EnerSys
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
ENS$147.02+3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-07.
0001289308-24-000005
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001289308-24-000028
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 151 previous paragraphs and 156 current paragraphs.
94 unchanged; 46 reworded; 16 added; 8 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Bren-Tronics Acquisition
Current report
On July 26, 2024, the Company completed the acquisition of all of the equity of Bren-Tronics Defense LLC for $208 million in cash consideration, subject to adjustments as set forth in the stock purchase agreement. Bren-Tronics Defense LLC, headquartered in Commack, New York, is a leading manufacturer of highly reliable portable power solutions, including small and large format lithium batteries and changing solutions, for military and defense applications.
Current report
Global economic conditions are mixed with the impacts of elevated interest rates and rising geopolitical tensions having various levels of impacts in North America, China and EMEA. All regions experienced a moderate rise in inflation in calendar year 2023 compared to calendar 2022 and continue to be negatively impacted by the war in Ukraine. We expect inflationary pressures and interest rates to continue to stay elevated through calendar 2024, but saw positive trends in June 2024 when the European Central Bank (ECB) cut its main interest rate by 25 basis points for the first time in five years. The U.S. Federal Reserve kept interest rates stable, but there is an expectation for a modest decrease in the second half of calendar year 2024. Policy makers in both regions have maintained a cautious stance. China’s economy saw some bright spots entering calendar year 2024 as a result of increasing travel and consumer spending due to relaxed COVID policies, but the region faces ongoing challenges from a weakened real estate market and is expected to experience a slowdown compared to calendar year 2023.
Current report
During the current quarter of fiscal 2025, we purchased 129,433 shares for $11.6 million.
Current report
Net sales of our Energy Systems segment in the first quarter of fiscal 2025 decreased $63.6 million or 15.0% compared to the first quarter of fiscal 2024. This decrease was due to an 11% decrease in organic volume, a 3% decrease in price/mix and a 1% decrease in foreign currency translation. This decrease in sales and price/mix was driven by continued capital spending pauses by our telecommunication and broadband customers.
Current report
Net sales of our Specialty segment in the first quarter of fiscal 2025 decreased by $7.5 million or 5.7% compared to the first quarter of fiscal 2024. The decrease was primarily due to a 3% decrease in organic volume, and a 3% decrease in price/mix. This decrease in sales was primarily driven by decreased volumes from Class 8 OEM transportation customers.
Current report
Renewables
Current report
During the current quarter of fiscal 2025, the Company recorded cash charges of $0.8 million primarily related to manufacturing variances.
Current report
During the current quarter of fiscal 2025, the Company recorded cash charges of $0.4 million primarily related to relocation expenses.
Current report
During fiscal 2024, the Company recorded cash charges of $2.1 million relating primarily to site cleanup and $0.5 million of non-cash charges relating to accelerated depreciation of fixed assets.
Current report
During the current quarter of fiscal 2025, the Company recorded cash charges of $0.4 million relating primarily to site cleanup and $0.1 million of non-cash charges relating to accelerated depreciation of fixed assets.
Current report
NM = not meaningful
Current report
The Specialty operating earnings, as a percentage of sales, decreased 350 basis points in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. This decrease is primarily a result of lower volumes in our transportation OEM's.
Current report
NM = not meaningful
Current report
The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective for taxable years beginning after December 31, 2023. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The impact of the enacted legislation is identified below. The Company will continue to monitor and evaluate as new legislation and guidance is issued.
Current report
accruals of $8.0 million, interest payments net of accruals of $5.5 million, deferred income and contract liabilities of $4.8 million, other miscellaneous accruals of $1.5 million partially offset by warranty accruals of $1.8 million and freight charges of $1.6 million.
Removed paragraphs (8)
Previous report
The economic climate in North America, China and EMEA slowed in calendar 2022 after experiencing strong growth during calendar 2021. All regions experienced a rise in inflation in calendar 2023 and were negatively impacted by the war in Ukraine. We expect interest rates to continue to stay elevated and potentially decrease in the second half of calendar year 2024 in the U.S. and the Euro zone. China’s slowing economy is facing further headwinds caused by pressure on the renminbi and the impact from its zero COVID polices that were relaxed in August of 2023.
Previous report
During the nine months of fiscal 2024, we purchased 855,034 shares for $82.3 million.
Previous report
Net sales decreased $47.5 million or 1.7% in the nine months of fiscal 2024 as compared to the nine months of fiscal 2023. This decrease was due to an 8% decrease in organic volume, partially offset by a 5% increase in pricing and a 1% increase in foreign currency translation.
Previous report
Net sales of our Energy Systems segment in the third quarter of fiscal 2024 decreased $60.8 million or 14.0% compared to the third quarter of fiscal 2023. This decrease was due to a 15% decrease in organic volume, partially offset by a 1% increase in price/mix. This decrease in sales was driven by capital spending pauses of our telecommunication and broadband customers. Net sales of our Energy Systems segment in the nine months of fiscal 2024 decreased $59.3 million or 4.6% compared to the nine months of fiscal 2023. This decrease was due to a 12% decrease in organic volume, offset by a 7% increase in price/mix. This decrease in sales was driven by a decrease in demand from telecommunication and broadband customers as a result in a pause in the capital spending, offset by stronger demand within the data centers markets.
