EnerSys

Previous wording

We evaluate business segment performance based primarily upon operating earnings exclusive of highlighted items. Highlighted items are those that the Company deems are not indicative of ongoing operating results, including those charges that the Company incurs as a result of restructuring activities, impairment of goodwill and indefinite-lived intangibles and other assets, acquisition activities and those charges and credits that are not directly related to operating unit performance, such as significant legal proceedings, ERP system implementation, amortization of recently acquired intangible assets and tax valuation allowance changes, including those related to the adoption of the Tax Cuts and Jobs Act. Because these charges are not incurred as a result of ongoing operations, or are incurred as a result of a potential or previous acquisition, they are not as helpful a measure of the performance of our underlying business, particularly in light of their unpredictable nature and are difficult to forecast. All corporate and centrally incurred costs are allocated to the business segments based principally on net sales. We evaluate business segment cash flow and financial position performance based primarily upon capital expenditures and primary operating capital levels.

Current wording

We evaluate business segment performance based primarily upon operating earnings exclusive of highlighted items. Highlighted items are those that the Company deems are not indicative of ongoing operating results, including those charges that the Company incurs as a result of restructuring activities, impairment of goodwill and indefinite-lived intangibles and other assets, acquisition activities and those charges and credits that are not directly related to operating unit performance, such as significant legal proceedings, amortization of recently acquired intangible assets and tax valuation allowance changes, including those related to the adoption of the Tax Cuts and Jobs Act. Because these charges are not incurred as a result of ongoing operations, or are incurred as a result of a potential or previous acquisition, they are not as helpful a measure of the performance of our underlying business, particularly in light of their unpredictable nature and are difficult to forecast. All corporate and centrally incurred costs are allocated to the business segments based principally on net sales. We evaluate business segment cash flow and financial position performance based primarily upon capital expenditures and primary operating capital levels.

Previous wording

Global economic conditions are mixed with the impacts from the uncertainty surrounding U.S. tariffs, elevated interest rates and heightened geopolitical tensions having various levels of impacts in the Americas, China and EMEA. On February 1, 2025, the U.S. signed an executive order, effective February 3, 2025, whereby the U.S. will apply additional tariffs on imported goods from Canada, Mexico, and China. Since this announcement, the tariffs to be applied to Canada and Mexico were suspended pending negotiations. Subsequent to our fiscal year end, on April 2, 2025, the U.S. imposed significant tariff increases on China and other countries. In May 2025, the U.S. administration lowered tariffs on China and announced tariff agreements with other countries such as the U.K. The impact of the U.S. tariffs and retaliatory actions by other countries have been and could be substantial. We are currently assessing the impacts these tariffs could have on our Company, including our supply chain and customers' response to these dynamic macro conditions. We believe that the international nature of our organizational structure, supply chain management and our ability to pass through increased costs will allow us to mitigate most of the financial impact of these shifting market conditions.

Current wording

Global economic conditions are mixed with the impacts from the uncertainty surrounding U.S. tariffs, elevated interest rates and heightened geopolitical tensions having various levels of impacts in North America, China and EMEA. On February 1, 2025, the U.S. signed an executive order, effective February 3, 2025, whereby the U.S. will apply additional tariffs on imported goods from Canada, Mexico, and China. Since that announcement, the tariffs to be applied to these three countries, and others, were suspended and/or renegotiated several times with varying results and some new negotiations delayed to take effect until later dates. The impact of the U.S. tariffs and retaliatory actions by other countries could be substantial. We are currently assessing the impacts these tariffs could have on the organization, and we believe that the international nature of our organizational structure will allow us to mitigate some of the financial impact of these potential tariffs.

Previous wording

The war in Ukraine continues to have widespread economic repercussions, particularly in Europe. The ongoing Israel-Hamas conflict is disrupting stability in the Middle East, raising significant concerns about the potential for further escalation across the region. Inflation in North America, China and EMEA, while somewhat more controlled compared to the sharp increases in 2023, remains a challenge with some signs of cooling in the U.S. and Europe. Both the Federal Reserve and the European Central Bank (ECB) cut their main interest rates by 25 basis points in December, marking the third consecutive reduction in calendar year 2024 in both regions. In April 2025, the ECB cut their interest rates by an additional 25 basis points, while the U.S. Federal Reserve held rates steady in May 2025. While these are incrementally positive actions toward deflation, both economies continue to face uncertainties such as potential tariffs and policy changes from the U.S. presidential administration and potential global trade frictions, macroeconomic fragmentation and geopolitical tensions in the euro area. Recent policy actions in China signal a shift towards more proactive fiscal measures to stabilize consumption and support economic growth, but China's economy continues to face challenges from a weakened real estate market and declining exports.

