Key Highlights

  • Gross Margin reached 29.9% in the quarter, or 25.2% excluding the IRC Section 45X credit.
  • Diluted EPS was $2.42, up 34%, and $1.22 excluding the 45X credit, up 61%.
  • Net sales of $949.9 million were slightly lower than a year earlier and below the company’s guidance range.
  • Precision Power Solutions sales grew more than 20%, while Network and Infrastructure Solutions grew 3%.

EnerSys (NYSE:ENS) reported results for the second quarter of fiscal year 2027, which ended on October 4, 2026, showing a higher gross margin and a sharp rise in earnings per share. The company, which describes itself as a global provider of stored energy solutions for industrial, infrastructure and defense applications, said its gains came from margin expansion and adjusted earnings growth. Net sales were slightly lower than a year earlier, however, and fell short of the company’s own guidance range.

Much of the earnings growth depends on the IRC Section 45X Manufacturing credit. Excluding that credit, gross margin was 25.2% and diluted EPS rose 61% to $1.22, a figure that gives a clearer view of operating performance.

Sales Mix and the Defense Contribution

Precision Power Solutions delivered more than 20% year-over-year sales growth, supported by Demand for soldier power and munitions. The company said that demand helped offset softer conditions in other areas. Network and Infrastructure Solutions grew 3%, despite an unusually high prior-year comparison, and it was supported by double-digit growth in Data Center applications.

Net sales for the quarter were $949.9 million, a decline of 0.1% from $951.3 million a year earlier and below the company’s guidance range of $955 million to $995 million. For the six months, net sales rose 2.2% to $1,885.5 million, helped by a 1% increase in pricing and a 1% gain in organic volume.

The company’s use of non-GAAP measures makes the margin and EPS picture easier to read, but it also means investors must compare adjusted figures with reported ones. Management will need to demonstrate that the adjusted trend reflects improving operations, not only the effect of tax credits and one-time items.

Margin Expansion and the 45X Credit

Gross margin of 29.9% includes the benefit of the 45X credit. Without it, the margin would have been 25.2%, which shows how much the tax Credit contributes to reported profitability. Investors will therefore pay close attention to the underlying margin trend, since the credit depends on specific production activity and may change over time.

Chief Executive Shawn O’Connell said the company delivered gross margin expansion and adjusted Operating Margin expansion while advancing its strategic priorities. The company also referred to continued pressure in one of its Business areas, indicating that the gains were not uniform across all of its operations.

Material handling pressure, which the company mentioned in its commentary, is an area to watch. If that segment does not recover, group sales growth may remain limited even as defense and data center demand expands.

Earnings Quality and the Outlook Ahead

Diluted EPS of $2.42 represented an increase of 34%, and adjusted EPS for the period rose on a comparable basis. The gap between reported and adjusted figures is a reminder that the company uses non-GAAP measures to show the business without certain items, and readers should consider both sets of numbers when assessing progress.

The main questions for the coming quarters are whether sales can return to growth, whether the defense and data center demand continues, and whether margin gains can be sustained without the same level of tax credit support. Management’s next updates will show how those factors develop.

Final Word

EnerSys improved its gross margin and Earnings Per Share in the second quarter of fiscal 2027, supported by defense demand and data center growth. Net sales were flat and below guidance, and much of the margin gain relies on the 45X credit. The company’s next results will show whether its operating improvements hold up as sales growth resumes.