Previous report
Net sales of our Specialty segment in the third quarter of fiscal 2024 increased by $8.5 million or 6.8% compared to the third quarter of fiscal 2023. The increase was primarily due to a 6% increase in organic volume and a 1% increase in foreign currency translation. This increase in sales was primarily driven by strong demand in the transportation sector. Net sales of our Specialty segment in the nine months of fiscal 2024 increased by $18.1 million or 4.9% compared to the nine months of fiscal 2023. The increase was primarily due to a 3% increase in pricing, a 1% increase in organic volume and a 1% increase in foreign currency translation. This increase in net sales was primarily driven by improved pricing and strong demand in primarily the transportation and space sectors, which is restrained by our capacity growth in our Missouri plants.
Previous report
During the nine months of fiscal 2024, the Company recorded cash charges of $1.7 million relating primarily to site cleanup and $0.4 million of non-cash charges relating to accelerated depreciation of fixed assets.
Previous report
The Specialty operating earnings, as a percentage of sales, decreased 370 basis points and 230 basis points in the third quarter and nine months of fiscal 2024, respectively, compared to the third quarter and nine months of fiscal 2023. These decreases were primarily a result of higher manufacturing and operating costs that produced an adverse impact on operating earnings.
Previous report
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. The IRA includes multiple incentives to promote clean energy, and energy storage manufacturing among other provisions with tax credits available from 2023 to 2032, subject to phase down beginning in 2030. In particular the IRA creates a refundable tax credit, pursuant to Section 45X of the Internal Revenue Code (“IRC”), for battery cells and battery modules manufactured or assembled in the United States and sold to third parties. On December 14, 2023, the United States Treasury issued proposed regulations which provided further guidance related to the Section 45X Advanced Manufacturing Production Credit. In the third quarter and nine months of fiscal 2024, the IRA impact resulted in a reduction of our costs of goods sold and income tax payable of $59.1 million and $100.4 million, respectively. The issuance of the aforementioned proposed regulations resulted in a $28.7 million retroactive adjustment to the beginning of the effective date of the IRA, January 1, 2023, in the third quarter of fiscal 2024. There is a possibility that additional clarification guidance is issued with respect to the Section 45X credit qualifications. Amounts recognized in the Consolidated Condensed Financial Statements are based on Management's judgement and best estimate utilizing the most current guidance. The Company will continue to evaluate the effects of IRA as more guidance is issued and the relevant implications to our Consolidated Condensed Financial Statements. Actual results could differ from management’s current estimate.
Reworded paragraphs (46)
Previous wording
The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of EnerSys. EnerSys and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in EnerSys’ filings with the Securities and Exchange Commission (“SEC”) and its reports to stockholders. Generally, the inclusion of the words “anticipate,” “believe,” “expect,” “future,” “intend,” “estimate,” “will,” “plans,” or the negative of such terms and similar expressions identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, or developments that EnerSys expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are and will be based on management’s then-current beliefs and assumptions regarding future events and operating performance and on information currently available to management, and are applicable only as of the dates of such statements.
Current wording
The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of EnerSys. EnerSys and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in EnerSys’ filings with the Securities and Exchange Commission (“SEC”) and its reports to stockholders. Generally, the inclusion of the words “anticipate,” “believe,” “expect,” “future,” “intend,” “estimate,” “will,” “plans,” or the negative of such terms and similar expressions identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, or developments that EnerSys expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are and will be based on management’s then-current beliefs and assumptions regarding future events and operating performance, on information currently available to management, and are applicable only as of the dates of such statements.
Previous wording
•global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and the related sanctions and other measures, changes in the rates of investment or economic growth in key markets we serve, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our global supply chains and strategies;
Current wording
•global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and the related sanctions and other measures, tensions across the Middle East, changes in the rates of investment or economic growth in key markets we serve, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our global supply chains and strategies;
Previous wording
Supply chain disruptions and cost spikes in certain materials that impacted EnerSys during calendar year 2022 and the beginning of calendar year 2023 started to stabilize during the second quarter of calendar year 2023. While there are still pockets of supply chain challenges and some elevated materials costs such as plastic resins, electronic components and utilities, other costs such as transportation have returned to pre-COVID levels. However, recent geopolitical tensions between Hamas and Israel have begun to disrupt shipments in the Red Sea. As a result, some ocean freight costs and transit times may temporarily increase until shipping in the region returns to normal. In addition, we have broadly achieved our hiring and labor retention goals in certain locations that were facing challenges at the beginning of the year. Generally, our mitigation efforts and ongoing lean initiatives have tempered the impact of the pandemic-related challenges. The market demand in our Motive Power and Specialty segments remains robust, but cyclical capex pauses in the communication networks market has decreased demand in the Energy Systems segment since our fiscal second quarter.
Current wording
Supply chain has been stabilizing since the second quarter of calendar year 2023. While there are still pockets of supply chain challenges and some elevated materials costs such as plastic resins, electronic components and copper and other costs such as transportation have returned to pre-COVID levels. However, recent geopolitical tensions between Hamas and Israel have begun to disrupt shipments in the Red Sea. As a result, some ocean freight costs and transit times may temporarily increase until shipping in the region returns to normal. Generally, our mitigation efforts and ongoing lean initiatives have tempered the impact of the pandemic-related challenges. The market demand in our Motive Power segment remains healthy, but we saw a decrease in demand in the Class 8 truck market in our fiscal first quarter, which impacted the Specialty segment. The cyclical capex pauses in the communication networks market has decreased demand in the Energy Systems segment since our second quarter fiscal 2024, but we saw some improvements in the last month of our first quarter fiscal 2025.
