EnerSys · NYSE:ENS
EnerSys — Investor Presentation (November 2023)
55 slides from EnerSys's investor presentation, November 2023
Slide 1: Investor Presentation November 2023
Investor Presentation NOVEMBER 2023 November 2023 © 2023 EnerSys. All Rights Reserved.
Slide 2: Forward Looking Statements
Forward Looking Statements As a reminder, we will be presenting certain forward-looking statements on this call that are based on Management’s current expectations and views regarding future events and operating performance and are subject to uncertainties and changes in circumstances. Our actual re
Slide 3: EnerSys at a Glance
EnerSys at a Glance F Y 2 0 2 3 K E Y S TAT I S T I C S 1 $4.3B $322M $388M $5.34 10K+ Market Cap2 Adj. Operating Earnings3 Adj. EBITDA3 Adj. Diluted EPS3 Customers G L O B AL FAC I L I T Y B AS E 4 F Y 2 0 2 3 N E T S AL E S $3.7B Business Geography Segments 6% 14% 21% 39% 47% 73% Energy Systems Am
Slide 4: Well-Positioned for Long-Term Profitable Growth
Well-Positioned for Long- Term Profitable Growth Provider of highly differentiated energy solutions with 1 full suite of technologies for diverse end markets Strategically aligned with megatrends in 2 large and growing markets Resilient business model positioned for strong cash 3 flow generation, pr
Slide 5: Empowering Our Team to Innovate and Deliver Differentiated Solutions
Empowering Our Team to Innovate and Deliver Differentiated Solutions MISSION VISION Providing people everywhere with Serving the global community accessible power to help them with mission-critical work and live better stored energy solutions VAL U E S - D R I V E N C U LT U R E Safety & Our Continu
Slide 6: Executing Our Strategic Vision | Significantly Transformed Portfolio
Executing Our Strategic Vision | Significantly Transformed Portfolio • Improved new product TO D AY • Established vision- • Integrated Alpha and development time driven culture NorthStar acquisitions • Expanded product Innovating, Optimizing, • Built teams to execute • Deepened capabilities lines an
Slide 7: Product Portfolio Evolution
Product Portfolio Evolution | Transformed to End-to-End Energy Solutions Provider N ET SA L ES M IX H IG H L IGH T S ($B) $3.7 New Product 110 Introductions $3.1 44% Faster New Product $2.4 3.5x Development Time 56% 73% 56% 75 UL Approvals 44% 27% Increase in FY'17 FY'20 FY'23 288% Engineers Mainten
Slide 8: Business Segments
Business Segments ENERGY SYSTEMS NEW VENTURES Power conversion, power distribution, Energy storage and management and energy storage solutions systems for demand charge • Communication Networks reduction, utility back-up power, • Data Centers and dynamic fast charging • Industrial Power and Utilitie
Slide 9: Foundational Core Modular Platforms
Foundational Core Modular Platforms E N E R G Y S TO R AG E POWER ELECTRONICS Lithium-ion • Advanced, high-efficiency power conversion • Maintenance-free • High voltage power transfer with power • Longer cycle life line communication for 5G small cells • Fastest charge rate • Wireless power transfer
Slide 10: Addressing Global Megatrends in Attractive and Diverse End Markets
Addressing Global Megatrends in Attractive and Diverse End Markets Energy • Modernizing energy grids, storage, and distribution Transition • Shifting market to EVs ~$30B+ Serviceable Energy • Increasing resiliency of electrical infrastructure and grid Addressable Market1 Security • Growing need for
Slide 11: Leveraging Our Sustainable Competitive Advantages
