Inquired about the assumptions driving the mid-20s IRR target for the Greenville lithium plant and how to model net CapEx for FY28 given the construction start.

Andi Funk explained that the IRR is driven by the value of FEOC-compliant cells for national security in the A&D space, allowing for incremental revenue and margin expansion. She noted that the company has a long history of government grants for A&D. She also mentioned that the CapEx for the plant will be handled by ongoing cash flow and will not impact leverage, but specific FY28 CapEx details are not yet available due to environmental and permitting requirements. “there is a real value for FEOC compliant cells in the A&D space. This is of critical importance for national security.”

Asked for details on the implied sequential margin expansion in Q2 FY27, given the 2.5% revenue growth and 12% EPS growth at the midpoint.

Andi Funk reiterated that early FY27 earnings growth is margin-driven, shifting to higher top-line growth later in the year. Drivers include annualization of prior RIF adjustments, 45X benefits from plant closures (Monterrey, Tijuana, Bellingham, Brazil), increased cost discipline, mix improvements (Gen 2 lithium in material handling, power electronics in NIS), and growth in NIS service business. Shawn O'Connell added that Q2 typically has some summer seasonality impacting top-line. “early in this fiscal year, a lot of our earnings growth is going to be driven more by margin expansion. And then as we get towards the end of this fiscal year, you'll start to see some of our growth kick in.”

Requested more detail on the size, growth, and margin contribution of the NIS service business, and the work done to turn it into a contributor.

Shawn O'Connell explained that the company invested in disciplined project management and upskilling the workforce, particularly for specialized electrical construction. Andi Funk quantified NIS services revenue growth at around 20% YoY in Q1, with total EnerSys services margin up about 100 bps. She highlighted its strategic importance as an enabler for growth initiatives like BAS installations for data centers. “If you look in our Network Information Systems, and I'll always give specifics down to this level, but you're talking revenue up around 20% in the quarter year-on-year.”

ENS

EnerSys (ENS) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q1 FY27)· Industrials· Aug 13, 2026

Source: earnings call transcript

Executive summary

EnerSys Q1 FY27 — Record Results Driven by Data Center & Defense Strength, Lithium Expansion

EnerSys delivered record Q1 FY27 results, driven by strong performance in Network & Infrastructure Solutions and Precision Power Solutions, particularly in data center and defense markets. The company secured a significant DOE grant for a new U.S. lithium manufacturing facility, reinforcing its long-term growth strategy in critical applications. While material handling faced continued weakness, management expressed confidence in a recovery later in the fiscal year, supported by new product introductions and disciplined operational execution.

Highlights

EnerSys delivered record financial results in Q1 FY27, with net sales up 5% year-over-year to $936 million.
Adjusted diluted EPS increased 65% year-over-year, or 42% excluding 45X benefits, setting new Q1 records.
Operating cash flow reached $230 million and free cash flow was $218 million in Q1 FY27, achieving a conversion rate of 187%.
Network & Infrastructure Solutions revenue grew 9% year-over-year to $428 million, with adjusted operating earnings increasing 51%.
Precision Power Solutions revenue rose 24% year-over-year to $101 million, and adjusted operating earnings were up 48%.
Data center orders surged over 80% year-over-year, providing 12-36 months of delivery visibility.
A $150 million DOE grant was secured for a new U.S. lithium manufacturing facility in Greenville, SC.

Concerns

Industrial Mobility Solutions revenue decreased 3% year-over-year to $407 million, primarily due to lower material handling volumes.
IMS adjusted operating earnings declined 11% year-over-year, resulting in a 70 basis point reduction in adjusted operating margin.
Material handling demand is expected to improve only in the back half of FY27, with Q1 orders down high single digits.
Q2 FY27 net sales guidance of $955 million to $995 million is impacted by unusually high prior year Q2 sales, affecting year-over-year comparisons.

