EnerSys (NYSE:ENS), the global leader in stored energy solutions
for industrial applications, announced today results for its second
quarter of fiscal 2018, which ended on October 1, 2017.
Net earnings attributable to EnerSys stockholders (“Net
earnings”) for the second quarter of fiscal 2018 were $43.2
million, or $1.00 per diluted share, which included an unfavorable
highlighted net of tax impact of $2.1 million or $0.05 per share
from cash and non-cash charges from highlighted items described in
further detail in the tables shown below, reconciling non-GAAP
adjusted financial measures to reported amounts.
Net earnings for the second quarter of fiscal 2017 were $45.6
million, or $1.04 per diluted share, which included an unfavorable
highlighted net of tax impact of $4.8 million or $0.11 per share
from cash and non-cash charges and credits from highlighted
items.
Excluding these highlighted items, adjusted Net earnings per
diluted share for the second quarter of fiscal 2018, on a non-GAAP
basis, were $1.05, which met the guidance of $1.03 to $1.07 per
diluted share given by the Company on August 9, 2017. These
earnings compare to the prior year second quarter adjusted Net
earnings of $1.15 per diluted share. Please refer to the section
included herein under the heading “Reconciliation of Non-GAAP
Financial Measures” for a discussion of the Company’s use of
non-GAAP adjusted financial information which include tables
reconciling GAAP and non-GAAP adjusted financial measures for the
quarters and six months ended October 1, 2017 and October 2,
2016.
Net sales for the second quarter of fiscal 2018 were $617.3
million, an increase of 7% from the prior year second quarter net
sales of $576.0 million and a 1% sequential quarterly decrease from
the first quarter of fiscal 2018 net sales of $622.6 million. The
increase in the current quarter compared to the prior year quarter
was the result of a 4% increase in pricing, a 2% increase due to
foreign currency translation impact and a 1% increase in organic
volume. The 1% sequential quarterly decrease was due to a 3%
decrease in organic volume, partially offset by a 2% increase due
to foreign currency translation impact.
The Company’s operating results for its business segments for
the second quarters of fiscal 2018 and 2017 are as follows:
|
|
|
Quarter ended |
|
($ millions) |
|
October 1, 2017 |
|
October 2, 2016 |
Net sales by
segment |
|
|
|
Americas |
$ |
341.5 |
|
|
$ |
324.8 |
|
EMEA |
197.9 |
|
|
180.6 |
|
Asia |
77.9 |
|
|
70.6 |
|
|
|
|
|
Total net sales |
$ |
617.3 |
|
|
$ |
576.0 |
|
|
|
|
|
Operating
earnings |
|
|
|
Americas |
$ |
44.8 |
|
|
$ |
50.3 |
|
EMEA |
17.9 |
|
|
17.0 |
|
Asia |
4.2 |
|
|
3.6 |
|
Inventory write-off
relating to exit activities - EMEA |
— |
|
|
(2.6 |
) |
Restructuring charges -
Americas |
(0.3 |
) |
|
— |
|
Restructuring charges -
EMEA |
(1.5 |
) |
|
(4.6 |
) |
Restructuring charges -
Asia |
— |
|
|
(0.3 |
) |
ERP system
implementation - Americas |
(0.7 |
) |
|
(0.4 |
) |
Acquisition activity
expense - Americas |
(0.1 |
) |
|
— |
|
Acquisition activity
expense - EMEA |
(0.3 |
) |
|
(0.1 |
) |
|
|
|
|
Total operating
earnings |
$ |
64.0 |
|
|
$ |
62.9 |
|
EMEA -
Europe, Middle East and Africa |
Net earnings for the six months of fiscal 2018 were $91.4
million, or $2.09 per diluted share, which included an unfavorable
net of tax impact of $3.3 million or $0.08 per share from cash and
non-cash charges from highlighted items described in further detail
in the tables shown below, reconciling non-GAAP adjusted financial
measures to reported amounts.
Net earnings for the six months of fiscal 2017 were $90.2
million, or $2.06 per diluted share, which included an unfavorable
net of tax impact of $10.3 million or $0.23 per share from cash and
non-cash charges and credits from highlighted items.