Previous wording
Our most significant commodity and foreign currency exposures are related to lead and the Euro, respectively. Historically, volatility of commodity costs and foreign currency exchange rates have caused large swings in our production costs. In the fiscal year 2024, we have experienced a range in lead prices from approximately $1.05 per pound to $0.90 per pound. We experienced elevated costs in some of our other raw materials such as plastic resins, steel, copper, acid, separator paper and electronics and elevated freight and increased energy costs. However, these increased costs have moderated during fiscal year 2024.
Current wording
Our most significant commodity and foreign currency exposures are related to lead and the Euro, respectively. Historically, volatility of commodity costs and foreign currency exchange rates have caused large swings in our production costs. In the fiscal year 2025, we have experienced a range in lead prices from approximately $1.05 per pound to $0.90 per pound. Costs in some of our other raw materials such as steel, acid, separator paper and electronics have moderated since the middle of fiscal year 2024, but we have seen some price increases in other raw materials such as copper and plastic resins since the beginning of fiscal year 2025.
Previous wording
As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable. The resulting net amount is divided by the trailing three month net sales (annualized) to derive a primary operating capital percentage. We believe these three elements included in primary operating capital are most operationally driven, and this performance measure provides us with information about the asset intensity and operating efficiency of the business on a company-wide basis that management can monitor and analyze trends over time. Primary operating capital was $911.6 million (yielding a primary operating capital percentage of 26.5%) at December 31, 2023, $1,057.0 million (yielding a primary operating capital percentage of 26.7%) at March 31, 2023 and $1,071.7 million at January 1, 2023 (yielding a primary operating capital percentage of 29.1%). The primary operating capital percentage of 26.5% at December 31, 2023 improved by 20 basis points compared to March 31, 2023 and improved 260 basis points compared to January 1, 2023. The decrease in primary operating capital percentage at December 31, 2023 compared to March 31, 2023 was primarily due to a reduction in accounts receivable inventory as a result of lower sales and a seasonal reduction in accounts payable compared to the fourth fiscal quarter of the prior fiscal year. The decrease in primary operating capital percentage at December 31, 2023 compared to January 1, 2023 was primarily from a reduction in accounts receivable and inventory as a result of lower sales compared to the third quarter of fiscal 2023.
Current wording
As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable. The resulting net amount is divided by the trailing three-month net sales (annualized) to derive a primary operating capital percentage. We believe these three elements included in primary operating capital are most operationally driven, and this performance measure provides us with information about the asset intensity and operating efficiency of the business on a company-wide basis that management can monitor and analyze trends over time. Primary operating capital was $866.9 million (yielding a primary operating capital percentage of 25.4%) at June 30, 2024, $852.9 million (yielding a primary operating capital percentage of 23.4%) at March 31, 2024 and $1,032.6 million at July 2, 2023 (yielding a primary operating capital percentage of 28.4%). The primary operating capital percentage of 25.4% at June 30, 2024 increased by 200 basis points compared to March 31, 2024 and decreased 300 basis points compared to July 2, 2023. The increase in primary operating capital percentage at June 30, 2024 compared to March 31, 2024 was primarily due to consistent inventory and accounts payable levels maintained this quarter in anticipation for future sales. Accounts receivable amounts were decreased comparatively mainly due to improved collection compared to the fourth fiscal quarter of the prior fiscal year. The decrease in primary operating capital percentage at June 30, 2024 compared to July 2, 2023 was primarily from a reduction in accounts receivable due to higher collections and inventory due to improved inventory management actions and easing of supply chain constraints compared to the first quarter of fiscal 2024.
Previous wording
We believe that our financial position is strong, and we have substantial liquidity to cover short-term liquidity requirements and anticipated growth in the foreseeable future, with $333 million of available cash and cash equivalents and available and undrawn committed credit lines of approximately $747 million at December 31, 2023, availability subject to credit agreement financial covenants.
Current wording
We believe that our financial position is strong, and we have substantial liquidity to cover short-term liquidity requirements and anticipated growth in the foreseeable future, with $344 million of available cash and cash equivalents and available and undrawn committed credit lines of approximately $782 million at June 30, 2024, availability subject to credit agreement financial covenants.
Previous wording
During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”). The Third Amended Credit Facility provided new incremental delayed-draw senior secured term loan up to $300 million (the “Third Amended Term Loan”), which was available to draw until March 15, 2023. During the fourth quarter of fiscal 2023, the Company drew $300 million in the form of the Third Amended Term Loan. The funds will mature on September 30, 2026, the same as the Company's Second Amended Term Loan and Second Amended Revolver. In connection with the agreement, the Company incurred $1.2 million in third party administrative and legal fees recognized in interest expense and capitalized $1.1 million in charges from existing lenders as a deferred asset. Additionally, the Company derecognized the capitalized deferred asset and recognized the $1.1 million as deferred financing costs.
Current wording
During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”). The Third Amended Credit Facility provided a new incremental delayed-draw senior secured term loan up to $300 million (the “Third Amended Term Loan”), which was available to draw until March 15, 2023. During the fourth quarter of fiscal 2023, the Company drew $300 million in the form of the Third Amended Term Loan. The funds will mature on September 30, 2026, the same as the Company's Second Amended Term Loan and Second Amended Revolver. In connection with the agreement, the Company incurred $1.2 million in third party administrative and legal fees recognized in interest expense and capitalized $1.1 million in charges from existing lenders as a deferred asset. Additionally, the Company derecognized the capitalized deferred asset and recognized the $1.1 million as deferred financing costs.
