UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 2, 2013
EnerSys
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 1-32253 | 23-3058564 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 2366 Bernville Road, Reading Pennsylvania | 19605 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: 610-208-1991
Not Applicable.
(Former Name or Former Address, if Changed Since Last Report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
On April 2, 2013, EnerSys (the “Company”) is hosting an Investor Day conference in New York City. The webcast and slide presentation for the event are available on the Investor Relations page of the Company’s website at www.enersys.com. The slide presentation for the event is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information in this Item 7.01 and Exhibit 99.1 attached hereto is intended to be furnished under Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Act, except as expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements Pro Forma Financial Information and Exhibits. |
| (d) | Exhibits |
| 99.1 | Information in presentation by EnerSys. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EnerSys | ||
| By: | /s/ Richard W. Zuidema | |
| Richard W. Zuidema | ||
| Executive Vice President | ||
Date: April 2, 2013
INDEX TO EXHIBITS
| 99.1 | Information in presentation by EnerSys. |
Exhibit 99.1
Enersys power/full Solutions Investor Day April 2, 2013 Investor Day April 2, 2013
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Enersys power/full solutions John D. Craig Chairman, President & CEO Investor Day April 2, 2013
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Forward -Looking Information This presentation includes forward -looking statements and/or information, which are based on the Companys current expectations and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to materially differ from those anticipated. Such risks include, among others, risks associated with competitive actions, technology development and implementation, intellectual property infringement, failure to integrate acquired businesses, penetration of existing markets, expansion into new markets, hiring and retaining high quality management and key employees and general economic conditions including the risks described in the Companys most recent annual/quarterly report, as applicable, on Form 10-K/10-Q respectively, filed with the SEC, along with other unforeseen risks. Nothing that we say today should be interpreted as an update to the information or guidance that we provided in our most recent investor call, our most recent quarterly/annual report, as applicable, on Form 10-Q/10-K respectively, filed with the SEC, and our current reports filed with the SEC on Form 8-K since such quarterly/annual report. Investor Day April 2, 2013
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EnerSys Investor Day Agenda 8:00 am 9:00 am: Registration and Breakfast 9:00 am 9:30 am: John Craig Chairman, President and CEO EnerSys Vision 9:30 am 10:00 am: Michael Schmidtlein Sr. Vice President Finance & CFO Financial Results 10:00 am 10:30 am: Dr. Rhodri Evans - V.P. Global Technology & Engineering New Product Initiatives 10:30 am 10:40 am: BREAK 10:40 am 11:10 am: Todd Sechrist President, Americas Americas Overview 11:10 am 11:40 am: David Shaffer President, EMEA EMEA Overview 11:40 am 12:10 pm: Mark Tough President, Asia Asia Overview 12:10 pm 1:00 pm: Lunch and Management Q&A in product display area Investor Day April 2, 2013
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The World s Largest Industrial Battery Company EnerSys manufactures, markets, and distributes industrial batteries in three markets Reserve Power Motive Power Aerospace & Defense (1) Global leader: 25% share in a $7.9 billion market in CY 2011 Includes Motive Power and Reserve Power only Aerospace & Defense an additional $1 to $2 billion market Broadest product line in industry, with > 25% revenue from unique lead- acid premium products Leading worldwide presence 30 manufacturing facilities in the Americas, EMEA and Asia Over 10,000 customers in over 100 countries Adjusted EPS of $2.75/share was a nine month record and up 33% versus last year. (2) 9 month FY13 sales were $1,705 million, also an all-time record, 1% higher than prior year Well-positioned cost structure to prepare for any potential global business downturn and ample capacity for profitable growth. Solid liquidity to finance growth Aerospace & Defense sales are included in the Company s Reserve Power segment. As-adjusted earnings exclude certain highlighted items as shown in the attached appendix. Investor Day April 2, 2013 1
