EnerSys (NYSE:ENS) executives used a company update call to outline how the battery and stored-energy provider is positioning itself for what CEO Shawn O’Connell described as two major “super cycles”: energy security and labor scarcity. Joined by CFO Andrea Funk and an investor relations representative, O’Connell emphasized that the company operates in niche, high-consequence markets where it typically holds a No. 1 or No. 2 position and where long-term customer relationships, service capability, and application-specific know-how can be decisive.
Business focus and “full technology stack”
O’Connell said EnerSys has expanded well beyond its roots as a lead-acid battery manufacturer and now offers “a full technology stack,” including batteries (with nine lithium chemistries), power electronics, software to manage and aggregate systems, and an in-house service organization staffed by EnerSys employees rather than subcontractors. He said the company avoids electric vehicle markets and broad commercial and industrial markets, instead focusing on segments where it can “application stack” and leverage proprietary knowledge.
- Network and infrastructure, including communication service providers, internet service providers, data centers, and power utilities.
- Warehousing logistics, including forklift fleet electrification and Class 8 over-the-road truck applications, along with battery energy storage systems (BESS) used to manage warehouse power demand.
- Aerospace and defense, including satellite batteries, submarine systems, unmanned vehicles and drones, soldier power, and munitions.
Data centers: lead-acid strength and lithium trials
O’Connell highlighted EnerSys’ historical position in data centers, stating the company holds roughly 55% U.S. market share in lead-acid batteries used for data center power. He said EnerSys’ installed base and relationships with UPS original equipment manufacturers—citing Vertiv, Schneider, and Eaton—as well as direct engagement with hyperscalers, put it in what he called “high trust environments” where availability and service readiness are critical.
While the company expects its lead-acid data center business to grow about 20% this year, O’Connell characterized lithium as the larger growth vector, noting lithium accounts for roughly 60% to 70% of greenfield AI-related data centers. He said EnerSys launched its first customer trials of a lithium data center battery offering “this month,” with efforts focused on product validation, communications with UPS systems, and performance in the operating environment.
On timing, O’Connell said EnerSys is “level setting” expectations that the sales lift from lithium in data centers is likely to begin showing up in fiscal 2028 (the company operates on an April-to-March fiscal year). He added that batteries are often ordered late in data center build cycles, even when upstream components such as transformers carry multi-year lead times.
800-volt DC transition and power quality opportunity
Executives also addressed the industry’s transition toward 800-volt DC architectures. O’Connell said EnerSys has long provided DC systems via batteries, with the main change being a move from traditional 480-volt designs to 800-volt designs to improve efficiency and reduce copper requirements. He said the shift should be a “lift in volume” for EnerSys because it would require more cells per system.
Separately, O’Connell discussed power quality needs in AI environments, describing battery technology as a near-term tool for managing rapid swings in load. He said using batteries for power quality can accelerate battery wear, which could increase replacement demand over time. He also pointed to an opportunity for rapidly deployable, smaller-scale power systems at the edge—an area where he said EnerSys has experience through its telecommunications, cable, and broadband businesses.
South Carolina lithium plant: pivot toward defense domestication
EnerSys addressed its planned lithium facility in South Carolina, describing a strategic shift in how the project is framed. O’Connell said the factory was initially conceived during the Biden administration when incentives were oriented toward EV supply chains, but that subsequent policy emphasis on “foreign entity of concern” (FEOC) rules and changes to EV credits altered the original premise. He said EnerSys has since pivoted discussions toward supporting U.S. government goals to domesticize battery supply for the military, citing the risk of reliance on China for soldier power programs.
O’Connell called the company’s statements “aspirational” until final government “definitization,” but said discussions have been positive. He described a government objective to consolidate numerous soldier power-related battery programs into fewer programs and suggested EnerSys could support that effort. He also said a defense-focused strategy could be less exposed to open-market pricing dynamics because sales would be tied to programs rather than competing against commercial pack price declines.
Funk said the company has received a $200 million Department of Energy grant (a grant, not a loan) that it is seeking to reaffirm, noting it is a cost-share program and could be adjusted based on scope changes. She also cited about $200 million of South Carolina incentives, which she characterized as longer-term. Both executives said more detailed updated financials would be provided when plans are communicated, and at an investor day on June 11 at the New York Stock Exchange.
Capital allocation: internal investment, acquisitions, buybacks, and 45X benefits
Funk outlined EnerSys’ capital allocation priorities, starting with internal investment. She said ongoing capital expenditures for the existing lead-acid footprint are expected to be about $75 million to $100 million before considering the new lithium plant, and noted that this is below depreciation.
On external growth, Funk said EnerSys has completed more than 36 acquisitions since 2004 and continues to favor deals in the $100 million to $300 million range that are in growth markets and margin accretive, rather than turnarounds or early-stage startups. She also said the board has authorized a $1 billion share repurchase program, and that the company has been buying back stock “pretty aggressively.”
Funk also discussed EnerSys’ 45X benefits, saying the company receives about $40 million per quarter, treated as a reduction in cost of sales and not subject to tax. She said the credit currently offsets federal income tax liability and referenced an expected $120 million refund that was due “this month,” adding that any delay would be received with interest. Funk linked the incentive to decisions to invest in U.S. capacity, including moving production from Monterrey to Kentucky and announcing the closure of a Tijuana plant with production moving largely to Missouri.
O’Connell said his “Energize” program—focused on optimizing the core business, tightening the operating model through centers of excellence, and accelerating growth—has progressed ahead of expectations, pointing to cost reductions, operating effectiveness, and faster execution on customer-driven redesign work. He reiterated that EnerSys competes in different markets than large EV-focused battery players, emphasizing that the company’s value add extends beyond the cell through integration, communications, regulatory requirements, and service.
About Enersys (NYSE:ENS)
Enersys, headquartered in Reading, Pennsylvania, is a global leader in stored energy solutions, specializing in manufacturing and distributing industrial batteries, battery chargers, power equipment, and related accessories. The company serves a diverse range of end markets, including telecommunications, data centers, medical, aerospace, defense, electric vehicle motive power, and utility outcomes. Its products are engineered to deliver critical reserve power and motive power applications across key infrastructure and industrial sectors.
The company’s product portfolio encompasses lead-acid batteries, lithium-ion energy storage systems, chargers, inverters, power management software, and a broad array of battery accessories.
