May Powering the Future Everywhere for Everyone. At EnerSys, we pursue perfection to deliver Power to innovate and inspire.

Transcription

1 Powering the Future Everywhere for Everyone. May 2017 At EnerSys, we pursue perfection to deliver Power to innovate and inspire. Power delivered simply, safely and sustainably. Power that creates superior value for our customer. We are proud to be EnerSys.

2 Forward-Looking Information This presentation includes forward-looking statements and/or information, which are based on the Company s current expectations and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to materially differ from those anticipated. Such risks include, among others, risks associated with competitive actions, technology development and implementation, intellectual property infringement, failure to integrate acquired businesses, penetration of existing markets, expansion into new markets, hiring and retaining high quality management and key employees and general economic conditions including the risks described in the Company s most recent annual/quarterly report, as applicable, on Form 10-K/10-Q respectively, filed with the SEC, along with other unforeseen risks. Nothing that we say today should be interpreted as an update to the information or guidance that we provided in our most recent investor call, our most recent quarterly/annual report, as applicable, on Form 10-Q/10-K respectively, filed with the SEC, and our current reports filed with the SEC on Form 8-K since such quarterly/annual report. 1

3 The Global Leader in stored energy solutions for industrial applications Reserve Power, Motive Power, Aerospace & Defense Sales: $2.4 billion in fiscal year 2017 Global leader: 23% market share Over 10,000 customers in more than 100 countries Global manufacturing facilities 9,400 employees worldwide 3

4 Acquisitions Financial Strength Continued increase in Sales of Premium Products ENS Lean Initiatives Digital Core Automation Projects Drivers for future growth and earnings expansion Asia Growth Growth via new products Product Roadmap 4

5 Trends expanding backup power needs Electric Grid Backup Power Systems Electric Grid Datacenters Vehicles Trucks Buses Fire Engines Police Cruisers Regulation requiring renewable energy storage Electric Grid infrastructure having trouble keeping up with ever increasing demand Data usage increases Streaming/Facetime/ Videos UPS architectural change to faster backup Premium product Commercial Fleet heavier electric loads Truck, Emergency response, Refrigeration, APU 5

6 Targeted Opportunities Expand Addressable Market by 50% Energy Storage Systems $1B Commercial Trucks $2B $9.3B $14B + A&D $1B China and India Share $1B Current Market Future Market 6

7 Two Growth Markets Two Drivers India Telecom $400M 2016 $900M 2025 China MP $300M 2016 $1B

8 China is 55% of U.S. market China Motive Power Growth By %+ of U.S. market Move from #2to #1 40 Million New middle class consumers every year 8

9 Motive Power China Electric Forklift Growth % CAGR Source: Worldwide Industrial Truck Statistics (WITS) , Management estimates USA China 9

10 4x U.S. mobile subscriptions India has #2 Mobile subscriptions (1.1 B) Digital India Universal access to mobile content India Reserve Power Growth Telecom and Digital India Drive growth in UPS 10

11 India Telecom Grid quality 70% of towers have power outages for up to 8 hours a day TCO product strategy DRIVERS Key drivers of the Indian Telecom Tower Industry Source: Deloitte Analysis 11

12 Create & Exploit a Digital Core Create the EnerSys Operating System EOS Operational Excellence Priorities Create Productivity & Capacity Automation Deliver 2% Cost Improvement 12

13 Lean initiatives Relentless elimination of waste Enterprise transformation Harmonize factories worldwide Consultant support Software enhancements 13

14 High degree of confidence in substantial productivity gains Creating the EnerSys Operating System EOS External Sensei 41 month implementation Increase enterprise value through Customer satisfaction Employee satisfaction Funding source for future initiatives 14

15 Increase TPPL throughput in existing footprint Automation technology advancements create substantial opportunities Automation Initiatives $70M investment for $33M cost reductions with revenue upside Productivity/ Capacity Vertical integration Workplace safety 15

16 Freight Noncommodity Material Price Material Usage 22% 13% $4M $9M $2M FY18 Min. Goal $15M Productivity Active Cost Reduction Programs 16

17 Key Takeaways Operational Excellence Digital Core automates customer experience from quote to delivery Lean Initiatives to relentlessly eliminate waste and compress cycle times Allocate additional CapEx on global harmonization and automation Improve Operating Earnings by at least 200 bps by end FY21 17

18 Product Roadmap Overview Continued advancement of lead technologies Expand lithium from A&D into broader Industrial markets Enhancing product portfolio for new markets including Energy Storage Systems (ESS) Larger emphasis on system engineering and modular kit development 18

19 Worldwide Secondary Battery Market 2015 Secondary Battery market $65B Battery market still highly dominated by lead (90% market share) Increase in lithium based technology is demonstrating exponential growth (CAGR 2005/ %/year) Source: Avicenne Energy

20 Market Share (Billions, USD) Industrial Battery Market 2016 Forklift Other Motive Telecom UPS ESS Other Applications Lead Acid Lithium Ion Source: Avicenne Energy

