EnerSys · NYSE:ENS
EnerSys — Investor Presentation (August 2023)
59 slides from EnerSys's investor presentation, August 2023
Slide 1: Investor Presentation August 2023
Investor Presentation AUGUST 2023 August 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 Power conversion, power distribution, and energy storage solutions • Communication Networks • Data Centers • Industrial Power, Utilities, and Renewable Energy MOTIVE POWER Power batteries and chargers for S P E C I ALT Y electric forklift trucks and other industrial
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 & Storage
Accelerating Innovation with Fast Charge & 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 mark
Slide 23: 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 $7.5B+ Residential Retail & On-the-Go
Slide 24: FY'20 to FY'23 Financial Performance
FY’20 to FY’23 Financial Performance N E T S AL E S AD J . O P E AR N I N G S 1 AD J . D I L U T E D E P S 1 ($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 $5.34 CAGR FY'20 FY'23 FY'20 FY'23 FY'20 FY'23 K EY D R IVER S • Robust demand from growing m
Slide 25: FY'20 to FY'23 Bridge
FY’20 to FY’23 Bridge AD J . D I L U T E D E P S 1 ~20% 4.5% Pro Forma CAGR CAGR Segment Performance Operational Efficiencies and Wins Headwinds • Capitalizing on high-growth end-markets • EOS waste elimination and footprint optimization • FX and interest rates • Significant price / mix achievements
Slide 26: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet SUMMARY CAPITAL STRUCTURE ($M, 07/02/2023) Strong balance sheet with significant Cash & Cash Equivalents $258 upcoming cash generation supported by earnings growth and $850M Revolving Credit Facility1 $115 drawn disciplined POC management 2026 Term Loan (USD)1 $422
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: Expanding Margin and Growing Profits
Expanding Margin and Growing Profits D R IVER S AD J . O P E R AT I N G E AR N I N G S 1 Accelerate Volume Growth $750M - • 8% – 10% net sales CAGR through FY’27 $850M • Capitalize on megatrends in growing end-markets • Increase share in under-served markets • Accretive contribution from FC&S in ear
Slide 34: 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 35: Appendix
Appendix August 2023 © 2023 EnerSys. All Rights Reserved. 35
Slide 36: Financial Update
Financial Update August 2023 © 2023 EnerSys. All Rights Reserved.
Slide 37: Strong Q1'24 Performance
Strong Q1’24 Performance $909M $107M $122M $1.89 $59M Net Sales Adj. Op. Adj. Adj. EPS1 Free Cash Earnings1 EBITDA1 Flow1 +1% Y/Y +65% Y/Y +43% Y/Y +64% Y/Y +$154M Y/Y Adj. Op. Earnings1 Adj. EBITDA1 Margin of 11.8% Margin of 13.4% Delivered Solid Operational Results August 2023 1) Non-GAAP measure.
Slide 38: Q1'24 Results
Q1’24 Results ($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 $909 $107 $899 Y/Y Change $65 +9% price Includes $19M (8%) volume 9.2% 11.8% IRA benefit FX flat 7.2% Q1'23 Q1'24 Q1'23 Q1'24 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 $122 $1.89 $86 $1
Slide 39: Backlog Normalizing and Remains Healthy
Backlog Normalizing and Remains Healthy Backlog coverage ratio (backlog / quarterly net sales) by segment noted above Backlog Down from Peak Prior Year Level; 2X Pre-Covid Levels August 2023 1) Constant Currency “CC” for backlog refers to a static budgeted exchange rate © 2023 EnerSys. All Rights Re
Slide 40: Adj EPS Bridge & Adj Op Earnings