Adjusted Net earnings for the six months of fiscal 2018, on a
non-GAAP basis, were $2.17 per diluted share. This compares to the
prior year six months adjusted Net earnings of $2.29 per diluted
share. Please refer to the section included herein under the
heading “Reconciliation of Non-GAAP Financial Measures” for a
discussion of the Company's use of non-GAAP adjusted financial
information.
Net sales for the six months of fiscal 2018 were $1,239.9
million, an increase of 5% from the net sales of $1,176.6 million
in the comparable period in fiscal 2017. This increase was the
result of a 4% increase in pricing and a 1% increase in organic
volume.
The Company's operating results for its business segments for
the six months of fiscal years 2018 and 2017 are as follows:
|
|
|
Six months ended |
|
($ millions) |
|
October 1, 2017 |
|
October 2, 2016 |
Net sales by
segment |
|
|
|
Americas |
$ |
696.1 |
|
|
$ |
654.5 |
|
EMEA |
397.0 |
|
|
377.7 |
|
Asia |
146.8 |
|
|
144.4 |
|
|
|
|
|
Total net sales |
$ |
1,239.9 |
|
|
$ |
1,176.6 |
|
|
|
|
|
Operating
earnings |
|
|
|
Americas |
$ |
99.4 |
|
|
$ |
101.0 |
|
EMEA |
31.4 |
|
|
36.8 |
|
Asia |
7.4 |
|
|
7.8 |
|
Restructuring charges -
Americas |
(0.3 |
) |
|
(0.9 |
) |
Inventory adjustment
relating to exit activities - EMEA |
— |
|
|
(2.6 |
) |
Restructuring charges -
EMEA |
(2.3 |
) |
|
(4.9 |
) |
Restructuring charges -
Asia |
— |
|
|
(0.4 |
) |
ERP system
implementation - Americas |
(1.6 |
) |
|
(7.7 |
) |
Acquisition activity
expense - Americas |
(0.1 |
) |
|
(0.1 |
) |
Acquisition activity
expense - EMEA |
(0.3 |
) |
|
(0.1 |
) |
|
|
|
|
Total operating
earnings |
$ |
133.6 |
|
|
$ |
128.9 |
|
EMEA -
Europe, Middle East and Africa |
|
“Our core business remains stable,” stated David M. Shaffer,
President and Chief Executive Officer of EnerSys. “However,
commodity cost increases continue to out pace price increases and
the benefits from cost saving initiatives. Price increases
typically lag behind commodity cost increases by as much as two
quarters and lead has continued to rise. Our third quarter guidance
for non-GAAP adjusted net earnings per diluted share is $1.12 to
$1.16, which excludes an expected charge of $0.04 from our ongoing
restructuring programs, ERP system implementation and acquisition
expenses.”
Reconciliation of Non-GAAP Financial Measures
This press release contains financial information determined by
methods other than in accordance with U.S. Generally Accepted
Accounting Principles, ("GAAP"). EnerSys' management uses the
non-GAAP measure “adjusted Net Earnings” in their analysis of the
Company's performance. This measure, as used by EnerSys in past
quarters and years, adjusts Net Earnings determined in accordance
with GAAP to reflect changes in financial results associated with
the Company's restructuring initiatives and other highlighted
charges and income items. Management believes the presentation of
this financial measure reflecting these non-GAAP adjustments
provides important supplemental information in evaluating the
operating results of the Company as distinct from results that
include items that are not indicative of ongoing operating results;
in particular, those charges that the Company incurs as a result of
restructuring activities, impairment of goodwill and
indefinite-lived intangibles and other assets and those charges and
credits that are not directly related to operating unit
performance, such as fees and expenses related to acquisition
activities, stock-based compensation of senior executives,
significant legal proceedings, ERP system implementation and tax
valuation allowance changes. 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.
Income tax effects of non-GAAP adjustments are calculated using
the applicable statutory tax rate for the jurisdictions in which
the charges (benefits) are incurred, while taking into
consideration any valuation allowances. For those items which
are non-taxable, the tax expense (benefit) is calculated at 0%.
This non-GAAP disclosure has limitations as an analytical tool,
should not be viewed as a substitute for Net Earnings determined in
accordance with GAAP, and should not be considered in isolation or
as a substitute for analysis of the Company's results as reported
under GAAP, nor is it necessarily comparable to non-GAAP
performance measures that may be presented by other companies.
