Enersys · NYSE:ENS
Enersys — Q4 FY2023 Earnings Presentation
45 slides from Enersys's earnings presentation, May 24, 2023
Slide 1: Q4’23 and FY’23 Financial Results
Q4’23 and FY’23 Financial Results M AY 2 4 , 2 0 2 3 May 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 E 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 May 2023 © 2023 EnerSys. All Rights Reserved. 3
Slide 4: Q4’23 & FY’23 Highlights
Q4’23 & FY’23 Highlights ($ millions, except EPS) Q4’23 FY’23 Key Takeaways • Record net sales in the quarter and full year Net Sales $990 $3,709 (Y / Y Growth) 9.1% 10.5% • $1.3B backlog at CC2, down 7% y/y; ~2X pre-covid levels, stable demand and order trends across all segments Adj. Operating Ear
Slide 5: Healthy Backlog Drives Long-Term Growth
Healthy Backlog Drives Long-Term Growth ORDER GROWTH & MACRO CONDITIONS DRIVING STRONG BACKLOG • Energy Systems: backlog normalizing with FY’22 large program orders closing and easing supply chain constraints; backlog coverage remains above historic levels • Motive Power: backlog coverage >2x histor
Slide 6: Technology Advancements
Technology Advancements POWERING THE FUTURE, EVERYWHERE FOR EVERYONE TouchSafe NexSys® Li-ion 80V Battery DataSafe® XE Battery Rigorous safety testing underway Shipped first EMEA customer units Power Project of the Year Telecom customer field trials CE compliant to meet EU health, Committed to excel
Slide 7: FY’23 Business Segment Performance
FY’23 Business Segment Performance Net Sales Adj. OE1 Segment Overview ($ millions) Margin • $645M backlog; -13% y/y, normalizing as FY’22 large program orders conclude, and supply chains improve Energy Systems $1,738 5.0% • Revenue growth driven by battery sales in Amer & EMEA +13.1% y/y +190 bps y
Slide 8: 2022 Sustainability Update Highlights
2022 Sustainability Update Highlights SCOPE 1 SCOPE 2 NEW LEADERSHIP CLIMATE GOALS CLIMATE GOALS Emissions down 7.6%* Emissions down 3.7%* vs 2021 and >24%* vs 2021 NEUTRAL BY NEUTRAL BY lower than 2019 2040 2050 EMPLOYEE NET CLIMATE ACTION PROMOTER PLAN COMMITTEE Employee Net Promoter High-level cr
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 May 2023 © 2023 EnerSys. All Rights Reserved. 10
Slide 11: Q4’23 & FY’23 Results
Q4’23 & FY’23 Results Net Sales Adj Operating Earnings1 & Margin Y/Y Change $990 +7% price $107 Includes +4% volume 3,357 3,709 $17M IRA (2%) FX, benefit $907 $920 ~($21M) $85 $322 $67 $264 $ millions $ millions 10.8% 9.2% 7.4% 9.2% 7.9% 8.7% Q4'22 Q3'23 Q4'23 FY'22 FY'23 Q4'22 Q3'23 Q4'23 FY'22 FY'
Slide 12: Inflation Reduction Act (IRA)
Inflation Reduction Act (IRA) C R E D I T S A N D E S T I M AT E D I M PA C T • Advanced manufacturing production tax credits for battery cells and battery modules produced in the U.S. IRC 45X • Cells >=100 Watt hours per Liter (Wh/L) and & 12 Watt hour (Wh) • $35/kWh credit/ cell produced; $10/kWh
Slide 13: Q4’23 Segment Financial Highlights
Q4’23 Segment Financial Highlights $ MILLIONS; % AND BPS Y/Y GROWTH Net Sales Adj. Op Earnings1 Adj. OE1 Margin Volume +8% Price +6% Energy Systems $458 FX (2%) $29.6 6.5% ---------------------------- +86% +260 bps Reported +12% Volume (0.3%) Price +8% Motive Power $384 FX (3%) $50.4 13.1% ---------
Slide 14: Price/Mix - Cost Recapture Closing the Gap
Price/Mix - Cost Recapture Closing the Gap Price/Mix – Cost Recapture (q/q, $ millions) Price/Mix – Cost Recapture (y/y, $ millions) 90 $400 $320 45 $240 0 $160 $80 -45 $- -90 ($80) Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 FY'21 FY'22 FY'23 Cost Increase Price / Mix Increase Cumul
Slide 15: Adj EPS Bridge