Leveraging Our Sustainable Competitive Advantages Deep Customer Domain Modular Resilient Operational Relationships Expertise Technology Business Model Excellence Customer-centric Product and company Only fully integrated Large, diverse end- Continuous improvement end-to-end solutions differentiation
Slide 12: Strategic Priorities Driving Long Term Growth
Strategic Priorities Driving Long Term Growth Increasing Higher Value Solutions • Customer-centric NPIs (volume and mix) Innovate • State-of-the-art technology Compounding Value Creation • Organic hardware and software • Fast Charge and Storage (FC&S) • Scalable projects across Energy Systems, Motiv
Slide 13: Our Sustainability Journey
Our Sustainability Journey Established full- Announced time Sustainability Scope 1 and Team; joined Launched Published Scope 2 carbon Target date for external inaugural diversity supplemental neutrality goals; 2021 diversity sustainability engagement environmental submitted CDP Published first Scope
Slide 14: Committed to a Sustainable Future
Committed to a Sustainable Future SUSTAINABILITY OF ENVIRONMENTAL OUR PEOPLE SUSTAINABILITY PRODUCTS AND SERVICES STEWARDSHIP AND COMMUNITY GOVERNANCE • Driving profitability and growth, • Tracking emissions metrics • Committed to embedding DEI in • Assigned Board-level oversight with focus on energ
Slide 15: Energy Systems at a Glance
Energy Systems at a Glance FY 2023 KEY STATISTICS1 Net Adj. Operating Global Customers Market Share Sales Earnings2 Installed Base $1.7B $86M 1M+ Multi-National North America - leading market position Systems in Operation Blue Chip Global - high growth opportunities Serving Diverse and Critical End
Slide 16: Well-Positioned to Grow in Attractive Addressable Market
Well-Positioned to Grow in Attractive Addressable Market DRIVERS $400B+ M AR K E T D Y N AM I C S Total Global Network Resilient Power Everywhere Infrastructure Market • Network expansion and capex funded build programs • Ongoing operational ~$20B+ maintenance of networks and facilities Serviceable
Slide 17: Motive Power at a Glance
Motive Power at a Glance FY 2023 KEY STATISTICS1 Installed Base Net Adj. Operating Global Global Charge Countries Sales Earnings2 Market Share Points $1.5B $179M ~500K 121 ~22% Solutions Utilized by Electric Forklifts, Mining, and Other Commercial Electric-Powered Vehicles B R AN D S / P R O D U C T
Slide 18: Well-Positioned to Grow at or Above Market
Well-Positioned to Grow at or Above Market DRIVERS F U T U R E S TAT E Fully-Automated Warehouse ~$6.8B Electrification • Decarbonization • Environmental health and safety Serviceable • Lower cost of operation vs. ICE • Lithium technology enablement Addressable Market Automation • Operational effici
Slide 19: Specialty at a Glance
Specialty at a Glance FY 2023 KEY STATISTICS1 Net Adj. Operating Transportation Customers Market Share3 Sales Earnings2 Installed Base3 Served $519M $39M 1.8M 700+ 30% Trucks U.S. OEM Truck Market T R A N S P O R TAT I O N A E R O S PA C E A N D D E F E N S E 40% Key Innovations Revenue by Key Innov
Slide 20: Positioned to Further Capture Share in Large and Attractive Markets
Positioned to Further Capture Share in Large and Attractive Markets DRIVERS M AR K E T D Y N AM I C S High-Density Resilient Power ~$3.1B • Increasing fleet electronic loads • Currently 9% of SAM – Vehicle tracking systems – Audio / infotainment / GPS • 31% OEM – Stop - start Serviceable • 30% OES –
Slide 21: Powering the Future through Energy Management Capabilities
Powering the Future through Energy Management Capabilities S M AR T E N E R G Y L O AD & E N E R G Y E C O S Y S T E M System Input System Output EV-Pedestal 150kW Commercial Solar Fast Charge & Storage 600kW Lithium-Ion Batteries Commercial Buildings and Multi-Family Units Grocery Stores Grid Peak