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Management Organization John Craig Chairman, President & CEO Age: 61 Yrs. Of Svc: 18 Michael Schmidtlein Sr. VP Finance & CFO Age: 51 Yrs. Of Svc. 17 KerryKane VP & Corporate Controller Age: 52 Yrs. Of Svc. 2 Rod Evans Todd Sechrist David Shaffer Mark Tough Richard Larry Axt VP Global President-Americas President-EMEA President-Asia Zuidema VP Global Technology & Age: 47 Age: 47 Age: 56 Executive VP Procurement Engineering Yrs. Of Svc: 19 Yrs. Of Svc. 7 Yrs. Of Svc. 8 Age: 64 Age: 58 Age: 45 Yrs. Of Svc. 15 Yrs. Of Svc. 17 Yrs. Of Svc. 20 Tom O Neill Robert Marley VP & Assistant Treasurer Treasurer Age: 53 Age: 60 Yrs. Of Svc. 9 Years of Svc. 2 Investor Day April 2, 2013 2
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Creating Shareholder Value Bought Bought Bought 23 Yuasa Hawker other $400M Sales $575M Sales acquisitions 2000 2002 $400M Sales Sales $0.4 $0.9 $2.3 OE$ $39 $55 $218 OE % 7.1% 6.4% 9.5% Extreme customer focus/best value Growth via acquisitions of battery companies Consolidation of operations Expansion of TPPL and other unique products capacity $4.0 billion at 10% OE $ 4.0 Billions $ 400 Millions 10.0% Continue like the past New products, technologies and applications Acquire businesses that compliment battery industry Stock buybacks Evaluate dividend Investor Day April 2, 2013 3
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Our Earnings Have More Than Doubled In Recent Years! ($ Millions, Except Per Share Amounts) +46% -22% Sales Net * +159% +1% - GAAP Earnings EPS n No Net * *End of Dec. F 13 Investor Day April 2, 2013 4
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EnerSys Underleveraged Net Debt/LTM EBITDA (1) 0.5x Need to invest in our future and have debt capacity to do it. For example: Net Debt/LTM EBITDA 2.0x requires $500 million more debt (2) Net Debt/LTM EBITDA 3.0x requires $800 million more debt (2) As defined in our U.S. Credit Agreement as of 12/31/12 Assumes $0 additional EBITDA Investor Day April 2, 2013 5
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Capital Allocation Capital Expenditures $50-75 million annually Acquisitions Focus on fast-growing regions in which we have limited market share Pursue more non-lead acid technologies for Reserve, A&D, and Motive markets Look for good values and expand our service network in our major markets Consider new specialty markets Expand acquisition targets to markets near or adjacent to our core battery business Benefit from our strong distribution channels Synergies could still be high Maintain disciplined valuation metrics Stock Buybacks Repurchased $80 million over last two years Evaluate increased buybacks in the future Dividends Consider a modest dividend in the future Investor Day April 2, 2013 6
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Energy Storage & Generation Technologies Size, Weight and Cost Considerations 400 e) 350 (Wh/litr 300 ity 250 dens 200 er nergy 150 e 100 Smal l olumetric 50 V 0 0 Li Ion cell (18650) Silver-Zinc $270/kWh $550/ kWh Li Ion battery $850-5000/ kWh Nickel-Zinc $250/ kWh Nickel metal hydride Sodium Sulphur $600/ kWh $650 /kWh Nickel cadmium PEM fuel cell $400/kWh $900/kWh SODIUM-NICKEL CHLORIDE Zebra Battery System Lead Acid $700 / kWh $150/ kWh Flow battery $650 /kWh Supercaps ($5000/kWh) 25 50 75 100 125 150 Gravimetric energy density (Wh/kg) Lighter Investor Day April 2, 2013 7
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New Product Applications Port Technology Automated Guided Vehicle Systems (AGV) Automated Guided Vehicle Systems (AGV) good example of superior benefits from TPPL technology Automation with batteries is the trend of the future Investor Day April 2, 2013 8
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New Product Development Large scale energy storage Potential $10 billion market Utilize any battery type Investor Day April 2, 2013 Motive Power TPPL 2V First EMEA offering of TPPL in Motive Power Opportunity charging versus 4-6 hours of charging One battery could run for 3 shifts