Previous wording
On January 11, 2024, we issued $300 million in aggregate principal amount of our 6.625% Senior Notes due 2032 (the “2032 Notes”). Proceeds from this offering, net of debt issuance costs were $297.0 million and were utilized to pay down the Fourth Amended Credit Facility. We plan to use the remaining net proceeds for general corporate purposes, including to repay a portion of the outstanding borrowings under the revolving portion of its existing credit facility (without a reduction in commitment).
Current wording
On January 11, 2024, we issued $300 million in aggregate principal amount of our 6.625% Senior Notes due 2032 (the “2032 Notes”). Proceeds from this offering, net of debt issuance costs were $297.0 million and were utilized to pay down the Fourth Amended Credit Facility.
Previous wording
We believe that our strong capital structure and liquidity affords us access to capital for future acquisitions, stock repurchase opportunities and continued dividend payments.
Current wording
We believe that our strong capital structure and liquidity affords us access to capital for future acquisitions, capital investments, stock repurchase opportunities and continued dividend payments.
Previous wording
Net sales decreased $58.7 million or 6.4% in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023. This decrease was the result of an 7% decrease in organic volume, partially offset by a 1% increase in pricing.
Current wording
Net sales decreased $55.7 million or 6.1% in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024. This decrease was the result of a 3% decrease in organic volume, a 2% decrease in price/mix, and a 1% decrease in foreign currency translation.
Previous wording
Net sales of our Motive Power segment in the third quarter of fiscal 2024 decreased by $6.4 million or 1.8% compared to the third quarter of fiscal 2023. This decrease was primarily due to a 3% decrease in organic volume, offset by a 1% increase from acquisitions. We continue to benefit from improved pricing and favorable sales mix, offset by a return to normal sales patterns. Net sales of our Motive Power segment in the nine months of fiscal 2024 decreased by $6.3 million or 0.6% compared to the nine months of fiscal 2023. This decrease was primarily due to a 7% decrease in organic volume, offset by a 5% increase in price/mix and a 1% increase in foreign currency translation. We continue to benefit from continued improved pricing and favorable sales mix.
Current wording
Net sales of our Motive Power segment in the first quarter of fiscal 2025 increased by $15.4 million or 4.4% compared to the first quarter of fiscal 2024. This increase was primarily due to a 6% increase in organic volume, offset by a 1% decrease from price/mix and a 1% decrease from foreign currency translation. We continue to benefit from a favorable sales mix, which was offset by the removal of both the utility adder and the elevated utility costs in EMEA in prior year.
Previous wording
Gross profit increased $34.9 million or 16.4% in the third quarter and increased $134.4 million or 22.6% in the nine months of fiscal 2024 compared to the comparable periods of fiscal 2023. Gross profit, as a percentage of net sales, increased 570 basis points and increased 540 basis points in the third quarter and nine months of fiscal 2024, respectively, compared to the third quarter and nine months of fiscal 2023. The increase in the gross profit margin in the current quarter reflects the impact of IRA benefits in fiscal year 2024 and a strong performance in our price/mix, which offset year on year cost increases.
Current wording
Gross profit decreased $1.9 million or 0.8% in the first quarter compared to the comparable periods of fiscal 2024. Gross profit, as a percentage of net sales, increased 160 basis points in the first quarter compared to the first quarter of fiscal 2024. The increase in gross profit margin as a percentage of revenue reflects greater impact of IRA benefits compared to the first quarter of fiscal 2024.
Previous wording
Operating expenses, as a percentage of sales, increased 210 basis points and increased 150 basis points in the third quarter and nine months of fiscal 2024, compared to the comparable periods of fiscal 2023.
Current wording
Operating expenses, as a percentage of sales, increased 60 basis points in the current quarter of fiscal 2025, compared to the first quarter of fiscal 2024. We have seen increased spending as a result of our increased investment in our Fast Charge and Storage products.
Previous wording
Selling expenses, our main component of operating expenses, decreased $2.1 million or 3.6% in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023, and decreased 19 basis points as a percentage of net sales. In the nine months of fiscal 2024, selling expenses increased by $4.8 million or 2.9% compared to the nine months of fiscal 2023 and increased 29 basis points as a percentage of net sales. The decrease in selling expenses as a percentage of sales in the current quarter is a result of our cost reduction initiatives partially offsetting labor increases earlier this fiscal year.
Current wording
Selling expenses, our main component of operating expenses, decreased $5.1 million or 6.2% in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024, and decreased 18 basis points as a percentage of net sales.
Previous wording
Included in our third quarter and nine months of fiscal 2023 operating results of Energy Systems were restructuring charges of $0.3 million and $1.2 million, respectively. Included in our third quarter and nine months of fiscal 2023 operating results of Motive Power were restructuring charges of $0.1 million and $0.3 million, respectively.
Current wording
Included in our first quarter of fiscal 2025 operating results of Energy Systems were restructuring charges of $3.0 million. Included in our first quarter of fiscal 2025 operating results of Motive Power were restructuring charges of $0.8 million. Included in our first quarter of fiscal 2025 operating results of Specialty were restructuring charges of $0.3 million.
Previous wording
Included in our third quarter and nine months of fiscal 2024 operating results of Energy Systems were restructuring charges of $0.0 million and $2.7 million respectively. Included in our third quarter and nine months of fiscal 2024 operating results of Motive Power were restructuring charges of $0.9 million and $1.8 million, respectively.