Current wording

Inflation in North America, China and EMEA, while more controlled compared to the sharp increases in 2023, remains a challenge despite some cooling in the U.S. and Europe through 2024 and 2025. After reducing rates three consecutive times in 2025, the Fed held the policy rate steady at 3.50%–3.75% in January 2026, citing improving economic activity and stabilizing unemployment. After several rate cuts the European Central Bank (ECB) has held their main interest rates stable since June 2025. While these are incrementally positive actions toward deflation, both economies continue to face uncertainties such as potential tariffs and policy changes from a new presidential administration in the U.S. and potential global trade frictions, macroeconomic fragmentation and geopolitical tensions the euro area. Policy actions in China signal a shift towards more proactive fiscal measures to stabilize consumption and support economic growth. While increasing travel and consumer spending due to relaxed COVID policies have provided some bright spots in 2024 and 2025, China's economy continues to face challenges from a weakened real estate market and declining exports.

Previous wording

The supply chain has been stabilizing since the second quarter of calendar year 2023. While some supply chain challenges and elevated costs remain, particularly for materials like copper and plastics, other costs, such as transportation, have returned to pre-COVID levels. However, the ongoing Israel-Hamas conflict have periodically disrupted some 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 broad market challenges.

Current wording

The supply chain is generally stable, however, the ongoing Israel-Hamas conflict has periodically disrupted some 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 broad market challenges.

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 2025, we have experienced a range in lead prices from approximately $0.85 per pound to $1.00 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 steel since the beginning of fiscal year 2025.

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 2026, we have experienced a range in lead prices from approximately $0.85 per pound to $0.95 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 antimony since the beginning of fiscal year 2026.

Previous wording

Our selling prices increased over the last several years to offset the volatile cost of commodities. Approximately 25% of our revenue is subject to agreements that adjust pricing to a market-based index for lead. Customer pricing changes generally lag movements in lead prices and other costs by approximately six to nine months. In fiscal 2024 and 2025, customer pricing has increased due to certain commodity prices and other costs having increased throughout the year.

Current wording

Our selling prices fluctuated during the last several years to offset the volatile cost of commodities. Approximately 25% of our revenue is now subject to agreements that adjust pricing to a market-based index for lead. Customer pricing changes generally lag movements in lead prices and other costs by approximately six to nine months. In fiscal 2025 and 2026, customer pricing increased due to certain commodity prices and other costs having increased throughout the year.

Previous wording

Commodity prices fluctuated in fiscal 2025 versus fiscal 2024 and it is difficult to predict with certainty whether commodity prices will be higher or lower in future years. In aggregate, selling prices were higher in fiscal 2025 versus fiscal 2024 to offset our cost increases and align with the value of our product offerings. Given the lag related to increasing our selling prices for inflationary cost increase, on average our selling prices should be higher in fiscal 2026 versus fiscal 2025. As we concentrate more on energy systems and non-lead chemistries, the emphasis on lead is expected to continue to decline.

Current wording

Based on current commodity markets, it is difficult to predict with certainty whether commodity prices will be higher or lower in fiscal 2026 versus fiscal 2025. However, given the lag related to increasing our selling prices for inflationary cost increase, on average our selling prices should be higher in fiscal 2026 versus fiscal 2025. As we concentrate more on energy systems and non-lead chemistries, the emphasis on lead is expected to continue to decline.

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 $932.2 million (yielding a primary operating capital percentage of 23.9%) at March 31, 2025 and $852.9 million (yielding a primary operating capital percentage of 23.4%) at March 31, 2024. The primary operating capital percentage of 23.9% at March 31, 2025 is 50 basis points higher than that for March 31, 2024, and 280 basis points lower than that for March 31, 2023. The change in the ratio is primarily due to an increase primarily related to higher sales at the end of the current period. Additionally Bren-Tronics provided additional outstanding balances of accounts receivables and accounts for the increase to inventory. Accounts payable increased due to seasonality.

