiscal 2021 were
On
The Company’s operating results for its business segments for the third quarters of fiscal 2021 and 2020 are as follows:
Quarter ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 337.2 | $ | 304.4 | $ | 109.5 | $ | 751.1 | ||||||||
Operating Earnings | $ | 17.7 | $ | 25.8 | $ | 12.6 | $ | 56.1 | |||||||
Restructuring and other exit charges | 0.8 | 14.4 | — | 15.2 | |||||||||||
Amortization of identified intangible assets from recent acquisitions | 6.3 | — | 0.5 | 6.8 | |||||||||||
Other | — | 0.3 | — | 0.3 | |||||||||||
Adjusted Operating Earnings | $ | 24.8 | $ | 40.5 | $ | 13.1 | $ | 78.4 |
Quarter ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 345.5 | $ | 315.5 | $ | 102.7 | $ | 763.7 | ||||||||
Operating Earnings | $ | 10.1 | $ | 30.3 | $ | 2.7 | $ | 43.1 | |||||||
Inventory step up to fair value relating to recent acquisitions | 1.6 | — | 2.2 | 3.8 | |||||||||||
Restructuring and other exit charges | 4.6 | 0.5 | 4.3 | 9.4 | |||||||||||
Amortization of identified intangible assets from recent acquisitions | 6.8 | — | 1.1 | 7.9 | |||||||||||
ERP system implementation and other | (1.6 | ) | 0.7 | — | (0.9 | ) | |||||||||
Acquisition activity expense | 0.3 | — | 0.1 | 0.4 | |||||||||||
Adjusted Operating Earnings | $ | 21.8 | $ | 31.5 | $ | 10.4 | $ | 63.7 | |||||||
Net earnings for the nine months of fiscal 2021 was
Net earnings for the nine months of fiscal 2020 were
Adjusted Net earnings per diluted share for the nine months of fiscal 2021, on a non-GAAP basis, were
Net sales for the nine months of fiscal 2021 were
The Company’s operating results for its business segments for the nine months of fiscal 2021 and 2020 are as follows:
Nine months ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 1,031.4 | $ | 831.0 | $ | 302.0 | $ | 2,164.4 | ||||||||
Operating Earnings | $ | 60.7 | $ | 74.8 | $ | 29.2 | $ | 164.7 | |||||||
Restructuring and other exit charges | 2.6 | 16.9 | 0.2 | 19.7 | |||||||||||
Amortization of identified intangible assets from recent acquisitions | 18.0 | — | 1.3 | 19.3 | |||||||||||
Other | 1.5 | 0.3 | — | 1.8 | |||||||||||
Acquisition activity expense | 0.2 | — | 0.1 | 0.3 | |||||||||||
Adjusted Operating Earnings | $ | 83.0 | $ | 92.0 | $ | 30.8 | $ | 205.8 |
Nine months ended | |||||||||||||||
($ millions) | |||||||||||||||
Energy Systems | Specialty | Total | |||||||||||||
$ | 1,042.2 | $ | 995.2 | $ | 268.6 | $ | 2,306.0 | ||||||||
Operating Earnings | $ | 52.3 | $ | 95.6 | $ | 22.2 | $ | 170.1 | |||||||
Inventory step up to fair value relating to recent acquisitions | 1.6 | — | 2.2 | 3.8 | |||||||||||
Restructuring and other exit charges | 6.3 | 1.5 | 4.8 | 12.6 | |||||||||||
Fixed asset write-off relating to exit activities and other | 0.1 | 5.4 | — | 5.5 | |||||||||||
Amortization of identified intangible assets from recent acquisitions | 17.4 | — | 1.1 | 18.5 | |||||||||||
ERP system implementation and other | 2.5 | 1.6 | — | 4.1 | |||||||||||
Acquisition activity expense | 1.1 | — | 0.6 | 1.7 | |||||||||||
Adjusted Operating Earnings | $ | 81.3 | $ | 104.1 | $ | 30.9 | $ | 216.3 | |||||||
Reconciliation of 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 or Net earnings 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 above, providing a reconciliation of non-GAAP adjusted operating earnings to the Company’s reported operating results for its business segments. 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 | $ | 38.6 | $ | 27.3 | ||||||||
Non-GAAP adjustments: | ||||||||||||
Inventory step up to fair value relating to recent acquisitions | — | (1 | ) | 3.8 | (1 | ) | ||||||
Restructuring and other exit charges | 15.2 | (2 | ) | 9.4 | (2 | ) | ||||||
Amortization of identified intangible assets from recent acquisitions | 6.8 | (3 | ) | 7.9 | (3 | ) | ||||||
ERP system implementation and other | 0.3 | (4 | ) | (0.9 | ) | (4 | ) | |||||
