EnerSys (ENS) Delivers Record Gross Margin and Strong Earnings Growth in Q2 Fiscal 2024
EnerSys (NYSE:ENS) achieves a record gross margin of 26.6%, up 490 basis points from the previous year.
Diluted EPS soars by 86% to $1.56, while adjusted diluted EPS climbs by 66% to $1.84.
Net sales reach $901 million, marking a slight increase from the prior year's second quarter.
Operating earnings and adjusted operating earnings rise by 63% and 58% respectively.
On November 8, 2023, EnerSys (NYSE:ENS), a global leader in stored energy solutions, announced its financial results for the second quarter of fiscal 2024. The company reported a record gross margin of 26.6%, an increase of 490 basis points from the prior year, and a significant rise in earnings per share (EPS). The diluted EPS for the quarter was $1.56, marking an 86% increase from the previous year, while the adjusted diluted EPS was $1.84, up by 66%. The net sales for the quarter were $901 million, a modest 0.2% increase from the second quarter of fiscal 2023.
Financial Highlights and Performance Analysis
EnerSys (NYSE:ENS) delivered a solid financial performance in the second quarter of fiscal 2024, driven by strength in its Motive Power segment. The company's net sales saw a slight uptick, supported by a 6% increase in price/mix and a 1% positive impact from foreign currency translation, which offset a 7% decrease in organic growth. Operating earnings for the quarter reached $89 million, a 63% increase, and adjusted operating earnings hit $103 million, up by 58%.
The company's net earnings attributable to EnerSys stockholders were $65.2 million, translating to $1.56 per diluted share. This included an unfavorable highlighted net of tax impact of $11.3 million, or $0.28 per diluted share, from highlighted items. In comparison, the net earnings for the same quarter in the previous fiscal year were $34.5 million, or $0.84 per diluted share, which included an unfavorable highlighted net of tax impact of $11.1 million, or $0.27 per diluted share.
Balance Sheet and Cash Flow Statement
The balance sheet of EnerSys (NYSE:ENS) as of October 1, 2023, showed total assets of $3.49 billion, with current assets accounting for $1.79 billion. The company's cash and cash equivalents stood at $327.75 million. Total liabilities were $1.83 billion, with current liabilities at $665.27 million. The equity attributable to EnerSys stockholders was approximately $1.66 billion.
From a cash flow perspective, EnerSys (NYSE:ENS) generated $185.72 million in net cash provided by operating activities for the six months ended October 1, 2023. Capital expenditures for the same period amounted to $35.85 million, resulting in free cash flow that supports the company's ability to invest in growth opportunities and return capital to shareholders.
Outlook and Strategic Initiatives
Looking ahead to the third quarter of fiscal 2024, EnerSys (NYSE:ENS) expects adjusted diluted earnings per share in the range of $1.80 to $1.90, inclusive of $0.50 to $0.60 from IRC 45X tax benefits under the Inflation Reduction Act. The company anticipates a gross margin in the range of 25.0% to 27.0%, including 150bps to 250bps from IRA credits. For the full fiscal year 2024, capital expenditures are projected to be between $100 million and $120 million.
EnerSys (NYSE:ENS) continues to execute its "Innovate, Optimize, Accelerate" strategy, with plans to advance its lithium battery gigafactory in the United States, which is expected to be a key competitive advantage. The company also received an initial order for 50 of its proprietary Fast Charge and Storage (FC&S) energy management systems, with the first tranche of 15 units expected to be delivered by mid-calendar year 2024.
David M. Shaffer, President and Chief Executive Officer of EnerSys, expressed confidence in the company's medium- and long-term demand, supported by megatrends such as digitization, automation, electrification, and decarbonization. The company remains focused on delivering for its customers and achieving its long-term financial targets.
For more detailed information on EnerSys (NYSE:ENS)'s financial results, please visit the Investor Relations section of the company's website at https://investor.enersys.com.
Explore the complete 8-K earnings release (here) from EnerSys for further details.
This article first appeared on GuruFocus.