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CY 2011 Global Industrial Lead Acid Battery Market $7.9 Billion (Significant Growth) Reserve - $4.9 Billion Motive - $3.0 Billion Americas EMEA Americas 28% EMEA 27% 37% 48% Geog 45% 15% Asia Asia Other Industrial UPS 24% Forklift 30% Trucks 89% 11% Other 46% Telecom Note Market size includes only the markets where EnerSys participates. Market size includes only batteries and chargers. It excludes the aerospace & defense market (estimated at $1 to $2 billion) and service revenue. Investor Day April 2, 2013 10
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Leading Market Positions #1 Worldwide Market Share -25% Reserve - $4.9 Billion Motive -$3.0 Billion EnerSys #1 Major EnerSys #1 Major 18% Competitors 36% Competitors Exide Exide C&D East Penn GS Yuasa Hoppecke Northstar Crown Narada Coslight Saft East Penn CY 2011 Global Industrial Battery Market -$7.9 Billion Source: BCI, Eurobat industry reports and management estimates basedonthe markets where EnerSys participates. Market sizeandshare are for batteries and chargers only. It excludes the aerospace & defense market (estimated at $1 to $2 billion) and service revenue. Investor Day April 2, 2013 11
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Regional Market Share (25% Global Share) Americas EMEA Asia $2.4 Billion $2.8 Billion $2.7 Billion EnerSys #1 EnerSys #1 EnerSys #5 36% 32% 7% Major Competitors Exide Exide Coslight East Penn Hoppecke Narada Northstar Fiamm Reserve Power China Shoto C&D Northstar Leoch Crown GS Yuasa Zibo Investor Day April 2, 2013 12
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Diversified Business Model FY12 Net Sales of $2.3 Billion End Markets Diversification Geographic Diversification Telecom 19% Industrial UPS Forklifts Americas EMEA 9% 45% 47% 44% Other 20% 7% Asia Other 9% Motive Power 52% Reserve Power 48% Note Other reserve power includes aerospace & defense, utilities, emergency lighting, security systems and specialty products. Other motive power is primarily ground handling and mining equipment.
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Michael J. Schmidtlein Senior VP, Finance & CFO Investor Day April 2, 2013
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F 13 Nine Months Sales By Region & Line Of Business ($ Millions) Fav/(Unfav) F’13 F’12 $ % VolumePrice M&A Fx Americas $841 $793 $49 6% 4% - 3% -1% Europe $684 $746 ($62) -8% -2% -1% 2% -7% Asia $180 $152 $28 19% 15% - 5% -1% Total Net Sales $1,705 $1,691 $15 1% 2% - 3% -4% Motive Power $865 $880 ($14) -2% - - 2% -4% Reserve Power $840 $811 $29 4% 4% -1% 4% -4% Total Net Sales $1,705 $1,691 $15 1% 2% - 3% -4% Note - Rounding may cause minor differences. Presented on an as adjusted basis. Investor Day April 2, 2013 1
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F 13 Nine Months Net Earnings and EPS ($ Millions, Except Per Share Amounts) Fav/(Unfav) F’13 F’12 $ % Operating33% Earnings - As Adjusted $198.6 $149.2 $49.4 As % Net Sales 11.6% 8.8% 2.8 Pts. Book Tax Rate 28% 24% -- Net Earnings - As Adjusted $133.8 $101.7 $32.1 32% As % Net Sales 78%. 60%. 1.8 Pts. EPS diluted - As Adjusted $2.75 $2.06 $0.69 33% Diluted Shares Outstanding 48.610 49.507(0.897) -2% (Millions) Note - Rounding may cause minor differences. Presented on an as adjusted basis. Investor Day April 2, 2013 2
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Gross Profit Margin 30.0% $1,200 $ Millions 25. GP0%25. Target 0%25. 25.0%25. 0%0%25.0%25.0% 25.0%25.0%25.0%25.0%25.0% 25.0%25.0%25.0%25.0%25.0%25.0%25.0%25.25.0%0% 25.0% $1,000 Actual GP % 25.0%25.0% 24.1% 24.5% LME 23.0% 22.8% 23.3% 23.4% 23.2% 24.0% 20.0% 22.0% 22.2% 22.7% 22.8% $800 21.4% 21.4% 20.9% % 20.7% M 19.0% $ Profit EURO 15.0% $600 Sales ss Gro Ne t 10.0% $400 $ 592 548 569 547 574 $ 593 $ 594 554 557 564 527 509 $ $ $ $ $ $ $ 5.0% $ 461 3 7 21 4 51 4 35 $ 473 $ $200 4 $ $ 39 36 $ $ $ 340 $ $ 0.0% $0 F09 F09 F09 F09 F10 F10 F10 F10 F11 F11 F11 F11 F12 F12 F12 F12 F13 F13 F13 F13 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (F) LME $1.34 $0.97 $0.84 $0.53 $0.52 $0.69 $0.93 $1.05 $1.00 $0.88 $0.93 $1.08 $1.16 $1.17 $1.13 $0.92 $0.95 $0.91 $0.87 $0.99 EURO $1.51 $1.57 $1.50 $1.31 $1.30 $1.38 $1.44 $1.48 $1.38 $1.27 $1.32 $1.35 $1.39 $1.46 $1.41 $1.35 $1.33 $1.28 $1.26 $1.30 Actual GP % 19.0% 20.7% 22.0% 23.0% 22.8% 24.1% 23.3% 21.4% 22.2% 23.4% 23.2% 22.7% 21.4% 20.9% 22.8% 24.5% 25.0% 25.0% 25.8% 24.0% Note: LME and Euro GP $ $113 $109 $102 $90 $78 $89 $98 $97 $97 $111 $118 $125 $122 $114 $131 $146 $148 $138 $144 $135 are set to our P&L basis. Investor Day April 2, 2013 3
