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What changed in EnerSys's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of EnerSys's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+294 added−276 removedSource: 10-K (2025-05-21) vs 10-K (2024-05-22)

Top changes in EnerSys's 2025 10-K

294 paragraphs added · 276 removed · 234 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

51 edited+11 added−9 removed56 unchanged
Biggest changeEnergy Systems also includes highly integrated power solutions and services to broadband, telecom, data center, and renewable and industrial customers, as well as thermally managed cabinets and enclosures for electronic equipment and batteries. • Motive Power - power for electric industrial forklifts used in manufacturing, warehousing and other material handling applications, AGVs, as well as mining equipment, diesel locomotive starting and other rail equipment. • Specialty - premium batteries for starting, lighting and ignition applications in premium automotive and large over-the-road trucks, energy storage solutions for satellites, spacecraft, commercial aircraft, military land vehicles, aircraft, submarines, ships and other tactical vehicles, as well as medical devices and equipment; and • New Ventures - energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.
Biggest changeEnergy Systems also includes highly integrated power solutions and services to broadband, telecom, data center, and industrial customers, as well as thermally managed cabinets and enclosures for electronic equipment and batteries. • Motive Power - power for electric industrial forklifts, AGVs other material handling equipment used in manufacturing, and warehousing operations, as well as equipment used in floor care, mining, rail and airport ground support applications. • Specialty - premium starting, lighting and ignition applications in transportation, energy solutions for satellites, spacecraft, commercial aircraft, military, aircraft, submarines, ships, other tactical vehicles, defense applications and portable power solutions for soldiers in the field, as well as medical devices and equipment. • New Ventures - energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.
We have also acquired our first Lithium-Ion product certification in accordance with ISO 26262 (Product Safety). This strategy enables us to provide consistent quality products and services to meet our customers’ needs. 11 Table of Contents Human Capital Management EnerSys believes that human capital management, including attracting, developing and retaining a high-quality workforce, is critical to our long-term success.
We have also acquired our first Lithium-Ion product certification in accordance with ISO 26262 (Product Safety). 11 Table of Contents This strategy enables us to provide consistent quality products and services to meet our customers’ needs. Human Capital Management EnerSys believes that human capital management, including attracting, developing and retaining a high-quality workforce, is critical to our long-term success.
We released comprehensive Sustainability Reports in both 2022 and 2023, which are aligned with GRI and SASB standards. Included in these reports, we announced key, measurable environmental, social, and governance (“ESG”) goals and objectives aimed at advancing progress in sustainability, reducing our environmental footprint and creating an inclusive and empowering workplace for all employees.
We released comprehensive Sustainability Reports in both 2022 and 2023, which are aligned with GRI and SASB standards. Included in these reports, we announced key, measurable environmental, social, and governance goals and objectives aimed at advancing progress in sustainability, reducing our environmental footprint and creating an inclusive and empowering workplace for all employees.
Our Environmental Policy and practices aim to protect, conserve, and sustain the world’s natural resources, as well as to protect our customers and the communities in which we live and operate. As one example of this, we offer a complete battery recycling program to assist our customers in preserving our environment and comply with recycling and waste disposal regulations.
Our Environmental Policy and practices aim to protect, conserve, and sustain the world’s natural resources, as well as to protect our customers and the communities in which we live and operate. As one example of this, we offer a complete battery recycling program to assist our customers in preserving natural resources and comply with recycling and waste disposal regulations.
We encourage all our employees to engage in ongoing training, professional development and educational advancement programs. Through our established EnerSys Academy, we provide employees worldwide with resources to expand their skills and knowledge on a broad scope of relevant topics, to promote their growth and development.
We encourage all our employees to engage in mentoring, ongoing training, professional development and educational advancement programs. Through our established EnerSys Academy, we provide employees worldwide with resources to expand their skills and knowledge on a broad scope of relevant topics, to promote their growth and development.
Environmental, Social and Governance At EnerSys, we understand that an effective business strategy must also be one that evaluates and addresses environmental and social risk factors as well as opportunities to leverage sustainable operations and ethical behavior as a means of driving business value.
Sustainability At EnerSys, we understand that an effective business strategy must also be one that evaluates and addresses environmental, social governance risk factors as well as opportunities to leverage sustainable operations and ethical behavior as a means of driving business value.
