READING, Pa. - EnerSys (NYSE: NYSE:ENS), a global provider of industrial energy storage solutions, is in negotiations to secure a $199 million grant from the U.S. Department of Energy (DOE) to fund the construction of a new lithium-ion cell production facility in Greenville, SC. This funding is part of the $62 billion Bipartisan Infrastructure Law aimed at bolstering the U.S. battery materials processing industry and expanding domestic manufacturing capabilities.
The company plans to invest around $615 million over the next four years to build and commission the plant, which is expected to create up to 500 new jobs. The factory will cover 500,000 square feet and is designed to produce various lithium-ion cell forms for commercial, industrial, and defense applications, starting with an initial capacity of five gigawatt hours (GWh) per year.
The project is bolstered by a $200 million incentive package from South Carolina and Greenville County, announced in February 2024, which includes both short-term and long-term incentives. EnerSys also plans to invest an additional $50 million for a specialized production line catering to the U.S. Department of Defense's needs for domestically sourced batteries.
EnerSys President & CEO David M. Shaffer expressed confidence in the factory's potential to generate a strong return on investment and drive the company's long-term growth. The facility will support a wide range of the company's products, including fast charge and storage systems, NexSys® iON batteries for electric forklifts, and Alpha® XRT-Li extended runtime power systems.
Construction is slated to begin in 2025, with commercial operations projected to start in 2028. EnerSys will further discuss its gigafactory development plans and lithium-ion technology roadmap during a webcast scheduled for Monday, September 30, 2024.
This development is expected to significantly strengthen EnerSys's U.S.-based supply chain and provide the manufacturing scale and flexibility required to meet the growing demand for domestically sourced batteries.
The information regarding EnerSys's plans is based on a press release statement, which does not guarantee the completion of the investment or the gigafactory, as it is subject to final contract and funding negotiations with the DOE.
In other recent news, EnerSys, a global leader in stored energy solutions, reported robust financial results, meeting its revenue target of $911 million and exceeding earnings expectations with $2.08 per share for the fourth quarter of fiscal 2024. The company also announced a 7% increase in its quarterly cash dividend to $0.24 per share. Roth/MKM initiated coverage of EnerSys with a Buy rating, citing confidence in the company's role in the energy transition and its ability to address complex power challenges.
EnerSys also made strategic moves, acquiring Bren-Tronics to bolster its defense applications and lithium product offerings. The company's shareholders elected David C. Habiger, Lauren Knausenberger, and Tamara Morytko to the Board, while ratifying Ernst & Young LLP as the independent registered public accounting firm for fiscal year 2025.
For the first quarter and full fiscal year 2025, EnerSys provided guidance, expecting net sales between $860 million and $900 million for Q1, and between $3.675 billion and $3.825 billion for the full year. The projected adjusted diluted earnings per share are anticipated to range from $1.93 to $2.03 for Q1, and $8.55 to $8.95 for the full fiscal year. Despite supply chain constraints, EnerSys remains confident in its strategic plan and its ability to deliver long-term shareholder value.
InvestingPro Insights
As EnerSys (NYSE: ENS) gears up for the construction of its new lithium-ion cell production facility, the company's financial health and market performance provide a broader context for investors considering the long-term potential of their investment. According to InvestingPro data, EnerSys has a market capitalization of $4.13 billion and a P/E ratio of 15.23, which is appealing especially when considering the adjusted P/E ratio over the last twelve months as of Q1 2025 stands at 12.76.
InvestingPro Tips highlight several key factors that could influence investor sentiment. Notably, EnerSys is trading at a low P/E ratio relative to near-term earnings growth, which may suggest the stock is undervalued given its growth prospects. Additionally, the company's commitment to shareholder returns is evident, having maintained dividend payments for 12 consecutive years, with a dividend yield of 0.95% as of late 2024. These dividends are supported by a strong financial structure, as EnerSys's liquid assets exceed its short-term obligations, and it operates with a moderate level of debt.
Furthermore, the company's profitability is not just a projection; EnerSys has been profitable over the last twelve months, with a return on assets of 7.74%. This financial stability is critical as the company embarks on significant investments like the new gigafactory. With analysts predicting the company will remain profitable this year, the InvestingPro platform offers additional insights for those interested, featuring a total of six InvestingPro Tips for EnerSys, which can be explored in detail at https://www.investing.com/pro/ENS.
Investors may also find the InvestingPro Fair Value estimate of $132.14 USD particularly relevant, which exceeds the previous close price of $102.5 USD, indicating potential undervaluation. As EnerSys continues to navigate the industrial energy storage market and expand its manufacturing capabilities, these financial metrics and expert tips can serve as a valuable guide for stakeholders monitoring the company's progress.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.