Management believes that this non-GAAP supplemental information
will be helpful in understanding the Company's ongoing operating
results. This supplemental presentation should not be construed as
an inference that the Company's future results will be unaffected
by similar adjustments to Net Earnings determined in accordance
with GAAP.
Included below is a reconciliation of non-GAAP adjusted
financial measures to reported amounts. Non-GAAP adjusted Net
Earnings are calculated excluding restructuring and other
highlighted charges and credits. The following tables provide
additional information regarding certain non-GAAP measures:
|
|
|
|
Quarter ended |
|
|
October 1, 2017 |
|
|
October 2, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except share and per share amounts) |
|
Net Earnings
reconciliation |
|
|
|
|
|
As reported Net
Earnings |
$ |
43.2 |
|
|
|
$ |
45.6 |
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
Restructuring charges |
1.8 |
|
(1 |
) |
|
7.5 |
|
(1 |
) |
ERP
system implementation |
0.7 |
|
(2 |
) |
|
0.4 |
|
(2 |
) |
Acquisition activity expense |
0.4 |
|
(3 |
) |
|
0.1 |
|
(3 |
) |
Non-controlling partner's share of restructuring and exit charges -
EMEA - South Africa joint venture |
— |
|
|
|
(2.6 |
) |
|
Income
tax effect of above non-GAAP adjustments |
(0.8 |
) |
|
|
(0.6 |
) |
|
Non-GAAP
adjusted Net Earnings |
$ |
45.3 |
|
|
|
$ |
50.4 |
|
|
|
|
|
|
|
|
Outstanding
shares used in per share calculations |
|
|
|
|
|
Basic |
42,938,131 |
|
|
43,426,955 |
|
Diluted |
43,327,361 |
|
|
43,949,543 |
|
|
|
|
|
|
|
Non-GAAP
adjusted Net Earnings per share: |
|
|
|
|
|
Basic |
$ |
1.06 |
|
|
|
$ |
1.16 |
|
|
Diluted |
$ |
1.05 |
|
|
|
$ |
1.15 |
|
|
|
|
|
|
|
|
Reported Net
Earnings per share: |
|
|
|
|
|
Basic |
$ |
1.01 |
|
|
|
$ |
1.05 |
|
|
Diluted |
$ |
1.00 |
|
|
|
$ |
1.04 |
|
|
Dividends per
common share |
$ |
0.175 |
|
|
|
$ |
0.175 |
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides the regional allocation of the
non-GAAP adjustments shown in the reconciliation above:
|
|
|
|
|
Quarter ended |
|
|
October 1, 2017 |
October 2, 2016 |
|
|
Pre-tax |
|
Pre-tax |
|
|
|
($ millions) |
|
|
($ millions) |
(1) Restructuring
charges - Americas |
|
$ |
0.3 |
|
|
$ |
— |
|
|
(1) Inventory write-off
relating to exit activities - EMEA - (South Africa joint
venture) |
|
— |
|
|
2.6 |
|
|
(1) Restructuring
charges - EMEA |
|
1.5 |
|
|
4.6 |
|
|
(1) Restructuring
charges - Asia |
|
— |
|
|
0.3 |
|
|
(2) ERP system
implementation - Americas |
|
0.7 |
|
|
0.4 |
|
|
(3) Acquisition
activity expense - Americas |
|
0.1 |
|
|
0.1 |
|
|
(3) Acquisition
activity expense - EMEA |
|
0.3 |
|
|
— |
|
|
Total Non-GAAP
adjustments |
|
$ |
2.9 |
|
|
$ |
8.0 |
|
|
EMEA - Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
October 1, 2017 |
|
|
October 2, 2016 |
|
|
|
|
|
|
|
|
(in millions, except share and per share amounts) |
|
Net Earnings
reconciliation |
|
|
|
|
|
As reported Net
Earnings |
$ |
91.4 |
|
|
|
$ |
90.2 |
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
Restructuring charges |
2.6 |
|
(1 |
) |
|
8.8 |
|
(1 |
) |
ERP
system implementation |
1.6 |
|
(2 |
) |
|
7.7 |
|
(2 |
) |
Acquisition activity expense |
0.4 |
|
(3 |
) |
|
0.2 |
|
(3 |
) |
Non-controlling partner's share of restructuring and exit charges -
EMEA - South Africa joint venture |
— |
|
|
|
(2.6 |
) |
|
Income
tax effect of above non-GAAP adjustments |