Warranties Warranties for our products vary geographically and by product type and are competitive with other suppliers of these types of products. Generally, our Energy Systems product warranties range from one to twenty years, our Motive Power product warranties range from one to five years and from one to four years for Specialty transportation batteries.
Warranties Warranties for our products vary by application and geographically and by product type and are competitive with other suppliers of these types of products. Generally, our Energy Systems product warranties range from one to twenty years, our Motive Power product warranties range from one to five years and from one to four years for Specialty transportation batteries.
We established a Corporate Giving Committee to assist the Company in its philanthropic endeavors that support the communities in which we live and work. Additionally, we regularly sponsor volunteer events and fundraising campaigns, to encourage our employees to give back to our communities.
We established a Giving Back Committee to assist the Company in its philanthropic endeavors that support the communities in which we live and work. Additionally, we regularly sponsor volunteer events and fundraising campaigns, to encourage our employees to give back to our communities.
Energy Systems We compete principally with East Penn Manufacturing, Exide Technologies (Stryten), Fiamm, SAFT, New Power, C&D Technologies Inc., Vertiv, ABB, Amphenol, Eltek (a Delta Group company), as well as Chinese producers.
Energy Systems We compete principally with East Penn Manufacturing, Exide Technologies (Stryten), Fiamm, SAFT, Hoppecke, New Power, C&D Technologies Inc., Vertiv, ABB, Amphenol, Eltek (a Delta Group company), as well as Chinese producers.
ITEM 1. BUSINESS Overview EnerSys (the “Company,” “we,” or “us”) is a world leader in stored energy solutions for industrial applications. We design, manufacture, and distribute energy systems solutions, and motive power batteries, specialty batteries, battery chargers, power equipment, battery accessories and outdoor equipment enclosures solutions to customers worldwide.
ITEM 1. BUSINESS Overview EnerSys (the “Company,” “we,” or “us”) is a world leader in stored energy solutions for industrial applications. We design, manufacture, and distribute energy systems solutions, and motive power batteries, specialty batteries, battery chargers, power equipment, battery accessories and outdoor equipment enclosure solutions to customers worldwide.
The Company identifies the following as its four operating segments, based on lines of business: • Energy Systems - uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems used in data centers, as well as telecommunications systems, switchgear and electrical control systems used in industrial facilities and electric utilities, large-scale energy storage and energy pipelines.
The Company identifies the following as its four operating segments, based on lines of business: • Energy Systems - uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems, as well as telecommunications systems, switchgear and electrical control systems used in industrial facilities and electric utilities, large-scale energy storage and energy pipelines.
Sustainability, reliability and resilience are at the core of who we are and what we do at EnerSys every day. Our products help tackle some of our world’s most significant challenges, be it addressing the impacts of climate change, decarbonization, efficient and affordable distribution of goods, grid reliability, telecommunications, and even medical safety.
Sustainability, reliability and resilience are at the core of who we are and what we do at EnerSys every day. Our products help tackle some of our world’s most significant challenges, be it efficient and affordable distribution of goods, grid reliability, telecommunications, medical safety or addressing the impacts of climate change and decarbonization,.
Relationships between EnerSys and our suppliers must be based on mutual respect and integrity. Our purchasing and quality teams strive to maintain the highest standards and principles of business ethics, courtesy and competence in dealings and transactions with suppliers. Our code of supplier conduct reflects our commitment to the values of honesty, integrity, respect, and responsibility.
Relationships between EnerSys and our suppliers must be based on mutual respect and integrity. Our strategic sourcing, purchasing and quality teams strive to maintain the highest standards and principles of business ethics, courtesy and competence in dealings and transactions with suppliers. Our code of supplier conduct reflects our commitment to the values of honesty, integrity, respect, and responsibility.
Of these employees, approximately 28% were covered by collective bargaining agreements. Employees covered by collective bargaining agreements that expire in the next twelve months were approximately 7% of the total workforce. The average term of these agreements is 2 years, with the longest term being 4 years. We consider our employee relations to be good.
