Exchange: NYSE | Sector: Industrials | Industry: Electrical Equipment Parts
Q2 2025
Published: Nov 6, 2024
Earnings Highlights
Revenue of $883.67M down 1.9% year-over-year
EPS of $2.01 increased by 28.9% from previous year
Gross margin of 28.5%
Net income of 82.27M
"Orders were up year over year, with particular strength in energy systems Americas, in which we received a 30% increase in orders this quarter on 10% lower revenue, clearly indicating the inflection points in both years and driving the second consecutive quarter of increases in energy systems backlog." - David Shaffer
EnerSys (ENS) QQ2 2025 Results: Resilient mix-shift growth, margin expansion, and strategic milestones (Bren-Tronics integration, DOE lithium gigafactory, and fast-charge storage rollout)
Executive Summary
EnerSys posted a resilient Q2 2025 in a mixed macro environment, delivering revenue of $883.7 million and a net income of $82.3 million, with adjusted gross margins expanding to 28.7% (up 210 bps year over year). Management cited strength in Motive Power and the accretive Bren-Tronics integration as key drivers of margin expansion, while Energy Systems faced softer demand in communications and Class 8 OEM markets. Despite a 2% YoY revenue decline, the company achieved sequential revenue growth in Energy Systems for the first time in six quarters and reported meaningful progress on strategic initiatives, including the fast-charge/storage pilot and the planned lithium‑ion gigafactory. Management maintained a constructive view into the second half of fiscal 2025, albeit with modestly lower full-year revenue guidance to account for macro headwinds and project delays in fast charge and storage.
The quarter featured material strategic milestones: a $200 million Department of Energy award to partially fund EnerSys' planned lithium giga factory in Greenville, SC; Bren-Tronics integration delivering elevated revenue and improved margins; and the first fast-charge storage system installation at a launch customer site. EnerSys remains focused on product-mix optimization, automation, and scaling high-margin growth platforms (lithium solutions, data center applications, and energy management software). Near-term guidance is calibrated to reflect a slower pace in Class 8 OEM spending and continued but easing headwinds in communications, with the company expecting improvement in energy systems and motive power through H2 2025.
Overall, EnerSys presents a differentiated growth profile within the Industrials/Electrical Equipment space: a diversified portfolio across Energy Systems, Motive Power, and Specialty, a constructive backlog trajectory in key segments, strong liquidity with a cash balance of about $408 million and net debt around $825 million, and a capital-allocation plan that includes ongoing buybacks and selective bolt-on acquisitions. The combination of earnings leverage from cost actions, Bren-Tronics synergies, and DoD/DOE programs supports an improving earnings trajectory into fiscal 2026, though near-term execution risks around UL certification timing, regulatory developments, and macro volatility warrant close monitoring.
Key Performance Indicators
Revenue
883.67M
QoQ: 3.61% | YoY:-1.93%
Gross Profit
252.15M
28.53% margin
QoQ: 5.14% | YoY:5.23%
Operating Income
99.39M
QoQ: 0.69% | YoY:12.16%
Net Income
82.27M
QoQ: 17.34% | YoY:26.12%
EPS
2.05
QoQ: 17.82% | YoY:28.93%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $883.7 (Q2 2025) down 1.93% YoY; up 3.61% QoQ. Gross profit: $252.15; gross margin 28.53% (GAAP). Adjusted gross margin: 28.7% (+210 bps vs. prior year), driven by higher-margin Motive Power mix and Bren-Tronics contribution, plus IRA benefits booked as a cost reduction.
Net income and EPS: Net income $82.27; net income margin 9.31%. GAAP EPS $2.05; diluted $2.01. Adjusted EPS $2.12 (above the midpoint of guidance); YoY EPS growth 28.93%; QoQ 17.82%.
Cash flow and capital allocation: Net cash from operating activities $33.65; CapEx $30.35; Free cash flow $3.00; Net change in cash $63.85; Cash at end of period $407.92; Net debt $824.74 (increase of ~$329.0 since 2024 year-end). Dividend payout $10.0; share repurchases $64.0. Leverage (credit agreement) 1.6x EBITDA; Net leverage expected to stay at the low end of a 2.0x–3.0x target band.
Financial Highlights
Key financial metrics and trend context (USD, in millions unless noted):
- Revenue: $883.7 (Q2 2025) down 1.93% YoY; up 3.61% QoQ. Gross profit: $252.15; gross margin 28.53% (GAAP). Adjusted gross margin: 28.7% (+210 bps vs. prior year), driven by higher-margin Motive Power mix and Bren-Tronics contribution, plus IRA benefits booked as a cost reduction.