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 $876.6 million (yielding a primary operating capital percentage of 22.2%) at March 31, 2026 and $932.2 million (yielding a primary operating capital percentage of 23.9%) at March 31, 2025. The primary operating capital percentage of 22.2% at March 31, 2026 is 170 basis points lower than that for March 31, 2025, and 120 basis points lower than that for March 31, 2024. The change in the ratio is primarily due to improved collections and asset securitization and decrease in inventory due to the release of our strategic build up in prior periods.

Previous wording

We believe that our financial position is strong. We have substantial liquidity with $343 million of available cash and cash equivalents and available and undrawn, under all lines of credit of approximately $653 million at March 31, 2025 to cover short-term liquidity requirements and anticipated growth in the foreseeable future. The nominal amount of credit available is subject to a leverage ratio maximum of 4.0x EBITDA, as discussed in Liquidity and Capital Resources.

Current wording

We believe that our financial position is strong. We have substantial liquidity with $439 million of available cash and cash equivalents and available and undrawn, under all lines of credit of approximately $565 million at March 31, 2026 to cover short-term liquidity requirements and anticipated growth in the foreseeable future. The nominal amount of credit available is subject to a leverage ratio maximum of 4.0x EBITDA, as discussed in Liquidity and Capital Resources.

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 a 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 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.

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

During fiscal 2025, our operating cash flow provided cash of $260.3 million, compared to $457.0 million in the prior year. The change in the operating cash flows in fiscal 2025 was a result of effect from AMPC's (defined in Critical Accounting Policies and Estimates) recognized in the year and higher receivables relating to higher sales in March than the previous years and additional balances outstanding from Bren-Tronics.

Current wording

During fiscal 2026, our operating cash flow provided cash of $547.6 million, compared to $260.3 million in the prior year. The change in the operating cash flows in fiscal 2026 was a result of effect from AMPC's (defined in Critical Accounting Policies and Estimates) recognized in the year and reduced receivables relating to improved collections and increases to our Amended RPA (defined in footnote 6 Accounts Receivable in the Consolidated Financial Statement).

Previous wording

In fiscal 2025 and 2024, we repurchased 1,568,292 and 1,002,415 shares of common stock for $154.0 million and $95.7 million, respectively. In fiscal 2023, we repurchased 358,365 shares of common stock for $22.9 million.

Current wording

In fiscal 2026 and 2025, we repurchased 3,457,688 and 1,568,292 shares of common stock for $370.7 million and $154.0 million, respectively. In fiscal 2024, we repurchased 1,002,415 shares of common stock for $95.7 million.

Previous wording

We continue to evaluate the extent of benefits available to us pursuant to the IRA, which we expect will favorably impact our results of operations in future periods. We currently expect to qualify for the advanced manufacturing production credit (AMPC) under Section 45X of the IRC, which provides certain specified benefits for battery cells, battery modules manufactured or assembled in the United States and sold to third parties, as well for active electrode materials for such batteries. For eligible batteries the credit is equal to $35 multiplied by the capacity of such battery cell expressed on a kilowatt-hour basis. For eligible battery module the credit is equal to $10 multiplied by the capacity of such battery module expressed on a kilowatt-hour basis. For eligible electrode active material the credit is equal to 10% of the costs incurred with respect to the production of such materials.

Current wording

We continue to evaluate the extent of benefits available to us pursuant to the IRA, which we expect will favorably impact our results of operations in future periods. We currently expect to continue to qualify for the advanced manufacturing production credit (AMPC) under Section 45X of the IRC, which provides certain specified benefits for battery cells, battery modules manufactured or assembled in the United States and sold to third parties, as well for active electrode materials for such batteries. For eligible batteries the credit is equal to $35 multiplied by the capacity of such battery cell expressed on a kilowatt-hour basis. For eligible battery module the credit is equal to $10 multiplied by the capacity of such battery module expressed on a kilowatt-hour basis. For eligible electrode active material the credit is equal to 10% of the costs incurred with respect to the production of such materials.

