EnerSys raises Q3 EPS view to $2.50-$2.60 from $1.80-$1.90, consensus $1.85

The company stated: “EnerSys is providing a one time update to a portion of its previously issued fiscal third quarter 2024 outlook following the December 14, 2023 issuance of proposed regulations by the U.S. Department of the Treasury regarding the Advanced Manufacturing Production Credit – Section 45X of the Internal Revenue Code. The proposed regulations provide additional clarification on the methodology for calculating capacities of batteries that qualify for tax credits. EnerSys believes the impact of the proposed regulations will result in more of its product sales than previously anticipated to qualify for the related tax credits. As a result, the Company now expects the annual tax credits that are recorded as a reduction to cost of goods sold and not subject to taxation to be in the range of approximately $120 million to $160 million. This represents an ongoing annual increase to our anticipated tax credits of approximately $35 million to $45 million compared to the previously communicated annual range of approximately $80 million to $120 million. The Company expects to continue to receive credits with regard to its qualifying U.S. production volumes through December 31, 2032. Based on the proposed regulations from the U.S. Department of the Treasury, the Company now expects its third quarter fiscal 2024 adjusted diluted EPS to be in the range of $2.50 to $2.60, which reflects an adjustment – including retroactive impacts for the incremental IRC 45X tax benefits attributable to the fourth quarter of fiscal 2023 through the third quarter of fiscal 2024, as well as absorbing sustained capex pauses from telecom and broadband customers. This compares to the previously communicated range of $1.80 to $1.90.”