- Operating performance: Operating income $99.39; operating margin 11.25% (GAAP). Adjusted operating earnings $115.0; adjusted operating margin about 13.0% (YoY up ~20 bps ex-IRA benefits). Adjusted EBITDA $129.0; adjusted EBITDA margin 14.6% (+170 bps YoY).
- Net income and EPS: Net income $82.27; net income margin 9.31%. GAAP EPS $2.05; diluted $2.01. Adjusted EPS $2.12 (above the midpoint of guidance); YoY EPS growth 28.93%; QoQ 17.82%.
- Segment performance (Q2 2025):
• Energy Systems revenue $382.0 (-10% YoY; +$20.0 sequential). Adjusted operating earnings $24.0; margin 6.4% (+100 bps sequential, +30 bps YoY).
• Motive Power revenue $367.0 (+3% YoY). Adjusted operating earnings $58.0; margin 15.7% (+70 bps YoY).
• Specialty revenue $135.0 (+9% YoY). Adjusted operating earnings $8.0; margin 5.4% (+90 bps YoY).
- Cash flow and capital allocation: Net cash from operating activities $33.65; CapEx $30.35; Free cash flow $3.00; Net change in cash $63.85; Cash at end of period $407.92; Net debt $824.74 (increase of ~$329.0 since 2024 year-end). Dividend payout $10.0; share repurchases $64.0. Leverage (credit agreement) 1.6x EBITDA; Net leverage expected to stay at the low end of a 2.0x–3.0x target band.
- Guidance and outlook: 3Q2025 net sales guidance $920–$960 million; adjusted diluted EPS $2.20–$2.30. Full-year 2025 net sales guidance narrowed to $3,675–$3,765 million; adjusted diluted EPS guidance narrowed to $8.75–$9.05. Capex guidance remains $100–$120 million, inclusive of incremental investment related to the domestic lithium plant. The company expects a second-half acceleration in volume, better product mix, Bren-Tronics contributions, and ongoing cost improvements, with DoE/DOE-related incentives expected to support earnings and capital investments. 45x tax relief expected later this fiscal year.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
883.67M
-1.93%
3.61%
Gross Profit
252.15M
5.23%
5.14%
Operating Income
99.39M
12.16%
0.69%
Net Income
82.27M
26.12%
17.34%
EPS
2.05
28.93%
17.82%
Key Financial Ratios
currentRatio
2.97
grossProfitMargin
28.5%
operatingProfitMargin
11.2%
netProfitMargin
9.31%
returnOnAssets
2.08%
returnOnEquity
4.48%
debtEquityRatio
0.67
operatingCashFlowPerShare
$0.84
freeCashFlowPerShare
$0.08
dividendPayoutRatio
11.6%
priceToBookRatio
2.23
priceEarningsRatio
12.46
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key takeaways from EnerSys management remarks and Q2 2025 earnings call:
- Strategy and leadership: Dave Shaffer announced retirement in May 2025 and confirmed Shawn O'Connell as his successor, emphasizing a seamless transition and continued execution of strategic priorities. Quote:
Orders were up year over year, with particular strength in energy systems Americas, in which we received a 30% increase in orders this quarter on 10% lower revenue, clearly indicating the inflection points in both years and driving the second consecutive quarter of increases in energy systems backlog.
— David Shaffer
Revenue was down 10% YoY but orders were up 30% YoY. If I look at Comms in particular... book-to-bill was 1.09 in Q2 2025. It was 0.57 in Q2 2024 to give you an idea. 1.09 is the healthy increase.
— Andrea Funk
Forward Guidance
Management indicates a constructive path into H2 2025 with improving volumes and margins as Bren-Tronics scales and energy systems stabilize. Key triggers to monitor include: (1) timing and realization of fast-charge and storage deployments, (2) the pace of the lithium gigafactory development and related DOE reimbursements, (3) the ramp of data center UPS and energy management solutions, and (4) restoration of Class 8 OEM demand as inventory normalizes post-election and macro conditions ease. Guidance is conservative on revenue given near-term headwinds but confident in long-term growth drivers.
