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Introduction & Market Context
EnerSys (NYSE:ENS), a global leader in stored energy solutions, presented its fourth quarter and full fiscal year 2025 earnings on May 21, 2025, showcasing strong profit growth despite modest revenue gains. The company’s stock reacted negatively, falling 2.68% during regular trading and an additional 3.14% in after-hours, as investors digested both the solid results and cautious forward guidance.
The presentation highlighted EnerSys’s ability to expand margins across all business segments while navigating an increasingly complex global trade environment and preparing for potential economic headwinds. Management emphasized its proactive approach to tariff mitigation and operational efficiency improvements.
Quarterly Performance Highlights
EnerSys reported robust financial performance for Q4’25, with net sales of $975 million, representing a 7% year-over-year increase. More impressively, adjusted operating earnings jumped 40% to $152 million, while adjusted EBITDA rose 34% to $167 million. Adjusted earnings per share reached $2.97, a 43% increase compared to the same period last year.
As shown in the following comprehensive performance overview, the company achieved significant margin expansion, with Q4’25 adjusted gross margin (excluding IRC 45X tax credits) reaching 26.7%, a 260 basis point improvement year-over-year:
The company’s full-year results also demonstrated solid profitability, with adjusted EPS of $10.15 for FY’25, representing a 22% increase over the previous year. However, annual revenue growth was more modest at just 1%, reaching $3.6 billion.
A more detailed breakdown of the quarterly and annual financial metrics reveals the company’s ability to drive earnings growth despite limited top-line expansion:
Segment Performance Analysis
All three of EnerSys’s business segments showed significant margin expansion in Q4’25, though with varying revenue performance. The Energy Systems segment, which focuses on data centers and telecommunications, delivered particularly strong results with operating earnings nearly doubling year-over-year.
The following slide illustrates the performance across all three business segments:
The Energy Systems segment generated $399 million in Q4’25 net sales, an 8% increase year-over-year, driven by strong data center demand, which grew 22%. Adjusted operating earnings surged 99% to $34.7 million, with margin expansion of 400 basis points to 8.7%.
The Motive Power segment, which provides power solutions for material handling applications, maintained strong profitability despite flat sales. Net sales were $392 million, a slight decrease of 0.6% year-over-year, but adjusted operating earnings increased 14% to $66.5 million, with margins expanding 230 basis points to 17.0%.
The Specialty segment, which includes aerospace and defense (A&D) and transportation applications, showed the strongest revenue growth at 21% year-over-year, reaching $178 million in Q4’25. This growth was primarily driven by the Bren-Tronics acquisition, which contributed 22% to the segment’s growth. Adjusted operating earnings increased 79% to $15.1 million, with margins expanding 270 basis points to 8.5%.
Strategic Initiatives & Challenges
EnerSys’s new CEO outlined strategic priorities focused on building upon the company’s strengths while addressing key focus areas. The strategy emphasizes deep customer relationships, leading positions in diverse end markets, and solutions that help customers address energy security and labor scarcity concerns.
A significant challenge facing the company is the evolving tariff landscape. EnerSys identified approximately $92 million in current direct tariff exposure, with about 65% of global revenue coming from the U.S. The company has implemented a comprehensive mitigation strategy, including a dedicated tariff task force, supply chain and pricing adjustments, and structural buffers such as regional production and dual sourcing.
In preparation for potential economic headwinds, EnerSys has developed a recession playbook that leverages its diversified end-markets and global manufacturing footprint. The company plans to manage costs aggressively, optimize working capital, and potentially defer non-essential capital expenditures if necessary.
The company is also focusing on operational and strategic execution, including increasing higher-value solutions, implementing operational improvements, and executing its lithium strategy. Key initiatives include the Synova Sync charger, battery energy storage systems for warehouses and distribution centers, and strengthening the company’s manufacturing footprint.
Forward Guidance & Long-Term Targets
EnerSys provided guidance for Q1’26, projecting net sales between $830 million and $870 million and adjusted EPS between $2.03 and $2.13. The company noted that it is pausing quantified full-year guidance due to current market uncertainties. Q1’26 is expected to mark the low point of the year, with assumptions including strong data center market performance, continued cautious communications market recovery, and seasonality exacerbated by tariff disruptions.
Despite near-term challenges, EnerSys remains committed to its FY’27 targets. The company has already achieved its adjusted operating margin target of 14-16%, with FY’25 performance at 14.6%. Adjusted EBITDA and EPS are also on track, though revenue growth is lagging behind the 8-10% CAGR target.
EnerSys maintains a strong balance sheet with a net leverage ratio of 1.3x, up from 1.0x in the prior year but still at a comfortable level. The company generated $105 million in free cash flow in Q4’25 and $139 million for the full year, though this represents a significant decrease from $371 million in FY’24.
The company’s capital allocation strategy remains disciplined, with investments in organic growth, strategic M&A, and returning capital to shareholders through dividends and share repurchases. In Q4’25, EnerSys invested $30 million in capital expenditures, paid $9.5 million in dividends, and repurchased $40 million in shares.
As EnerSys navigates the challenges of tariffs and potential economic headwinds, its focus on operational efficiency, margin expansion, and strategic growth initiatives positions the company to continue delivering solid financial performance while working toward its long-term objectives.
Full presentation:
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