(1.3 |
) |
|
|
(3.8 |
) |
|
Non-GAAP
adjusted Net Earnings |
$ |
94.7 |
|
|
|
$ |
100.5 |
|
|
|
|
|
|
|
|
Outstanding
shares used in per share calculations |
|
|
|
|
|
Basic |
43,194,107 |
|
|
43,348,449 |
|
Diluted |
43,745,218 |
|
|
43,889,678 |
|
|
|
|
|
|
|
Non-GAAP
adjusted Net Earnings per share: |
|
|
|
|
|
Basic |
$ |
2.19 |
|
|
|
$ |
2.32 |
|
|
Diluted |
$ |
2.17 |
|
|
|
$ |
2.29 |
|
|
|
|
|
|
|
|
Reported Net
Earnings per share: |
|
|
|
|
|
Basic |
$ |
2.12 |
|
|
|
$ |
2.08 |
|
|
Diluted |
$ |
2.09 |
|
|
|
$ |
2.06 |
|
|
Dividends per
common share |
$ |
0.35 |
|
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides the regional allocation of the
non-GAAP adjustments shown in the reconciliation above:
|
|
|
|
|
Six months ended |
|
|
October 1, 2017 |
October 2, 2016 |
|
|
Pre-tax |
|
Pre-tax |
|
|
|
($ millions) |
|
|
($ millions) |
(1) Restructuring
charges - Americas |
|
$ |
0.3 |
|
|
$ |
0.9 |
|
|
(1) Inventory
adjustment relating to exit
activities - EMEA - (South Africa joint venture) |
|
— |
|
|
2.6 |
|
|
(1) Restructuring
charges - EMEA |
|
2.3 |
|
|
4.9 |
|
|
(1) Restructuring
charges - Asia |
|
— |
|
|
0.4 |
|
|
(2) ERP system
implementation - Americas |
|
1.6 |
|
|
7.7 |
|
|
(3) Acquisition
activity expense - Americas |
|
0.1 |
|
|
0.1 |
|
|
(3) Acquisition
activity expense - EMEA |
|
0.3 |
|
|
0.1 |
|
|
Total Non-GAAP
adjustments |
|
$ |
4.6 |
|
|
$ |
16.7 |
|
|
EMEA - Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Earnings
(Unaudited)(In millions, except share and
per share data) |
|
|
|
Quarter ended |
|
October 1, 2017 |
|
October 2, 2016 |
Net sales |
$ |
617.3 |
|
|
$ |
576.0 |
|
Gross profit |
159.9 |
|
|
161.3 |
|
Operating expenses |
94.1 |
|
|
93.5 |
|
Restructuring
charges |
1.8 |
|
|
4.9 |
|
Operating earnings |
64.0 |
|
|
62.9 |
|
Earnings before income
taxes |
55.1 |
|
|
58.0 |
|
Net earnings
attributable to EnerSys stockholders |
$ |
43.2 |
|
|
$ |
45.6 |
|
|
|
|
|
Net earnings per common
share attributable to EnerSys stockholders: |
|
|
|
Basic |
$ |
1.01 |
|
|
$ |
1.05 |
|
Diluted |
$ |
1.00 |
|
|
$ |
1.04 |
|
Dividends
per common share |
$ |
0.175 |
|
|
$ |
0.175 |
|
Weighted-average number
of common shares used in per share calculations: |
|
|
|
Basic |
42,938,131 |
|
|
43,426,955 |
|
Diluted |
43,327,361 |
|
|
43,949,543 |
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
October 1, 2017 |
|
October 2, 2016 |
Net sales |
$ |
1,239.9 |
|
|
$ |
1,176.6 |
|
Gross profit |
323.0 |
|
|
327.6 |
|
Operating expenses |
186.8 |
|
|
192.5 |
|
Restructuring
charges |
2.6 |
|
|
6.2 |
|
Operating earnings |
133.6 |
|
|
128.9 |
|
Earnings before income
taxes |
116.1 |
|
|
117.0 |
|
Net earnings
attributable to EnerSys stockholders |
$ |
91.4 |
|
|
$ |
90.2 |
|
|
|
|
|
Net earnings per common
share attributable to EnerSys stockholders: |
|
|
|
Basic |
$ |
2.12 |
|
|
$ |
2.08 |
|
Diluted |
$ |
2.09 |
|
|
$ |
2.06 |
|
Dividends
per common share |
$ |
0.35 |
|
|
$ |
0.35 |
|
Weighted-average number
of common shares used in per share calculations: |
|
|
|
Basic |
43,194,107 |
|
|
43,348,449 |
|
Diluted |
43,745,218 |
|
|
43,889,678 |
|
|
|
|
|
|
|
EnerSys also announced that it will host a conference call to
discuss the Company's second quarter fiscal year 2018 financial
results and provide an overview of the business. The call will
conclude with a question and answer session.
