Executive Summary

Q1 FY26 delivered $893.0M revenue (+4.7% YoY) and adjusted EPS of $2.08 (+5% YoY), beating revenue guidance ($830–$870M) and landing within EPS guidance ($2.03–$2.13); GAAP EPS was $1.46 (−15% YoY) as non‑GAAP adjustments and FX weighed on reported earnings .
Segment mix: Energy Systems grew (+8% YoY) with improving communications and robust data center, Specialty rose (+18% YoY, Bren‑Tronics), while Motive Power declined (−5% YoY) on tariff‑driven demand pauses; adjusted operating margin at the consolidated level was 12.8% .
Board authorized a $1.0B buyback (total authorization ~$1.06B) and raised the quarterly dividend 9% to $0.2625; company repurchased 1.7M shares for $150M in Q1; net leverage 1.6x remains below the low end of the target range .
Q2 FY26 outlook: revenue $870–$910M, adjusted EPS $2.33–$2.43 (ex‑45X: $1.34–$1.44); full‑year quantitative guidance paused pending policy clarity; management reiterated that Q1 is the earnings trough for FY26 .

What Went Well and What Went Wrong

What Went Well
- Energy Systems momentum: communications recovery and strong data center deployments drove +8% YoY revenue and +170 bps YoY adjusted operating margin to 7.0% .
- Strategic execution and capital returns: $1.0B buyback authorization and 9% dividend hike signal confidence; $150M repurchases executed in Q1 at ~$86/share average .
- Cost transformation underway: “EnerGize” framework and 11% non‑production workforce reduction targeting ~$80M annualized savings, with $30–$35M expected in FY26 2H; early benefits expected from Q3 .
- Quote: “We delivered revenue of $893 million…with adjusted diluted EPS of $2.08” and are “confident in the people executing” EnerGize .
What Went Wrong
- Tariff uncertainty weighed on Motive Power: −5% YoY revenue; adjusted operating margin fell to 13.4% (−190 bps YoY) as smaller, higher‑margin customers delayed purchases and new DC installations slowed .
- FX and mix pressure: Base business adjusted EPS ex‑45X was $1.11 (−6% YoY), with ~$0.15 EPS headwind from FX below the line; Q1 gross margin compressed sequentially on mix/volume .
- Softer macro pockets: India softness across businesses and transportation weakness (Class 8) continued; A&D U.S. revenue ex‑Bren‑Tronics was flat due to procurement timing .

Financial Results

Quarterly performance (oldest → newest)

Metric	Q3 FY25	Q4 FY25	Q1 FY26
Revenue ($M)	$906.2	$974.8	$893.0
GAAP Diluted EPS	$2.88	$2.41	$1.46
Adjusted Diluted EPS (Non‑GAAP)	$3.12	$2.97	$2.08
Gross Margin % (GAAP)	32.9%	31.2%	28.4%
Gross Margin ex‑45X %	—	26.6%	24.1%
Adjusted Operating Earnings ($M)	$155.3	$152.5	$114.3
Adjusted EBITDA ($M)	$171.4	$166.9	$123.3

Q1 FY26 actuals vs S&P Global consensus

Metric	Consensus	Actual	Beat/(Miss)
Revenue ($M)	848.0*	893.0	+45.0
Adjusted EPS ($)	2.05*	2.08	+0.03
EBITDA ($M)	127.6*	119.1*	(8.5)

Values with asterisk retrieved from S&P Global.

Segment breakdown (Q1 FY26 vs Q1 FY25)

Segment	Q1 FY26 Net Sales ($M)	Q1 FY25 Net Sales ($M)	Q1 FY26 Adj. Op. Earnings ($M)	Q1 FY25 Adj. Op. Earnings ($M)	Q1 FY26 Adj. Op. Margin	Q1 FY25 Adj. Op. Margin
Energy Systems	391.4	361.0	27.4	19.0	7.0%	5.3%
Motive Power	349.1	366.2	46.7	56.0	13.4%	15.3%
Specialty	148.5	125.7	9.6	4.9	6.5%	3.9%
Corporate & Other	4.0	—	30.6	25.8	NM	NM
Total	893.0	852.9	114.3	105.7	12.8%	12.4%

KPIs and other metrics

KPI	Q1 FY26	Prior Period/Note
Book-to-Bill	>1.0	Indicates strengthening orders
Backlog Coverage	~1.1x quarterly revenue	Stable vs historical
Motive Power maintenance‑free mix	27.1% of segment sales	23.8% prior year
Data Center revenue growth	+14% YoY	Robust demand
Cash From Ops ($M)	$1.0	$10.4 in Q1 FY25
Free Cash Flow ($M)	$(32.1)	$(25.7) in Q1 FY25
Net Leverage	1.6x	1.1x prior‑year Q1
Share Repurchases	$150.0M; 1.7M shares	$11.6M prior‑year Q1
Dividend per share	$0.2625 declared for Q2 FY26	$0.24 paid in Q1

