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EnerSys (ENS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered net sales of $974.8M (+7% YoY) and adjusted diluted EPS of $2.97 (+43% YoY), exceeding company guidance and modestly beating Wall Street consensus; GAAP diluted EPS was $2.41 (+63% YoY) .
  • Gross margin expanded 320 bps YoY to 31.2%; gross margin ex-45X advanced manufacturing credits was 26.6% (+270 bps YoY), reflecting price/mix, Bren-Tronics contribution, and segment productivity gains .
  • Segment performance was broad-based: Energy Systems net sales +8% YoY with adjusted operating margin of 8.7% (+400 bps), Motive Power adjusted operating margin 17.0% (+240 bps), and Specialty revenue +21% YoY with adjusted operating margin 8.5% (+270 bps) .
  • Q1 FY2026 outlook guides net sales to $830M–$870M, adjusted EPS $2.03–$2.13 (including $35M–$40M of IRC 45X benefits), and pauses full-year quantitative guidance amid tariff uncertainty; management asserts Q1 will be the low point with margins and EPS growth (ex-45X) expected to outpace revenue for FY2026 .
  • Strategic/catalyst: tariff mitigation playbook, maintenance-free conversion (29% of Motive Power), data center and A&D momentum, and DOE lithium program progress; leadership transition to Shawn O’Connell finalized May 23, 2025 .

What Went Well and What Went Wrong

What Went Well

  • “We delivered 7% revenue growth, our second-highest revenue quarter ever, and achieved record adjusted diluted EPS of $1.86 per share excluding 45X benefits … and $2.97 including 45X benefits, +43%” .
  • Energy Systems margin expansion and demand improvement (data centers +22% YoY, signs of U.S. communications recovery); adjusted operating earnings in ES grew for the fifth consecutive quarter .
  • Motive Power mix shift: maintenance-free products reached a record 29% of segment sales; adjusted operating margin rose to 17.0% with earnings +15% YoY .
  • Specialty/A&D strength and Bren-Tronics outperformance drove revenue +21% and adjusted operating margin +270 bps YoY .

What Went Wrong

  • Tariff/macro uncertainty: stranded tariff costs (~$5M) expected to pressure Q1; order moderation and choppy near-term (Motive Power Americas Q4 orders -14% YoY) .
  • FX headwinds impacted results intra-year; lead times in Energy Systems extend revenue conversion timing despite order growth .
  • Class 8 truck OEM recovery paused; transportation order rates choppy as OEMs revise forecasts .

Financial Results

Quarterly Trend: Revenue, EPS, and Margins

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$883.7 $906.2 $974.8
Diluted EPS (GAAP) ($)$2.01 $2.88 $2.41
Adjusted Diluted EPS ($)$2.12 $3.12 $2.97
Gross Margin % (reported)28.5% 32.9% 31.2%
Adjusted Gross Margin %28.7% 33.0% 31.2%
Adjusted EBITDA ($USD Millions)$129.0 $171.4 $166.9

Q4 YoY Comparison (vs Q4 FY2024)

MetricQ4 2024Q4 2025YoY Change
Revenue ($USD Millions)$910.7 $974.8 +7.0%
Diluted EPS (GAAP) ($)$1.48 $2.41 +$0.93
Adjusted Diluted EPS ($)$2.08 $2.97 +$0.89
Gross Margin % (reported)27.9% 31.2% +320 bps
Gross Margin ex-45X %23.9% [inferred prior year; not disclosed]26.6% +270 bps

Note: Prior-year gross margin ex-45X is not explicitly disclosed in Q4 FY2024; EnerSys provides YoY bps improvement ex-45X in narrative .

Segment Breakdown – Q4 FY2025

SegmentNet Sales ($USD Millions)Operating Earnings ($USD Millions)Adjusted Operating Earnings ($USD Millions)Operating Margin %Adjusted Operating Margin %
Energy Systems$398.8 $27.0 $34.7 6.8% 8.7%
Motive Power$392.3 $57.9 $66.5 14.8% 17.0%
Specialty$177.8 $10.2 $15.1 5.7% 8.5%
Corporate & Other$5.9 $36.2 $36.2 NM NM
Total$974.8 $131.3 $152.5 13.5% 15.6%

KPIs and Cash Flow

KPIQ4 2025Comment
Maintenance-free share (Motive Power)29% of segment sales Record level; supports margin expansion
Data Center revenue YoY+22% ES demand driver
Operating Cash Flow ($USD Millions)$135.2 OCF conversion 140.1%
Free Cash Flow ($USD Millions)$105.0 Strong FCF generation
Net Leverage Ratio1.3x (credit adj EBITDA) Up from 1.0x YoY (Bren-Tronics acquisition)
IRC 45X benefit (quarter)$44.1 to net earnings 45X boosts margins/earnings

Results vs Wall Street Consensus (S&P Global)

MetricQ2 2025 EstimateQ2 2025 ActualBeat/MissQ3 2025 EstimateQ3 2025 ActualBeat/MissQ4 2025 EstimateQ4 2025 ActualBeat/Miss
Revenue ($USD Millions)887.8*883.7*Miss*932.7*906.2*Miss*973.5*974.8*Beat*
Primary EPS ($)2.07*2.12*Beat*2.868*3.12*Beat*2.782*2.97*Beat*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)Q4 FY2025$960–$1,000 Actual: $974.8 Achieved within range
Adjusted Diluted EPS ($)Q4 FY2025$2.75–$2.85 Actual: $2.97 Raised vs guidance (beat)
Net Sales ($USD Millions)Q1 FY2026N/A$830–$870 New
Adjusted Diluted EPS ($)Q1 FY2026N/A$2.03–$2.13 (incl. 45X) New
IRC 45X to Gross Profit ($USD Millions)Q1 FY2026N/A$35–$40 New
Full-year quantitative guidanceFY2026Previously provided (FY2025 only)Paused (temporary) Lowered (paused)
Dividend per share ($)Q1 FY2026$0.24 (run-rate) $0.24 declared Maintained

