EnerSys
For the period ended Mar 31, 2025. Filed May 21, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed May 21, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Report of Independent Registered Public Accounting Firm (on Consolidated Financial Statements) (PCAOB ID:
To the Stockholders and the Board of Directors of EnerSys
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of EnerSys (the Company) as of March 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended March 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 21, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Accounting for Certain Tax Credits Under the Inflation Reduction Act | |
| Description of the Matter | As described in Note 1 to the consolidated financial statements, management accounts for government assistance that is not subject to income tax accounting using a grant accounting model, by analogy to international accounting standards for government grants and disclosure of government assistance. Management recognizes such grants when there is reasonable assurance that the Company will comply with the grant’s conditions and that the grant will be received. The Company recognizes the benefit as a reduction in cost of sales and income taxes payable as revenue and costs are recognized on the qualifying finished goods. As described in Note 1 to the consolidated financial statements, in August 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. 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 as well as a credit for electrode active material for batteries. The Company recognized a benefit to cost of sales of $184.6 million for the year ended March 31, 2025 related to the tax credit under Section 45X of the IRC.Auditing management’s tax credits under the IRA was complex and involved a high degree of auditor judgment and subjectivity in evaluating the Company’s methodology for the determination of qualifying products and the quantification of the benefit earned pursuant to Section 45X of the IRC. In determining the appropriateness of the application of the relevant regulations to the qualifying products included in management’s calculation, the audit effort involved the use of professionals with specialized skill and knowledge. |
|---|---|
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s tax credits under the IRA. For example, we tested controls over management’s review of the applicable accounting model related to the laws and regulations related to the IRA, calculation of the tax credits under the IRA based on the qualifying products, and the completeness and accuracy of the data used in the model.To test the tax credits under the IRA, we performed audit procedures that included, among other procedures, assessing the methodology used by management in calculating the tax credits pursuant to Section 45X of the IRC and evaluating management’s determination of the qualifying products included within the benefit calculation. For example, we validated information related to product specifications used in management’s evaluation of qualifying products by involving professionals with specialized skill and knowledge, and validated the inputs used to calculate the benefit pursuant to the IRA and industry practice. We also evaluated management’s presentation of tax credits within the financial statements. |
| Valuation of Indefinite-Lived Intangible Assets | |
| Description of the Matter | As reflected in the Company’s consolidated financial statements, the Company’s indefinite-lived intangible assets were $128.3 million as of March 31, 2025. As discussed in Note 1 to the consolidated financial statements, indefinite-lived intangible assets are tested for impairment at least annually, using both the qualitative and quantitative assessments.Auditing management’s annual indefinite-lived intangible asset impairment test was complex and involved a high degree of subjectivity due to the significant estimation required in determining the fair value of the indefinite-lived intangible asset valuated using the quantitative assessment. The fair value estimate related to this indefinite-lived intangible asset was sensitive to significant assumptions such as discount rate, forecasted revenue growth rates, and royalty rate, which are forward-looking and could be affected by future economic and market conditions. |
|---|---|
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s annual quantitative indefinite-lived intangible asset impairment test. For example, we tested controls over management’s review of the valuation model, the significant assumptions used to develop the estimate including discount rate, forecasted revenue growth rates and royalty rate, and the completeness and accuracy of the data used in the valuation. To test the estimated fair value of the Company’s indefinite-lived intangible asset, we performed audit procedures that included, among other procedures, assessing fair value methodology and testing the significant assumptions discussed above and the completeness and accuracy of the underlying data used by the Company in its analysis. For example, we compared the significant assumptions used by management to current industry, market and economic trends, to historical results of the Company's business and other guideline companies within the same industry and to other relevant factors. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the indefinite-lived intangible asset that would result from changes in the assumptions. We also involved internal valuation specialists to assist in our evaluation of the significant assumptions and methodology used by the Company. |
| Acquisition of Bren-Tronics | |
| Description of the Matter | As discussed in Note 4 to the Company’s consolidated financial statements, the Company completed the acquisition of Bren-Tronics Defense LLC. (“Bren-Tronics”) on July 26, 2024 for a purchase price of $206 million. The Company recognized the intangible assets acquired at their estimated fair values as of the date of the acquisition. The valuations required management to make significant judgments, estimates, and assumptions, especially with respect to the identifiable intangible assets, which were based in part upon historical experience and forward-looking information obtained from management of the acquired company.Auditing the Company's accounting for its acquisition of Bren-Tronics was complex due to the significant estimation uncertainty in determining the fair value of the acquired customer relationship intangible asset of $63.1 million. In particular, the income approach used to determine the fair value of the customer relationship was complex and required the use of assumptions that were inherently uncertain. The significant assumptions used to estimate the value of this intangible asset included discount rates and certain assumptions that form the basis of the forecasted results, including revenue, revenue growth rates, EBITDA margins, and customer attrition rates. These significant assumptions are forward-looking and could be affected by future economic and market conditions. |
|---|---|
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for the acquisition of Bren-Tronics. For example, we tested controls over the recognition and measurement of intangible assets acquired. We also tested controls over management’s review of the valuation models, the significant underlying assumptions used to develop the estimates and the completeness and accuracy of the data used in the valuations.To test the estimated fair value of the customer relationships intangible asset, we evaluated (1) whether all material intangible assets were properly identified, (2) the significant assumptions discussed above that were used in valuing this intangible asset and (3) the completeness and accuracy of the underlying data used by the Company in its analysis. Specifically, when evaluating the assumptions related to the revenue growth rates, we compared the assumptions to the past performance of Bren-Tronics in addition to current industry, market, and economic trends. We evaluated whether the assumptions used in developing the discount rate were consistent with the economic environment, market information, management’s plans, and the risk associated with the future cash flows. In addition, we involved internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the Company. |
/s/Ernst & Young LLP
We have served as the Company's auditor since 1998.
Philadelphia, Pennsylvania
May 21, 2025
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.