Slide 22: Accelerating Innovation with Fast Charge and Storage
Accelerating Innovation with Fast Charge and Storage E N D - TO - E N D S O L U T I O N KEY BENEFITS • Smart energy and load management ecosystem for reliable fast charging solutions • Solar panel integration in decentralized system enables power in rural areas • Modularity allows growth with the ma
Slide 23: Fast Charge and Storage Momentum Growing
Fast Charge and Storage Momentum Growing LAUNCH ORDER RECEIVED SYSTEM ORDER Battery Energy Storage DC Pedestal • Initial 50 system order System (BESS) • 15 systems to be deployed Power midyear 2024 Conversion Software System • 4 pedestals per system with parallel charging capability ONLY SYSTEM COMB
Slide 24: Significant Opportunity in Attractive and Growing Market
Significant Opportunity in Attractive and Growing Market TAR G E T M AR K E T M AR K E T P U B L I C D C C H AR G E R S 1 OPPORTUNITY U.S. CHARGER DEMAND $217B 27.5 2 (M) 1.3 Global Public DCFC Hardware 0.7 Spend Estimate 2022 – 2030 0.6 0.5 0.5 0.1 0.1 0.1 0.0 $7.5B+ Residential Retail & On-the-Go
Slide 25: FY'20 to FY'23 Financial Performance
FY’20 to FY’23 Financial Performance N E T S AL E S AD J . O P E AR N I N G S 1 AD J . D I L U T E D E P S 1 ($B) ($M) Includes $17M IRA Includes $0.42 IRA 6.3% $3.7 3.9% $3.1 CAGR $287 $322 4.5% CAGR $4.68 $5.34 CAGR FY'20 FY'23 FY'20 FY'23 FY'20 FY'23 K EY D R IVER S • Robust demand from growing m
Slide 26: FY'20 to FY'23 Bridge
FY’20 to FY’23 Bridge AD J . D I L U T E D E P S 1 ~20% 4.5% Pro Forma CAGR CAGR Segment Performance Operational Efficiencies and Wins Headwinds • Capitalizing on high-growth end-markets • EOS waste elimination and footprint optimization • FX and interest rates • Significant price / mix achievements
Slide 27: Clear Path to Achieving FY'27 Targets
Clear Path to Achieving FY’27 Targets NET AD J . O P E R AT I N G AD J . AD J . S AL E S M AR G I N 1 E B I T D A1 EPS1 FY’23 6.3% 8.7% $388M $5.34 Baseline FY’20-23 CAGR FY’27 8% - 10% 14% - 16% $850M - $950M $11.00 - $13.00 Targets FY’23-27E CAGR + reinvestment of capital for additional shareholde
Slide 28: Accelerating Growth in Diverse End Markets
Accelerating Growth in Diverse End Markets Total EnerSys: 8% – 10% Net Sales FY’23 – 27E CAGR Energy Systems Motive Power Specialty Fast Charge & Storage CAGR 6% – 8% 5% – 7% 10% – 12% Incremental • Accelerating higher-tech • Growing automation and • Capturing market share • Demonstrates ability to
Slide 29: Significant Free Cash Flow Generation
Significant Free Cash Flow Generation F R EE C A SH F L O W 1 D R IVER S • Revenue and earnings growth $1.2B - $1.6B ‒ Improved volume and price / mix FY’24E – FY’27E ‒ EOS savings IRA Benefit ‒ Positive OpEx leverage • POC normalization – reduce $0.5B average percent of net sales from FY’20 – FY’23
Slide 30: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy F U T U R E PR IO R ITIES PRIORITIES FY’20 – FY’23 ($M, cumulative) • Continue TPPL capacity investments & end-to-end solutions 1 Invest in Organic Growth (CapEx) ~$330 • Optimize EOS to drive additional operational efficiencies • Accelerate domestic-sourced l
Slide 31: Strategic and Accretive M&A
Strategic and Accretive M&A S T R AT E G I C F I LT E R S F I N AN C I AL F I LT E R S Aligns with Growth Priorities Cost and/or Revenue Synergies Accelerates Technical Evolution in Our Markets Accretive to Growth / Earnings Adds Differentiating Technology for Portfolio Transformation ROIC > WACC In
Slide 32: Inflation Reduction Act (IRA) Enables...
