Enersys (NYSE:ENS) Q4 2020 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2020 InterSys Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker today, David Shaffer, President and CEO. Please go ahead.

0:36 Thanks, Sarah. Good morning and thank you for joining us for our fourth quarter and full year earnings call. On the call with me this morning is Mike Schmidlein, our Chief Financial Officer. Last evening, we posted slides on our website that we will be referencing during the call this morning. If you didn't get a chance to see this information, you can go to the webcast tab in the investor section of our website at www.enersys.com. I'm going to ask Mike to cover information regarding forward-looking statements.

1:13 Thank you, Dave, and good morning to everyone. 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 results may differ materially from the forward-looking statements for a number of reasons. Our forward-looking statements are applicable only as of the date of this presentation. For a list of factors which could affect our future results, including our earnings estimates, C, forward-looking statements included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in our annual report on Form 10-K for the fiscal year ended March 31, 2020, which was filed with the U.S. Securities and Exchange Commission.

2:05 In addition, we will also be presenting certain non-GAAP financial measures. For an explanation of the differences between the comparable GAAP financial information and the non-GAAP information, please see our company's Form 8K, which includes our press release dated June 1, 2020, which is located on our website at www.entersys.com. Now let me turn it back to you, Dave.

2:29 Thanks, Mike. I would like to spend the first few minutes of this morning's call providing an update on how COVID-19 is impacting our business and the things we are doing to confront this challenge. Despite the many challenges this pandemic has brought with it, our focus has been on the health and safety of our employees worldwide. Wherever possible, our employees are working from home and every factory is operating in compliance with all applicable health and safety guidelines, rules, and regulations. I am extremely proud of the responsiveness and adaptability of our employees in the face of this crisis. Morale has stayed high as the teams continue to pull together to get the job done for our customers.

3:17 I'll talk more about our go-forward strategy in this COVID environment later in the call. I'd like to move on to slide three. The most significant COVID-related impact on Enersys was the forced closure of our electric forklift and Class 8 over-the-road OEM truck customers in April, which had an immediate impact and significant effect on order rates. While these customers' facilities have since reopened, many are not operating at full capacity due to market demand or their supply chain disruptions. Though our May sales looks much stronger than April, Given the uncertainty about the full size and shape of the truck OEM recovery, we are not in a position to provide forward-looking guidance at this time.

4:14 While we have only seen minor supply chain disruptions, our largest factories around the world have continued to operate given the vital nature of our products in many critical infrastructure markets, including communications, information technology, defense, energy, and transportation systems. I'd like to move on to slide four. In light of the headwinds caused by the COVID outbreak during this quarter, we were pleased to report fourth quarter 2020 adjusted earnings of $1.11 per diluted share, which is largely in line with information contained in our April 21st press release. China's economic activity was the hardest hit during our fourth quarter. with our two plants shut down for several weeks and our order demand slowed significantly.

5:08 In Europe and North America, the impact of the coronavirus was felt mainly toward the end of our fourth quarter. As previously noted, orders in EMEA had been softening from our traditional motive power OEM customers pre-COVID, and we also saw the return to the market of a low-priced competitor in EMEA in the third fiscal quarter. Despite these challenges, EMEA's demand for high margin motive power TPPL products continues to be strong. Mike will provide more detail around the quarterly results in his portion of the call. Please turn to slide five. I'd now like to update you on some of our key markets.

5:53 Energy Systems Americas enjoyed a strong order intake in Q4 driven by a number of factors stemming from the nationwide build-out of 5G. T-Mobile closed the acquisition of Sprint, which helped move prior orders through, as well as generating