Of these employees, approximately 28% were covered by collective bargaining agreements. Employees covered by collective bargaining agreements that expire in the next twelve months were approximately 8% of the total workforce. The average term of these agreements is 2 years, with the longest term being 4 years. We consider our employee relations to be good.
Training, Career Development, and Performance Management: We are committed to developing a qualified and motivated workforce to power our continued innovation and growth. We provide opportunities for employees to gain the skills and knowledge they need to advance in the Company and fulfill their personal career goals.
People Development and Performance Management: We are committed to developing a qualified and motivated workforce to power our continued innovation and growth. We provide opportunities for employees to gain the skills and knowledge they need to advance in the Company and fulfill their personal career goals.
Funk, age 54, Executive Vice President and Chief Financial Officer . Ms. Funk joined EnerSys in December 2018 and served as Vice President Finance, Americas. She was promoted to Executive Vice President & Chief Fin ancial Officer effective April 1, 2022. Ms.
Funk, age 55, Executive Vice President and Chief Financial Officer . Ms. Funk joined EnerSys in December 2018 and served as Vice President Finance, Americas. She was promoted to Executive Vice President & Chief Fin ancial Officer effective April 1, 2022. Ms.
From time to time, we apply for patents on new inventions and designs, but we believe that the growth of our business will depend primarily upon the quality of our products and our relationships with our customers, rather than the extent of our patent protection. 8 Table of Contents We believe we are the leader in TPPL technology.
From time to time, we apply for patents on new inventions and designs, but we believe that the growth of our business will depend primarily upon the quality of our products and our relationships with our customers, rather than the extent of our patent protection. We believe we are the leader in TPPL technology.
Minimizing our environmental footprint and providing a safe and inclusive workplace for our employees are top priorities for EnerSys. Being an excellent neighbor and good corporate citizen in the communities where we work and live is extremely important as well. Our products facilitate positive environmental, social and economic impacts around the world.
Optimizing our natural resource management, minimizing our environmental footprint and providing a safe and inclusive workplace for our employees are top priorities for EnerSys. Being an excellent neighbor and good corporate citizen in the communities where we work and live is extremely important as well. Our products facilitate positive environmental, social and economic impacts around the world.
We allocate our resources to the following key areas: • the design and development of new products; • optimizing and expanding our existing product offering; • waste and scrap reduction; • production efficiency and utilization; • capacity expansion without additional facilities; and • quality attribute maximization. Employees At March 31, 2024, we had approximately 10,797 employees.
We allocate our resources to the following key areas: • the design and development of new products; • optimizing and expanding our existing product offering; • waste and scrap reduction; • production efficiency and utilization; • capacity expansion without additional facilities; and • quality attribute maximization. Employees At March 31, 2025, we had approximately 10,858 employees.
In addition, private parties, including current or former employees, can bring personal injury or other claims against us due to the presence of, or their exposure to, hazardous substances used, stored, transported or disposed of by us or contained in our products. 10 Table of Contents Environmental and safety certifications Eighteen of our facilities in the Americas, EMEA and Asia are certified to ISO 14001 standards.
In addition, private parties, including current or former employees, can bring personal injury or other claims against us due to the presence of, or their exposure to, hazardous substances used, stored, transported or disposed of by us or contained in our products. 10 Table of Contents Environmental and safety certifications Twenty-two of our facilities in the Americas, EMEA and APAC are certified to ISO 14001.
Energy Systems, which combine power conversion, power distribution, energy storage, and thermally managed enclosures, are used in the telecommunication, broadband, data center, and utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions. Motive Power batteries and chargers are utilized in electric forklift trucks, automated guided vehicles (AGVs), and other industrial electric powered vehicles.
Energy Systems, which combine power conversion, power distribution, energy storage, and enclosures, are used in the telecommunication, broadband, data center, and utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions. Motive Power batteries and chargers are utilized in electric forklifts, automated guided vehicles ("AGVs"), and other industrial electric powered vehicles.
ISO 14001 is a globally recognized, voluntary program that focuses on the implementation, maintenance and continual improvement of an environmental management system and the improvement of environmental performance. Eight facilities in EMEA and Asia are certified to ISO 45001 standards. The ISO 45001 is a globally recognized occupational health and safety management systems standard.
