EnerSys · NYSE:ENS
EnerSys — Q3 FY2023 Earnings Presentation
38 slides from EnerSys's earnings presentation, Feb 9, 2023
Slide 1: Q3'23 Financial Results
Q3’23 Financial Results FEBRUARY 09, 2023 February 2023 © 2023 EnerSys. All Rights Reserved. 1
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: Business Update
Business Update D AV I D S H A F F E R , C H I E F E X E C U T I V E O F F I C E R February 2023 © 2023 EnerSys. All Rights Reserved. 3
Slide 4: Q3'23 Results
Q3’23 Results ($ millions, except EPS) Q3’23 Key Takeaways • Record quarter net sales Net Sales $920 • +13% y/y at Constant Currency1 “CC” (Y / Y Growth) 9.0% • ~($35M) y/y FX pressure • $1.3B backlog, +11% y/y, robust demand and order trends across all segments Adj. Operating Earnings1 & $84.9 9.2%
Slide 5: Healthy Backlog Drives Long-Term Growth
Healthy Backlog Drives Long-Term Growth ORDER GROWTH & MACRO CONDITIONS DRIVING STRONG BACKLOG • Energy Systems: shipments from longer-term programs & seasonality slightly reducing Q3’23 backlog; backlog coverage >2x historic levels w/January book to bill >1.0 • Motive Power: continued strong order
Slide 6: Technology Advancements
Technology Advancements POWERING THE FUTURE, EVERYWHERE FOR EVERYONE Wireless Chargers: Initial Orders Received Fast Charge & Storage Maintenance-free batteries and wireless charger solutions Upgraded on-site demo installed to be showcased at ProMat and LogiMAT • Position assistance for autonomous v
Slide 7: Q3'23 Business Segment Performance
Q3’23 Business Segment Performance Net Sales Adj. OE1 Segment Overview ($ million) Margin • $737M backlog; +14% y/y, tailwind as supply chains improve Energy Systems $434 6.1% • Q3 revenue growth driven by broadband and data center +12.7% y/y +350 bps y/y • Pricing actions materializing, richer sale
Slide 8: Our Sustainability Strategy
Our Sustainability Strategy E N D E D 2 0 2 2 W I T H K E Y A C H I E V E M E N T S W I T H I N O U R S T R AT E G Y Appointed Tamara Morytko to Released first TCFD report Ranked #42 Technology Board of Directors, enhancing December 14, 2022, aligned Hardware company in the depth of the Board and wi
Slide 9: Focusing on What We Can Control
Focusing on What We Can Control 1 Pricing – continue to execute pricing increases commensurate with cost increases Operating Efficiencies – reduce waste through EOS, including plant rationalization, productivity 2 improvements & inventory reductions balanced w/strategic buffers FX and Interest Rate
Slide 10: Finance Update
Finance Update ANDI FUNK, CHIEF FINANCIAL OFFICER February 2023 © 2023 EnerSys. All Rights Reserved. 10
Slide 11: Q3'23 Results
Q3’23 Results Net Sales Adj Operating Earnings1 & Margin $920 Y/Y Change $899 +8% price +5% volume $85 (4%) FX, ~($35m) $844 $65 $ millions $ millions $60 7.2% 7.3% 9.2% Q3'22 Q2'23 Q3'23 Q3'22 Q2'23 Q3'23 Adj EBITDA1 & Margin Adj Diluted EPS1 $98 $1.27 $86 $1.11 $79 $1.01 $ millions 9.4% 9.5% 10.7%
Slide 12: Q3'23 Segment Financial Highlights
Q3’23 Segment Financial Highlights $MILLIONS; % AND BPS Y/Y GROWTH Net Sales Adj. Op Earnings1 Adj. OE1 Margin Volume +8% Price +9% Energy Systems $434 FX (4%) $26.5 6.1% ---------------------------- +169% +350 bps Reported +13% Volume +3% Price +8% Motive Power $362 FX (5%) $47.1 13.0% ------------
Slide 13: Price/Mix - Cost Recapture Gaining Traction
Price/Mix - Cost Recapture Gaining Traction Price/Mix – Cost Recapture (q/q, $ millions) Price/Mix – Cost Recapture (y/y, $ millions) 90 Ongoing price $160 Further price/mix recapture initiatives recapture anticipated 45 anticipated to push $80 in FY’23 recapture higher 0 $- -45 ($80) -90 ($160) Q3'
