EnerSys (NYSE:ENS) executives outlined a strategic reset, market opportunities across data centers, telecom infrastructure, material handling and defense, and an active capital allocation plan during a fireside chat at the 38th Annual ROTH Conference. CEO Shawn O’Connell, who said he has been in the role for less than a year, and CFO Andrea Funk discussed how the company is positioning its “stored energy solutions” portfolio amid what O’Connell described as major “super cycles” in energy and defense.
Company overview and strategic focus
O’Connell described EnerSys as a market leader in stored energy solutions with roughly 16 GWh of annual production capacity, emphasizing that the company is not involved in electric vehicles or open commercial-and-industrial battery energy storage. Instead, he said EnerSys’ “technology stack” spans batteries, power electronics, software, and a global service organization made up of EnerSys employees.
- Network and infrastructure, including telecom carriers, internet service providers, data centers, and an industrial utility component (switchgear and control).
- Material handling, including electrification of forklift fleets, warehouse power solutions, and Class 8 truck auxiliary power units.
- Specialty, led by aerospace and defense, where he said EnerSys is the largest supplier of batteries to the U.S. military across a range of applications.
O’Connell said he launched a strategic reset called “EnerGize” aimed at refocusing on the core business, reducing “non-value add” costs, strengthening operating rigor, and executing on growth while putting cash generation “to work on the right things.”
Telecom and network infrastructure: “Green shoots” after a downturn
Discussing communications markets, O’Connell said telecom spending had been depressed as carriers and providers worked through inventory and faced rising interest rates and a “5G monetization issue.” He said the company is now beginning to see “green shoots” as carriers, cable, and broadband providers expand data capability to meet growing demand, including from AI-related use cases.
He pointed to technology transitions such as DOCSIS 4.0 and a broader “network refresh” that he said could be “very lucrative” for EnerSys, particularly because newer systems are more power-hungry and customers are seeking improved efficiency. O’Connell said multiple approaches—macro improvements, fiber and dark fiber, and millimeter wave—are likely to be required, and he argued EnerSys is positioned to participate regardless of which deployment choices dominate because it can provide power systems across these options.
Data centers: lead-acid strength, Thin Plate Pure Lead growth, and lithium trials
O’Connell said EnerSys supports centralized UPS systems in data centers and maintains relationships both with UPS manufacturers—citing Vertiv, Eaton, and Schneider—and directly with hyperscalers. He stated that in the United States, EnerSys holds 55% market share in lead-acid batteries for data centers.
He highlighted EnerSys’ Thin Plate Pure Lead technology, describing it as a way to achieve shorter run-time ratings demanded by hyperscalers (he said some want less than five minutes, and even “less than 15 minutes” has shifted materially). He said standard lead-calcium batteries cannot meet those needs, while Thin Plate Pure Lead can offer “two-minute ratings like lithium.”
O’Connell also said EnerSys has “no business not having a lithium battery” in this market and announced that the company has introduced its first lithium battery offering into customer trials as of the month of the conference, working with a technology partner. He cautioned that hyperscalers require testing and validation, and he framed lithium commercialization in data centers as “probably a fiscal 2028 story,” noting EnerSys’ fiscal year runs from April to March and that validation could take about 12 months.
On order sizes, O’Connell said the company has seen quotations of $40 million to $50 million at a time, while emphasizing that adoption depends on customer validation and deployment cycles. He also noted that not all new data centers are moving to lithium, citing factors such as risk tolerance, local permitting and fire marshal constraints, and potential architectural costs.
He added that higher-voltage DC trends, such as 800-volt systems, are favorable for EnerSys. O’Connell said traditional UPS architectures already rely on a DC battery stage, and that higher voltage would simply require more cells—meaning more battery volume for the company.
Material handling and warehouses: electrification and “power famine”
In motive power, O’Connell said electrification in warehouses still has runway, with electric trucks in the “low 60s%” today. He tied the opportunity to labor scarcity, arguing warehouses want labor focused on moving goods, not managing power systems, and said the market is also moving toward autonomous equipment.
He said EnerSys offers maintenance-free products in both lead and lithium and has already deployed lithium in the space. He also described “power famine” issues in which warehouses seeking to expand are told by utilities they cannot obtain additional power for more charger banks. In response, O’Connell said EnerSys is discussing battery energy storage systems that can help offset demand and peak costs, including approaches that combine forklift batteries with storage systems to better utilize existing assets.
Specialty and defense: rising munitions orders and program consolidation
O’Connell said EnerSys is seeing strong order activity in defense-related areas. He described the company’s munitions battery offerings, including lithium thermal batteries and liquid reserve batteries, and said the government has identified the liquid reserve battery as usable in drone defense. While he said sales have not yet shown the “lift,” O’Connell stated that the order book has quadrupled for munitions batteries.
He also cited strength in soldier power following the Bren-Tronics acquisition and said Bren-Tronics connected EnerSys to Rebel, a maker of hybridized power systems, which EnerSys acquired. O’Connell said Rebel has been selected as the “number one forward base powering system for rechargeable drones.”
O’Connell further said the U.S. government has about 42 programs for soldier and radio batteries that “originate in China,” and is seeking to consolidate options to fewer than 10, with EnerSys being asked to help. He said discussions have occurred through a Department of Energy grant and with the Department of Defense, and he suggested an announcement could come “very soon” regarding progress and a roadmap.
Trucking: aftermarket share amid a freight downturn
Addressing heavy-duty trucking, O’Connell discussed the “great freight recession,” saying fleets overbought trucks after COVID-era demand and have been working through excess capacity for years. He said EnerSys is gaining aftermarket share as fleets maintain older trucks. As an example, he cited a customer he described as the largest private fleet operator in the U.S. with 412,000 tractors, and relayed that the customer believes 50,000 units are beyond end-of-life if orders were placed today. O’Connell said the fleet is beginning to place initial orders and is using expectations for a potential second-half turn as a planning benchmark, though he added EnerSys has not yet seen evidence of a broader upturn.
Capital allocation: internal investment, buybacks, and balance sheet capacity
Funk emphasized EnerSys’ cash generation and said the company has been “a little over 100% free cash flow conversion” over a multi-year period, with or without 45X. She said the company ended its last quarter at 1.2x leverage and targets 2–3x leverage.
Funk said an IRS refund was expected during the month of the conference, and if delayed, it would accrue interest, bringing the amount to “about $120 million.” She outlined capital allocation priorities led by internal investment, noting prior investments in lead-acid plants have reduced near-term capital intensity, and added that EnerSys maintains a dividend that grows with earnings (excluding 45X).
She said the company continues to look for disciplined inorganic opportunities—citing Bren-Tronics as fitting its “sweet spot”—and noted that in the absence of acquisitions, EnerSys has been buying back stock under a $1 billion repurchase program.
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.