ISO 14001 is a globally recognized, voluntary program that focuses on the implementation, maintenance and continual improvement of an environmental management system and the improvement of environmental performance. Thirteen facilities in EMEA and APAC are certified to ISO 45001. The ISO 45001 is a globally recognized occupational health and safety management systems standard.
The four quarters in fiscal 2023 ended on July 3, 2022, October 2, 2022, January 1, 2023, and March 31, 2023, respectively. History EnerSys and its predecessor companies have been manufacturers of industrial batteries for over 125 years.
The four quarters in fiscal 2024 ended on July 2, 2023, October 1, 2023, December 31, 2023, and March 31, 2024, respectively. History EnerSys and its predecessor companies have been manufacturers of industrial batteries for over 125 years.
Specialty batteries are used in aerospace and defense applications, large over the road trucks, premium automotive, and medical products. New Ventures provides energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.
Specialty batteries are used in aerospace and defense applications, large over-the-road trucks, premium automotive, portable power solutions for soldiers in the field, medical and security systems applications. New Ventures provides energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.
See Note 23 to the Consolidated Financial Statements for information on segment reporting. Fiscal Year Reporting In this Annual Report on Form 10-K, when we refer to our fiscal years, we state “fiscal” and the year, as in “fiscal 2024”, which refers to our fiscal year ended March 31, 2024.
See Note 24 to the Consolidated Financial Statements for information on segment reporting. Fiscal Year Reporting In this Annual Report on Form 10-K, when we refer to our fiscal years, we state “fiscal” and the year, as in “fiscal 2025”, which refers to our fiscal year ended March 31, 2025.
We are committed to fostering a culture of innovation, collaboration and continuous learning, driving sustainable growth and long-term value creation for our shareholders, employees and stakeholders alike. We consider our talent management lifecycle and creating a positive employee experience key to a highly stable and engaged workforce and a critical element to meet strategic business goals.
We are committed to fostering a culture of innovation, collaboration and continuous learning, driving sustainable growth and long-term value creation for our shareholders, employees and stakeholders alike. Creating a positive employee experience throughout the talent lifecycle is key to a highly stable and engaged workforce and a critical element in meeting strategic business goals.
We did not experience any significant labor unrest or disruption of production during fiscal 2024. Information about Our Executive Officers As of May 22, 2024, our executive officers are: David M. Shaffer, age 59, President and Chief Executive Officer . Mr.
We did not experience any significant labor unrest or disruption of production during fiscal 2025. Information about Our Executive Officers As of May 21, 2025, our executive officers are: David M. Shaffer, age 60, President and Chief Executive Officer . Mr.
Individuals are evaluated based on merit, without concern for race, color, religion, national origin, citizenship, marital status, gender (including pregnancy), gender identity, gender expression, sexual orientation, age, disability, veteran status, or other characteristics protected by law. We are committed to providing equal and equitable opportunities to every member of our workforce.
Individuals are evaluated based on merit, without concern for race, color, religion, national origin, citizenship, marital status, gender (including pregnancy), gender identity, gender expression, sexual orientation, age, disability, veteran status, or other characteristics protected by law. We are committed to providing equal opportunities to every member of our workforce. We cultivate our inclusive culture with robust business resource groups.
Certain of our competitors produce energy storage products utilizing technologies or chemistries different from our own. We compete primarily on the basis of reputation, product quality, reliability of service, delivery lead time and price. We believe that our products and services are competitively priced.
Our competitors range from development stage companies to large domestic and international corporations. Certain of our competitors produce energy storage products utilizing technologies or chemistries different from our own. We compete primarily on the basis of reputation, product quality, reliability of service, delivery lead time and price. We believe that our products and services are competitively priced.
To that end, we have been integrating the fundamental values of sustainability into our everyday operations and future business strategies. Our Sustainability Team coordinates environmental, social and governance our efforts with respect to climate change management, product sustainability, operations, and supply chain management.
To that end, we continue to integrate the fundamental values of sustainability into our everyday operations and future business strategies. Our Sustainability Team coordinates our environmental, social and governance efforts with respect to climate change management, product sustainability, operations, and supply chain management and corresponding sustainability-specific disclosures.
