| Over a week ago | ||||
Corning Incorporated… Corning Incorporated (GLW) and EnerSys (ENS) announced a strategic collaboration to speed 5G deployment by simplifying the delivery of fiber and electrical power to small-cell wireless sites. The collaboration will leverage Corning's industry-leading fiber, cable, and connectivity expertise and EnerSys' technology leadership in remote powering solutions. The companies are working to solve infrastructure challenges in the deployment of 5G and small cells in outside plant networks. Corning and EnerSys will focus on two types of challenges facing wireless service providers and network architects in the deployment of outdoor small cells: electrical power and fiber connectivity. Power is often assumed to be available when and where needed, but, in reality, connections to small-cell sites from the electrical grid are not always readily available - increasing deployment costs and delaying network activation. Meanwhile, small cell locations that optimize signal coverage may not align well with the fiber pathways that provide the necessary backhaul. Identifying easily placed fiber access points and the pathway to reach them is key to avoiding costly delays. The Corning and EnerSys collaboration will accelerate the development of solutions to deliver distributed powering and optical connectivity, helping telecommunications operators ultimately move toward routine deployment of 5G. | ||||
| Over a month ago | ||||
BTIG analyst Gregory… BTIG analyst Gregory Lewis initiated coverage of EnerSys with a Neutral rating. The analyst likes the company's medium- and long-term prospects, but not its potential near-term headwinds and current valuation. | ||||
Oppenheimer analyst Noah… Oppenheimer analyst Noah Kaye raised the firm's price target on EnerSys to $80 from $75 and keeps an Outperform rating on the shares. While shares were flattish Tuesday after the company reported Q4 earnings, the analyst is constructive following management commentary and datapoints. Kaye notes that observed organic trends in April/May and management's targeted June exit rate appear far better than his outlook. Additionally, the company is flexing cost levers to achieve net cash savings of $200M in fiscal year 2021, actions that Kaye believes will strengthen EnerSys' balance sheet and competitive position amid the downturn. Key strategic initiatives for share gains in motive, transportation, and defense appear to be progressing well, he adds, pointing out that lead cost and synergy tailwinds could also support margin upside in the second half of 2021. | ||||
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Reports Q4 revenue… Reports Q4 revenue $781.8M, consensus $771.59M. The company states: "Our third quarter results were impacted by a fire in our Richmond, KY motive power facility in late September, near the end of our second quarter. We estimate the disruption from the fire resulted in $30M of lost sales to the third quarter. By the beginning of our fourth fiscal quarter, we had largely recovered from the fire operationally, and included in our initial guidance for the fourth quarter a recovery from our business interruption claim of approximately $15M. The progress of our claim has been slowed by the COVID-19 virus and only $5M received on April 1, 2020 has been reflected in our reported results for the fourth quarter. We are still pursuing our claim and have received an additional $3.7M on May 15, 2020, which will be reflected in our first quarter of FY21 along with any further funds we receive towards our claim prior to our filing that quarterly report." | ||||
Pre-earnings options… Pre-earnings options volume in Enersys is 7.8x normal with calls leading puts 2:1. Implied volatility suggests the market is anticipating a move near 7.0%, or $4.57, after results are released. Median move over the past eight quarters is 5.6%. |
| Over a quarter ago | ||||
EnerSys' balance… EnerSys' balance sheet is well positioned with no significant maturities related to our term loans, revolving credit facility or notes until early in fiscal year 2024. As of March 31, 2020, net debt was approximately $0.9B. The company's cash position was strong in Q4, with cash from operations in excess of approximately $75M, and the company is taking further actions to support cash flow. EnerSys is aggressively managing operating costs, reducing net working capital, and targeting at least a 50% reduction to our planned capital expenditures of nearly $100M for FY21. EnerSys continues to prudently manage its balance sheet and monitor business performance. While EnerSys maintains a share repurchase authorization, it does not plan on utilizing the share repurchase authorization in the present financial environment. | ||||
Sees revenues for Q4 of… Sees revenues for Q4 of approximately $782M, which represented a 3% reduction, excluding currency translation impacts, to the expectation of the company's now withdrawn guidance originally issued February 5. Sees gross profit of approximately $195M, or 25% of sales, which met the guidance expectation as to the percentage of sales. Sees operating expenses $5M lower than the company's guidance expectation resulting principally from lower volume as well as cost saving initiatives implemented in response to the virus. Sees foreign currency losses of $1.5M, which were not assumed in the guidance. | ||||
Oppenheimer analyst Noah… Oppenheimer analyst Noah Kaye lowered the firm's price target on EnerSys to $75 from $80 and keeps an Outperform rating on the shares. The analyst sees 41% organic sales decline year over year in June quarter, comparable to EnerSys' weakest quarters in the Great Recession. Nonetheless, while execution challenges and macro uncertainties remain, Kaye believes risk/reward is attractive. | ||||
Meetings to be held in… Meetings to be held in Boston March 30-31 hosted by Oppenheimer. | ||||