ENS Q1 Earnings and Sales Beat on Pricing, Margin Expansion

ENS Sales Mix Benefits From NIS and PPS Strength

Network & Infrastructure Solutions (NIS) sales rose 9.4% year over year to $428.3 million. Favorable volume and mix reflected strength in power electronics and data-center demand. Volume contributed 5%, price/mix added 4% and currency translation provided a 1% lift.

Precision Power Solutions (PPS) sales surged 23.6% to $100.5 million. Volume advanced 16%, price/mix added 7% and acquisitions contributed 1%. Aerospace and defense demand, particularly counter-drone and missile-defense applications, supported the increase.

EnerSys Faces Continued Industrial Mobility Softness

Industrial Mobility Solutions (IMS) sales fell 3.2% year over year to $406.8 million. Volume declined 5% as material-handling demand remained soft, partly offset by recovery in Transportation and improved price/mix.

Adjusted operating earnings for IMS declined 10.5% to $37.7 million, with adjusted operating margin contracting 70 basis points to 9.3%. This contrasted with NIS and PPS, where adjusted operating margins expanded 280 and 300 basis points, respectively.

ENS Margin Gains Drive Stronger Profitability

Gross profit increased to $313.4 million from $253.2 million, while gross margin expanded 510 basis points to 33.5%. Excluding IRC 45X benefits, gross margin improved 440 basis points to 28.5%.

Adjusted operating earnings advanced 47.2% to $178.8 million, with the margin rising 550 basis points to 19.1%. Excluding 45X benefits and tariff refunds, adjusted operating earnings increased 21% and the related margin improved 140 basis points to 10.8%, highlighting underlying operating leverage.

EnerSys Sees Healthy Orders Despite Market Variability

First-quarter orders increased 7% year over year, driven by NIS, though they declined 9% sequentially on seasonality. The total book-to-bill ratio was 1.06, with NIS at 1.15, IMS at 1.04 and PPS at 0.73.

EnerSys also advanced targeted growth initiatives. Its Fortix 172 kWh battery energy storage system received UL and NFPA 855 approval, while the DataSafe Noir lithium offering launched in June. The company also secured a revised roughly $150 million Department of Energy grant for its planned U.S. lithium cell manufacturing campus.

ENS Cash Generation Improves Financial Flexibility

Cash from operating activities totaled $230.2 million, while free cash flow was $217.8 million and free cash flow conversion reached 187%. Cash and cash equivalents stood at $530.7 million at quarter-end, with net debt at $521.5 million and net leverage at 0.8.

The company returned $59.6 million to shareholders, including $50 million through share repurchases and $9.6 million through dividends. The board also raised the quarterly dividend 10% to $0.2875 per share for the second quarter of fiscal 2027.

EnerSys Guides Higher Q2 Sales and Earnings

For the second quarter of fiscal 2027, EnerSys expects net sales of $955-$995 million. At the midpoint, this represents 2% year-over-year growth. IRC 45X benefits to cost of sales are projected at $42-$47 million.

Adjusted earnings are projected at $3.15-$3.25 per share, with adjusted earnings excluding 45X benefits at $1.95-$2.05. The company expects first-half earnings growth to be driven primarily by margin expansion, followed by greater top-line growth later in fiscal 2027 as material handling recovers and strength continues in data centers, communications, aerospace and defense, and transportation.

Zacks Rank and Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks are discussed below:

Flowserve Corporation FLS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Flowserve’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 11.2%.  In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2026 bottom line has increased 1%.

Graco GGG presently carries a Zacks Rank of 2. Graco’s earnings surpassed the consensus estimate in the last reported quarter by 12.4%. In the past 60 days, the Zacks Consensus Estimate for Graco’s 2026 earnings has increased 5.5%.

Helios Technologies HLIO currently carries a Zacks Rank of 2. Helios Technologies’ earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 13.1%. In the past 60 days, the Zacks Consensus Estimate for HLIO’s 2026 earnings has increased 6.9%.

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