Guidance & targets

Category	Target	Timeline	Confidence
Net sales	$955 million to $995 million high materiality	Q2 · FY27	High
Adjusted diluted EPS (including 45X benefits)	$3.15 to $3.25 per share high materiality	Q2 · FY27	High
Adjusted diluted EPS (excluding 45X benefits)	$1.95 to $2.05 per share high materiality	Q2 · FY27	High
Full-year Effective Tax Rate (as-adjusted, before 45X)	21.5% to 23.5% medium materiality	FY27	High
Full-year Capital Expenditures	$70 million medium materiality	FY27	High
Lithium plant construction start	First half of fiscal year 2028 high materiality	H1 FY28	High
Lithium plant full production	Approximately 3 years after construction begins high materiality	H1 FY31	High
Data center revenue growth	High single-digit to low teens growth medium materiality	FY27	High
Aerospace and Defense market growth	9% to 11% high materiality	Annual	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Network & Infrastructure Solutions Driven by strong volume growth and favorable price/mix, continued high demand for power electronics, robust data center demand, and volume and margin expansion in service offerings. Adjusted operating earnings: up 51% YoYAdjusted operating margin: up 280 bps YoY	$428 million	9%	—	Adjusted operating earnings $45 million, Adjusted operating margin 10.5%
Industrial Mobility Solutions Lower volumes from material handling market activity, partially offset by transportation volume recovery, favorable price/mix, and FX. Price/mix and cost improvements were temporarily offset by lost leverage on lower volumes. Adjusted operating earnings: down 11% YoYAdjusted operating margin: down 70 bps YoY	$407 million	-3%	—	Adjusted operating earnings $38 million, Adjusted operating margin 9.3%
Precision Power Solutions Primarily driven by strong volume growth and favorable price/mix, ongoing A&D strength, particularly counter-drone and missile defense. Adjusted operating earnings: up 48% YoYAdjusted operating margin: up 300 bps YoY	$101 million	24%	—	Adjusted operating earnings $18 million, Adjusted operating margin 18.2%

ENS operating KPIs by quarter

ENS operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q4 FY26	This call Jun 2026 Q1 FY27	Change vs prior quarter
Book-to-bill ratio	1.1 ratio While volumes were down overall for the strong prior year comp, posted our highest book-to-bill in nearly 4 years at 1.1, with all lines of business Q4 orders outpacing revenue. Source: earnings call transcript	1.06 ratio Q1 '27 orders were up 7% versus prior year with our book-to-bill at 1.06 and backlog relatively flat versus prior year and up 2% sequentially. Source: earnings call transcript	-3.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total backlog relatively flat Q1 FY27

up 2% sequentially

Data center orders deliveries extending 12 to 36 months Q1 FY27

Increasing visibility in this project-based business and reinforcing multiyear demand opportunities.

Product announcements

Product	Type	Timeline
Fortix 172-kilowatthour BESS	milestone	—
DataSafe Noir lithium offering	launch	June
Gen 2 lithium offering	launch	second half of FY27

Deals & partnerships

U.S. Department of Energy Financial support for lithium manufacturing plant $150 million

Grant for the refined defense-focused lithium cell manufacturing plant in Greenville, South Carolina, which will also serve as a campus for lithium and advanced technologies center of excellence.

South Carolina and Greenville County Comprehensive incentive package for lithium manufacturing plant approximately $200 million short-term and long-term

Incentive package for the Greenville, SC lithium plant, including a combination of short-term and long-term incentives.

Capital programs

Greenville, SC Lithium Manufacturing Plant planned $650 million

Funding: $150 million from DOE grant, $500 million from operating cash flow, $200 million incentive package from SC/Greenville County

Start: First half of fiscal 2028

Benefit:approximately 1 gigawatt hour (initial annual production capacity), expansion opportunities for future growth, purpose-built for defense applications

This investment will strengthen our domestic lithium strategy while helping support customers that increasingly require U.S.-based and FEOC-compliant supply chains for critical applications. Expected to generate an internal return in the mid-20s.

Risks & headwinds

Material handling market weakness Expected to improve in the back half of FY27.

IMS revenue decreased 3% YoY; material handling orders down high single digits in Q1 FY27.

