EnerSys (NYSE:ENS) Q2 2023 Earnings Conference Call November 10, 2022 9:00 AM ET

Company Participants

Lisa Hartman - VP, IR

David Shaffer - CEO, President & Director

Andrea Funk - EVP & CFO

Conference Call Participants

Noah Kaye - Oppenheimer

John Franzreb - Sidoti & Company

Gregory Wasikowski - Webber Research

Gregory Lewis - BTIG

Operator

Ladies and gentlemen, thank you for standing by, and welcome to EnerSys Second Quarter Fiscal Year 2023 Earnings Call. [Operator Instructions].

I would now like to hand the call over to Lisa Hartman, Vice President of Investor Relations. Please go ahead.

Lisa Hartman

Good morning, everybody. Welcome to the EnerSys Q2 Fiscal Year 2023 Earnings Conference Call. On the call with me today are David Shaffer, EnerSys's President and Chief Executive Officer; and Andrea Funk, EnerSys Executive Vice President and Chief Financial Officer.

Last evening, we published our second quarter fiscal year 2023 results and filed our 10-Q with the SEC, which are available on our website. We also posted slides that will be referenced during this call. The slides are available on the Presentations page within the Investor Relations section of our website at www.enersys.com.

As a reminder, we will be presenting certain forward-looking statements on this call that are subject to uncertainties and changes in circumstances. Our actual results may differ materially from those forward-looking statements for a number of reasons. Our forward-looking statements are applicable only as of today, November 10, 2022. For a list of forward-looking statements and factors which could affect our future results, please refer to our recent 10-K filed with the SEC.

In addition, we will also be presenting certain non-GAAP financial measures, particularly concerning our adjusted consolidated operating earnings performance, adjusted diluted earnings per share and adjusted EBITDA, which excludes certain items. For an explanation of the difference between the GAAP and non-GAAP financial metrics, please see our company's Form 8-K, which includes our press release dated November 9, 2022.

Now I'll turn the call over to our President and CEO, Dave Shaffer.

David Shaffer

Thanks, Lisa, and good morning, everyone. Please turn to Slide 4. We delivered solid Q2 results with our second highest quarterly revenue in what is typically a slow quarter, significant gross margin expansion as prices catching up with costs and robust demand for our products across our diverse set of end markets.

Second quarter net sales were $899 million, an increase of nearly 14% over Q2 '22 even after absorbing approximately $45 million of FX headwinds with strong volume growth in all lines of business. Despite ongoing supply chain and inflationary pressures, we reported second quarter adjusted earnings of $1.11 per diluted share, above the midpoint of our guidance and up $0.10 versus prior year. We were encouraged by our adjusted gross margin expansion of 120 basis points from last quarter, a sign that we have begun to turn the corner on the long anticipated catch-up on price/cost recapture.