READING, PA — EnerSys (NYSE: ENS) reported third-quarter fiscal 2026 results showing modest revenue growth, expanding margins excluding federal manufacturing credits, and a surge in cash flow as the industrial battery maker maintained a low leverage profile and continued returning capital to shareholders.
For the quarter ended December 28, 2025, net sales rose 1.4 percent to $919.1 million, up from $906.2 million a year earlier and at the low end of the company’s guidance range of $920 million to $960 million. The increase reflected a 3 percent improvement in pricing and a 2 percent benefit from foreign currency translation, partially offset by a 4 percent decline in organic volume.
Gross margin was 30.1 percent, down 280 basis points compared to the prior year, which included a catch-up adjustment tied to IRC 45X Advanced Manufacturing Production Credits. Excluding 45X benefits, gross margin expanded 170 basis points to 26.3 percent.
Net earnings attributable to EnerSys stockholders were $90.4 million, or $2.40 per diluted share, down from $114.8 million, or $2.88 per diluted share, in the prior-year quarter. Adjusted diluted earnings per share were $2.77, compared with $3.12 a year ago. Excluding 45X benefits, adjusted diluted EPS was $1.84, a 50 percent increase year over year.
“We delivered strong earnings in the third quarter with adjusted diluted EPS ex 45X of $1.84, up 50%,” said President and Chief Executive Officer Shawn O’Connell. He noted margin expansion across most business lines, driven by product mix and disciplined pricing and expense management, while acknowledging continued softness in Motive Power volumes.
For the first nine months of fiscal 2026, net sales increased 4.6 percent to $2.76 billion. Adjusted diluted EPS for the nine-month period rose to $7.38, compared with $7.19 in the prior year.
Cash generation strengthened sharply during the quarter. Cash from operating activities totaled $184.6 million, up from $81.1 million a year earlier. Free cash flow reached $171.3 million, compared with $56.8 million in the prior-year period, aided in part by an expansion of the company’s Receivables Purchasing Agreement.
Capital expenditures were $13.3 million, down from $24.3 million in the prior year quarter. As of December 28, 2025, EnerSys held $450.1 million in cash and cash equivalents, with net debt of $743.3 million. The company’s net leverage ratio stood at 1.2 times EBITDA, below the low end of its target range and improved from 1.5 times in the prior year period.
EnerSys returned approximately $93.7 million to shareholders in the quarter, including $84.1 million in share repurchases and $9.6 million in dividends. As of February 3, 2026, $931 million remained available under the company’s share repurchase authorization.
The board approved a quarterly cash dividend of $0.2625 per share, payable March 27, 2026, to shareholders of record on March 13, 2026.
Looking ahead to the fourth quarter of fiscal 2026, EnerSys expects net sales between $960 million and $1.0 billion and adjusted diluted EPS in the range of $2.95 to $3.05, inclusive of IRC 45X credits. Excluding 45X benefits, adjusted diluted EPS is projected between $1.91 and $2.01. For the full fiscal year, the company expects capital expenditures of approximately $80 million.
Chief Financial Officer Andrea Funk said the quarter’s performance “further validate[s] the strength and resilience of our diversified business model,” adding that operational efficiencies under the company’s EnerGize strategic framework are positioning the business for long-term growth and margin expansion despite a dynamic macroeconomic environment.
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