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Gross Profit Margin 30.0% $1,200 $ Millions 25.0%25.GP0%Target25.0%25.25.0%25.0%0%25.0% 25.0%25.0%25.0%25.0%25.0% 25.0%25.0%25.0%25.0%25.0%25.0%25.0%25.25.0%0% 25.0% $1,000 25.0%25.0% 24.1% 24.5% 23.0% 22.8% 23.3% 23.4% 23.2% 24.0% 20.0% 22.0% 22.2% 22.7% 22.8% $800 Actual GP % 21.4% 21.4% 20.9% % 20.7% M Profit 19.0% $ 15.0% $600 LME Sales ss Gro Ne t 10.0% $400 $ 592 548 569 547 574 $ 593 $ 594 554 557 564 527 509 $ $ $ $ $ $ $ 5.0% $ 461 3 7 21 4 51 4 35 $ 473 $ $200 4 $ $ 39 36 $ $ $ 340 $ $ 0.0% $0 F09 F09 F09 F09 F10 F10 F10 F10 F11 F11 F11 F11 F12 F12 F12 F12 F13 F13 F13 F13 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (F) LME $1.34 $0.97 $0.84 $0.53 $0.52 $0.69 $0.93 $1.05 $1.00 $0.88 $0.93 $1.08 $1.16 $1.17 $1.13 $0.92 $0.95 $0.91 $0.87 $0.99 Actual GP % 19.0% 20.7% 22.0% 23.0% 22.8% 24.1% 23.3% 21.4% 22.2% 23.4% 23.2% 22.7% 21.4% 20.9% 22.8% 24.5% 25.0% 25.0% 25.8% 24.0% GP $ $113 $109 $102 $90 $78 $89 $98 $97 $97 $111 $118 $125 $122 $114 $131 $146 $148 $138 $144 $135 Note: LME and Euro are set to our P&L basis. Investor Day April 2, 2013 4
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Solid Earnings in Challenging Environment Net Sales Adj. Net Earnings / Diluted EPS ($ in Millions)($ in Millions, except per share information) $3.50 $2.52 $3.03 $2.75 $3.00 $2,500 $2,283 $149 $2.50 $150 $1.92 $2,027 $134 $2.00 $1,973 $1,964 $1.42 $126 $2.06 $2,000 $1.50 $1,691 $1,705 $120 $0.87 . $1 44 $1,504 $1,579 $102 $1.00 $1,500 $95 $0.50 $90 Adj. Diluted $69 $70 EPS $1,000 $60 $41 $500 $30 $- FY07 FY08 FY09 FY10 FY11 FY12 9mos. 9mos. $- FY12 FY13 FY07 FY08 FY09 FY10 FY11 FY12 9 mos. 9 mos. FY12 FY13 Total Up Up Down Down Up Up Up Up Up Up Down(EPS Growth 17% 35% 3% 20% 24% 16% 1% Up Up Up 12% 63% 35% 25% 75% 20% 33% Changes) Volume 6% 11% 7% 17% 18% 8% 2% Price 5 14 5 4 4 2 0 Note - Adjusted earnings results exclude highlighted items and FX 4 8 1 -- 2 2 -4 restated for Convertible Debt Interest Expense. Acquisitions 2 2 -- 1 4 4 3 Investor Day April 2, 2013 5
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Financial Position Highlights ($ Millions) Nine Months Full Fiscal Year Fiscal Year 2013 2012 Cash & Cash Equivalents $228.6 $160.5 Net Debt (Gross Debt - Investments) $74.3 $170.6 Net Cash from Operations $135.5 $204.2 Capital Expenditures $37.6 $48.9 Leverage Ratio (per US Credit Agreement) 0.5X 0.8X Primary Working Capital as a % of Sales 27.4% 24.4% Return on Adj Shareholders’ Equity 17.9% 16.4% Investor Day April 2, 2013 6
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Leverage Underlevered at .5X Net Debt/LTM EBITDA (1) Wider net for acquisitions Increase opportunities for U.S. and Western Europe Consider leverage of 2X+ Will continue to keep a conservative balance sheet Allow for new products development, additional acquisitions, higher capital expenditures Has been a real asset Compliment acquisition strategy with more stock buybacks and consider dividends (1) As defined in our U.S. Credit Facility as of 12/31/12. Investor Day April 2, 2013 7
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Dr. Rhodri Evans VP Global Technology & Engineering Investor Day April 2, 2013
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New Product Initiatives Investor Day April 2, 2013
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EnerSys New Product Introduction Crucial we match the business case and the engineering capability to invest and provide best in class products that make money Global market and customer driven new product introduction (NPI) process within EnerSys Disciplined NPI process, one global team driving, engineering & marketing working closely Target 30% min GP on new product programs Global engineering must provide the confident approval for new products & new technologies. Investor Day 1 April 2, 2013