Inflation Reduction Act (IRA) Enables… B AC K G R O U N D ENERSYS COMMITMENT AN N U AL B E N E F I T S 1 $369B in New Tax Credits Accelerating Lithium Strategy Recorded as reduction to COGS • Law in effect 1/1/23 - 12/31/32 with • Invest in U.S. domestic energy growth ‒ Securing domestic lithium cel
Slide 33: Compelling Investment Thesis
Compelling Investment Thesis 1 2 3 Strategically positioned in Transformed company expanding markets driven Invigorated leadership delivering innovative by global megatrends team executing a clear solutions and defining the strategy for accelerated future of energy transition earnings growth Playing
Slide 34: Appendix
Appendix November 2023 © 2023 EnerSys. All Rights Reserved. 34
Slide 35: Financial Update
Financial Update November 2023 © 2023 EnerSys. All Rights Reserved.
Slide 36: Strong Q2'24 Performance
Strong Q2’24 Performance $901M $103M $116M $1.84 $91M Net Sales Adj Op Adj Adj EPS1 Free Cash Earnings1 EBITDA1 Flow1 +0.2% Y/Y +58% Y/Y +36% Y/Y +66% Y/Y +$106M Y/Y Adj Op Earnings1 Adj EBITDA1 Margin of 11.5% Margin of 12.9% Delivered Adjusted Gross Profit1 Margin of 26.6%; up 480 bps Y/Y November
Slide 37: Q2'24 Results
Q2’24 Results ($M, except EPS) N E T S AL E S AD J O P E R AT I N G E AR N I N G S 1 & M AR G I N $103 $899 $901 Y/Y Change $65 6% price Includes $22M (7%) volume 9.2% 11.5% IRA benefit 1% FX 7.3% Q2'23 Q2'24 Q2'23 Q2'24 AD J E B I T D A 1 & M AR G I N AD J D I L U T E D E P S 1 $116 $1.84 $86 $1.11
Slide 38: Adj EPS Bridge & Adj Op Earnings
Adj EPS1 Bridge & Adj Op Earnings1 Q2’24 YEAR-OVER YEAR ($M) Net Sales AOE1 $1.84 Energy Systems $422.5 $25.6 Motive Power $355.2 $53.4 $1.11 Specialty $123.3 $5.6 Corporate/Other - $18.9 Total $901.0 $103.5 2 Sales and Earnings in Line with Expectations on Strong Comps; Holding Price with Customer
Slide 39: Balance Sheet, Cash Flow and Leverage
Balance Sheet, Cash Flow and Leverage SELECTED S E L E C T E D Q U AR T E R LY B AL AN C E S H E E T M E T R I C S 1 C AS H F L O W M E T R I C S 2 Q2’24 ($M) FY’23 ($M) Q2’23 Q2’24 YTD Cash and Cash Cash Flow from $347 $328 $2 $111 Equivalents Operations Net Debt3 $736 $662 CapEx ($17) ($20) Net Le
Slide 40: Non-GAAP Reconciliations
Non-GAAP Reconciliations November 2023 © 2023 EnerSys. All Rights Reserved. 40
Slide 41: Reconciliations of GAAP to Non-GAAP Financial Measures
Reconciliations of GAAP to Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles, ("GAAP"). EnerSys' management uses the non-GAAP financial measures “adjusted Net earnings”, “adju
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation Q 2 ’ 2 4 & Q 2 ’ 2 3 A D J U S T E D O P E R AT I N G E A R N I N G S Quarter Ended October 1, 2023 ($ in millions) Energy Systems Motive Power Specialty Corporate and other Total Net Sales $422.5 $355.2 $123.3 $— $901.0 Operating Earnings $16.8 $49.6 $3.3 $18.9 $88.6 Restru
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation Q2’24 & Q2’23 ADJUSTED EBITDA Quarter ended ($ in millions) October 1, 2023 October 2, 2022 Net Earnings $65.2 $34.5 Depreciation 15.4 14.8 Amortization 7.2 8.0 Interest 12.2 15.4 Income Taxes 8.2 5.8 EBITDA 108.2 78.5 Non-GAAP adjustments 8.2 7.2 Adjusted EBITDA $116.4 $85.7
Slide 44: Non-GAAP Reconciliation
Non-GAAP Reconciliation Q2’24 & Q2’23 ADJUSTED DILUTED EPS Quarter ended The following table provides the line of business allocation of the non-GAAP adjustments of items ($ in millions, except share and per share amounts) October 1, 2023 October 2, 2022 relating operating earnings (that are allocat