Acquisition activity expense | — | (5 | ) | 0.4 | (5 | ) | ||||||
Income tax effect of above non-GAAP adjustments | (5.9 | ) | (3.4 | ) | ||||||||
Non-GAAP adjusted Net Earnings | $ | 55.0 | $ | 44.5 | ||||||||
Outstanding shares used in per share calculations | ||||||||||||
Basic | 42,599,834 | 42,286,641 | ||||||||||
Diluted | 43,290,403 | 42,838,969 | ||||||||||
Non-GAAP adjusted Net Earnings per share: | ||||||||||||
Basic | $ | 1.29 | $ | 1.05 | ||||||||
Diluted | $ | 1.27 | $ | 1.04 | ||||||||
Reported Net Earnings per share: | ||||||||||||
Basic | $ | 0.91 | $ | 0.65 | ||||||||
Diluted | $ | 0.89 | $ | 0.64 | ||||||||
Dividends per common share | $ | 0.175 | $ | 0.175 | ||||||||
The following table provides the line of business allocation of the non-GAAP adjustments shown in the reconciliation above:
Quarter ended | |||||||||
($ millions) | |||||||||
Pre-tax | Pre-tax | ||||||||
(1) Inventory step up to fair value relating to recent acquisitions - Energy Systems | $ | — | $ | 1.6 | |||||
(1) Inventory step up to fair value relating to recent acquisitions - Specialty | — | 2.2 | |||||||
(2) Restructuring charges - Energy Systems | 0.8 | 4.6 | |||||||
(2) Restructuring and other exit charges - |
14.4 | 0.5 | |||||||
(2) Restructuring and other exit charges - Specialty | — | 4.3 | |||||||
(3) Amortization of identified intangible assets from recent acquisitions - Energy Systems | 6.3 | 6.8 | |||||||
(3) Amortization of identified intangible assets from recent acquisitions - Specialty | 0.5 | 1.1 | |||||||
(4) ERP system implementation and other - Energy Systems | — | (1.6 | ) | ||||||
(4) ERP system implementation and other - |
0.3 | 0.7 | |||||||
(5) Acquisition activity expense - Energy Systems | — | 0.3 | |||||||
(5) Acquisition activity expense - Specialty | — | 0.1 | |||||||
Total Non-GAAP adjustments | $ | 22.3 | $ | 20.6 |
Nine months ended | ||||||||||
(in millions, except share and per share amounts) | ||||||||||
Net Earnings reconciliation | ||||||||||
As reported Net Earnings | $ | 109.5 | $ | 138.6 | ||||||
Non-GAAP adjustments: | ||||||||||
Inventory step up to fair value relating to recent acquisitions | — | (1) | 3.8 | (1) | ||||||
Restructuring and other exit charges | 19.7 | (2) | 18.1 | (2) | ||||||
Amortization of identified intangible assets from recent acquisitions | 19.3 | (3) | 18.5 | (3) | ||||||
ERP system implementation and other | 1.8 | (4) | 4.1 | (4) | ||||||
Acquisition activity expense | 0.3 | (5) | 1.7 | (5) | ||||||
Income tax effect of above non-GAAP adjustments | (11.1 | ) | (10.7 | ) | ||||||
Swiss Tax Reform | (1.9 | ) | (21.0 | ) | ||||||
Non-GAAP adjusted Net Earnings | $ | 137.6 | $ | 153.1 | ||||||
Outstanding shares used in per share calculations | ||||||||||
Basic | 42,502,460 | 42,445,006 | ||||||||
Diluted | 43,103,304 | 42,888,495 | ||||||||
Non-GAAP adjusted Net Earnings per share: | ||||||||||
Basic | $ | 3.24 | $ | 3.61 | ||||||
Diluted | $ | 3.19 | $ | 3.57 | ||||||
Reported Net Earnings per share: | ||||||||||
Basic | $ | 2.58 | $ | 3.27 | ||||||
Diluted | $ | 2.54 | $ | 3.23 | ||||||
Dividends per common share | $ | 0.525 | $ | 0.525 | ||||||
The following table provides the line of business allocation of the non-GAAP adjustments shown in the reconciliation above:
Nine months ended | ||||||||
($ millions) | ||||||||
Pre-tax | Pre-tax | |||||||
(1) Inventory step up to fair value relating to recent acquisitions - Energy Systems | $ | — | $ | 1.6 | ||||
(1) Inventory step up to fair value relating to recent acquisitions - Specialty | — | 2.2 | ||||||
(2) Restructuring charges - Energy Systems | 2.6 | 6.3 | ||||||
(2) Restructuring and other exit charges - |
16.9 | 1.5 | ||||||
(2) Restructuring and other exit charges - Specialty | 0.2 | 4.8 | ||||||
(2) Fixed asset write-off relating to exit activities and other - Energy Systems | — | 0.1 | ||||||
