EnerSys Q1 FY2026 earnings call

1. Launched EnerGize strategic framework with 3 pillars: optimizing core, invigorating operating model, accelerating growth. 2. Announced organizational realignment, reducing 11% of nonproduction workforce for $80M annual savings, with $30-35M in FY2026 H2. 3. Shifted manufacturing to 3 CoEs (lead acid, power electronics, lithium-ion) for operational clarity. 4. Completed acquisition of Rebel Systems, enhancing defense portfolio. 5. Q1 net sales up 5%, adjusted operating earnings up 8%, adjusted EBITDA up 2%. 6. Board approved $1B increase in share repurchase authorization. 7. Tariff task force mitigating tariff impact, expecting policy clarity to stabilize markets. 8. Missouri plants output improving, but financial benefits delayed by transportation issues. Lithium factory plans on hold, upcoming discussions.

Energy Systems: Revenue increased 8% to $391 million, adjusted operating earnings up 44% to $27 million, adjusted operating margin 7% (up 170 basis points). Motive Power: Revenue decreased 5% to $349 million, adjusted operating earnings down $9 million to $47 million, adjusted operating margin 13.4% (down 190 basis points). Specialty: Revenue increased 18% to $149 million, adjusted operating earnings nearly doubled to $10 million, adjusted operating margin 6.5% (up 260 basis points).

1. Q2 net sales expected $870M-$910M, adjusted diluted EPS $2.33-$2.43 (includes $35M-$40M 45X benefits), excluding 45X $1.34-$1.44 (up 8% midpoint). 2. Full year adjusted operating earnings growth excluding 45X expected to outpace revenue growth. 3. Cost reduction program: $80M annual savings, $15M-$20M one-time charges in Q2-Q3, net benefits from Q3 onwards.

1. Tariff uncertainty impacting volumes and mix, especially in forklift and EMEA markets. 2. Geopolitical uncertainty affecting macroeconomic conditions. 3. Delayed realization of financial benefits from manufacturing improvements due to transportation issues.

Q: Expand on communications recovery and cadence of that recovery?

A: Shawn and Andrea discuss early-stage build-outs in telecom/broadband, DOCSIS 4.0 upgrades, and steady progression in communications.

Q: Comment on margin trajectory with cost optimization?

A: Andrea mentions Q1 as low point, Q2 and beyond to track back towards record Q4 levels with upside, $80M savings equate to significant margin expansion.

Q: Talk about strategic growth framework and margin/growth opportunities?

A: Shawn talks about supply chain mitigation of tariff exposure, CoEs enabling specialization; Andrea discusses deeper wallet share with existing customers.

Q: Discuss buyback and near-term gross margin?

A: Shawn and Andrea discuss capital allocation discipline, Board approval of share repurchase, and near-term gross margin improvement as uncertainties dissipate.