Slide 45: Non-GAAP Reconciliation
Non-GAAP Reconciliation L E V E R A G E R AT I O B Y Y E A R Fiscal year ended March 31, (1) The $51.7 million adjustment to EBITDA in fiscal 2023 primarily related to $26.4 million of non-cash stock ($ in millions, except ratios) 2023 2022 2021 2020 2019 2018 compensation, $22.4 million of restruct
Slide 46: Non-GAAP Reconciliation
Non-GAAP Reconciliation L E V E R A G E R AT I O B Y Q U A R T E R Last twelve months ended (1) The $48.4 million adjustment to EBITDA in the last twelve October 1, July 2, March 31, January 1, October 2, months ending October 1, 2023 primarily related to $27.6 million ($ in millions, except ratios)
Slide 47: Non-GAAP Reconciliation
Non-GAAP Reconciliation FREE CASH FLOW Quarter ended ($ in millions) October 1, 2023 October 2, 2022 Net cash provided by (used in) operating activities $110.8 $1.6 Less Capital Expenditures (19.8) (16.6) Free Cash Flow 91.0 (15.0) Non-GAAP adjusted Net earnings $76.5 $45.6 Adjusted Free Cash Flow C
Slide 48: Non-GAAP Reconciliation
Non-GAAP Reconciliation P R I M A R Y O P E R AT I N G C A P I TA L As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable
Slide 49: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED GROSS PROFIT AND GROSS MARGIN Quarter ended ($ in millions) October 1, 2023 October 2, 2022 Net Sales $901.0 $899.4 Gross Profit 239.6 194.9 Inventory adjustment relating to exit activities — 1.5 Adjusted Gross Profit $239.6 $196.4 Adjusted Gross Margin 26.6% 21.8% N
Slide 50: Non-GAAP Reconciliation
Non-GAAP Reconciliation F Y ’ 2 3 & F Y ’ 2 2 A D J U S T E D O P E R AT I N G E A R N I N G S Twelve months ended March 31, 2023 Twelve months ended March 31, 2022 Energy Motive IRA Tax Energy Motive ($ in millions) Specialty Total ($ in millions) Specialty Total Systems Power Credits Systems Power
Slide 51: Non-GAAP Reconciliation
Non-GAAP Reconciliation F Y ’ 2 0 A D J . O P E R AT I N G E A R N I N G S Twelve months ended March 31, 2020 ($ in millions) Energy Systems Motive Power Specialty Total Net Sales $1,357.3 $1,348.2 $382.3 $3,087.8 Operating Earnings $31.0 $124.7 $34.5 $190.2 Inventory step up to fair value relating
Slide 52: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY’23 & FY’22 ADJUSTED EBITDA Twelve months ended ($ in millions) March 31, 2023 March 31, 2022 Net Earnings $175.8 $143.9 Depreciation 60.4 62.6 Amortization 30.8 33.2 Interest 59.5 37.8 Income Taxes 34.8 30.0 EBITDA 361.3 307.5 Non-GAAP adjustments 26.2 32.0 Adjusted EBITDA
Slide 53: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY’23 & FY’22 ADJUSTED DILUTED EPS Twelve months ended The following table provides the line of business allocation of the non-GAAP adjustments of items relating ($ in millions, except share and per share amounts) March 31, 2023 March 31, 2022 operating earnings (that are all
Slide 54: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY’20 ADJ. DILUTED EPS The following table provides the line of business allocation of the non-GAAP adjustments of items relating Twelve months ended operating earnings (that are allocated to lines of business) shown in the reconciliation at left: ($ in millions, except share
Slide 55: Thank you.
Thank you. For more information visit us at www.enersys.com EnerSys Global Headquarters EnerSys EMEA EnerSys Asia 2366 Bernville Road EH Europe GmbH 152 Beach Road Reading, PA 19605 | USA Baarerstrasse 18 Gateway East Building #11- 08 Tel. +1-610-208-1991 6300 Zug Singapore +1-800-538-3627 Switzerla