Adj EPS1 Bridge Q4’23 SEQUENTIAL AND YEAR-OVER YEAR Price/mix outpaced costs for third consecutive quarter 1) Non-GAAP measure. Please refer to appendix for reconciliation. $M USD AA May 2023 © 2023 EnerSys. All Rights Reserved. 15
Slide 16: Disciplined & Balanced Capital Allocation
Disciplined & Balanced Capital Allocation Capital Allocation FY’18 – FY’22 FY’23 Healthy Balance Sheet (cumulative) Priorities $ millions $ millions • 2 – 3x target leverage, adjusted to lower end of range Invest in Organic • Over $340M in cash and cash equivalents 1 Growth (CapEx) ~$390 ~$90 • Effe
Slide 17: Looking Ahead
Looking Ahead Guidance Assumptions • Volumes seasonally lower • Improved mix, EOS savings EPS • Leveling price/cost adj. diluted $1.77 - $1.87 • FX/Int rates consistent with Q4’23 (Q1’24) • Includes $0.40 - $0.50 from IRA • Intended to be invested in US capacity for high density batteries • Continue
Slide 18: Save the Date: EnerSys Investor Day
SAVE THE DATE E N E R S Y S 2 0 2 3 I N V E S T O R D AY Date: June 15th Time: 8:30 AM - 12:00 PM ET Format: Hybrid event hosted in-person and via webcast with archived replays Link: https://enersys-investor-day-2023.open-exchange.net/ Request an invitation to the live event at investorrelations@ene
Slide 19: Appendix
Appendix May 2023 © 2023 EnerSys. All Rights Reserved. 19
Slide 20: 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 21: 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 $140,000 vs Prior Cycles: 6% • Bolstered by movements from increased $120,000 4% automation & electrification of ICE forklifts $100,000 2% • Higher margin NexSys® main
Slide 22: Q4’23 Results
Q4’23 Results ($ millions) Q4 F'22 Q3 F'23 Q4 F'23 NET SALES $907.0 $920.2 $989.9 1 Adj. GROSS PROFIT $196.2 (22%) $212.8 (23%) $246.0 (25%) 1 Adj. OP EARNINGS $ $66.8 $84.9 $107.1 1 Adj. OP EARNINGS % 7.4% 9.2% 10.8% Adj. EPS1 $1.20 $1.27 $1.82 1) Non-GAAP measure. Please refer to appendix for reco
Slide 23: Q4’23 Net Sales by Segment & Region, Q/Q
Q4’23 Net Sales by Segment & Region, Q/Q ($ millions, Except per Share Amounts) Fav/(Unfav) Q3'23 Q4'23 $ % Energy Systems $434 $458 $24 6% Motive Power $362 $384 $22 6% Specialty $124 $148 $24 19% Total Net Sales $920 $990 $69.7 7.6% 1% Price, 6% Organic, 0% Acquisitions, 1% Fx Fav/(Unfav) Q3'23 Q4
Slide 24: Q4’23 Net Sales by Segment & Region, Y/Y
Q4’23 Net Sales by Segment & Region, Y/Y ($ millions) Fav/(Unfav) Q4'22 Q4'23 $ % Volume Price M&A Fx Energy Systems $410 $458 $48 12% 8% 6% - -2% Motive Power $365 $384 $19 5% 0% 8% - -3% Specialty $132 $148 $16 12% 6% 7% - -1% Total Net Sales $907 $990 $83 9% 4% 7% - -2% Fav/(Unfav) Q4'22 Q4'23 $
Slide 25: FY’23 Net Sales by Segment & Region, Y/Y
FY’23 Net Sales by Segment & Region, Y/Y ($ millions) Fav/(Unfav) Q4'22 Q4'23 $ % Volume Price M&A Fx Energy Systems $1,537 $1,738 $202 13% 9% 8% - -4% Motive Power $1,361 $1,451 $90 7% 3% 8% - -5% Specialty $459 $519 $60 13% 9% 6% - -2% Total Net Sales $3,357 $3,709 $351 10% 7% 8% - -4% Fav/(Unfav)
Slide 26: Q4’23 Adj Operating Earnings by Segment
Q4’23 Adj Operating Earnings1 by Segment ($ millions) Fav/(Unfav) Year Over Year Q4'22 Q4'23 $ % Adj. Operating Earnings1 $ % of Sales $ % of Sales Energy Systems $15.9 3.9% $29.6 6.5% $13.7 86% Motive Power $40.1 11.0% $50.4 13.1% $10.3 26% Specialty $10.8 8.2% $9.8 6.6% ($1.0) -9% IRA benefit $0.0
Slide 27: FY’23 Adj Operating Earnings by Segment
FY’23 Adj Operating Earnings1 by Segment ($ millions) Fav/(Unfav) Year Over Year FY'22 FY'23 $ % 1 Adj. Operating Earnings $ % of Sales $ % of Sales Energy Systems $47.2 3.1% $86.3 5.0% $39.1 83% Motive Power $170.9 12.6% $179.5 12.4% $8.6 5% Specialty $45.5 9.9% $39.3 7.6% ($6.2) -14% IRA benefit $