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Automated Guided Vehicle (AGV) Applications: Industrial motive power application Solutions require fast charge in a cyclic duty high reliability application Common in e.g. car plants, paper mills, food & beverage, distribution EnerSys thin plate, pure lead technology (TPPL) maintenance free solutions for a growing market (unique high power, fast charge solutions) XFC / NexSys TPPL battery & high frequency charger solutions from EnerSys Estimated market size in three years: $200 million global (batteries & chargers) incremental & substituted sales Investor Day 2 April 2, 2013
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Port Technology AGV Solution NEW GROWING MARKET SECTOR automated shipping container handling systems, estimated global market size $175 million for batteries and chargers in 3 yrs Fuel savings, reductions in carbon dioxide emissions & changes to electric drive systems are key factors to consider Battery ENERSYS -AGV PROVIDESgenerates battery, charging systems, monitoring -comms system ~ 50% of CO2-quantity versus diesel AGV: 50% CO2 -reduction with EnerSys battery & charger systems additional CO2 -reduction when using green electicity (e.g. From Renewables) Investor Day April 2, 2013 3
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Battery -AGV (automated guided vehicle) Example Investor Day April 2, 2013 4
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Battery -Change and Charging Station length ~120 ft. Battery-change and charging station for battery-AGV width ~ 65 ft. It enables: Decoupling of driving and loading Fully automatic battery change <5 height ~ 40 ft. minutes Optimized current network utilization through intelligent charging system Investor Day April 2, 2013 5
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Motive Power TPPL 2V — XFC Technology Market ? Maintenance free Motive Power $450 million market in 3 yrs globally. Incremental & substituted higher margin sales XFC batteries with matched EnerSys HF charger ?KEY ADVANTAGES: Maintenance Free operation Discharge as required, leave the battery on the truck Recharge as and when possible - Opportunity charge Multi-shift operation (?always available’) Opportunity charging suitable No topping-up Can be operated at partial state of charge (PSOC) 1200 Discharge / Charge cycles to a 60% depth of discharge Investor Day 6 April 2, 2013
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XFC 2V TPPL ? SYSTEM ? ENERGY PACKAGE XFC Battery with Low Voltage Wireless Data & CHARGER with TPPL Inside Alarm Control Module WIRELESS CONTROLS MAINTENANCE FREE SOLUTION Investor Day 7 April 2, 2013
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Typical Motive Battery Room - Flooded Investor Day 8 April 2, 2013
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With XFC Maintenance Free Investor Day April 2, 2013 9
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XFC 2V TECHNOLOGY ? Summary Benefits PREMIUM HIGH TECH PRODUCT PACKAGE FOR MP APPLICATIONS THE ONLY VRLA PRODUCT ON THE MARKET SUITABLE FOR MULTISHIFT AND HEAVY DUTY APPLICATIONS A SERIOUS COMPETITOR TO LITHIUM AT MUCH LOWER COSTS REDUCED COST OF OPERATIONS ENVIRONMENTALLY FRIENDLY FLEXIBLE IN OPERATIONS REDUCED MAINTENANCE EQUIPMENT NO BATTERY HANDLING OPERATIONS FREES UP INFRASTRUCTURE ROOM Investor Day 10 April 2, 2013
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Energy Storage & Generation Technologies Size, Weight and Cost Considerations 400 e) 350 (Wh/litr 300 ity 250 dens 200 er nergy 150 e 100 Small olumetric 50 V 0 0 Li Ion cell (18650) $270/kWh Silver-Zinc Li Ion battery $550/ kWh $850-5000/ kWh Nickel-Zinc $250/ kWh Nickelmetal hydride Sodium Sulphur $600/ kWh $650 /kWh Nickel cadmium PEM fuel cell $400/kWh $900/kWh SODIUM -NICKEL CHLORIDE Zebra Battery System Lead Acid $700 / kWh $150/ kWh Flow battery $650 /kWh Supercaps ($5000/kWh ) 25 50 75 100 125 150 Gravimetric energy density (Wh/kg) Lighter Investor Day April 2, 2013 11
