[Management View]
EnerSys delivered its second-highest quarterly revenue on record and achieved record adjusted EPS of $1.86, excluding 45x benefits. Management emphasized a structural shift toward higher-maintenance-free product adoption and strategic cost optimization, supported by resilient end-market demand in data centers, aerospace and defense, and recovering communications. Leadership transition was confirmed, with Shawn O'Connell set to assume the CEO role, focusing on targeted growth verticals, service expansion, and operational efficiency.

[Outlook]
Guidance anticipates sales and earnings pressure from tariff-related disruptions and seasonal softening. The company suspended full-year guidance for FY2026 due to macro uncertainty regarding tariffs. EnerSys expects $19 million in annual pretax benefits starting in FY2027 from restructuring initiatives, complemented by targeted investments in domestic lithium manufacturing pending DOE funding clarity.

[Financial Performance]
- Net Sales: up 7%, with a 4% organic volume increase and 1% positive price mix.
- Adjusted Gross Margin: up 260 basis points despite FX headwinds.
- Adjusted Operating Earnings: increased 48%, with an adjusted margin of 11.1%.
- Adjusted EPS: $2.97, up 43%; excluding 45x, adjusted diluted EPS was $1.86, $0.66 higher than the prior year.
- Effective Tax Rate: 15.9% as-reported and 18.9% as-adjusted before 45x.
- Energy Systems Revenue: Adjusted operating earnings were $35 million, with margin up 400 basis points to 8.7%.
- Motive Power Revenue: $392 million, flat versus prior year; adjusted operating earnings were $67 million, with margin at 17.1%.
- Specialty Revenue: Adjusted operating earnings were $15 million, with margin up 270 basis points to 8.5%.

[Q&A Highlights]
Question 1: Can you help bridge to the EPS growth with your expectations around operating margins and tax rate?
Answer: The EPS guide is up about $0.10 year on year. Normalizing for Brentronics and 45x benefits, and accounting for FX pressure, the EPS is flat year on year. Lower volume in motive power and stranded tariff costs are offset by favorable price mix gains.

Question 2: Why pause full-year guidance if there is recovery in orders?
Answer: The main reason for pausing full-year guidance is awaiting the final outcome of reciprocal tariff negotiations. The situation is manageable, but clarity is needed before providing full annual guidance.

Question 3: Can you provide year-to-date order growth for energy storage and specialty excluding Brentronics?
Answer: Significant pickup in energy systems orders, with Q4 orders pressured but showing recovery. Transportation orders are mostly flat to slightly up year on year.

Question 4: Have you seen anyone else in the industry get the 45x tax refund check?
Answer: Other lead acid battery companies have received their checks. EnerSys expects to receive the refund with interest any day due to IRS staffing delays.

Question 5: Are you making any comments regarding your latest thinking on the lithium plant?
Answer: EnerSys continues to have direct conversations with the administration and DOE, with strong support for the lithium plant. The company is advancing cell development and remains positive about the project.

Question 6: How are you thinking about the potential for inorganic growth given your balance sheet?
Answer: EnerSys is opportunistic about acquisitions, particularly in A&D and domestic lithium manufacturing. The company has a strong balance sheet and is looking for targets that fit its ROIC model.

Question 7: What are the opportunities on the M&A front given the current economic environment?
Answer: The company sees opportunities to acquire good targets, particularly in A&D and domestic lithium manufacturing. The balance sheet allows for opportunistic acquisitions.

Question 8: Can you provide more color on the green shoots in energy systems and potential network expansion?
Answer: The recovery in energy systems is driven by solving technical debt issues and upgrading macro sites for AI-centered traffic. The company is seeing early investment in network backbone enhancements.

Question 9: What might give you comfort to resume full-year guidance?
Answer: EnerSys is committed to resuming full-year guidance once there is more clarity in the macro environment and tariff landscape.

[Sentiment Analysis]
The tone of the management was cautiously optimistic, focusing on strategic growth and operational efficiency. Analysts were concerned about the impact of tariffs and the suspension of full-year guidance but acknowledged the company's strong financial performance and strategic initiatives.

[Quarterly Comparison]
| Metric | Q4 FY2025 | Q4 FY2024 |
|--------|-----------|-----------|
| Net Sales | $975M | $911M |
| Adjusted Gross Margin | 31.2% | 28.6% |
| Adjusted Operating Earnings | $152M | $109M |
| Adjusted EPS | $2.97 | $2.08 |
| Effective Tax Rate | 15.9% | 20.2% |
| Energy Systems Revenue | $399M | $369M |
| Motive Power Revenue | $392M | $392M |
| Specialty Revenue | $178M | $147M |

[Risks and Concerns]
- Guidance Pause: Management temporarily paused full-year guidance for FY2026 due to uncertainty surrounding evolving tariff policies.
- Tariff Exposure: Direct tariff exposure is approximately $92 million, with expected near-term friction in Q1 due to stranded tariffs.
- Motive Power Headwinds: Adjusted operating earnings for Motive Power are expected to be pressured by seasonality, tariff disruptions, and a decline in Americas Q4 orders.
- Class 8 Truck Volatility: The Specialty segment was negatively affected by slower Class 8 truck OEM volume recovery and choppy order rates.

[Final Takeaway]
EnerSys delivered strong financial performance in Q4 FY2025, achieving record adjusted EPS and significant margin expansion. The company is strategically focused on higher-maintenance-free product adoption, cost optimization, and targeted growth verticals. However, macro uncertainty regarding tariffs has led to the suspension of full-year guidance for FY2026. EnerSys remains well-positioned to navigate the current economic environment, with a strong balance sheet and strategic initiatives aimed at long-term growth and profitability.