(2) Fixed asset write-off relating to exit activities and other - |
— | 5.4 | ||||||
(3) Amortization of identified intangible assets from recent acquisitions - Energy Systems | 18.0 | 17.4 | ||||||
(3) Amortization of identified intangible assets from recent acquisitions - Specialty | 1.3 | 1.1 | ||||||
(4) ERP system implementation and other - Energy Systems | 1.5 | 2.5 | ||||||
(4) ERP system implementation and other - |
0.3 | 1.6 | ||||||
(5) Acquisition activity expense - Energy Systems | 0.2 | 1.1 | ||||||
(5) Acquisition activity expense - Specialty | 0.1 | 0.6 | ||||||
Total Non-GAAP adjustments | $ | 41.1 | $ | 46.2 | ||||
Summary of Earnings (Unaudited)
(In millions, except share and per share data)
Quarter ended | |||||||
Net sales | $ | 751.1 | $ | 763.7 | |||
Gross profit | 189.3 | 185.3 | |||||
Operating expenses | 118.0 | 132.8 | |||||
Restructuring and other exit charges | 15.2 | 9.4 | |||||
Operating earnings | 56.1 | 43.1 | |||||
Earnings before income taxes | 43.8 | 32.6 | |||||
Income tax expense | 5.2 | 5.3 | |||||
Net earnings attributable to |
$ | 38.6 | $ | 27.3 | |||
Net reported earnings per common share attributable to |
|||||||
Basic | $ | 0.91 | $ | 0.65 | |||
Diluted | $ | 0.89 | $ | 0.64 | |||
Dividends per common share | $ | 0.175 | $ | 0.175 | |||
Weighted-average number of common shares used in reported earnings per share calculations: | |||||||
Basic | 42,599,834 | 42,286,641 | |||||
Diluted | 43,290,403 | 42,838,969 | |||||
Nine months ended | |||||||
Net sales | $ | 2,164.4 | $ | 2,306.0 | |||
Gross profit | 541.8 | 584.1 | |||||
Operating expenses | 357.4 | 395.9 | |||||
Restructuring and other exit charges | 19.7 | 18.1 | |||||
Operating earnings | 164.7 | 170.1 | |||||
Earnings before income taxes | 126.9 | 139.6 | |||||
Income tax expense | 17.4 | 1.0 | |||||
Net earnings attributable to |
$ | 109.5 | $ | 138.6 | |||
Net reported earnings per common share attributable to |
|||||||
Basic | $ | 2.58 | $ | 3.27 | |||
Diluted | $ | 2.54 | $ | 3.23 | |||
Dividends per common share | $ | 0.525 | $ | 0.525 | |||
Weighted-average number of common shares used in reported earnings per share calculations: | |||||||
Basic | 42,502,460 | 42,445,006 | |||||
Diluted | 43,103,304 | 42,888,495 | |||||
Consolidated Condensed Balance Sheets (Unaudited)
(In Thousands, Except Share and Per Share Data)
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 488,651 | $ | 326,979 | ||||||
Accounts receivable, net of allowance for doubtful accounts: |
547,462 | 595,873 | ||||||||
Inventories, net | 515,469 | 519,460 | ||||||||
Prepaid and other current assets | 132,565 | 120,593 | ||||||||
Total current assets | 1,684,147 | 1,562,905 | ||||||||
Property, plant, and equipment, net | 507,858 | 480,014 | ||||||||
707,171 | 663,936 | |||||||||
Other intangible assets, net | 438,998 | 455,685 | ||||||||
Deferred taxes | 60,844 | 55,803 | ||||||||
Other assets | 76,210 | 83,355 | ||||||||
Total assets | $ | 3,475,228 | $ | 3,301,698 | ||||||
Liabilities and Equity | ||||||||||
Current liabilities: | ||||||||||
Short-term debt | $ | 40,268 | $ | 46,544 | ||||||
Accounts payable | 269,019 | 281,873 | ||||||||
Accrued expenses | 296,345 | 271,902 | ||||||||
Total current liabilities | 605,632 | 600,319 | ||||||||
Long-term debt, net of unamortized debt issuance costs | 1,054,191 | 1,104,731 | ||||||||
Deferred taxes | 80,420 | 78,363 | ||||||||
Other liabilities | 203,571 | 214,223 | ||||||||
Total liabilities | 1,943,814 | 1,997,636 | ||||||||
Commitments and contingencies | ||||||||||
Equity: | ||||||||||
Preferred Stock, |
— | — | ||||||||
Common Stock, 0.01 par value per share, 135,000,000 shares authorized, 55,407,527 shares issued and 42,624,471 shares outstanding at |
554 | 551 | ||||||||
Additional paid-in capital | 546,385 | 529,100 | ||||||||
(563,662 | ) | (564,376 | ) | |||||||
Retained earnings | 1,643,583 | 1,556,980 | ||||||||