Note: S&P Global’s “actual EBITDA” for Q1 ($119.1M*) differs from company‑reported adjusted EBITDA ($123.3M) due to methodology differences (S&P normalization vs company non‑GAAP adjustments) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	Q2 FY26	—	$870M–$910M	New
Adjusted Diluted EPS	Q2 FY26	—	$2.33–$2.43 (incl. 45X)	New
Adjusted Diluted EPS (ex‑45X)	Q2 FY26	—	$1.34–$1.44	New
45X benefit to cost of sales	Q2 FY26	—	$35M–$40M	New
Full‑year quantitative guidance	FY26	Paused (May 21)	Paused (reiterated)	Maintained
Dividend	Ongoing	$0.24/quarter Q4 FY25	$0.2625 (+9%) from Q2 FY26	Raised
Share repurchase authorization	5 years	~$58M remaining	+$1.0B; total ~$1.06B	Increased
Tax rate (as‑adjusted pre‑45X)	Q1 FY26	—	~21.4%	Informational

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q3 FY25; Q-1: Q4 FY25)	Current Period (Q1 FY26)	Trend
Communications recovery	Q3: recovery underway ; Q4: continued signs of recovery	Orders picking up; disciplined capex cycles	Improving
Data centers	Q3: solid contributor ; Q4: support to Energy Systems	Robust demand; UPS share; timing aligns with later build phases	Strong and durable
Tariffs/supply chain	Q4: “refined playbook” on tariffs	22% of U.S. sourcing exposed; task force mitigating; aim to fully offset P&L impact	Managed but still near‑term headwind
Motive Power	Q3: record margins; MF reaching 29%	Volumes/mix pressured by tariff uncertainty; MF mix 27.1%	Near‑term soft, structurally positive
Specialty / A&D	Q3: robust A&D; Bren‑Tronics accretive	A&D demand strong; U.S. timing flat ex‑Bren‑Tronics	Positive LT demand
Macro/regions	Q3: EMEA uncertainty ; Q4: macro uncertainty	India softness; EMEA still soft	Mixed
Technology/AI/IoT	Q3: first FC&S revenue	EnerGize framework; IoT shipping on every Motive Power battery; predictive analytics focus; new CTO	Accelerating initiatives
Manufacturing footprint	Q4: MO line installs planned	MO line 1 running; line 2 in fall; COEs to improve balance	Execution progressing
Lithium cell project	Q4: ongoing planning	On hold; gov’t discussions scheduled; update next quarter	Pending

Management Commentary

Strategy: “We have launched EnerGize, our strategic framework…reduces layers of management, enabling us to be much more agile and focused” .
Demand drivers: “Revenue growth was driven by…Bren‑Tronics…continued recovery in the U.S. Communications market, and robust Data Center deployments” .
Policy/tariffs: “We believe we will be able to fully offset the impact of tariffs to our P&L” .
Capital allocation: “Board…approved a $1 billion increase…[and] increased our quarterly dividend by 9% to $0.2625” .
CFO tone on outlook: “We remain confident…Q1 will mark the low point of earnings for the fiscal year” with Q2 guidance provided .

Q&A Highlights

Energy Systems cadence: Management sees telecom/broadband activity improving, including DOCSIS 4.0 power needs and energy footprint upgrades; momentum expected through the year .
Margin trajectory and cost saves: ~~$80M annualized savings (~~$1.60/share) implies structural margin uplift; benefits weighted to Q4 after Q3 start; aiming for adjusted operating earnings growth ex‑45X to outpace revenue .
Tariff mitigation: Weekly task force actions across specialized COEs and sourcing to offset direct and tertiary impacts; assert confidence in full P&L offset .
Capital allocation vs 45X: Buyback authorization is opportunistic and not a diversion of 45X; 45X proceeds intended for domestic production investments (e.g., Kentucky, TPPL capacity, lithium) .
Q2 gross margin: All lines expected to improve vs prior year with Motive Power “closing the gap,” though some tariff pressure remains .

Estimates Context

Q1 FY26 results vs S&P Global consensus: Revenue $893.0M vs $848.0M*; Adjusted EPS $2.08 vs $2.05*; EBITDA $119.1M* vs $127.6M* consensus (company-reported adjusted EBITDA was $123.3M) . Values with asterisk retrieved from S&P Global.
Implications: Sell‑side likely raises revenue trajectory on Energy Systems/Data Centers and trims Motive Power near‑term margin assumptions. Q2 guidance (ex‑45X EPS $1.34–$1.44) supports sequential improvement off Q1 trough and may prompt upward revisions to 2H margin cadence .

Key Takeaways for Investors

Core beat on revenue with resilient adjusted EPS; Energy Systems and Specialty offset Motive Power softness; book‑to‑bill >1 supports near‑term visibility .
EnerGize transformation and ~$80M savings are credible levers for structural margin expansion into FY27; benefits weighted to 2H FY26 .
Robust Data Center cycle and communications recovery underpin Energy Systems growth; Specialty levered to sustained A&D budgets; Motive Power mix shift to maintenance‑free is a margin tailwind once tariffs normalize .
Capital return is now a larger part of the thesis: $1.0B buyback authorization plus dividend increase, with balance sheet at 1.6x net leverage and IRS $137M refund received in Q2 (cash bolster) .
Watch policy/tariffs and regional macro (EMEA, India) for timing/volume normalization; management expects full tariff impact to be mitigated .
Modeling note: Use company non‑GAAP constructs for comparability (adjusted EPS/EBITDA); be aware S&P normalization yields different EBITDA prints versus company adjustments .
Near‑term catalysts: Execution on Q2 guide, visibility on tariff regime and lithium plant decisioning, EnerGize savings flowing through the P&L, and continued buyback pacing .

EnerSys (ENS)·Q1 2026 Earnings Summary