- Market and demand dynamics: Energy Systems orders up 30% YoY on 10% lower revenue, signaling a demand recovery in communications and data center applications; Comms book-to-bill of 1.09 in Q2 2025 (versus 0.57 in Q2 2024) indicates improving resilience in network spending. In Motive Power, maintenance-free offerings grew 24% YoY to 26% of total Motive Power sales, underscoring mix benefits and pricing power; DC/telecoms-related data center expansion and high-margin TPPL chemistry opportunities discussed as growth levers. Quote:
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ENS Focus
28.53%
11.20%
4.48%
12.46%
AEIS
33.20%
4.28%
1.29%
65.97%
HUBB
35.20%
21.00%
7.00%
22.57%
AYI
46.50%
11.00%
3.07%
29.71%
KE
6.55%
2.30%
0.64%
33.93%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall investment thesis on EnerSys remains moderately bullish with a balanced risk-reward profile. The company is transitioning toward higher-margin, differentiated growth through Bren-Tronics integration, lithium-based products, and a planned U.S. gigafactory supported by a $200 million DOE award. Near-term profitability is buoyed by cost improvements and IRA benefits, but revenue visibility is tempered by ongoing end-market softness (Energy Systems and Class 8 OEMs) and near-term delays in fast-charge/storage deployments. The 2025 guidance upgrade for adjusted earnings aligns with stronger mix and expense discipline, while the 2025 revenue guidance is narrowed to reflect macro uncertainty and project timing. Investors should monitor: (1) the pace of energy systems order intake and data-center deltas, (2) UL certification progress and customer approvals for fast-charge/storage systems, (3) DOE/45x tax credit realization timing, (4) progress and economics of the Greenville gigafactory, and (5) Bren-Tronics ramp and aftermarket opportunities. Overall, EnerSys offers a compelling optionality around its lithium strategy, DoD opportunities, and a multi-year data-center demand trajectory, with a solid balance sheet and a disciplined capital plan that supports long-term value creation.
Key Investment Factors
Growth Potential
EnerSys' growth is anchored by Bren-Tronics integration, data center demand, and the expansion of lithium-based energy solutions including the planned gigafactory. upside from energy management software (EnVision CONNECT) and fast-charge/storage deployments is meaningful, with potential for multi-hundred-million incremental revenue over the next 2–4 years as projects scale.
Profitability Risk
Near-term macro headwinds in Class 8 OEMs and communications, sequencing risk around UL certification for fast-charge/storage and the glide path to DoD/DOE funding realization. Execution risk on Missouri plant load-absorption and capex intensity for the gigafactory; potential for delays in government reimbursements or regulatory changes.
Financial Position
Solid liquidity (cash ~$408m) with modest net debt (~$825m) and a leverage ratio of ~1.6x EBITDA; strong free cash flow profile and ongoing capital allocation (dividends and buybacks) support a flexible balance sheet for growth initiatives.
SWOT Analysis
Strengths
Diversified energy storage portfolio across Energy Systems, Motive Power, and Specialty
Bren-Tronics acquisition with accretive margins and expanding addressable markets
Strong order growth in Energy Systems (30% YoY) and robust data-center demand in Energy Systems and Motive Power
DoD-aligned lithium gigafactory plan and DOE funding support (DOE award of $200 million)
Industry-leading energy management software (EnVision CONNECT) and rapid expansion of fast-charge/storage capabilities
Solid balance sheet with ample liquidity and a disciplined capital allocation stance
Weaknesses
Q2 2025 revenue declined 2% YoY (headwinds in Communications and Class 8 OEM markets)
Energy Systems softness and under-absorption pressures in Missouri plants limiting margin potential
Execution risk around UL certification delays for fast-charge/storage and implementation of the gigafactory spend
Near-term dependency on government incentives and funding timing for the gigafactory and Bren-Tronics integration
Opportunities
Growth in data centers and DC UPS demand; higher-margin Transportation aftermarket opportunities; expansion of lithium solutions and cell manufacturing capabilities; Deeper penetration of premium automotive aftermarkets (AutoZone/NAPA)
New ventures' fast-charge/storage system deployments and network energy management (EnVision CONNECT) improving stickiness and recurring revenue
Domestic lithium supply chain strengthening via the Greenville gigafactory and related DoD requirements, expanding energy-storage ecosystem with DoD and NASA programs
Threats
Macro volatility in transport cycles (Class 8 OEMs) and telecom capex; potential delays in UL certification and DOE reimbursement timelines
Regulatory shifts and political uncertainty affecting government incentives and defense-related programs
Competition from other large energy storage and BESS providers; supply-chain disruptions and rising input costs