Earnings Call Themes & Trends

TopicQ2 FY2025 (Nov 2024)Q3 FY2025 (Feb 2025)Q4 FY2025 (May 2025)Trend
AI/data center initiativesImproving ES orders in Communications & Data Centers; DOE gigafactory award negotiation announced Gradual U.S. Communications recovery; ES optimization; record ES margins ES adjusted OE growth 5th straight qtr; data center revenue +22% YoY; carriers upgrading networks to handle AI traffic Improving demand; execution momentum
Supply chain & tariffsProduce in-region strategy; onshoring; dual sourcing noted FX/commodity hedges timing headwinds Cross-functional tariff task force; direct tariff exposure ~$92M; structural buffers; stranded tariff costs in Q1 Elevated focus; mitigation actions
Product performance (Motive Power)Record Q2 adj operating earnings; maintenance-free enthusiasm TPPL mix gains; strong margin on flat revenue Maintenance-free reached 29% of segment; adj op margin 17.0%; temporary order disruption from tariffs Mix-led margin expansion; near-term orders choppy
Regional trendsAmericas order momentum; Communications/Data Centers improving EMEA disruption at a major MP customer plant ES order strength in Americas; EMEA sequential improvement from prior lows; APAC/EMEA MP volumes lower Americas strength; EMEA stabilizing
Regulatory/legal (IRA/45X)DOE $199M award negotiation for lithium plant Expanded 45X benefit boosted Q3 EPS Q1 guide includes $35–$40M 45X; IRS refund delay expected “any day” with interest Policy tailwinds; admin delays
R&D execution/technology roadmapFC&S first system installed NPI progress; TPPL capacity investments Synova Sync charger & warehouse BESS preview; Acting CTO appointed to sharpen lithium strategy Accelerating innovation pipeline
Services monetizationN/AN/AES services flagged as near-term opportunity; utilization expected to rise after equipment orders Emerging focus

Management Commentary

  • “We delivered 7% revenue growth … and achieved record adjusted diluted EPS of $1.86 per share excluding 45X benefits … and $2.97 including 45X benefits, +43%” — CEO David Shaffer .
  • “Energy Systems saw growth in Data Center and continued signs of recovery in U.S. Communications… maintenance-free products reaching a record 29% of segment sales” — Incoming CEO Shawn O’Connell .
  • “We are proactively adjusting pricing, costs, working capital, supply chain and manufacturing to protect both volumes and profitability…well-positioned to respond swiftly [to tariffs]” — Shawn O’Connell .
  • “Adjusted diluted EPS…$2.97 per share…Excluding 45X, adjusted EPS was a record $1.86 per share” — CFO Andrea Funk .
  • “Given the evolving policy environment…we are pausing full year quantitative guidance…we believe Q1 will mark the low point” — CFO Andrea Funk .

Q&A Highlights

  • Bridge to Q1 EPS guide on flat revenue: mix/price and Bren-Tronics accretion offset FX/tariffs; normalized, EPS would be flat YoY given lower volumes and stranded tariffs .
  • Full-year guidance pause rationale: awaiting clarity on reciprocal tariffs; orders normalized YTD with Q4 softness offset by Q1 rebound; Motive Power calendar YTD orders “flat” vs last year .
  • IRC 45X refund status: peers received checks; ENS expects imminent IRS refund with interest; bipartisan support for 45X package progressing .
  • Lithium plant outlook: DOE support intact; advancing cell development with partner; model updating for cost inputs and 45X; ready to move upon policy clarity .
  • M&A and capital allocation: dry powder to act opportunistically; A&D runway and lithium synergies; no bolt-ons in current EPS guidance; buybacks remain active .

Estimates Context

  • Q4 FY2025 adjusted EPS of $2.97 vs S&P Global consensus $2.782 (Beat); revenue $974.8M vs $973.5M (Beat).*
  • Q3 FY2025 adjusted EPS $3.12 vs $2.868 (Beat); revenue $906.2M vs $932.7M (Miss).*
  • Q2 FY2025 adjusted EPS $2.12 vs $2.07 (Beat); revenue $883.7M vs $887.8M (Miss).*
  • Implication: EPS estimates likely revise up on margin quality (mix/price, Bren-Tronics, ES optimization), while near-term revenue estimates may temper for Q1 given tariffs/seasonality but supported by A&D/data center demand .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin engine intact: mix (maintenance-free), ES optimization, and A&D strength drove broad-based expansion; focus on protecting profitability despite macro noise .
  • Tariff risk manageable: structural buffers (“produce in region”), active task force, and pricing/supply actions; expect transient Q1 headwinds with stranded costs, then normalization .
  • Secular demand drivers: AI-led data traffic upgrades (carriers upgrading macro sites/COs), warehouse electrification, and defense spending underpin multi-year growth .
  • Cash/returns optionality: strong FCF ($105M in Q4) and 1.3x leverage support buybacks and selective bolt-ons like Bren-Tronics; $200M remaining authorization .
  • Technology roadmap: Synova Sync charger, warehouse BESS, and domestic lithium strategy (DOE engagement) could expand TAM and pricing power over time .
  • Near-term trading setup: Q1 guide frames earnings trough; watch tariff developments and IRS refund timing as sentiment catalysts; ES orders, maintenance-free mix, and A&D backlog are key trackers .
  • Medium-term thesis: EPS growth ex-45X to outpace revenue; mix/innovation, footprint rationalization (Monterrey closure, Richmond consolidation) deliver structural margin gains by FY2027 .