Slide 14: Adj EPS Bridge
Adj EPS1 Bridge Q3’23 SEQUENTIAL AND YEAR-OVER YEAR Price/mix outpaced costs for second consecutive quarter 1) Non-GAAP measure. Please refer to appendix for reconciliation. $M USD AA February 2023 © 2023 EnerSys. All Rights Reserved. 14
Slide 15: Disciplined & Balanced Capital Allocation
Disciplined & Balanced Capital Allocation Capital Allocation FY’18 – FY’22 FY’23 YTD Healthy Balance Sheet (cumulative) Priorities $ millions $ millions • 2 – 3x target leverage Invest in Organic • ~$300M cash and cash equivalents 1 Growth (CapEx) ~$390 ~$58 • Strong cash generation outpaced by stra
Slide 16: Looking Ahead
Looking Ahead Guidance Assumptions EPS • Volumes increase adj. diluted $1.33 - $1.43 • Pricing/mix outpace costs (Q4’23) • Significant FX/Int pressure broadly in line with Q3’23 CapEx • Continued capacity investments $90M (FY’23) • Includes $58M FY’23 YTD spend • Continued strong customer demand in
Slide 17: Appendix
Appendix February 2023 © 2023 EnerSys. All Rights Reserved. 17
Slide 18: Recession Playbook
Recession Playbook I M PA C T & A C T I O N S T O M I T I G AT E S L O W D O W N Key Takeaways: LoB Resilience 1. Slowdown not evident yet, but being vigilant All • Extensive backlog & pent-up demand buffers impact 2. Company has deep history of disciplined cost management & cash generation in • Sup
Slide 19: Motive Power
Motive Power R E V E N U E H I S T O R I C A L LY T R E N D S W I T H G D P Americas MP Net Sales vs US GDP % Motive Power Strengths vs Prior Cycles: $140,000 6% • Bolstered by movements from increased $120,000 4% automation & electrification of ICE forklifts $100,000 2% • Higher margin NexSys® main
Slide 20: Inflation Reduction Act (IRA)
Inflation Reduction Act (IRA) F U N D I N G A L L O C AT I O N S A L I G N W I T H E N E R S Y S T E C H N O L O G Y • Lithium / TPPL / Other products in our product Manufacturing tax credit for Potential Annual Tax mix may qualify depending on energy density Direct Financial battery cells credits O
Slide 21: Q3'23 Results
Q3’23 Results ($ millions) Q3 F'22 Q2 F'23 Q3 F'23 NET SALES $844.0 $899.4 $920.2 Adj. GROSS PROFIT1 $184.3 (22%) $196.4 (22%) $212.8 (23%) Adj. OP EARNINGS1 $ $60.4 $65.4 $84.9 Adj. OP EARNINGS1 % 7.2% 7.3% 9.2% 1 Adj. EPS $1.01 $1.11 $1.27 1) Non-GAAP measure. Please refer to appendix for reconcil
Slide 22: Q3'23 Net Sales by Segment & Region, Q/Q
Q3’23 Net Sales by Segment & Region, Q/Q ($ millions, Except per Share Amounts) Fav/(Unfav) Q2'23 Q3'23 $ % Energy Systems $437 $434 ($3) -1% Motive Power $338 $362 $24 7% Specialty $124 $124 ($0) 0% Total Net Sales $899 $920 $20.8 2.3% 2% Price, 0% Organic, 0% Acquisitions, 0% Fx Fav/(Unfav) Q2'23
Slide 23: Q3'23 Net Sales by Segment & Region, Y/Y
Q3’23 Net Sales by Segment & Region, Y/Y ($ millions) Fav/(Unfav) Q3'22 Q3'23 $ % Volume Price M&A Fx Energy Systems $385 $434 $49 13% 8% 9% - -4% Motive Power $340 $362 $22 7% 3% 8% - -5% Specialty $119 $124 $5 4% 1% 5% - -2% Total Net Sales $844 $920 $76 9% 5% 8% - -4% Fav/(Unfav) Q3'22 Q3'23 $ %
Slide 24: Q3'23 Adj Operating Earnings by Segment
Q3’23 Adj Operating Earnings1 by Segment ($ millions) Fav/(Unfav) Year Over Year Q3'22 Q3'23 $ % 1 Adj. Operating Earnings Energy Systems $9.8 $26.5 $16.7 169% 2.6% 6.1% Motive Power $39.0 $47.1 $8.1 21% 11.5% 13.0% Specialty $11.5 $11.3 ($0.2) -2% 9.6% 9.1% Total Adj. Operating Earnings1 $60.3 $84.