The call, scheduled for Thursday, November 9, 2017 at 9:00 a.m.,
Eastern Time, will be hosted by David M. Shaffer, Chief Executive
Officer, and Michael J. Schmidtlein, Chief Financial Officer.
The call will also be Webcast on EnerSys' website. There will be
a free download of a compatible media player on the Company’s
website at http://www.enersys.com.
The conference call information is:
Date: |
Thursday, November 9,
2017 |
Time: |
9:00 a.m. Eastern
Time |
Via Internet: |
http://www.enersys.com |
Domestic Dial-In
Number: |
877-359-9508 |
International Dial-In
Number: |
224-357-2393 |
Passcode: |
82785100 |
A replay of the conference call will be available from 12:00
p.m. on November 9, 2017 through midnight on December 9, 2017.
The replay information is:
Via Internet: |
http://www.enersys.com |
Domestic Replay
Number: |
855-859-2056 |
International Replay
Number: |
404-537-3406 |
Passcode: |
82785100 |
For more information, contact Thomas O'Neill, Vice President and
Treasurer, EnerSys, P.O. Box 14145, Reading, PA 19612-4145, USA.
Tel: 610-236-4040 or by emailing investorrelations@enersys.com; Web
site: www.enersys.com.
EDITOR'S NOTE: EnerSys, the global leader in stored energy
solutions for industrial applications, manufactures and distributes
reserve power and motive power batteries, battery chargers, power
equipment, battery accessories and outdoor equipment enclosure
solutions to customers worldwide. Motive power batteries and
chargers are utilized in electric forklift trucks and other
commercial electric powered vehicles. Reserve power batteries
are used in the telecommunication and utility industries,
uninterruptible power supplies, and numerous applications requiring
stored energy solutions including medical, aerospace and defense
systems. Outdoor equipment enclosure products are utilized in
the telecommunication, cable, utility, transportation
industries and by government and defense customers. The
company 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.
Caution Concerning Forward-Looking Statements
This press release, and oral statements made regarding the
subjects of this release, contains forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995, or the Reform Act, which may include, but are not limited
to, statements regarding EnerSys’ earnings estimates, intention to
pay quarterly cash dividends, return capital to stockholders,
plans, objectives, expectations and intentions and other statements
contained in this press release that are not historical facts,
including statements identified by words such as “believe,” “plan,”
“seek,” “expect,” “intend,” “estimate,” “anticipate,” “will,” and
similar expressions. All statements addressing operating
performance, events, or developments that EnerSys expects or
anticipates will occur in the future, including statements relating
to sales growth, earnings or earnings per share growth, order
intake, backlog, payment of future cash dividends, execution of its
stock buy back program, judicial or regulatory proceedings, and
market share, as well as statements expressing optimism or
pessimism about future operating results or benefits from either
its cash dividend or its stock buy back programs, are
forward-looking statements within the meaning of the Reform Act.
The forward-looking statements are based on management's current
views and assumptions regarding future events and operating
performance, and are inherently subject to significant business,
economic, and competitive uncertainties and contingencies and
changes in circumstances, many of which are beyond the Company’s
control. 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.
Although EnerSys does not make forward-looking statements unless
it believes it has a reasonable basis for doing so, EnerSys cannot
guarantee their accuracy. The foregoing factors, among others,
could cause actual results to differ materially from those
described in these forward-looking statements. For a list of other
factors which could affect EnerSys’ results, including earnings
estimates, see EnerSys’ filings with the Securities and Exchange
Commission, “Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations,” including
“Forward-Looking Statements,” set forth in EnerSys’ Annual Report
on Form 10-K for the fiscal year ended March 31, 2017. No undue
reliance should be placed on any forward-looking statements.
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