EnerSys (ENS -0.29%), a global leader in industrial batteries and energy storage solutions, reported its Q1 FY2026 earnings on August 6, 2025. The most significant news was Revenue (GAAP) rose to $893.0 million, up 4.7% from the prior year and adjusted diluted earnings per share (non-GAAP) increased to $2.08. However, both revenue and adjusted EPS missed analyst estimates—analyst consensus called for $939.8 million in GAAP revenue. Operating earnings, margins, and cash flow all reflected bumps from acquisitions, pricing, and tax credits, but organic business volume declined by 1%, and some key segments faced policy-driven headwinds. The quarter was mixed, with headline growth driven by acquisition benefits and pricing, but persistent external uncertainty and short-term operating challenges led to suspension of full-year quantitative guidance for FY2026.
| Metric | Q1 FY26(ended Jun 29, 2025) | Q1 Estimate(ended Jun 29, 2025) | Q1 FY25(ended Jun 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| Adjusted Diluted EPS (Non-GAAP) | $2.08 | $2.59 | $1.98 | 5.1% |
| Revenue | $893.0 million | $939.8 million | $852.9 million | 4.7% |
| Revenue vs. Guidance Midpoint | N/A | N/A | ||
| EBITDA (Non-GAAP) | $103.9 million | $113.9 million | (-8.8%) | |
| Adjusted Operating Earnings (Non-GAAP) | $114.3 million | $105.7 million | 8.1% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.
Understanding EnerSys’s Business and Recent Strategic Focus
EnerSys is a global manufacturer of industrial batteries, chargers, and energy storage systems. Its core business is supplying stored energy solutions for sectors such as data centers, telecommunications, warehousing, aerospace, defense, and material handling.
The company’s recent strategies emphasize innovation—especially advanced battery technologies like thin plate pure lead (TPPL) and lithium-ion batteries. Managing the cost of lead, which is the primary raw material, remains vital. EnerSys’s expansion through acquisitions, such as its July 2024 purchase of Bren-Tronics Defense LLC (a defense and aerospace battery supplier), contributed to results. Regulatory compliance and sustainability are also priorities. The company serves a wide range of customers globally, enabling it to offset challenges in specific regions or market sectors.
Notable Highlights and Developments This Quarter
Revenue increased 4.7% year over year, driven by a combination of acquisitions, pricing improvements, and favorable currency movements. The newly acquired Bren-Tronics business made a notable contribution, particularly boosting the Specialty segment by 18.1%. However, the company’s core "organic" business—metrics that exclude acquisitions and currency effects—showed a modest volume decline of 1%.
Segment performance was mixed. The Energy Systems segment, which includes battery and power systems for data centers and telecommunications, saw sales climb 8.4% and adjusted operating margin improved to 7.0%, up from 5.3% in Q1 FY2025. Strong demand in data center and communications markets helped offset foreign exchange headwinds. Motive Power, which covers batteries and charging for vehicles such as forklifts and transportation, saw sales fall 4.7% and adjusted operating margins shrank from 15.3% in Q1 FY2025 to 13.4% in Q1 FY2026. This decline reflected weakened demand due to tariff uncertainty affecting customers’ purchasing decisions. Specialty, which covers batteries for aerospace, defense, and certain transportation uses, saw an 18.1% sales jump. Adjusted operating earnings in Specialty nearly doubled year over year in Q4 FY2025, reflecting the impact of the Bren-Tronics acquisition and strong aerospace and defense project activity, though this was offset by slow transportation sector demand.
Profitability metrics were a story of mixed signals. Gross margin (GAAP) improved to 28.4%, up from 28.0% in Q1 FY2025, but when stripping out advanced manufacturing tax credits called IRC 45X—government incentives that reduce cost of goods sold—gross margin excluding the IRC 45X benefit was flat at 24.1%. Adjusted operating earnings (non-GAAP) grew 8.1%, while Free cash flow (non-GAAP) was negative, at $(32.1) million, reflecting seasonal working capital needs and higher inventories. Net leverage ratio (non-GAAP) increased to 1.6x EBITDA, primarily due to the acquisition and share repurchases.
EnerSys declared a quarterly dividend of $0.24 per share for Q4 FY2025, a 6.7% year-over-year increase, and announced it will rise further to $0.2625 per share for the second quarter of fiscal 2026 (up 9%). The company also completed $150 million in share repurchases, a significant jump from $11.6 million in share repurchases in Q1 FY2025. These moves mark an ongoing commitment to shareholder capital returns, even as earnings undershot analyst targets.
This quarter saw several notable one-time or episodic events. The $38.1 million IRC 45X tax benefit continued to play a key role in results, consistent with government policy. The company began implementing a new strategic framework, "EnerGize," which includes a workforce reduction and reorganization targeting approximately $80 million in annualized cost savings. No major restructuring or impairment charges occurred beyond these planned actions.
On the innovation front, EnerSys continues to invest in battery technologies. Its TPPL batteries, a type of advanced lead-based battery with higher performance and lower maintenance needs, and its lithium-ion offerings are both expanding in use. Maintenance-free batteries accounted for 29% of Motive Power sales in Q4 FY2025. Initial products such as the Cenova Sync charger—a device for warehouses providing connectivity and efficient charging—also saw strong customer feedback at recent trade shows. These product moves help deepen ties with key logistics and warehousing customers.
Financial Outlook and What to Watch Next
Management provided an outlook for Q2 FY2026, forecasting net sales between $870 million and $910 million and adjusted diluted EPS between $2.33 and $2.43. Excluding tax credits, guidance for adjusted diluted EPS (non-GAAP) is $1.34 to $1.44. The company did not offer full-year quantitative guidance for FY2026, citing uncertainty around tariffs and customer order behavior, and noted that ongoing macroeconomic and policy developments are likely to shape the year ahead.
Several factors are front of mind for investors looking to the next few quarters. First, organic growth in core business areas such as Motive Power will be closely watched, given the drop-off in organic volumes. Tariff-related market uncertainty remains an active risk, especially in transportation and warehouse markets. The realization of cost savings from recent reorganization and how successfully the company integrates Bren-Tronics will be important. Investors may also track the ongoing impact of IRC 45X tax credits on reported profitability, as management has noted that much of the recent EPS growth relies on these statutory credits. Free cash flow improvement and leverage reduction will also feature as key themes for the rest of the year.
The quarterly dividend was raised 9% to $0.2625 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