Slide 25: Q3'23 Adj Net Earnings & Adj EPS
Q3’23 Adj Net Earnings1 & Adj EPS1 ($ millions, except per share amounts) Fav/(Unfav) Q3'22 Q3'23 $ % 1 Adj. Operating Earnings $60.3 $84.9 $24.6 41% As % Net Sales 7.2% 9.2% 2.0 Pts. Book Tax Rate 17% 19% 1 Adj. Net Earnings $43.0 $52.3 $9.3 22% As % Net Sales 5.1% 5.7% 0.6 Pts. Adj. Diluted EPS1 $
Slide 26: Balance Sheet & Other Highlights
Balance Sheet & Other Highlights ($ millions) FY'22 Q3'23 YTD Cash & Cash Equivalents $402.5 $298.1 Net Debt (Gross Debt − Investments) $1,018 $974 Net Cash from Operations ($65.6) $135.8 Capital Expenditures ($74.0) ($57.5) Leverage Ratio1 (per US Credit Agreement) 2.5X 2.3X 1 Primary Operating Cap
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations February 2023 © 2023 EnerSys. All Rights Reserved. 27
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation C O N S TA N T C U R R E N C Y N E T S A L E S We define non-GAAP constant currency net sales as total net sales excluding the effect of foreign exchange rate movements, and we use it to determine the constant currency growth rate on a year-on-year basis. Non-GAAP constant cu
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation A D J U S T E D O P E R AT I N G E A R N I N G S February 2023 © 2023 EnerSys. All Rights Reserved. 29
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED EBITDA February 2023 © 2023 EnerSys. All Rights Reserved. 30
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED DILUTED EPS February 2023 © 2023 EnerSys. All Rights Reserved. 31
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED DILUTED EPS (CONTINUED) February 2023 © 2023 EnerSys. All Rights Reserved. 32
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED DILUTED EPS (CONTINUED) February 2023 © 2023 EnerSys. All Rights Reserved. 33
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED DILUTED EPS (CONTINUED) February 2023 © 2023 EnerSys. All Rights Reserved. 34
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation L E V E R A G E R AT I O February 2023 © 2023 EnerSys. All Rights Reserved. 35
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation P R I M A R Y O P E R AT I N G C A P I TA L February 2023 © 2023 EnerSys. All Rights Reserved. 36
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED GROSS PROFIT Quarter ended ($ millions) January 1, 2023 October 2, 2022 January 2, 2022 Net Sales $ 920.2 $ 899.4 $ 844.0 Gross Profit $ 213.6 $ 194.9 $ 184.3 Inventory adjustment relating to exit activities (0.9) 1.5 — Adjusted Gross Profit $ 212.8 $ 196.4 $ 184.3 F
Slide 38: Thank you.
Thank you. For more information visit us at www.enersys.com World 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 +1 610-208-1991 / +1 800-538-3627 6300 Zug Switzerland Singapore 189721 / +6