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EnerSys Nickel Zinc Technology Nickel Zinc technology is an attractive rechargeable maintenance free battery chemistry Intermediate between lead acid and lithium ion technology though at a cost point closer to lead acid & without the complexity of li-ion battery systems Solution for various industrial & speciality applications Exceptional high power capability Estimate market size in three years $450 million (Displace Nickel Cadmium plus incremental sales prospects) Investor Day 12 April 2, 2013
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EnerSys OptiGrid Solution Containerized Battery based system coupled with a Power Conversion System providing high power & long duration back up Estimated market size in three years $300 million globally Potential in 10-20 years between $200-$600 billion Leverage existing EnerSys battery technologies Complete with racks, battery monitoring, battery management & ambient temperature controls inside the container Demonstration System located in Vermont, USA Provide back up or main source of power, renewable charging Also peak shaving, frequency regulation, ?arbitrage? Investor Day 13 April 2, 2013
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EnerSys Lithium Chemistries Primary (non recharge) Battery Applications: Chemistries: Missiles, A&D ground applications, Space Suits Lithium Thionyl; Lithium Silicon Lithium Aluminium Secondary (Chargeable) Lithium Applications: Chemistries: e.g. Rocket Launchers, Satellites, A&D Radio, Drones, Lithium Ion Niche Industrial Industrial Lithium Market Size: $2 -$4 billion globally Investor Day 14 April 2, 2013
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Todd Sechrist President Americas Investor Day April 2, 2013
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EnerSys Americas Investor Day April 2, 2013
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Market Share Americas CY 2011 Source: BCI, industry reports and management estimates based on the markets where EnerSys participates. Market size and share are for batteries and chargers only. It excludes the aerospace & defense market and service revenue. Investor Day April 2, 2013 1
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Who’s chasing ENS Investor Day April 2, 2013 2
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CLEVELAND, OH MP Advanced HF Chargers RICHMOND, KY MP OOLTEWAH, TN MP MONTERREY, MEXICO MP and RP SUMTER, SC MP Steel Fabrication Investor Day April 2, 2013 Americas Operations HAYS, KS RP WARRENSBURG, MO TPPL for RP and A&D TIJUANA, MEXICO RP LONGMONT, CO Lithium A&D HORSHAM, PA Lithium A&D SAO PAULO, BRAZIL RP and MP BUENOS AIRES, ARGENTINA RP and MP
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EnerSys Americas .WE ARE Undisputed market leader Global Power with local reach Sustainable differentiators Manufacturing platforms on all continents. Investor Day April 2, 2013 4
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Making the Motive Market Move Organic growth driven from GDP growth Sustainable push to lower AC operating expense Trends to higher voltage vehicles Electrics now 60%+ of all material handling Source: ITA, Company estimates. Investor Day April 2, 2013 5
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What’s Fueling the Americas Reserve Markets 2011 data traffic was 8x the 2000 Internet data traffic Data center expansion 4G LTE network expansions Smart grid genesis OptiGrid Source = Cisco VNI Mobile - 2012 Investor Day April 2, 2013 6
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Americas SWOT Analysis Strengths Weaknesses Stable, experienced management team Application specific product range Value/Price Leadership Service & Installation capabilities Premium products End user and dealer loyalty programs South America share Growth inhibited by anti-trust limitations Opportunities South America share A&D expansion Advanced Pb & Ni solutions TPPL expansion into cyclic apps Large scale energy storage Threats New competitors Regulation/Sequestration South America political stability Other technologies Investor Day April 2, 2013 7
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Americas Net Sales & Operating Earnings Net Sales ($ in Millions) $1,200 $1,083 $897 $831 $841 $778 $800 $700 $400 $0 F’08 F’09 F’10 F’11 F’12 F’13 9m Investor Day April 2, 2013 Operating Earnings ($ in Millions, except %) 16.0% 14.0% 15.9% 12.6% 13.0% 9.5% 12.0% 8.8% 80%. $200 4.0% $150 $141 $134 OE % $126 $100 $79 $88 $68 $50 $0 F’08 F’09 F’10 F’11 F’12 F’13 9m Note: Operating Earnings excluding highlighted items 8