The Company reports interim financial information for 13-week periods, except for the first quarter, which always begins on April 1, and the fourth quarter, which always ends on March 31. The four quarters in fiscal 2024 ended on July 2, 2023, October 1, 2023, December 31, 2023, and March 31, 2024, respectively.
The Company reports interim financial information for 13-week periods, except for the first quarter, which always begins on April 1, and the fourth quarter, which always ends on March 31. The four quarters in fiscal 2025 ended on June 30, 2024, September 29, 2024, December 29, 2024, and March 31, 2025, respectively.
We believe that a significant capital investment would be required by any party desiring to produce products using TPPL technology for our markets. We own or possess exclusive and non-exclusive licenses and other rights to use a number of trademarks in various jurisdictions. We have obtained registrations for many of these trademarks in the United States and other jurisdictions.
We believe that a significant capital investment would be required by any party desiring to produce products using TPPL technology for our markets. 8 Table of Contents We own or possess exclusive and non-exclusive licenses and other rights to use a number of trademarks in various jurisdictions.
We expect our suppliers will share and embrace our values, as well as our commitment to regulatory compliance. We have an ESG steering committee, which includes members of senior management and funded additional staffing to further support the ongoing development of our sustainability program.
We expect our suppliers will share and embrace our values, as well as our commitment to regulatory compliance. We have a sustainability steering committee, which includes members of senior management and maintain a dedicated team to further support the ongoing development of our sustainability program.
O’Connell received his Master of Business Administration degree in International Business from the University of Redlands, CA and his Bachelor of Arts degree in English Literature from the California State University, San Bernardino. Mr. O’Connell is a veteran of the U.S.
O’Connell joined EnerSys in 2011, serving in various sales and marketing capacities in several areas of our business. Mr. O’Connell received his Master of Business Administration degree in International Business from the University of Redlands, CA and his Bachelor of Arts degree in English Literature from the California State University, San Bernardino. Mr. O’Connell is a veteran of the U.S.
We align our executives’ and 12 Table of Contents eligible employees’ annual bonus opportunity and long-term equity compensation with our stockholders’ interests by linking realizable pay with company financial performance. In addition, we perform annual pay equity studies to evaluate our global pay practices across the organization.
We align our executives’ and 12 Table of Contents eligible employees’ annual bonus opportunity and long-term equity compensation with our stockholders’ interests by linking realizable pay with company financial performance.
Our Board of Directors, through the Compensation Committee and the Nominating and Corporate Governance Committee, retains oversight of our human capital management process, including demographics, talent development, employee retention, material aspects of employee compensation, as well as diversity, equity and inclusion, as well as talent recruitment, development and retention.
Our Board of Directors, through the Compensation Committee and the Nominating and Corporate Governance Committee, retains oversight of our human capital management process, including talent development, employee retention, material aspects of employee compensation, as well as our People Index as an indicator of cultural health.
From April 2019 through July 2020, he served as our President, Motive Power, our Vice President – Reserve Power Sales and Service for the Americas from February 2017, and Vice President, EnerSys Advanced Systems from December 2015 to January 2017. Mr. O’Connell joined EnerSys in 2011, serving in various sales and marketing capacities in several areas of our business. Mr.
From April 2019 through July 2020, he served as our President, Motive Power, our Vice President – Reserve Power Sales and Service for the Americas from 9 Table of Contents February 2017, and Vice President, EnerSys Advanced Systems from December 2015 to January 2017. Mr.
Uplinger , age 52, President Motive Power Global. Mr. Uplinger has served as our President, Motive Power Global since November 2023. Prior to that, he served as Vice President, Motive Power, Americas since November 2017, General Manager of Motive Power Specialty Markets since April 2013, and District Manager in the Mid-Atlantic Region since April 2002. Mr.
Prior to that, he served as Vice President, Motive Power, Americas since November 2017, General Manager of Motive Power Specialty Markets since April 2013, and District Manager in the Mid-Atlantic Region since April 2002. Mr. Uplinger began his career with EnerSys in 1999 and has held various roles in sales and marketing throughout the Motive Power business. Mr.
O’Connell, age 51, President, Energy Systems Global. Since November 2023, Mr. O’Connell serves as our President, Energy Systems Global. Prior thereto, Mr. O’Connell served as President, Motive Power Global since July 2020.
