EnerSys (ENS) Misses Revenue Estimates in Q4 Earnings

EnerSys (NYSE:ENS), a leading provider of stored energy solutions, reported fourth-quarter fiscal 2024 earnings that fell short of analyst estimates. The company's revenue of $910.70 million missed the consensus estimate of $932.6 million by 2.8%. Despite the revenue miss, EnerSys' adjusted earnings per share (EPS) of $2.08 surpassed the analyst estimate of $2.02 by 3.9%. Let's delve into the key factors contributing to the revenue miss and the EPS beat, as well as the company's outlook for the future.



EnerSys' revenue miss in Q4 CY2024 can be attributed to several factors:

1. Temporary spending pauses in telecom and broadband: The Energy Systems segment, which accounts for 40.5% of total sales, experienced a 19.4% year-over-year decrease in sales due to capital spending pauses by telecom and broadband customers. This decline significantly impacted the company's overall revenue.
2. Lower sales volumes: Although sales volumes rose 2% year on year, this increase was not sufficient to offset the impact of the temporary spending pauses and other factors contributing to the revenue miss.
3. Adverse impact of foreign currency translation: The adverse impact of foreign currency translation on sales was 1% in Q4 CY2024, which also contributed to the revenue miss.

Despite the revenue miss, EnerSys' adjusted EPS beat was driven by several key factors:

1. Lower Sales Costs: The company's adjusted earnings surged 14.3% year over year due to lower sales costs. This cost reduction positively impacted the bottom line, contributing to the EPS beat.
2. Segmental Performance: The Motive Power segment generated revenues of $394.8 million, up 3% year over year, driven by a 5% increase in organic sales. This segment's strong performance contributed to the overall EPS beat.
3. Gross Margin Improvement: EnerSys' gross margin increased by 300 basis points (bps) to 27.9% in the quarter, primarily due to price/mix benefits. This improvement in gross margin positively impacted the company's earnings.
4. Operating Margin Increase: The company's operating margin increased by 120 bps year over year to 12%, driven by cost-cutting measures and improved gross margin. This increase in operating margin also contributed to the EPS beat.



Looking ahead, EnerSys expects adjusted earnings to be in the range of $8.55–$8.95 per share in fiscal 2025. Net sales are expected to be in the band of $3.7-$3.8 billion. The company expects capital expenditures to be approximately $100-$120 million. Despite the revenue miss in Q4 CY2024, EnerSys' management remains optimistic about the company's long-term prospects.

In conclusion, EnerSys' revenue miss in Q4 CY2024 was primarily driven by temporary spending pauses in telecom and broadband, lower sales volumes, and the adverse impact of foreign currency translation. Despite the revenue miss, the company's adjusted EPS beat was driven by lower sales costs, segmental performance, gross margin improvement, and operating margin increase. As the company looks to the future, investors should monitor EnerSys' progress in returning to consistent revenue growth and maintaining its strong EPS trend.