EnerSys (NYSE:ENS), a Reading-based industrial batteries manufacturer, released its Q2 fiscal 2024 results on November 8, 2023, revealing a record gross margin of 26.6%, marking a year-over-year increase of 490 basis points. The company's diluted earnings per share (EPS) surged by 86% to $1.56, while the adjusted diluted EPS climbed by 66% to $1.84.
The firm's net sales for the quarter saw a slight uptick to $901 million, representing marginal growth of 0.2% from Q2 fiscal 2023. Despite this increase, the revenue did not meet the anticipated $907.9 million as per Wall Street expectations. The Motive Power segment was identified as the main contributor to this solid performance.
Although there was a decrease in organic growth by 7%, an increase in price/mix by 6% and a positive foreign currency translation impact of 1% compensated for the drop, leading to a modest boost in net sales. Operating earnings saw a significant rise, escalating by 63% to reach $89 million, while adjusted operating earnings grew by 58%, touching $103 million.
EnerSys stockholders were attributed net earnings of $65.2 million or $1.56 per diluted share, surpassing Wall Street expectations. This figure includes an unfavorable highlighted net of tax impact from highlighted items of $11.3 million, compared to net earnings of $34.5 million or $0.84 per diluted share for Q2 fiscal 2023.
As of October 1, 2023, total assets were $3.49 billion, with cash at $327.75 million and equity attributable to EnerSys stockholders approximately $1.66 billion. Total liabilities were reported at $1.83 billion.
EnerSys generated $185.72 million in net cash from operating activities for the six months ended October 1, 2023, with capital expenditures at $35.85 million, resulting in free cash flow supporting growth opportunities.
For Q3 2024, EnerSys expects adjusted diluted EPS in the range of $1.80 to $1.90 and gross margin in the range of 25.0% to 27.0%, inclusive of IRC 45X tax benefits under the Inflation Reduction Act. Capital expenditures for fiscal year 2024 are projected between $100 million and $120 million.
EnerSys received an initial order for 50 FC&S energy management systems with the first tranche of 15 units expected by mid-calendar year 2024. CEO David M. Shaffer expressed confidence in the company's medium- and long-term demand, supported by megatrends such as digitization, automation, electrification, and decarbonization.
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