Slide 28: Q4’23 Adj Net Earnings & Adj EPS
Q4’23 Adj Net Earnings1 & Adj EPS1 ($ millions, except per share amounts) Fav/(Unfav) Q4'22 Q4'23 $ % % of Sales % of Sales 1 Adj. Operating Earnings $66.8 7.4% $107.1 10.8% $40.4 60% Book Tax Rate 28% 13% Adj. Net Earnings1 $50.1 5.5% $75.5 7.6% $25.4 51% Adj. Diluted EPS1 $1.20 $1.82 $0.62 52% Avg
Slide 29: FY’23 Adj Net Earnings & Adj EPS
FY’23 Adj Net Earnings1 & Adj EPS1 ($ millions, except per share amounts) Fav/(Unfav) FY'22 FY'23 $ % % of Sales % of Sales 1 Adj. Operating Earnings $263.6 7.9% $322.4 8.7% $58.8 22% Book Tax Rate 28% 13% 1 Adj. Net Earnings $50.1 5.5% $75.5 7.6% $25.4 51% 1 Adj. Diluted EPS $4.47 $5.34 $0.88 20% A
Slide 30: Balance Sheet & Other Highlights
Balance Sheet & Other Highlights ($ millions) FY'22 FY'23 Cash & Cash Equivalents $402.5 $346.7 Net Debt (Gross Debt − Investments) $1,018 $844 Net Cash from Operations ($65.6) $279.9 Capital Expenditures ($74.0) ($88.8) 1 Leverage Ratio (per US Credit Agreement) 2.5X 1.8X 1 Primary Operating Capita
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations May 2023 © 2023 EnerSys. All Rights Reserved. 31
Slide 32: Non-GAAP Reconciliation: Adjusted Operating Earnings
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 May 2023 © 2023 EnerSys. All Rights Reserved. 32
Slide 33: Non-GAAP Reconciliation: FY Adjusted Operating Earnings
Non-GAAP Reconciliation F Y A D J U S T E D O P E R AT I N G E A R N I N G S May 2023 © 2023 EnerSys. All Rights Reserved. 33
Slide 34: Non-GAAP Reconciliation: Adjusted EBITDA
Non-GAAP Reconciliation ADJUSTED EBITDA May 2023 © 2023 EnerSys. All Rights Reserved. 34
Slide 35: Non-GAAP Reconciliation: Q4 Adjusted Diluted EPS
Non-GAAP Reconciliation Q4 ADJUSTED DILUTED EPS May 2023 © 2023 EnerSys. All Rights Reserved. 35
Slide 36: Non-GAAP Reconciliation: Q4 Adjusted Diluted EPS (Continued)
Non-GAAP Reconciliation Q4 ADJUSTED DILUTED EPS (CONTINUED) May 2023 © 2023 EnerSys. All Rights Reserved. 36
Slide 37: Non-GAAP Reconciliation: FY Adjusted Diluted EPS
Non-GAAP Reconciliation FY ADJUSTED DILUTED EPS May 2023 © 2023 EnerSys. All Rights Reserved. 37
Slide 38: Non-GAAP Reconciliation: FY Adjusted Diluted EPS (Continued)
Non-GAAP Reconciliation FY ADJUSTED DILUTED EPS (CONTINUED) May 2023 © 2023 EnerSys. All Rights Reserved. 38
Slide 39: Non-GAAP Reconciliation: Q3 Adjusted Diluted EPS
Non-GAAP Reconciliation Q3 ADJUSTED DILUTED EPS May 2023 © 2023 EnerSys. All Rights Reserved. 39
Slide 40: Non-GAAP Reconciliation: Q3 Adjusted Diluted EPS (Continued)
Non-GAAP Reconciliation Q3 ADJUSTED DILUTED EPS (CONTINUED) May 2023 © 2023 EnerSys. All Rights Reserved. 40
Slide 41: Non-GAAP Reconciliation: Leverage Ratio
Non-GAAP Reconciliation L E V E R A G E R AT I O May 2023 © 2023 EnerSys. All Rights Reserved. 41
Slide 42: Non-GAAP Reconciliation: Free Cash Flow
Non-GAAP Reconciliation FREE CASH FLOW May 2023 © 2023 EnerSys. All Rights Reserved. 42
Slide 43: Non-GAAP Reconciliation: Primary Operating Capital
Non-GAAP Reconciliation P R I M A R Y O P E R AT I N G C A P I TA L May 2023 © 2023 EnerSys. All Rights Reserved. 43
Slide 44: Non-GAAP Reconciliation: Adjusted Gross Profit
Non-GAAP Reconciliation ADJUSTED GROSS PROFIT Quarter ended Year ended ($ millions) ($ millions) March 31, 2023 January 1, 2023 March 31, 2022 March 31, 2023 March 31, 2022 Net Sales $ 989.9 $ 920.2 $ 907.0 $ 3,708.5 $ 3,357.3 Gross Profit $ 246.0 $ 213.6 $ 194.6 $ 840.1 $ 750.0 Inventory adjustment
Slide 45: 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