Contra equity - indemnification receivable | (5,273 | ) | (6,724 | ) | ||||||
Accumulated other comprehensive loss | (94,030 | ) | (215,006 | ) | ||||||
Total |
1,527,557 | 1,300,525 | ||||||||
Nonredeemable noncontrolling interests | 3,857 | 3,537 | ||||||||
Total equity | 1,531,414 | 1,304,062 | ||||||||
Total liabilities and equity | $ | 3,475,228 | $ | 3,301,698 | ||||||
Consolidated Condensed Statements of Cash Flows (Unaudited)
(In Thousands)
Nine months ended | ||||||||||
Cash flows from operating activities | ||||||||||
Net earnings | $ | 109,538 | $ | 138,639 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 70,192 | 65,788 | ||||||||
Write-off of assets relating to exit activities | 7,292 | 10,024 | ||||||||
Derivatives not designated in hedging relationships: | ||||||||||
Net (gains) losses | (592 | ) | 517 | |||||||
Cash proceeds (settlements) | 790 | (599 | ) | |||||||
Provision for doubtful accounts | 270 | 2,922 | ||||||||
Deferred income taxes | (1,785 | ) | (20,948 | ) | ||||||
Non-cash interest expense | 1,554 | 1,160 | ||||||||
Stock-based compensation | 16,982 | 14,759 | ||||||||
Gain on disposal of property, plant, and equipment | (4,007 | ) | (112 | ) | ||||||
Changes in assets and liabilities, net of effects of acquisitions: | ||||||||||
Accounts receivable | 71,077 | 58,779 | ||||||||
Inventories | 28,069 | (24,888 | ) | |||||||
Prepaid and other current assets | 15,047 | (6,977 | ) | |||||||
Other assets | 3,012 | 3,686 | ||||||||
Accounts payable | (40,933 | ) | (44,885 | ) | ||||||
Accrued expenses | 9,839 | (7,295 | ) | |||||||
Other liabilities | (14,246 | ) | (14,738 | ) | ||||||
Net cash provided by operating activities | 272,099 | 175,832 | ||||||||
Cash flows from investing activities | ||||||||||
Capital expenditures | (53,742 | ) | (60,936 | ) | ||||||
Purchase of business | — | (176,548 | ) | |||||||
Insurance proceeds relating to property, plant and equipment | 4,800 | 403 | ||||||||
Proceeds from disposal of property, plant, and equipment | 145 | 2,718 | ||||||||
Net cash used in investing activities | (48,797 | ) | (234,363 | ) | ||||||
Cash flows from financing activities | ||||||||||
Net repayments on short-term debt | (9,367 | ) | (17,632 | ) | ||||||
Proceeds from 2017 Revolver borrowings | 90,000 | 326,700 | ||||||||
Proceeds from 2027 Notes | — | 300,000 | ||||||||
Repayments of 2017 Revolver borrowings | (123,000 | ) | (497,700 | ) | ||||||
Repayments of 2017 Term Loan | (28,194 | ) | (11,276 | ) | ||||||
Debt issuance costs | — | (4,607 | ) | |||||||
Option proceeds | 4,818 | 505 | ||||||||
Payment of taxes related to net share settlement of equity awards | (4,959 | ) | (6,281 | ) | ||||||
Purchase of treasury stock | — | (34,561 | ) | |||||||
Dividends paid to stockholders | (22,338 | ) | (22,299 | ) | ||||||
Other | 466 | 586 | ||||||||
Net cash (used in) provided by financing activities | (92,574 | ) | 33,435 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 30,944 | (1,606 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 161,672 | (26,702 | ) | |||||||
Cash and cash equivalents at beginning of period | 326,979 | 299,212 | ||||||||
Cash and cash equivalents at end of period | $ | 488,651 | $ | 272,510 | ||||||
The call, scheduled for
The call will also be webcast on
The conference call information is:
Date: | |
Time: | |
Via Internet: | http://www.enersys.com |
Domestic Dial-In Number: | 877-359-9508 |
International Dial-In Number: | 224-357-2393 |
Passcode: | 9359557 |
A replay of the conference call will be available from
The replay information is:
Via Internet: | http://www.enersys.com |
Domestic Replay Number: | 855-859-2056 |
International Replay Number: | 404-537-3406 |
Passcode: | 9359557 |
For more information, contact
EDITOR'S NOTE:
More information regarding
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
Source: EnerSys