21 What is Thin Plate Pure Lead (TPPL)? Traditional 13 Plates per Section 0.5m 2 550Wpc TPPL 21 Plates per Section 0.8m 2 706Wpc TPPL Pure Lead Crystallography Thinner grids allow for a higher energy density within the same footprint Very fine grain structure makes the grid far more resistant to corrosion Promotes surface area reaction Dramatically lowers resistance 21

22 Next Generation TPPL Property TPPL (Extreme) Next Gen TPPL* Energy Density (C20 Rated) The trucking industry comprises a 1 billion USD market 34 Wh/Kg 53 Wh/Kg Power Density 730 W/Kg 1200 W/Kg Cycle Life (100% DoD to 50% BoL) Vibration Life (SAEJ930 L2) hours 620 hours For the same size, more energy content=longer stand times without the need for engine idle More cranking power for the weight better engine start Longer battery life for improved TCO Will withstand harsher environments allowing for large application range *Prototype 22

23 Evolution of UPS Run Time (min) Enterprise Colocation Cloud Giants 23

24 UPS Evolution Type Flooded TPPL UTPPL Description 4DXC17B XE95 Prototype Number of blocs W/Kg W/L Area (ft 2 ) System Cost (USD per KWHr) 100% 72% 62% Life Expectation Yrs Maintenance Free No Yes Yes System: 750 KW Battery, 5 min 24

25 Limited Success to Date for Industrial Lithium x x Yesterday Most cells produced economically were small format Limited variation available only consumer LCO was produced at high volume Today Extensive usage of large format cells Advanced NMC with high energy density x cell cost was valued at 345 USD/KWh Automotive OEMs are pushing the battery industry to offer increasingly lower pricing x x Safety strategy primitive with limited monitoring Low cyclic capability increases cost of ownership and limits applications Functional safety hardware topology complying with ISO26262 coupled with enhanced cell safety designs High cyclic capability (+8000) at 75% 80% DoD 25

26 Solutions Modular Concept Module 26

27 ESS 100KW/400KWh System Next Generation TPPL If the application requires Limited to daily partial cycling (peak shaving, demand charges) Space is somewhat confined No maintenance Restrictions (e.g. fire code) Remote monitoring Parameter Value Price (USD/Wh/L) 1.13 Cycle Life (80% BoL with 80% DoD) 800 Relative Price 52% TCO (Cents/Wh/L/Cycle)

28 ESS 100KW/400KWh System Li-Ion System If the application requires Significant cycling (PV, demand charges, high load profile) Space is very confined No maintenance No restrictions (e.g. fire code) Remote monitoring Parameter Value Price (USD/Wh/L) 2.56 Cycle Life (80% 100% DoD) 6000 Relative Price 118% TCO (Cents/Wh/L/Cycle)

29 Historical Earning Improvements Adj. Net Earnings / Diluted EPS ($ in Millions, except per share information) Increased sales mix of premium products $250 $3.03 $3.55 $3.96 $4.32 $3.93 $4.75 Adj. Diluted EPS $2.52 Restructuring cost savings $200 $1.42 $1.92 $1.44 $150 Market Leadership $100 Adj. Net Earnings $50 Note - Adjusted earnings results exclude highlighted items. $- FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY 17 FCST Up 63% Up 35% Down 25% Up 75% Up 20% Up 17% Up 12% Up 9% Down 9% Up % (EPS Changes) 29

30 EPS Increasing Premium Products Mix Thin Plate Pure Lead Telecom, UPS, A&D, Motive Power Premium Motive Power - Ironclad Modular Chargers Battery Management Systems Lithium A&D 40% 38% 36% 34% 32% 30% 28% 26% 24% $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Product % EPS 30

31 Net Sales & Gross Profit Margin NET SALES ($ Millions) 28% 26% 24% 22% 20% $1.40 $1.20 $1.00 $0.80 $0.60 $1.60 $1.45 $1.30 $1.15 $1.00 ACTUAL GP % 25% LME EURO GP $ Notes: LME and Euro are set to our P&L basis. $ amounts are in average actual rates F17 Q4 values forecasted $175 $150 $125 $100 31

32 Global Tax Considerations Fiscal 2016 Data

33 Revenue FY 2017 Revenue FY 2021 Americas EMEA Asia $ 2.4 ~ 4 % Organic CAGR Improved regional balance M&A TBD Op Earnings FY 2017 Our Balance Improves ($ Billions) $ % Organic CAGR ~ 200 bps improvement 33

34 Journey to FY21 Sources / Uses of ANE: $ 55 Organic Growth 40 EOS Savings 0 Price / Commodity Costs (5) Digital Core $

35 Operating Margin Expansion YTD Q3 FY % FY bps Organic Growth Premium Mix Lean Initiatives New Products 35

36 PRODUCTS Motive Power solutions advanced technology to meet our customers requirements 36

37 Motive Power - advanced battery solutions Low maintenance battery Longer topping up intervals (4/8/13/20 weeks) More power, more longer life time Ideal for very heavy duty application Opportunity charges TPPL technology (thin plate pure lead) Extra fast charges Opportunity charges 37

