EnerSys Provides Update on IRC Section 45X Tax Credit Benefits and Updated Guidance for Its Fiscal Third Quarter 2024
December 19 2023 - 4:22PM
Business Wire
EnerSys (NYSE: ENS) the global leader in stored energy solutions
for industrial applications is providing a one time update to a
portion of its previously issued fiscal third quarter 2024 outlook
following the December 14, 2023 issuance of proposed regulations by
the U.S. Department of the Treasury regarding the Advanced
Manufacturing Production Credit - Section 45X of the Internal
Revenue Code. The proposed regulations provide additional
clarification on the methodology for calculating capacities of
batteries that qualify for tax credits. EnerSys believes the impact
of the proposed regulations will result in more of its product
sales than previously anticipated to qualify for the related tax
credits.
As a result, the Company now expects the annual tax credits that
are recorded as a reduction to cost of goods sold and not subject
to taxation to be in the range of approximately $120 million to
$160 million. This represents an ongoing annual increase to our
anticipated tax credits of approximately $35 million to $45 million
compared to the previously communicated annual range of
approximately $80 million to $120 million. The Company expects to
continue to receive credits with regard to its qualifying U.S.
production volumes through December 31, 2032.
Based on the proposed regulations from the U.S. Department of
the Treasury, the Company now expects its third quarter fiscal 2024
adjusted diluted EPS to be in the range of $2.50 to $2.60, which
reflects an adjustment – including retroactive impacts for the
incremental IRC 45X tax benefits attributable to the fourth quarter
of fiscal 2023 through the third quarter of fiscal 2024, as well as
absorbing sustained capex pauses from telecom and broadband
customers. This compares to the previously communicated range of
$1.80 to $1.90.
EnerSys President & CEO David M. Shaffer stated, “EnerSys’s
eligibility for Section 45X credits emphasizes the critical role
our products play in helping to drive the global energy transition.
We remain highly focused on executing on our strategic initiatives
to achieve our long-term goals. We are pleased that the proposed
regulations provide further support to EnerSys’s domestic
investments in technology and operations in order to provide
efficient, innovative solutions for our customers.”
The Company is continuing to evaluate the proposed regulations
with its advisors and will provide more details during its
regularly scheduled third quarter fiscal 2024 earnings results
conference call to be held in February 2024.
Section 45X was created under Section 13502 of the Inflation
Reduction Act of 2022 (the "IRA" or the "Act") and signed into law
on August 16, 2022. Section 45X provides Advanced Manufacturing
Production Credits (“Credit(s)”) for battery cells and battery
modules produced in the United States (U.S.) with an energy density
of not less than 100 watt-hours per liter. Credits will be
determined based on sales of qualifying products produced in the
U.S. from January 1, 2023 through December 31, 2032. See Section
13502 of the IRA for more information on Section 45X -
https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf
About EnerSys:
EnerSys is the global leader in stored energy solutions for
industrial applications, and designs, manufactures and distributes
energy systems solutions and motive power batteries, specialty
batteries, battery chargers, power equipment, battery accessories
and outdoor equipment enclosure solutions to customers worldwide.
The company goes to market through four lines of business: Energy
Systems, Motive Power, Specialty and New Ventures. Energy Systems,
which combine power conversion, power distribution, energy storage,
and enclosures, are used in the telecommunication, broadband and
utility industries, uninterruptible power supplies, and numerous
applications requiring stored energy solutions. Motive power
batteries and chargers are utilized in electric forklift trucks and
other industrial electric powered vehicles. Specialty batteries are
used in aerospace and defense applications, large over-the-road
trucks, premium automotive, medical and security systems
applications. New Ventures provides energy storage and management
systems for various applications including demand charge reduction,
utility back-up power, and dynamic fast charging for electric
vehicles. EnerSys also provides aftermarket and customer support
services to its customers in over 100 countries through its sales
and manufacturing locations around the world. More information
regarding EnerSys can be found at www.enersys.com.
Sustainability
Sustainability at EnerSys is about more than just the benefits
and impacts of our products. Our commitment to sustainability
encompasses many important environmental, social and governance
issues. Sustainability is a fundamental part of how we manage our
own operations. Minimizing our environmental footprint is a
priority. Sustainability is our commitment to our employees, our
customers and the communities we serve. Our products facilitate
positive environmental, social and economic impacts around the
world. To learn more visit:
www.enersys.com/en/about-us/sustainability.
Caution Concerning Forward-Looking Statements
EnerSys is making this statement in order to satisfy the “Safe
Harbor” provision contained in the Private Securities Litigation
Reform Act of 1995. Any of the statements contained in this press
release that are not statements of historical fact may include
forward-looking statements that involve a number of risks and
uncertainties. The updated guidance regarding Enersys’ financial
performance is a forward-looking statement. A forward-looking
statement predicts, projects, or uses future events as expectations
or possibilities. Forward-looking statements may be based on
expectations concerning future events and are subject to risks and
uncertainties relating to operations and the economic environment,
all of which are difficult to predict and many of which are beyond
our control. For example, the proposed regulations are not final
and any final regulations may differ from the regulations proposed
by the U.S. Department of the Treasury on December 14, 2023, and
such differences may be material. For a discussion of other such
risks and uncertainties that could cause actual results to differ
materially from those matters expressed in or implied by
forward-looking statements, please see our risk factors as
disclosed in the “Risk Factors” section of our annual report on
Form 10-K for fiscal year ended March 31, 2023. The statements in
this press release are made as of the date of this press release,
even if subsequently made available by EnerSys on its website or
otherwise. EnerSys does not undertake any obligation to update or
revise these statements to reflect events or circumstances
occurring after the date of this press release.
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version on businesswire.com: https://www.businesswire.com/news/home/20231219502410/en/
Lisa Hartman VP, Investor Relations and Corporate Communications
EnerSys 610-236-4040 E-mail: investorrelations@enersys.com
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