Current wording
Included in our first quarter of fiscal 2024 operating results of Energy Systems were restructuring charges of $0.5 million.
Previous wording
On November 8, 2023, the Company's Board of Directors approved a plan to stop production and operations of residential renewable energy products, which include our OutBack and Mojave brands. Management determined that residential renewable energy products no longer fit with the company’s core strategy and resources will be better allocated toward commercial energy solutions for enterprise customers. The Company currently estimates that the total charges for these actions will amount to $23.5 million relating primarily to $22.6 million in non-cash charges primarily including inventory and an indefinite-lived intangible asset write-offs and $0.9 million in cash charges including employee severance and retention payments. The plan is expected to be completed in fiscal 2024.
Current wording
On November 8, 2023, the Company's Board of Directors approved a plan to stop production and operations of residential renewable energy products, which include our OutBack and Mojave brands. Management determined that residential renewable energy products no longer fit with the Company’s core strategy and resources will be better allocated toward commercial energy solutions for enterprise customers. The Company currently estimates that the total charges for these actions will amount to $24.5 million relating primarily to $23.6 million in non-cash charges primarily including inventory and an indefinite-lived intangible asset write-offs and $0.9 million in cash charges including employee severance and retention payments. The plan was substantially complete as the end of fiscal 2024.
Previous wording
During the nine months of fiscal 2024, the Company recorded non-cash charges totaling $6.6 million primarily related to indefinite-lived intangible asset write-off and cash charges of $0.4 million related to severance costs. The Company also recorded a non-cash write off relating to inventories of $16.1 million, which was reported in cost of goods sold.
Current wording
During fiscal 2024, the Company recorded non-cash charges totaling $0.6 million primarily related to fixed assets and cash charges of $0.7 million related to severance costs. The Company also recorded a non-cash write-offs relating to inventories of $17.1 million, which was reported in cost of goods sold, and impairment of indefinite lived intangible asset of $6.0 million.
Previous wording
On November 8, 2023, the Company committed to a plan to close its facility in Spokane, Washington, which primarily manufactures enclosure systems for telecommunications and related end markets. Management determined that existing manufacturing locations have the capacity to satisfy demand for these products and will execute more efficient distribution to customers. The Company currently estimates that the total charges for these actions will amount to approximately $3.6 million relating to $0.7 million in cash charges for employee severance, and non-cash charges of $2.9 million fixed assets, facility lease, and inventory. The plan is expected to be completed in fiscal 2024.
Current wording
On November 8, 2023, the Company committed to a plan to close its facility in Spokane, Washington, which primarily manufactures enclosure systems for telecommunications and related end markets. Management determined that existing manufacturing locations have the capacity to satisfy demand for these products and will execute more efficient distribution to customers. The Company currently estimates that the total charges for these actions will amount to approximately $3.6 million relating to $1.4 million in cash charges for employee severance, and non-cash charges of $2.2 million fixed assets, facility lease, and inventory. The plan was substantially complete as the end of fiscal 2024.
Previous wording
During the nine months of fiscal 2024, the Company recorded cash charges of $0.6 million primarily related to severance costs and non-cash charges totaling $0.5 million related to fixed asset write offs.
Current wording
During fiscal 2024, the Company recorded cash charges of $1.3 million primarily related to severance costs and non-cash charges totaling $2.1 million related to lease right of use asset and fixed asset write-offs.
Previous wording
In November 2022, the Company committed to a plan to close its facility in Sylmar, California, which manufactures specialty lithium batteries for aerospace and medical applications. Management determined to close the site upon the expiration of its lease on the property and to redirect production through consolidation into existing locations. The Company currently estimates total charges in the exit to amount to $11.8 million. Cash charges are estimated to total $7.9 million primarily relating to severance and other costs to leave the site. Non-cash charges are estimated to be $3.9 million relating to fixed assets, inventory, and contract assets. The plan is expected to be completed in fiscal 2024.
Current wording
In November 2022, the Company committed to a plan to close its facility in Sylmar, California, which manufactures specialty lithium batteries for aerospace and medical applications. Management determined to close the site upon the expiration of its lease on the property and to redirect production through consolidation into existing locations. The Company currently estimates total charges in the exit to amount to $13.2 million. Cash charges are estimated to total $9.3 million primarily relating to severance and other costs to leave the site. Non-cash charges are estimated to be $3.9 million relating to fixed assets, inventory, and contract assets. The plan was substantially complete as the end of fiscal 2024.
Previous wording
During fiscal 2023, the Company recorded $1.7 million primarily related to severance costs and non-cash charges totaling $0.4 million primarily relating to contract assets.
Current wording
During fiscal 2023, the Company recorded cash charges of $1.6 million related primarily related to severance costs and non-cash charges totaling $0.4 million primarily relating to contract assets.
Previous wording
During the nine months of fiscal 2024, the Company recorded cash charges of $6.2 million primarily related to severance costs, relocation expenses, and manufacturing variances and non-cash charges totaling $0.4 million. The Company also recorded a non-cash write off relating to inventories of $3.1 million, which was reported in cost of goods sold.
Current wording
During fiscal 2024, the Company recorded cash charges of $7.2 million related primarily related to severance costs, relocation expenses, and manufacturing variances, and non-cash charges totaling $0.4 million. The Company also recorded a non-cash write-off relating to inventories of $3.1 million, which was reported in cost of goods sold.