Previous wording

During the year ended March 31, 2025 and March 31, 2024, we recognized $184.6 million and $136.4 million, respectively, of Section 45X credits as a reduction to “Cost of sales”. There are currently several critical and complex aspects of the IRA. The uncertainty of changes to the current guidance could materially affect the benefits we have recognized and expect to recognize from the advanced manufacturing production credit. We will continue to evaluate the effects of IRA to the extent should more guidance is issued and the relevant implications to our Consolidated Financial Statements.

Current wording

During the year ended March 31, 2026 and March 31, 2025, we recognized $158.6 million and $184.6 million, respectively, of Section 45X credits as a reduction to “Cost of sales”. There are currently several critical and complex aspects of the IRA. The uncertainty of changes to the current guidance could materially affect the benefits we have recognized and expect to recognize from the advanced manufacturing production credit. We will continue to evaluate the effects of IRA to the extent additional guidance is issued and the relevant implications to our Consolidated Financial Statements.

Previous wording

Our sales in fiscal 2025 were $3.6 billion, a 1.0% increase from prior year's sales. This increase was due to a 2% increase in acquisitions, partially offset by a 1% decrease in foreign currency translation impact.

Current wording

Our sales in fiscal 2026 were $3.8 billion, a 3.7% increase from prior year's sales. This increase was due to a 3% increase in pricing, a 2% increase in foreign currency translation, and a 1% increase from acquisitions, partially offset by a 2% decrease in organic volume.

Previous wording

Net sales of our Energy Systems segment in fiscal 2025 decreased $58.9 million, or 3.7%, compared to fiscal 2024. This decrease was due to a 2% decrease in organic volume, a 1% decrease in foreign currency translation impact, and a 1% decrease in pricing. This decrease in sales was driven by a capital spending pause by our telecommunication and broadband customers at the end of fiscal 2024 that continued but improved throughout fiscal 2025, partially offset by stronger demand within the data center customers.

Current wording

Net sales of our Energy Systems segment in fiscal 2026 increased $120.2 million, or 7.8%, compared to fiscal 2025. This increase was due to a 3% increase in organic volume, a 3% increase in pricing, and a 2% increase in foreign currency translation. This increase in sales was driven by a continuing robust demand from data center and industrial customers and stronger product mix in communications.

Previous wording

Net sales of our Specialty segment in fiscal 2025 increased by $58.0 million, or 10.8%, compared to fiscal 2024. The increase was due to a 14% increase in acquisitions, offset by a 3% decrease in organic volume. This increase in sales was primarily driven by increased volumes in Aerospace and Defense including impacts from the Bren-Tronics acquisition, partially offset by decreased demand in OEM transportation customers in line with market cyclically.

Current wording

Net sales of our Specialty segment in fiscal 2026 increased by $71.5 million, or 12.1%, compared to fiscal 2025. The increase was due to a 8% increase from acquisitions, and a 4% increase in pricing. This increase in sales was primarily driven by continued strength in Aerospace and Defense including impacts from the Bren-Tronics acquisition, partially offset by softer demand in OEM transportation customers.

Previous wording

Gross profit increased $109.6 million or 11.1% in fiscal 2025 compared to fiscal 2024. Gross profit, as a percentage of net sales increased 280 basis points in fiscal 2025 compared to fiscal 2024. The increase in the gross profit margin in fiscal 2025 compared to the prior year reflects greater impact of IRC 45X benefits compared to the same periods in fiscal year 2024 as well as improved mix from higher margin maintenance-free sales and accretive impact of Bren-tronics margins. The additional IRC 45X benefits recognized in the period represent further revised IRS guidance expanding qualified products and a catch up adjustment relating to prior periods.

Current wording

Gross profit increased $5.2 million or 0.5% in fiscal 2026 compared to fiscal 2025. Gross profit, as a percentage of net sales decreased 100 basis points in fiscal 2026 compared to fiscal 2025. The decrease in the gross profit margin in fiscal 2026 compared to the prior year reflects greater IRC 45x benefits in fiscal 2025 as prior year included a change in estimate impacting prior amounts to IRC 45X tax credits.

Previous wording

Selling expenses, our main component of operating expenses, decreased $9.4 million or 4.1% in fiscal 2025 compared to fiscal 2024. The decrease in selling expenses as a percentage of sales in the current quarter is a result of our cost reduction initiatives in Energy Systems during the fiscal year.

