Slide 1: Q2'24 Earnings
Q2’24 Earnings NOVEMBER 8, 2023 November 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: Q2 FY'24 Overview
Q2 FY’24 Overview D AV E S H A F F E R PRESIDENT AND CEO November 2023 © 2023 EnerSys. All Rights Reserved.
Slide 4: 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 5: 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 +$106M Y/Y Adj Op Earnings1 Adj EBITDA1 Margin of 11.5% Margin of 12.9% Delivered Adjusted Gross Profit1 Margin of 26.6%; up 480 bps Y/Y November
Slide 6: Q2'24 Executing on our Strategy
Q2’24 Executing on our Strategy Increasing Higher Value Solutions • Launched DPX Distributed Power System featuring new EnShield™ technology at Mobile World Congress Innovate • Alpha® ADOM Outdoor Gateway recognized among the best in industry for its innovative design and value at the 2023 CableTec
Slide 7: Fast Charge and Storage Momentum Growing
Fast Charge and Storage Momentum Growing LAUNCH ORDER RECEIVED SYSTEM ORDER Battery Energy Storage DC Pedestal • Initial 50 system order System (BESS) • 15 systems to be deployed Power midyear 2024 Conversion Software System • 4 pedestals per system with parallel charging capability ONLY SYSTEM COMB
Slide 8: Energy Efficiency Initiative of the Year
Energy Efficiency Initiative of the Year E N V I R O N M E N TA L F I N A N C E ’ S S U S TA I N A B L E C O M PA N Y A W A R D S E O S L E AN M E T H O D Environmental Savings Via • EnerSys Operating System (EOS) recognized as groundbreaking • Scrap, water, and gas energy efficient business model r
Slide 9: Q2 FY'24 Financial Results and Outlook
Q2 FY’24 Financial Results ANDI FUNK and Outlook EVP AND CFO November 2023 © 2023 EnerSys. All Rights Reserved.
Slide 10: Q2'24 Results
Q2’24 Results ($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 $1.11
Slide 11: Adj EPS Bridge & Adj Op Earnings
Adj EPS1 Bridge & Adj Op Earnings1 Q2’24 YEAR-OVER YEAR ($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 $103.5 2 Sales and Earnings in Line with Expectations on Strong Comps; Holding Price with Customer
Slide 12: Energy Systems Segment Highlights
Energy Systems Segment Highlights Q2’24 ($M) Y/Y change Net Sales $422.5 (3%) Adj Op Earnings1 $25.6 +56% Adj OE Margin1 6.1% +230 bps • Continued price / mix strength ‒ Price / Mix +8% and F/X +1% offset by Volume (12%) ‒ Record services revenues in Americas ‒ Volume pressured by U.S. Communication
Slide 13: Motive Power Segment Highlights
Motive Power Segment Highlights Q2’24 ($M) Y/Y change Net Sales $355.2 +5% Adj Op Earnings1 $53.4 +34% Adj OE Margin1 15.0% +330 bps • Net Sales +5% Y/Y ‒ Price / Mix +6% and F/X +2% offset by Volume (3%) ‒ Maintenance-free products growth: 21% of segment net sales ‒ +1% Q/Q despite seasonally lowes
Slide 14: Specialty Segment Highlights
Specialty Segment Highlights Q2’24 ($M) Y/Y change Net Sales $123.3 (1%) Adj Op Earnings1 $5.6 (40%) Adj OE Margin1 4.5% (290 bps) • Revenue and Adj Op Earnings1 temporarily constrained by capacity reallocation and Sylmar closure timing ‒ Price / Mix +2% and F/X +1% offset by Volume (4%) ‒ Strong bo
Slide 15: Balance Sheet, Cash Flow and Leverage
Balance Sheet, Cash Flow and Leverage SELECTED S E L E C T E D Q U AR T E R LY B AL AN C E S H E E T M E T R I C S 1 C AS H F L O W M E T R I C S 2 Q2’24 ($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 16: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Priorities Q2’24 Future Priorities • Continue TPPL capacity investments & end-to-end solutions Invest in Organic Growth (CapEx) $20M • Optimize EOS to drive additional operational efficiencies • Accelerate domestic-sourced lithium strategy Verkor agreement pro
Slide 17: Looking Ahead: Q3'24 Guidance
Looking Ahead: Q3’24 Guidance Guidance Assumptions • Benefit from diverse end markets and ability to hold price, tempered by Gross Margin 25.0% - 27.0% communication networks capex cycle Includes 150bps - 250bps (Q3’24) IRA tax credits to be invested in from IRC 45X tax credits • Continued higher
Slide 18: Q&A
Q&A November 2023 © 2023 EnerSys. All Rights Reserved.
Slide 19: Appendix
Appendix November 2023 © 2023 EnerSys. All Rights Reserved.
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations November 2023 © 2023 EnerSys. All Rights Reserved.
Slide 21: Non-GAAP Reconciliation: Adjusted Operating Earnings
Non-GAAP Reconciliation A D J U S T E D O P E R AT I N G E A R N I N G S Quarter Ended October 1, 2023 ($ 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 $88.6 Restructuring and other exit
Slide 22: Non-GAAP Reconciliation: Adjusted EBITDA
Non-GAAP Reconciliation ADJUSTED EBITDA Quarter ended ($ 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 $85.7 The following
Slide 23: Non-GAAP Reconciliation: Adjusted Diluted EPS
Non-GAAP Reconciliation ADJUSTED DILUTED EPS Quarter ended The following table provides the line of business allocation of the non-GAAP adjustments of items ($ in millions, except share and per share amounts) October 1, 2023 October 2, 2022 relating operating earnings (that are allocated to lines of
Slide 24: Non-GAAP Reconciliation: Leverage Ratio by Year
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 25: Non-GAAP Reconciliation: Leverage Ratio by Quarter
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 26: Non-GAAP Reconciliation: Free Cash Flow
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 $45.6 Adjusted Free Cash Flow C
Slide 27: Non-GAAP Reconciliation: Primary Operating Capital
Non-GAAP Reconciliation P R I M A R Y O P E R AT I N G C A P I TA L As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable
Slide 28: Non-GAAP Reconciliation: Adjusted Gross Profit and Gross Margin
Non-GAAP Reconciliation ADJUSTED GROSS PROFIT AND GROSS MARGIN Quarter ended ($ 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 29: 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