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EnerSys ENS has been witnessing strength in its Motive power segment, driven by increased sales of maintenance-free thin plate pure lead and lithium products. The segment’s revenues increased 3% year over year in the second quarter of fiscal 2025 (ended September 2024). Management expects the Motive Power segment will benefit from strength in the automation and electrification markets. Solid momentum in the aerospace and defense end markets is aiding the Specialty segment. The segment’s revenues increased 9% year over year in the fiscal second quarter.
The company has been strengthening its business through acquisitions. In July 2024, EnerSys acquired Bren-Tronics, Inc. in an all-cash deal of $208 million. The acquisition will strengthen its position as a critical enabler of the energy transition and support its growth in the growing military and defense end market. The buyout, which expanded ENS’ lithium product offerings, is likely to add $60 million of revenues and 25 cents of earnings per share to its fiscal 2025 results.
Also, in April 2023, EnerSys acquired the United Kingdom-based battery service and maintenance provider, Industrial Battery and Charger Services Limited (“IBCS”). The addition of IBCS has bolstered the company’s motive power service offerings and strengthened its presence in the U.K. market. In the fiscal second quarter, acquisitions boosted sales by 2%.
The company remains focused on rewarding its shareholders through dividend payouts and share repurchases. It paid out dividends of $18.6 million and bought back shares worth $75.2 million in the first six months of fiscal 2025. ENS hiked its quarterly dividend by 7% to 24 cents per share in August 2024. Exiting the second quarter of fiscal 2025, the company was left to repurchase shares worth $258 million in aggregate.
However, a decrease in capital spending of the telecommunication and broadband customers is adversely impacting EnerSys’ Energy Systems segment. The segment’s revenues were down 9.6% year over year in the fiscal second quarter. Demand softness in the telecom and broadband end markets remains concerning for the company.
ENS’ Price Performance
Image Source: Zacks Investment Research
In the past month, this Zacks Rank #3 (Hold) company’s shares have lost 5.1% compared with the industry’s 8.8% decline.
Also, adverse currency movements are a worry for the company. For instance, in the fiscal second quarter, foreign currency translation had an adverse impact of 1% on the Motive Power segment’s sales.
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