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David Shaffer President - EMEA Investor Day April 2, 2013
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Market Drivers - MP Economic activity in key markets like food, automotive and logistics Conversion from gas to electric forklifts Asian Competitors: Coslight Narada GS Yuasa China Shoto Leoch Market Share EMEA $2.8 Billion CY 2011 ~ 20% Asian Competitors (1) 32% EnerSys 48% European Competitors Market Drivers - RP Network upgrades like 4G Data driver services and uninterruptible power Power quality issues in developing countries European Competitors: Exide Hoppecke Fiamm Reserve Power Northstar 1) Minimal imports from outside of EMEA for MP. Significant Asian imports in RP Source: BCI, Eurobat industry reports and management estimates based on the markets where EnerSys participates. Market size and share are for batteries and chargers only. It excludes the aerospace & defense market and service revenue. Investor Day April 2, 2013 1
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EMEA Operations & Engineering Eastern Europe Western Europe Bielsko Biala , Poland Newport, Wales Material Handling / MP TPPL for RP and A&D Targovishte, Bulgaria Large cell plant for RP, Hagen, Germany MP and A&D Material handling / MP Hostomice, Czech Republic Arras, France Steel fabrication and specialized RP battery assembly Advanced HF chargers and controls TPPL for MP and RP Culham, England Space battery Eng. & Assembly Africa Nordhausen, Germany Dubai, UAE Large cell lithium production MP final assembly Zwickau, Germany Tunis, Tunisiaunisia Nickel ? based cell production RP Zurich, Switzerland ? HQ Port Elizabeth, S. Africa Plant for Mining, MP and RP Additional regional final assembly and distribution in Italy, Spain, Sweden, Switzerland, Benelux, Russia etc. Investor Day April 2, 2013 2
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EMEA Key Areas of Focus Increased pricing Market leadership Avoid low margins regardless of volume Changing customer mix (Loyalty programs) Product differentiation Launched TPPL MP Increase TPPL RP Large scale energy storage ? OptiGrid Nickel Zinc Market based product roadmaps Start and end with customers Always promote total cost of ownership (TCO) Investor Day April 2, 2013 3
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EMEA Key Areas of Focus (cont?d) Control costs Increase lead scrap reclaim and tolling Attrition/Automation in high cost countries Avoid vendor dependence Reduce SKU complexity End Result EMEA OE to 10% Investor Day April 2, 2013 4
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EMEA SWOT Analysis Strengths Market share and scale of operations Brands, quality reputation & TPPL technology Significant production in low cost countries Extensive geographic sales coverage Widest service coverage Weaknesses EMEA less than 10% OE High OEM revenue mix at lower margins Reduced flexibility by labor and social requirements Opportunities Threats MP unique product - TPPL 4G / LTE in Europe Port automation projects in MP Hybrid Telecom markets in RP End user and dealer loyalty programs Increased scrap collection & tolling Large scale energy storage Nickel Zinc Continued instability in North Africa and ME Austerity measures especially A&D spending Asia competition in RP Other technologies Investor Day April 2, 2013 5
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EMEA Total Net Sales & Operating Earnings Net Sales Operating Earnings ($ in Millions)($ in Millions, except %) 10.0% 6.8% 6.6% 6.4% 6.4% 7.5% 5.5% 50%. $1,200 $1,115 $100 2.5% $987 $995 2.5% $890 $75 $65 OE % $742 $64 $61 $800 $57 $684 $50 $46 $400 $25 $18 $0 $0 F’08 F’09 F’10 F’11 F’12 F’13 9m F’08 F’09 F’10 F’11 F’12 F’13 9m Note: Operating Earnings excluding highlighted items Investor Day April 2, 2013 6
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Mark Tough President - Asia Investor Day April 2, 2013
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Geographical Coverage Manage 5 geographical regions Sales, Service, DC 1. Australia, New Zealand and Factory Pacific Regional HQ 2. Greater China ? China, Taiwan, Hong Kong 3. India & Sub Continent 4. North Asia - Japan, Korea 5. South East Asia ? Singapore, Indonesia , Philippines, Malaysia, Thailand etc Singapore Singapore 6 Hour Flight radius Investor Day April 2, 2013 1