Previous wording
On June 29, 2022, the Company committed to a plan to close its facility in Ooltewah, Tennessee, which produced flooded motive power batteries for electric forklifts. Management determined that future demand for traditional motive power flooded cells will decrease as customers transition to maintenance free product solutions in lithium and TPPL. The Company currently estimates that the total charges for these actions will amount to approximately $18.5 million. Cash charges for employee severance related payments, cleanup related to the facility, contractual releases and legal expenses are estimated to be $9.2 million and non-cash charges from inventory and fixed asset write-offs are estimated to be $9.3 million. These actions will result in the reduction of approximately 165 employees. The majority of these charges are expected to be recorded by the end of calendar 2023.
Current wording
On June 29, 2022, the Company committed to a plan to close its facility in Ooltewah, Tennessee, which produced flooded motive power batteries for electric forklifts. Management determined that future demand for traditional motive power flooded cells will decrease as customers transition to maintenance free product solutions in lithium and TPPL. The Company currently estimates that the total charges for these actions will amount to approximately $18.5 million. Cash charges for employee severance related payments, cleanup related to the facility, contractual releases and legal expenses are estimated to be $9.2 million and non-cash charges from inventory and fixed asset write-offs are estimated to be $9.3 million. These actions will result in the reduction of approximately 165 employees. The plan was substantially complete as the end of fiscal 2024.
Previous wording
During fiscal 2023, the Company recorded cash charges relating primarily to severance and manufacturing variances of $2.8 million and non-cash charges of $7.3 million relating to fixed asset write-offs. The Company also recorded a non-cash write-off relating to inventories of $1.6 million, which was reported in cost of goods sold.
Current wording
During fiscal 2023, the Company recorded cash charges relating to severance and manufacturing variances of $2.7 million and non-cash charges of $7.3 million relating to fixed asset write-offs. The Company also recorded a non-cash write-off relating to inventories of $1.6 million, which was reported in cost of goods sold.
Previous wording
During the nine months of fiscal 2024, the Company recorded cash charges relating to site cleanup and decommissioning equipment of $3.5 million.
Current wording
During fiscal 2024, the Company recorded cash charges relating to site cleanup and decommissioning equipment of $4.4 million.
Previous wording
Operating earnings increased $14.1 million or 17.9% and increased $87.7 million or 48.0% in the third quarter and nine months of fiscal 2024, respectively, compared to the third quarter and nine months of fiscal 2023. Operating earnings, as a percentage of net sales, increased 220 basis points and 340 basis points in the third quarter and nine months of fiscal 2024, respectively, compared to the third quarter and nine months of fiscal 2023.
Current wording
Operating earnings increased $1.9 million or 2.1% in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. Operating earnings, as a percentage of net sales, increased 90 basis points in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.
Previous wording
The Energy Systems operating earnings, as a percentage of sales, decreased 260 basis points and increased 100 basis points in the third quarter and nine months of fiscal 2024, respectively, compared to the third quarter and nine months of fiscal 2023. This decrease for the quarter was primarily as a result of lower volumes that were partially offset by lower lead and freight costs; and the increase for the year was a result of continued price/mix gains that offset higher inflationary costs and lower volumes.
Current wording
The Energy Systems operating earnings, as a percentage of sales, decreased 170 basis points in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. This decrease for the quarter was primarily as a result of lower volumes and unfavorable price/mix that were partially offset by lower freight costs and operating costs.
Previous wording
The Motive Power operating earnings, as a percentage of sales, increased 170 basis points and 260 basis points in the third quarter and nine months of fiscal 2024, respectively, compared to the third quarter and nine months of fiscal 2023. These increases were driven by significant pricing/mix gains partially offset by lower volumes and higher operating expenses.
Current wording
The Motive Power operating earnings, as a percentage of sales, increased 90 basis points in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. This increase was driven by volume growth and favorable pricing/mix gains.
Previous wording
Interest expense of $11.7 million in the third quarter of fiscal 2024 (net of interest income of $0.8 million) was $5.8 million lower than the interest expense of $17.5 million in the third quarter of fiscal 2023 (net of interest income of $0.4 million).
Current wording
Interest expense of $11.0 million in the first quarter of fiscal 2025 (net of interest income of $1.1 million) was $4.2 million lower than the interest expense of 15.2 million in the first quarter of fiscal 2024 (net of interest income of $0.7 million).
Previous wording
The decrease in interest expense in the third quarter of fiscal 2024 and in the nine months of fiscal 2024 is primarily due to lower borrowing levels and impact from interest rate swaps partially offset by higher interest rates. Our average debt outstanding was $970.5 million and $1,008.4 million in the third quarter and nine months of fiscal 2024, compared to $1,300.2 million and $1,361.6 million in the third quarter and nine months of fiscal 2023.
Current wording
The decrease in interest expense in the first quarter of fiscal 2025 is primarily due to lower borrowing levels. Our average debt outstanding was $910.1 million in the first quarter of fiscal 2025, compared to $1,040.7 million in the first quarter of fiscal 2024.
Previous wording
Included in interest expense are non-cash charges for deferred financing fees of$0.4 million and $1.2 million for the third quarter and nine months of fiscal 2024 and $0.5 million and $1.5 million in the third quarter and nine months of fiscal 2023.
Current wording
Included in interest expense are non-cash charges for deferred financing fees of $0.5 million for the first quarter of fiscal 2025 and $0.4 million in the first quarter of fiscal 2024.