Mitigation:Pent-up demand, new Gen 2 lithium offering, transportation market recovery.

Tariff policy environment Ongoing.

Estimated annual tariff exposure remains materially unchanged.

Mitigation:Pricing, sourcing, and operational actions implemented; tariff task force.

Capacity-ramp drag on near-term margins Near-term, during construction and ramp-up of new facilities.

Not explicitly quantified, but implied by capacity expansion and ramp-up costs.

Mitigation:DOE grant and state incentives help offset costs; focus on cost discipline.

What to watch in Q2 FY27

Material handling demand recovery

Later this fiscal year (H2 FY27)

Current Orders down high single digits in Q1 FY27

Target Improvement in demand trends

Why it matters

Critical for IMS segment performance and overall revenue growth.

We maintain a high degree of confidence that material handling demand will improve later this fiscal year and pent-up demand will drive IMS to full year growth versus prior year.

Find out whether ENS delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked for context on the 80% YoY data center order growth, specifically trailing 12-month trends, and if the firm has orders in hand for the new DataSafe Noir lithium products given the FY28 revenue contribution target.

Shawn O'Connell confirmed robust quote activity and market interest for DataSafe Noir, with the first 100 systems already in the supply chain. Andi Funk clarified that the 80% order growth for lead-acid data center products extends deliveries 12-36 months, providing long-term visibility. The DataSafe Noir lithium product is expected to be incremental revenue starting in FY28, with over 500 units in active quotation.

“we've already got the first 100 systems on the water, priming the pump in the supply chain.”

asked by Noah Kaye · answered by Shawn O'Connell

2 min read 5 chapters

Detailed narrative

Record Q1 Performance and Strategic Framework

EnerSys achieved record Q1 FY27 financial results, driven by favorable price/mix, higher volumes, and operational discipline. The Network & Infrastructure Solutions and Precision Power Solutions segments performed strongly, supported by growth in data center, communications, and defense markets. The company's "energized strategic framework" focuses on high-growth markets and leveraging differentiated technologies to outpace end-market growth.

Lithium Manufacturing Facility and DOE Grant

EnerSys secured a $150 million grant from the U.S. Department of Energy for a new $650 million lithium cell manufacturing plant in Greenville, South Carolina. This facility will produce high energy density cells for mission-critical defense applications, ensuring a U.S.-based, FEOC-compliant supply chain.

The plant is expected to have an initial annual production capacity of approximately 1 GWh, purpose-built for specialized defense requirements. Construction is planned for H1 FY28, with full production by H1 FY31, targeting a mid-20s IRR.

Data Center and Lithium Expansion

The company continues to see solid growth in data centers, with Q1 top-line expanding in the low teens year-over-year. Data center orders were up over 80% YoY, with deliveries extending 12-36 months, providing long-term visibility. EnerSys launched its DataSafe Noir lithium offering, which has received strong customer enthusiasm for its energy density and cost advantages.

This differentiated lithium solution is expected to meaningfully impact revenue growth starting in FY28, expanding opportunities with existing customers.

Industrial Mobility Solutions Recovery

The Industrial Mobility Solutions business experienced initial recovery in the transportation market, with Q1 FY27 transportation orders nearly doubling YoY. However, material handling orders were down high single digits. Management maintains high confidence that material handling demand will improve in the latter half of FY27, driven by pent-up demand and new product introductions like the Gen 2 lithium offering.

The segment's long-term growth is supported by electrification, automation, and demand for maintenance-free batteries.

Aerospace & Defense Growth

Aerospace and Defense represents a compelling long-term growth and margin expansion opportunity. The segment's 24% YoY revenue growth was driven by increases in A&D products, particularly counter-drone powering liquid reserve batteries and missile defense powering thermal batteries. Demand is projected to accelerate through 2030 due to stockpile depletions and the evolution of battery-dependent drones.

The new Greenville plant will further support this growth by providing secure, U.S.-based supply for critical defense applications, with significant growth also seen in European allied nations.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.