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Market Size Industrial Batteries CY 2011 Market size ~ $2.7 bln (1) Motive Power ~ $.5 bln (1) Reserve Power ~ $2.2 bln (1) EnerSys share 7% Big Growth Opportunities Capacity expansion Acquisitions Why only 7% EnerSys environmental historical spending vs. competitor spending now; more level playing field 1) Excludes Japanese Motive Power market and entire Indian market * Source: BCI, industry reports and management estimates based on the markets where EnerSys participates. Market size and share are for batteries and chargers only. It excludes the aerospace & defense market and service revenue. Investor Day April 2, 2013 2
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Competitors Investor Day April 2, 2013 3
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Motive Power Dynamics Asia accounts for 23% of global fork truck sales. China 9.7%, Japan 7.4%, Australia 1.5% Market growth continues to be at robust 10% + -(WITS) EnerSys market share 9% with no footprint in Japan Focus on price we get a premium for our products Build on the base business Diversify the customer base and geographic reach by expanding into Japan and other SEA markets Add value to our core competency Move up and down the value chain redefining where our scope starts and finishes Build brand equity Hawker and EnerSys Leverage our global relationships Exploit our new technologies TPPL, WiiQ, Chargers Execute at an operational and customer service level Revenue ~ $70 million (up 75% from FY09) Investor Day April 2, 2013 4
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Reserve Power Dynamics New phase of investment in telecom - China LTE, Australia NBN, Japan SBM, Huawei & ZTE Partnering with large OEM customers, and EnerSys global hubs, cements our long term relationships China environmental legislation enforcement closed 1200 factories Two major Chinese competitors have issued profit warnings Disciplined Market Leader price strategy contributes to decline in volume and improvement in earnings Japan market opens after Fukashima India $700 million market with EnerSys well positioned after investment in Energy Leader and technology products Continued focus on diversifying our base business from Telecom to Energy, Rail, Resources, Data Revenue ~ $160 million Investor Day April 2, 2013 5
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Asia SWOT Analysis Strengths Scale of operations two new, large plants in China Global partnerships Brands, quality reputation & TPPL technology Product range Extensive geographic sales coverage Weaknesses Price vs. Valuealue Business built on Telecom sector Market diversification Opportunities Threats High market growth Chinese quality Competitors ENS growth India and Japan Unstable political environment & decisions 4G / LTE in China, Australia, NZ Price erosion Environmental enlightenment Other technologies Last mile service Hybrid technologies Acquisitions Investor Day April 2, 2013 6
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Asia Total Net Sales & Operating Earnings Net Sales Operating Earnings ($ in Millions) ($ in Millions, except %) 15.0% 16.0% 12.0% 10.4% 8.7% 6.0% 80% . $300 $30 5.9% 4.0% $250 $21 OE % 2.1% $19 $20 $205 $200 $178 $13 $180 $12 $154 $11 $137 $10 $150 $133 $3 $100 F’08 F’09 F’10 F’11 F’12 F’13 9m $0 F’08 F’09 F’10 F’11 F’12 F’13 9m Note: Operating Earnings excluding highlighted items Investor Day April 2, 2013 7
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Summary Wellpositioned inhighgrowthareainmanufacturing andsaleschannel Indiaprospects aregood HighbarrierstoentryMarginsimproving substantially TPPLunique technology valueproposition forIndiaOpexModel Tosupport growthinMPbusiness China(Gayou) andIndiaprovide lowcostmanufacturing basetomeetfuturemarketdemands FocusandexpandcoreTPPLproduct rangeforhighermargins Addingvaluetoourcorecompetency drivesvalueandmarginEstablishment ofassembling facilities enablequickertimeto marketandallowsolution baseselling Investor Day April 2, 2013 8
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