Previous wording
Other (income) expense, net in the third quarter of fiscal 2024 was expense of $2.2 million compared to expense of $3.2 million in the third quarter of fiscal 2023. Other (income) expense, net in the nine months of fiscal 2024 was expense of $5.9 million compared to expense of $3.5 million in the nine months of fiscal 2023. Foreign currency impact resulted in a gain of $0.4 million and a gain of $3.2 million in the third quarter and nine months of fiscal 2024, respectively, compared to a foreign currency loss of $1.3 million and a gain of $1.2 million in the third quarter and nine months of fiscal 2023, respectively. Included in the third quarter and nine months of fiscal 2023 foreign currency impact is a gain of $0.6 million and loss of $4.5 million relating to the remeasurement of monetary assets from the exit of our Russia operations.
Current wording
Other (income) expense, net in the first quarter of fiscal 2025 was expense of$1.0 million compared to expense of$0.7 million in the first quarter of fiscal 2024. Foreign currency impact resulted in a gain of $1.3 million in the first quarter of fiscal 2025 compared to a foreign currency gain of $2.3 million in the first quarter of fiscal 2024.
Previous wording
As a result of the above, earnings before income taxes in the third quarter of fiscal 2024 increased $20.9 million, or 36.0%, compared to the third quarter of fiscal 2023 and increased $90.7 million, or 67.3% in the nine months of fiscal 2024 compared to the nine months of fiscal 2023.
Current wording
As a result of the above, earnings before income taxes in the first quarter of fiscal 2025 increased $5.8 million, or 7.9%, compared to the first quarter of fiscal 2024.
Previous wording
The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provision for the third quarter of fiscal 2024 and 2023 was based on the estimated effective tax rates applicable for the full years ending March 31, 2024 and March 31, 2023, respectively, after giving effect to items specifically related to the interim periods. Our effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions, in which we operate, changes in tax laws and the amount of our consolidated earnings before taxes.
Current wording
The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provision for the first quarter of fiscal 2025 and 2024 was based on the estimated effective tax rates applicable for the full years ending March 31, 2025 and March 31, 2024, respectively, after giving effect to items specifically related to the interim periods. Our effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions, in which we operate, changes in tax laws and the amount of our consolidated earnings before taxes.
Previous wording
The consolidated effective income tax rates for the third quarter of fiscal 2024 and 2023 were 3.2% and 23.2% and for the nine months of fiscal 2024 and 2023 were 7.7% and 18.5%, respectively. The rate decrease in the third quarter and nine months of fiscal 2024 compared to the prior year periods are primarily due to the impact of the IRA and mix of earnings among tax jurisdictions.
Current wording
The consolidated effective income tax rates for the first quarter of fiscal 2025 and 2024 were 11.6% and 9.2%. The effective income tax rate increase in the first quarter compared to the prior year quarter is primarily due to a discrete foreign exchange tax benefit related to undistributed earnings in the first quarter of fiscal year 2024, impact of Pillar 2, and mix of earnings among tax jurisdictions.
Previous wording
Foreign income as a percentage of worldwide income is estimated to be 52% for fiscal 2024 compared to 83% for fiscal 2023. This reduction is primarily due to the IRA impact on domestic earnings. The foreign effective tax rates for the nine months of fiscal 2024 and 2023 were 11.0% and 15.0%, respectively. Income from the Company's Swiss subsidiary comprised a substantial portion of the Company's overall foreign mix of income for both fiscal 2024 and fiscal 2023 and were taxed at an effective income tax rate of approximately 9% in both periods.
Current wording
Foreign income as a percentage of worldwide income is estimated to be 49% for fiscal 2025 compared to 51% for fiscal 2024. The foreign effective tax rates for the current quarter of fiscal 2025 and 2024 were 14% and 12%, respectively. The foreign effective tax rate increased in the first quarter compared to the first quarter of the prior year is primarily due to the impact of Pillar 2. Income from the Company's Swiss subsidiary comprised a substantial portion of the Company's overall foreign mix of income for both fiscal 2025 and fiscal 2024 and were taxed at an effective income tax rate of approximately 11% and 8%, respectively.
Previous wording
Operating activities provided cash of $320.2 million in the nine months of fiscal 2024 compared to $135.8 million of cash provided in the nine months of fiscal 2023, with the increase in operating cash resulting mainly due to net earnings and activity in accounts receivable, inventory, and accounts payable. Accounts receivable decreased or provided cash of $139.5 million, and inventory decreased or provided cash of $27.4 million. Additionally, accounts payable decreased or used cash of $45.7 million. These results were due to lower sales in the period compared to the fourth quarter of fiscal 2023. In the nine months of fiscal 2024, net earnings were $208.2 million, depreciation and amortization $68.3 million, stock-based compensation $22.9 million, non-cash charges relating to exit charges $21.5 million, impairment of trademarks $6.0 million, allowance for doubtful debts of $1.9 million, derivative losses of $0.7 million, derivatives cash settlements of $0.2 million, and non-cash interest of $1.2 million. Prepaid and other current assets were a use of funds of $3.6 million, primarily from an increase of $6.9 million in prepaid taxes, $4.0 million in other prepaids, and $1.4 million in prepaid insurance partially offset by a decrease of $8.7 million in other prepaid expenses, such as non-trade receivables and other advances. Accrued expenses were a use of funds of $126.9 million primarily from decrease in tax accruals of $101.3 million, other miscellaneous accruals of $3.1 million, payroll related payments of $16.0 million net of accruals, decrease to sales related accruals of $3.0 million, and interest payments net of accruals of $5.9 million, partially offset by $2.4 million in restructuring and warranty accruals of $1.8 million.
