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EnerSys (ENS) Q2 Earnings & Revenues Top Estimates, Up Y/Y

EnerSys ENS reported better-than-expected second-quarter fiscal 2020 (ended Sep 29, 2019) results, wherein both earnings and revenues surpassed estimates.

The company’s adjusted earnings were $1.23 per share, beating the Zacks Consensus Estimate of $1.20. Also, the bottom line increased 5.1% from the year-ago figure of $1.17.

Revenues

In the quarter, EnerSys’ net sales were $762.1 million, reflecting growth of 15.4% from the year-ago quarter. The improvement was driven by 22% positive impact of the Alpha acquisition, partially offset by 4% decrease in organic volumes, 1% decline in pricing and forex woes of 2%. Moreover, the top line beat the Zacks Consensus Estimate of $758 million.

Sales generated from the reserve power product line totaled $427 million, increasing 36.4% year over year while that from motive power declined 3.5% to $335 million.

Enersys Price, Consensus and EPS Surprise

Enersys Price, Consensus and EPS Surprise

Enersys price-consensus-eps-surprise-chart | Enersys Quote

The company reports net sales under three segments as discussed below:

Revenues from the Americas (representing roughly 68.9% of the quarter’s net sales) were $524.9 million, increasing 35.1% year over year. The rise was driven by 38% increase from acquired assets, partially offset by 1% adverse impact of forex woes and 1% decline in organic volume.

Revenues from Europe, Middle East and Africa (24%) totaled $183 million, declining 10.3% year over year. The decline was attributable to 4% fall in organic volumes, 5% adverse impact of forex woes and adverse impact of 1% from unfavorable pricing.

Revenues from Asia (7.1%) were $54 million, down 20.1%. Decline in organic volume affected results by 17% and forex woes had an adverse 3% impact.

Margins Details

In the quarter, EnerSys’ cost of goods sold was $564.8 million. It represented 74.1% of net sales. Gross profit increased 22.6% year over year to $197.3 million, with margin increasing 150 basis points to 25.9%.

Operating expenses were $122.4 million, representing 16.1% of net sales. Total operating earnings decreased 7.2% to $58.7 million.

Balance Sheet and Cash Flow

Exiting the second quarter of fiscal 2020, EnerSys had cash and cash equivalents of $424.8 million compared with $545.2 million at the end of the year-ago quarter.

During the first six months of fiscal 2020, the company generated net cash of $105.1 million from operating activities. Capital expenditure totaled $43.4 million compared with $35.5 million incurred in the year-earlier quarter.

Concurrent with the earnings release, the company’s board of directors approved a quarterly cash dividend of 17.5 cents per share to shareholders on record as of Dec 13, 2019. The payment will be made on Dec 27.

Outlook

For the third quarter of fiscal 2020 (ending December 2019), EnerSys anticipates adjusted earnings of $1.12-$1.16 per share.

Zacks Rank & Key Picks

EnerSys currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Industrial Products sector are AZZ Inc. AZZ, Plug Power, Inc. PLUG and Energous Corporation WATT. While AZZ sports a Zacks Rank of 1 (Strong Buy), Plug Power and Energous carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AZZ pulled off average positive surprise of 2.12% in the last four quarters.

Plug Power’s earnings surprise in the last reported quarter was positive 20%.

Energous came up with average earnings beat of 9.52% in the preceding four quarters.

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