EnerSys

Q1 fiscal 2027 net sales were $936 million, up 5% year over year, driven by a 3% benefit from price/mix, 1% from volume and 1% from foreign currency translation. Gross profit was $313 million, up $60 million, and gross margin was 33.5%, up 510 basis points; excluding $31 million of tariff refunds, gross profit was up 12% and gross margin was up 180 basis points. Adjusted diluted EPS increased 65% year over year; excluding tariff refunds, adjusted EPS was up 36% with 45X and 42% excluding 45X. For Q2 fiscal 2027, management guided to net sales of $955 million to $995 million and adjusted diluted EPS of $3.15 to $3.25, including $42 million to $47 million of 45X benefits; excluding 45X, EPS is expected at $1.95 to $2.05. The full-year fiscal 2027 tax rate is expected to be 21.5% to 23.5% on an as-adjusted basis before 45X.

Shawn O'Connell said the quarter reflected the benefits of EnerSys’s diversified end markets, strategic focus and operating discipline. He highlighted strength in data centers, communications and defense, initial recovery in transportation, and a view that material handling demand should improve in the back half of the year. He also emphasized three growth bets—warehouse BESS, lithium batteries and data centers/aerospace-defense—and framed the new Greenville lithium campus as a focused defense-oriented investment with attractive long-term returns.

Andi Funk emphasized that the quarter set records across net sales, gross profit, adjusted operating earnings, adjusted EBITDA and adjusted EPS, even after normalizing for tariff refunds and stock-comp accounting changes. She cited $230 million of operating cash flow, $218 million of free cash flow, $115 million of U.S. federal tax refund cash, $531 million of cash and cash equivalents, and net debt of $522 million, with leverage at 0.8x EBITDA. She also noted $12 million of CapEx in the quarter, an unchanged expectation of $70 million for fiscal 2027, $50 million of buybacks for 219,000 shares, and a 10% dividend increase to $0.2875 per share.

Analysts focused on the data center backlog and the timing of the new lithium products, and management said data center orders are strong but much of the backlog extends 12 to 36 months, while Noir lithium is expected to be more of a fiscal 2028 revenue story. On the lithium plant, management said the mid-20s IRR reflects FEOC-compliant defense cells, pricing power, incremental revenue and margin expansion, but emphasized that construction timing still depends on permitting and environmental steps. Questions on material handling weakness drew a detailed response that current indicators remain choppy, but customer conversations, truck-order data and the start of transportation recovery support management’s confidence in a later-year rebound.