Current wording

Selling expenses, our main component of operating expenses, increased $2.2 million or 1.0% in fiscal 2026 compared to fiscal 2025. Selling expenses as a percentage of sales in the year decreased slightly as a result of our cost reduction initiatives.

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 approximately $24.5 million. Non-cash charges for inventory and fixed assets write offs, and impairment of an indefinite-lived intangible asset are estimated to be $23.6 million, and cash charges for employee severance and retention payments are estimated to be $0.9 million. The plan was completed as the end of fiscal 2025.

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 the 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 plan was completed as the end of fiscal 2025.

Previous 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 off relating to inventories of $17.1 million, which was reported in cost of goods sold, and impairment of indefinite lived intangible assets of $6.0 million.

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 $1.4 million in cash charges for employee severance, and non-cash charges of $2.2 million relating to fixed assets, facility lease, and inventory. The majority of the charges were incurred 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 plan was completed as of the end of fiscal 2025.

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 $13.7 million. Cash charges are estimated to total $9.7 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.

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 plan was completed as of the end of fiscal 2025.

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 $1.7 million related primarily related to severance costs and non-cash charges totaling $0.4 million primarily relating to contract assets.

Previous wording

In June, 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 were recorded by the end of fiscal 2024.

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. These actions resulted in the reduction of approximately 165 employees. The plan was completed as of the end of fiscal 2026.

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 fiscal 2024, the Company recorded cash charges relating to site cleanup and decommissioning equipment of $4.4 million.

Current wording

During fiscal 2024, the Company recorded cash charges relating to site cleanup and decommissioning equipment of $4.4million.

Previous wording

In fiscal 2021, we committed to a plan to close substantially all of our facility in Hagen, Germany, which produces flooded motive power batteries for forklifts. Management determined that future demand for the motive power batteries produced at this facility was not sufficient, given the conversion from flooded to maintenance free batteries by customers, the existing number of competitors in the market, as well as the near term decline in demand and increased uncertainty from the pandemic. We plan to retain the facility with limited sales, service and administrative functions along with related personnel for the foreseeable future.

Current wording

In fiscal 2021, the Company's Board of Directors approved a plan to substantially close all of its facility in Hagen, Germany, which produces flooded motive power batteries for forklifts. Management determined that future demand for the motive power batteries produced at this facility was not sufficient, given the conversion from flooded to maintenance free batteries by customers, the existing number of competitors in the market, as well as the near term decline in demand and increased

Previous wording

During fiscal 2021, the Company recorded charges relating to severance of $23.3 million and $7.9 million primarily relating to fixed asset write-offs.

Current wording

During fiscal 2021, the Company recorded cash charges relating to severance of $23.3 million and non-cash charges of $7.9 million primarily relating to fixed asset write-offs.

Previous wording

During fiscal 2023, the Company recorded cash charges of $2.2 million relating primarily to site cleanup and $0.6 million of non-cash charges relating to accelerated depreciation of fixed assets.

Current wording

During fiscal 2023, the Company recorded cash charges of $2.2 million relating to primarily to site cleanup and $0.6 million of non-cash charges relating to accelerated depreciation of fixed assets.

Previous wording

During fiscal 2025 there were no charges related to impairment of indefinite-lived trademarks. During 2024, the Company recorded non-cash charges of $13.6 million, related to impairment of indefinite-lived trademarks. Management completed its evaluation of key inputs used to estimate the fair value of its indefinite-lived trademarks and determined that an impairment charge was appropriate.

Current wording

During fiscal 2026 there were $0.4 million of charges related to impairment of indefinite-lived trademarks.

Previous wording

Operating earnings increased $113.2 million or 32.2% in fiscal 2025, compared to fiscal 2024. Operating earnings, as a percentage of net sales, increased 300 basis points in fiscal 2025, compared to fiscal 2024.

Current wording

Operating earnings decreased $38.3 million or 8.2% in fiscal 2026, compared to fiscal 2025. Operating earnings, as a percentage of net sales, decreased 140 basis points in fiscal 2026, compared to fiscal 2025.

Previous wording

The Motive Power operating earnings as a percentage of net sales increased 100 basis points in fiscal 2025 compared to fiscal 2024. This increase was driven by significant pricing and mix gains partially offset by higher operating expenses.