Current wording
Operating activities provided cash of $10.4 million in the first quarter of fiscal 2025 compared to $74.9 million of cash provided in the first quarter of fiscal 2024, with the decrease in operating cash resulting mainly due to activity in accounts receivable, inventory, accrued expenses and accounts payable. Accounts receivable decreased or provided cash of $12.2 million, and inventory increased or used cash of $16.5 million. Additionally, accounts payable decreased or used cash of $10.3 million. In the first quarter of fiscal 2025, net earnings were $70.1 million, depreciation and amortization $23.6 million, stock-based compensation $7.1 million, non-cash charges relating to exit charges $0.1 million, allowance for doubtful debts of $0.6 million, and non-cash interest of $0.5 million. Prepaid and other current assets were a use of funds of $9.9 million, primarily from an increase of $2.6 million in prepaid taxes and $11.6 million in contract assets, partially offset by a decrease of $2.7 million in other prepaid expenses, such as non-trade receivables and other advances and prepaid insurance of $1.6 million. Accrued expenses were a use of funds of $64.8 million primarily from decrease in tax accruals of $37.0 million, other miscellaneous accruals of $5.3 million, payroll related payments of $16.8 million net of accruals, decrease to sales related accruals of $11.0 million, and interest payments net of accruals of $14.2 million, partially offset by $16.0 million in accrued interest, warranty accruals of $1.1 million, and $2.5 million in contract liabilities.
Previous wording
In the nine months of fiscal 2023, operating activities provided cash of $135.8 million, with the increase in operating cash resulting mainly due to net earnings. Accounts receivable decreased or provided cash of $123.4 million due to sale of $150.0 million accounts receivable under the RPA entered into December 21, 2022. Inventory increased or used cash of $135.9 million. All components of inventory increased due to strategic investment, supply chain delays, new products and higher inventory costs from higher raw material costs, manufacturing and freight costs and to address the high backlog of customer orders. Accounts payable decreased or used cash of $31.6 million due to seasonal reduction. In the nine months of fiscal 2023, net earnings were $109.9 million, depreciation and amortization $69.0 million, stock-based compensation $18.8 million, non-cash charges relating to exit charges $8.4 million, primarily relating to the Ooltewah, Tennessee plant closure, derivative gains of $1.4 million, non-cash interest of $1.5 million, and allowance for doubtful debts of $0.7 million. Prepaid and other current assets were a use of funds of $8.3 million, primarily from an increase of $13.6 million in other prepaid expenses, such as taxes, insurance and other advances, partially offset by a $5.3 million decrease in contract assets. Accrued expenses were a use of funds of $17.1 million primarily from payroll related payments of $10.4 million net of accruals, tax payments net of accruals of $10.4 million, interest payments net of accruals of $6.2 million, partially offset by deferred income and contract liabilities of $3.9 million, freight charges of $3.5 million, warranty accruals of $1.2 million, other miscellaneous accruals of $1.3 million.
Current wording
In the first quarter of fiscal 2024, operating activities provided cash of $74.9 million, with the increase in operating cash resulting mainly due to net earnings. Accounts receivable decreased or provided cash of $73.2 million due to lower sales in the current quarter compared to the previous quarter. Inventory increased or used cash of $11.0 million due to lower inventory turns as compared to the previous quarter. Accounts payable decreased or used cash of $39.3 million due to seasonal reduction. In the first quarter of fiscal 2024, net earnings were $66.8 million, depreciation and amortization $22.7 million, stock based compensation $7.9 million, non-cash charges relating to exit charges $3.3 million, derivative gains of $0.5 million, derivatives cash proceeds of $0.7 million, non-cash interest of $0.4 million, and allowance for doubtful debts of $0.5 million. Prepaid and other current assets were a use of funds of $4.1 million, primarily from an increase of $7.3 million in contract assets partially offset by a decrease of $3.2 million in other prepaid expenses, such as taxes, insurance and other advances. Accrued expenses were a use of funds of $46.6 million primarily from tax payments net of accruals of $15.8 million, including $19.4 million relating to the IRA production tax credits, payroll related payments of $13.2 million net of accruals, decrease to sales related
Previous wording
Investing activities used cash of $13.7 million in the nine months of fiscal 2023 which primarily consisted of capital expenditures of $57.5 million relating to plant improvements, partially offset by proceeds from termination of a net investment hedge of $43.4 million.
Current wording
Investing activities used cash of $47.0 million in the first quarter of fiscal 2025, which primarily consisted of capital expenditures of $36.1 million relating to plant improvements and $10.9 million relating to investment in equity securities.
Showing the first 40 of 46 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
(1) The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales; Corporate and other is computed based on total consolidated net sales
Previous report — wording carried elsewhere
(2) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRA production tax credits. Also, included are start-up costs for exploration of a new lithium plant as well as start-up operating expenses from the New Ventures operating segment.
Previous report — wording carried elsewhere
Interest expense of $39.1 million in the nine months of fiscal 2024 (net of interest income of $2.0 million) was $5.4 million lower than the interest expense of $44.5 million in the nine months of fiscal 2023 (net of interest income of $1.1 million).