38 Reserve PRODUCTS Power solutions advanced technology to meet our customers requirements 38

39 Reserve Power - Mission-critical power Datacenters Datacenters IT Systems Banking & Finance Process Industries Healthcare Industrial UPS Oil & Gas Switchgear Distribution Substations Industrial Substations Process Industries Railways & Metros Air Transport Standard UPS Datacentres Power Quality IT Systems Banking & Finance Process Industries Healthcare 39

40 Reserve Power - challenging times in telecom EnerSys provides you with optimised solutions to reduce your energy consumption and promote the longest battery life. Today s telecom companies are under extreme pressure to improve operational efficiencies and reduce OPEX and CAPEX. Innovative, reliable battery and site solutions from EnerSys promotes lower Total Cost of Ownership. 40

41 EnerSys keeps you talking Backbone Small Cells FTTX Broadband Macro BTS 5G enables a 100x increase in data volume Central Office EnerSys will provide power reliability through the whole network Hybrid Higher data volume will require more backup power Typical telecom infrastructure 41

42 Reserve Power - the powerful choice Fleet/Vehicles Today s vehicles are loaded with more electronics. The ODYSSEY battery has been designed to keep up with the changes. US opportunity $1 B EMEA opportunity - $5+B Marine Twice the overall power and three times the life of conventional marine batteries, ODYSSEY batteries are ideal for today s boats and recreational vehicles. Power Sports Power sport vehicles need a powerful battery. The ODYSSEY battery can handle it. 42

43 Reserve Power - your assets protected Fire and Security Alarm and security systems are only good if they work consistently. In a power outage, people and systems are even more vulnerable to danger. Commercial Broad applications such as general electronics and instrumention have power requirements that are unique to their installations. Gensets Generator starting batteries, often referred to as genset batteries, must have a power density, long service life and quick recharge capability in order to be effective. 43

44 PRODUCT AREAS Aerospace & Defense solutions advanced technology to meet our customers requirements 44

45 A & D - lines of business: at a glance Air: Civil and military aviation Land: Storage and management Sea: Submarine batteries Lead-Acid & Ni-Cd technologies, OEM, MOD and aftermarket 7% market share Thin Plate Pure Lead (TPPL) technology and management systems OEM and replacement 50% market share Flooded Lead Acid, OEM and replacement 40% market share Next generation product development 45

46 Lithium ion Applications Space Medical Defense 46

47 RESERVE $5.8 Billion MOTIVE $3.5 Billion GEOGRAPHIC Americas EMEA Asia Global Industrial Lead Acid Battery Market END MARKETS Industrial Forklifts Other 20% 39% 11% 41% CY 2015 $9.3 Billion 89% Americas EMEA Asia Telecom UPS Other 53% 26% 24% 47% 21% 29% 47 Note: Market size includes only the markets where EnerSys participates. Market size includes only batteries and chargers. It excludes the aerospace & defense and cabinet enclosures markets (each estimated at $1 to $2 billion) and service revenue.

48 RESERVE $5.8 Billion MOTIVE $3.5 Billion EnerSys #1 Leading Market Positions #1 Worldwide Market Share 21% Motive - Major Competitors 33% Exide Hoppecke East Penn Crown Batteries CY 2015 Global Industrial Battery Market $9.3 Billion EnerSys #1 Reserve - Major Competitors 15% Exide GS Yuasa Northstar Narada Coslight Saft East Penn New Power C&D Amara Raja Exide Industries (India) 48 Source: BCI, Eurobat industry reports and management estimates based on the markets where EnerSys participates. Market size and share are for batteries and chargers only. It excludes the aerospace & defense and cabinet enclosures markets (each estimated at $1 to $2 billion).

49 INDIA Regional Market Share (21% Global Share) AMERICAS $2.8 Billion EMEA $2.7 Billion ASIA $3.8 Billion EnerSys #1 EnerSys #1 EnerSys #5 5% 38% 28% Major Competitors Exide East Penn Northstar C&D Crown New Power Exide Hoppecke Fiamm Reserve Power Northstar Coslight Narada China Shoto Leoch Vision Zibo GS Yuasa Exide Industries Amara Raja CHINA JAPAN 49

50 Diversified Business Model FY16 Net Sales of $2.3 Billion END MARKETS DIVERSIFICATION GEOGRAPHIC DIVERSIFICATION Motive Reserve Americas EMEA Asia Other RP 20% 11% UPS 11% Industrial Forklifts 46% 34% 55% Telecom 17% 6% Other MP Motive Power 52% Reserve Power 48% Note: Other reserve power includes aerospace & defense, cabinet enclosures, utilities, emergency lighting, security systems and specialty products. Other motive power is primarily ground handling and mining equipment. 50

51 Sustainability 51