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EnerSys (ENS) Surpasses Q3 Earnings & Revenue Estimates

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EnerSys ENS reported better-than-expected third-quarter fiscal 2021 (ended Jan 3, 2021) results, wherein earnings and revenues beat the Zacks Consensus Estimate by 6.7% and 0.2%, respectively.

The company’s earnings in the fiscal third quarter were $1.27 per share, surpassing the Zacks Consensus Estimate of $1.19. The bottom line improved 22.1% from the year-ago quarter figure of $1.04.

Revenue Details

In the reported quarter, EnerSys’ net sales amounted to $751.1 million, down 1.7% year over year. Revenues were adversely impacted by 3% fall in volumes, partially offset by 1% positive impact from foreign exchange. The company noted that the decline in the organic sales was attributable to the adverse impacts of the pandemic.

EnerSys’ top line beat the Zacks Consensus Estimate of $750 million.

Region wise, the company’s net sales decreased 1% year over year to $499 million in the Americas and fell 4% to $194 million in Europe, Middle East and Africa. Sales in Asia were $58 million, flat year over year.

The company reports revenues under three segments. A brief discussion of the quarterly results is provided below:

Energy Systems’ sales were $337 million, which contributed 45% to net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues declined 2%. Volume was down 4%, whereas foreign exchange had a positive impact of 2% on sales.

Motive Power generated revenues of $304 million, contributing 40.5% to net revenues in the reported quarter. The figure decreased 4% year over year due to negative impact of 5% from lower volume, partially offset by 1% positive impact from foreign exchange.

Specialty’s sales were $109 million, which contributed 14.5% to net revenues in the quarter. On a year-over-year basis, the segment’s revenues increased 7%. Volumes increased 6% and foreign exchange had a positive impact of 1%.

Margin Profile

In the reported quarter, EnerSys’ cost of sales declined 2.2% year over year to $561.8 million. Cost of sales was 74.8% of the quarter’s net sales. Gross profit in the quarter increased 2.2% to $189.3 million, while gross margin increased 90 basis points (bps) to 25.2%.

Operating expenses decreased 11.1% year over year to $118 million. It represented 15.7% of net sales in the reported quarter compared with 17.4% in the year-ago quarter. Operating earnings were $56.1 million, reflecting an increase of 30.2%. Margin increased 190 bps to 7.5%.

Balance Sheet & Cash Flow

Exiting the third quarter of fiscal 2021, EnerSys had cash and cash equivalents of $488.7 million, up 18% from $414.2 million recorded in the last reported quarter. Net debt decreased 5.3% sequentially to $754.7 million.

The company generated net cash of $272.1 million from operating activities in the first nine months of fiscal 2021, reflecting an increase from $253.4 million generated in the year-ago period. Capital expenditure totaled $53.7 million compared with $101.4 million in the year-ago period.

Dividend

Concurrently with the release, the company announced that its board of directors has approved the payment of a quarterly cash dividend of 17.5 cents per share to shareholders on record as of Mar 12. The disbursement will be made on Mar 26.

Outlook

Though uncertainties related to the pandemic persist, EnerSys anticipates gaining from cost control initiatives and solid product offerings in the quarters ahead.

Enersys Price, Consensus and EPS Surprise

Enersys Price, Consensus and EPS Surprise
Enersys Price, Consensus and EPS Surprise

Enersys price-consensus-eps-surprise-chart | Enersys Quote

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are Franklin Electric Co., Inc. FELE, SPX FLOW, Inc. FLOW and Danaher Corporation DHR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Franklin Electric delivered a positive earnings surprise of 12.82%, on average, in the trailing four quarters.

SPX FLOW delivered a positive earnings surprise of 146.55%, on average, in the trailing four quarters.

Danaher delivered a positive earnings surprise of 19.86%, on average, in the trailing four quarters.

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