Adj EPS1 Bridge & Adj Op Earnings1 Q1’24 YEAR-OVER YEAR ($M) Net Sales AOE1 Energy Systems $424.6 $29.7 $1.89 Motive Power $350.8 $50.3 $1.15 Specialty $133.2 $9.8 Corporate/Other - $17.4 Total $908.6 $107.2 2 Price/Mix Outpaced Costs for Fourth Consecutive Quarter $M USD AA August 2023 1) Non-GAAP
Slide 41: Balance Sheet, Cash Flow and Leverage
Balance Sheet, Cash Flow and Leverage SELECTED S E L E C T E D Q U AR T E R LY B AL AN C E S H E E T M E T R I C S 1 C AS H F L O W M E T R I C S 2 ($M) FY’23 Q1’24 ($M) Q1’23 Q1’24 Cash and Cash $347 $258 Equivalents Cash Flow from ($72) $75 Net Debt3 $736 $690 Operations Net Leverage Ratio3 1.8x 1
Slide 42: Non-GAAP Reconciliations
Non-GAAP Reconciliations August 2023 © 2023 EnerSys. All Rights Reserved. 42
Slide 43: 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 44: Non-GAAP Reconciliation
Non-GAAP Reconciliation Q 1 ’ 2 4 & Q 1 ’ 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 August 2023 © 2023 EnerSys. All Rights Reserved. 44
Slide 45: Non-GAAP Reconciliation
Non-GAAP Reconciliation Q1’24 & Q1’23 ADJUSTED EBITDA August 2023 © 2023 EnerSys. All Rights Reserved. 45
Slide 46: Non-GAAP Reconciliation
Non-GAAP Reconciliation Q1’24 & Q1’23 ADJUSTED DILUTED EPS August 2023 © 2023 EnerSys. All Rights Reserved. 46
Slide 47: Non-GAAP Reconciliation
Non-GAAP Reconciliation Q1’24 & Q1’23 ADJUSTED DILUTED EPS (CONTINUED) August 2023 © 2023 EnerSys. All Rights Reserved. 47
Slide 48: 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, (in millions, except ratios) 2023 2022 2021 2020 2019 2018 Net earnings as reported $175.8 $143.9 $143.3 $137.1 $160.5 $119.8 Add back: Depreciation and amortization 91.2 95.9 94.1 87.3 63.3 54.3 Interest expens
Slide 49: Non-GAAP Reconciliation
Non-GAAP Reconciliation L E V E R A G E R AT I O B Y Q U A R T E R Last twelve months ($ millions) (in millions, except ratios) July 2, 2023 March 31, 2023 January 1, 2023 October 2, 2022 July 3, 2022 Net earnings as reported $211.6 $175.8 $137.9 $129.8 $131.0 Add back: Depreciation and amortization
Slide 50: Non-GAAP Reconciliation
Non-GAAP Reconciliation FREE CASH FLOW August 2023 © 2023 EnerSys. All Rights Reserved. 50
Slide 51: Non-GAAP Reconciliation
Non-GAAP Reconciliation P R I M A R Y O P E R AT I N G C A P I TA L August 2023 © 2023 EnerSys. All Rights Reserved. 51
Slide 52: Non-GAAP Reconciliation
Non-GAAP Reconciliation ADJUSTED GROSS PROFIT Quarter ended ($ millions) July 2, 2023 July 3, 2022 Net Sales $ 908.6 $ 899.0 Gross Profit $ 240.3 $ 185.5 Inventory adjustment relating to exit activities 3.1 - Adjusted Gross Profit $ 243.4 $ 185.5 August 2023 © 2023 EnerSys. All Rights Reserved. 52
Slide 53: 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 August 2023 © 2023 EnerSys. All Rights Reserved. 53
Slide 54: 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 August 2023 © 2023 EnerSys. All Rights Reserved. 54
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY’23 & FY’22 ADJUSTED EBITDA August 2023 © 2023 EnerSys. All Rights Reserved. 55
Slide 56: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY’23 & FY’22 ADJUSTED DILUTED EPS August 2023 © 2023 EnerSys. All Rights Reserved. 56
Slide 57: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY’23 & FY’22 ADJUSTED DILUTED EPS (CONTINUED) August 2023 © 2023 EnerSys. All Rights Reserved. 57
Slide 58: Non-GAAP Reconciliation
Non-GAAP Reconciliation FY’20 ADJ. DILUTED EPS August 2023 © 2023 EnerSys. All Rights Reserved. 58
Slide 59: 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