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    ENS
    Earnings call· Jun 2026(Q1 FY27)

    EnerSys Q1 FY27 earnings call ENS

    Aug 13, 2026 Source

    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

    7

    • 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

    4

    • 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

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

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    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 million9%—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 million24%—Adjusted operating earnings $18 million, Adjusted operating margin 18.2%

    Operational metrics

    29
    Net sales
    $936 millionup 5% YoY
    Q1 FY27

    Driven by favorable price/mix, higher volumes, and foreign currency translation.

    Gross profit
    $313 millionup $60 million or 24% YoY
    Q1 FY27

    Includes tariff refunds and 45X benefits.

    Gross margin
    33.5%up 510 bps YoY
    Q1 FY27

    Includes tariff refunds and 45X benefits.

    Gross margin (excluding tariff refunds and 45X benefits)
    25.2%up 110 bps YoY
    Q1 FY27

    Excludes tariff refunds and 45X benefits.

    Effective tax rate (as-reported)
    13.7%
    Q1 FY27

    On an as-reported basis.

    Effective tax rate (as-adjusted, before 45X)
    21.8%vs 21.4% (Q1 FY26), 20.4% (prior quarter)
    Q1 FY27

    Before the benefit of 45X.

    Capital expenditures
    $12 millionvs $33 million (Q1 FY26)
    Q1 FY27

    Lower than prior year.

    Free cash flow conversion
    187%
    Q1 FY27

    Elevated due to strong cash flow and 45X benefits.

    Free cash flow conversion (excluding 45X earnings/cash)
    140%
    Q1 FY27

    Attributable to enhanced focus on working capital optimization.

    Primary operating capital (POC)
    $858 millionvs $993 million (prior year)
    Q1 FY27

    Decreased due to receivables purchasing agreement and working capital improvements.

    Cash and cash equivalents
    $531 million
    as of July 5, 2026

    Cash balance on hand.

    Net debt
    $522 milliondecrease of over $160 million since end of FY26
    Q1 FY27

    Reduced since the end of fiscal year 2026.

    Leverage ratio
    0.8x
    Q1 FY27

    Remains well below the target range, providing capital allocation flexibility.

    Shares purchased
    219,000
    Q1 FY27

    Part of the share repurchase program.

    Buyback amount
    $50 million
    Q1 FY27

    Amount spent on share repurchases.

    Average buyback price
    ~$229
    Q1 FY27

    Average price paid for shares repurchased.

    Remaining buyback authorization
    Nearly $900 million
    Q1 FY27

    Remaining amount under Board authorization.

    Quarterly dividend increase
    10%
    Q2 FY27

    Increase in the quarterly dividend.

    New quarterly dividend
    $0.2875
    Q2 FY27

    New dividend per share for the second quarter of fiscal 2027.

    Tariff refunds recognized
    $31 million
    Q1 FY27

    Related to previously paid IEEPA tariffs, creating a one-time positive impact.

    Tariff refunds received in cash
    Approximately $16 million
    Q1 FY27

    Remaining cash receipts expected in upcoming quarters.

    45X benefits (stock-based comp adjustment)
    $7.6 millionvs $7.2 million (Q1 FY26)
    Q1 FY27

    Noncash stock-based compensation expense excluded from adjusted metrics for better comparability.

    45X benefits (EPS lift)
    $0.16vs $0.15 (Q1 FY26)
    Q1 FY27

    Lift to adjusted EPS from excluding stock-based compensation expense.

    45X benefits (Q2 FY27 guidance)
    $42 million to $47 million
    Q2 FY27

    Expected benefits to cost of sales included in Q2 FY27 adjusted diluted EPS guidance.

    Transportation orders growth
    Nearly doubledYoY
    Q1 FY27

    Strong recovery in the transportation market.

    Material handling orders growth
    Down high single digitsYoY
    Q1 FY27

    Continued weakness in material handling market activity.

    NIS Services revenue growth
    Around 20%YoY
    Q1 FY27

    Meaningful contributor to top line growth and margin improvement.

    PPS A&D revenue growth
    24%YoY
    Q1 FY27

    Driven by increases across A&D products, particularly counter-drone and missile defense.

    European A&D growth
    2x
    FY26 vs FY25

    Growth rate in Europe for Aerospace & Defense business.

    Industry KPIs

    5
    MetricValueDetails
    Book to bill ratio1.06
    Orders bookings growth7%%
    Gigawatts under contract1GWh
    Backlog by segment end marketrelatively flat
    Data center exposure pipelineLow teens%

    Orderbook & backlog

    2
    Total backlogrelatively flatQ1 FY27

    up 2% sequentially

    Data center ordersdeliveries extending 12 to 36 monthsQ1 FY27

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

    Product announcements

    3
    ProductTypeDetails
    Fortix 172-kilowatthour BESSmilestone
    DataSafe Noir lithium offeringlaunch
    Gen 2 lithium offeringlaunch

    Deals & partnerships

    2
    U.S. Department of EnergyFinancial 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 CountyComprehensive incentive package for lithium manufacturing plantapproximately $200 millionshort-term and long-term

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

    Capital programs

    1
    Greenville, SC Lithium Manufacturing Plantplanned$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

    3
    Material handling market weaknessExpected 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 environmentOngoing.

    Estimated annual tariff exposure remains materially unchanged.

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

    Capacity-ramp drag on near-term marginsNear-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

    5

    Material handling demand recovery

    Later this fiscal year (H2 FY27)
    CurrentOrders down high single digits in Q1 FY27
    TargetImprovement 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.

    Q&A highlights

    7

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.