EnerSys Q3 FY2026 earnings call

• Delivered strong earnings in Q3 with adjusted diluted EPS ex 45X of $1.84, up 50% YOY. Net sales up 1% due to price/mix and FX offsetting lower volumes. - Progress on energized strategic framework: capturing realignment savings, optimizing core, invigorating operating model, accelerating growth. - Monterrey battery plant closure substantially complete, services improvement turning corner, new product development pipeline progressing. - Managed tariff impact through supply chain actions and pricing, diversified business model resilient with positive demand in most end markets.

Energy Systems: Revenue increased 3% from prior year to $400 million, adjusted operating earnings up 67% to $42 million, adjusted operating margin 10.5%. Motive Power: Revenue decreased 2% from prior year to $352 million, adjusted operating earnings roughly flat, maintenance-free product sales up 5% and 29% of revenue mix. Specialty: Revenue increased 8% from prior year to $168 million, adjusted operating earnings more than doubled, adjusted operating margin 11.8%.

• Q4 net sales expected $960M to $1B, adjusted diluted EPS $2.95 to $3.05 (includes 45X benefits), excluding 45X $1.91 to $2.01, up 10% YOY midpoint. - Full year adjusted operating earnings growth excluding 45X benefits expected to outpace revenue growth, supported by OpEx savings, price/mix, and improving Motive Power volumes. - CapEx expectation for full year fiscal 2026 remains approximately $80 million.

• Near-term softness in Motive Power & Transportation. - Geopolitical uncertainty impacting defense budgets and supply chains. - Tariff policy shifts and their impact on bottom line.

Q: Noah Kaye asks about data center growth and lithium battery pipeline.

A: Shawn O'Connell talks about data center market share (over 50% in US lead acid) and ongoing lithium product development for data centers, noting no public dates yet but significant growth opportunity.

Q: Chip Moore asks about lithium battery strategy and final decision.

A: Shawn O'Connell discusses progress with DOE, bipartisan support, and that the grant remains intact, expecting finalization of updated plan soon with positive outlook.

Q: Brian Drab asks about Energy Systems and Motive Power segments.

A: Shawn and Andrea Funk provide insights on Energy Systems' data center growth and Motive Power's pent-up demand, destocking outlook, and segment performance trends.

Q: Greg Lewis asks about lithium UPS rollout.

A: Shawn O'Connell talks about trials in the field, customer pull-through, need for fine-tuning with OEMs, and expected steady ramp rather than hockey stick growth