Current wording

The Motive Power operating earnings as a percentage of net sales decreased 170 basis points in fiscal 2026 compared to fiscal 2025. This decrease was driven by higher freight and tariff costs and lost leverage on lower volumes partially offset by higher pricing and our cost reduction initiatives.

Previous wording

Specialty operating earnings percentage of net sales increased 30 basis points in fiscal 2025 compared to fiscal 2024. This increase was primarily a result of softer transportation volume that more than offset the accretive benefit of the Bren-Tronics acquisition and continued strength in aerospace & defense end-markets.

Current wording

Specialty operating earnings percentage of net sales increased 310 basis points in fiscal 2026 compared to fiscal 2025. This increase was primarily a result of continued benefit of the Bren-Tronics acquisition and favorable price/mix.

Previous wording

Interest expense of $51.2 million in fiscal 2025 (net of interest income of $3.1 million) was $1.3 million higher than the $49.9 million in fiscal 2024 (net of interest income of $3.2 million).

Current wording

Interest expense of $50.5 million in fiscal 2026 (net of interest income of $9.3 million) was $0.7 million lower than the $51.2 million in fiscal 2025 (net of interest income of $3.1 million).

Previous wording

Our average debt outstanding was $1.1 billion in fiscal 2025, compared to our average debt outstanding of $977.7 million in fiscal 2024. Our average cash interest rate incurred in fiscal 2025 and fiscal 2024 was 4.3% and 4.9%, respectively. The increase in interest expense in fiscal 2025 compared to fiscal 2024 is slightly higher borrowing levels.

Current wording

Our average debt outstanding was $1,212.6 million in fiscal 2026, compared to our average debt outstanding of $1,129.8 million in fiscal 2025. Our average cash interest rate incurred in fiscal 2026 and fiscal 2025 was 4.8% and 4.3%, respectively. The decrease in interest expense in fiscal 2026 compared to fiscal 2025 is due to lower interest rates on long-term debt.

Previous wording

The Company capitalized $4.1 million in debt issuance costs in connection with the 2032 Senior Notes and wrote off $0.8 million in issuance costs relating to our Second and Third Amended Term Loans. Included in interest expense were non-cash charges related to amortization of deferred financing fees of $1.9 million and $1.7 million in fiscal 2025 and fiscal 2024, respectively.

Current wording

In fiscal 2026 the Company capitalized $3.5 million in debt issuance costs in connection with the Sixth Amendment of the 2017 Credit Facility and wrote off $0.3 million in deferred financing costs related to the Second and Third Amended Term Loans. In fiscal 2024 and 2025, we capitalized $4.4 million in debt issuance costs in connection with the 2032 Senior Notes and wrote off $0.8 million in issuance costs relating to our Second and Third Amended Term Loans. Included in interest expense were non-cash charges related to amortization of deferred financing fees of $1.9 million and $1.9 million in fiscal 2026 and fiscal 2025, respectively.

Previous wording

Other (income) expense, net was expense of $7.0 million in fiscal 2025 compared to expense of $9.4 million in fiscal 2024. Foreign currency impact resulted in a gain of $3.3 million in fiscal 2025 compared to a foreign currency gain of $6.1 million in fiscal 2024. Cost of funds associated with our asset securitization totaled $8.7 million fiscal 2025 compared to $8.8 million in fiscal 2024.

Current wording

Other (income) expense, net was expense of $28.5 million in fiscal 2026 compared to expense of $7.0 million in fiscal 2025. Foreign currency impact resulted in a loss of $7.4 million in fiscal 2026 compared to a foreign currency gain of $3.3 million in fiscal 2025. Cost of funds associated with our asset securitization totaled $9.2 million in fiscal 2026 compared to $8.7 million in fiscal 2025. We incurred additional pension related expenses relating to the settlement of the UK plan totalling $9.7 million in fiscal 2026 compared to a gain of $1.5 million relating to the settlement of the U.S. plans in fiscal 2025.

Previous wording

As a result of the factors discussed above, fiscal 2025 earnings before income taxes were $406.5 million, an increase of $114.3 million or 39.2% compared to fiscal 2024.

Current wording

As a result of the factors discussed above, fiscal 2026 earnings before income taxes were $347.4 million, a decrease of $59.1 million or 14.6% compared to fiscal 2025.