O’Connell, age 52, President and Chief Operating Officer. Since November 2024 Mr. O'Connell has served as our Chief Operating Officer . From November 2023 to November 2024, Mr. O’Connell served as our President, Energy Systems Global. Prior thereto, Mr. O’Connell served as President, Motive Power Global since July 2020.
Because lead is traded on the world’s commodity markets and its price 7 Table of Contents fluctuates daily, we periodically enter into hedging arrangements for a portion of our projected requirements to reduce the volatility of our costs.
Because lead is traded on the world’s commodity markets and its price fluctuates daily, we periodically enter into hedging arrangements for a portion of our projected requirements to reduce the volatility of our costs. 7 Table of Contents Competition The industrial energy storage market is highly competitive both among competitors who manufacture and sell industrial energy storage solutions and batteries, energy management solutions, dynamic fast chargers for EVs, and among customers who purchase these solutions.
Our various trademark registrations currently have durations of approximately 10 to 20 years, varying by mark and jurisdiction of registration and may be renewable. We endeavor to keep all of our material registrations current. We believe that many such rights and licenses are important to our business by helping to develop strong brand-name recognition in the marketplace.
We have obtained registrations for many of these trademarks in the United States and other jurisdictions. Our various trademark registrations currently have durations of approximately 10 to 20 years, varying by mark and jurisdiction of registration and may be renewable. We endeavor to keep all of our material registrations current.
We have an executive DEI steering committee, are committed to the CEO Action for Diversity and Inclusion and cultivate our inclusive culture with robust business resource groups. Philanthropy and Volunteerism : Through our Charitable Giving Program, EnerSys is strongly committed to being an outstanding corporate citizen on a global basis in all the countries and communities where we do business.
Giving Back : Through our Giving Back program, EnerSys is strongly committed to being an outstanding corporate citizen on a global basis in all the countries and communities where we do business.
We believe in the principles of this standard and reinforce the same by requiring mandatory certification to the ISO 9001 standard for all manufacturing locations globally. We also focus on plant certifications that serve specific industries such as AS9100 (Aerospace), ISO13485:2016 (Medical Devices), ISO/TS 22163:2017 (Rail), IATF 16949:2016 (Automotive).
We also focus on plant certifications that serve specific industries such as AS9100 (Aerospace), ISO 13485:2016 (Medical Devices), ISO/TS 22163:2017 (Rail), IATF 16949:2016 (Automotive) and ISO 19443 (Nuclear).
Army’s 82nd Airborne Division (Paratroopers) where he served as a Signals Intelligence Analyst, Spanish Linguist, and held a Top-Secret security clearance. Andrew M. Zogby, age 64, Former President, Energy Systems Global. Mr. Zogby served as President, Energy Systems Global from July 2020 through November 2023. Prior thereto, from April 2019, he served as President, Energy Systems–Americas.
Army’s 82nd Airborne Division (Paratroopers) where he served as a Signals Intelligence Analyst, Spanish Linguist, and held a Top-Secret security clearance. Chad C. Uplinger , age 53, President Motive Power Global. Mr. Uplinger has served as our President, Motive Power Global since November 2023.
Prior, she served in positions of increasing responsibility at Carpenter Technology, Arrow International, Rhone-Poulenc Rorer, Bell Atlantic Corporation and Ernst & Young. Since July 2017, Ms.
Prior, she served in positions of increasing responsibility at Carpenter Technology, Arrow International, Rhone-Poulenc Rorer, Bell Atlantic Corporation and Ernst & Young. Since July 2017, Ms. Funk has served on the Board of Directors of Crown Holdings Inc., whose shares are traded on the New York Stock Exchange, and is a member of their Audit and Compensation Committees. Shawn M.
We strive to operate our facilities in a manner that protects the environment and the health and safety of our employees, customers and communities. We have established required sustainability training for identified employees and incorporate climate and other sustainability considerations into our formal decision-making processes.
We have established required sustainability training for identified employees and incorporate climate and other sustainability considerations into our formal decision-making processes. We have implemented company-wide environmental, health and safety policies and practices, which includes monitoring, training and communication of these policies.
We have set net-neutral goals for Scopes 1 (2040) and 2 (2050) and have marked consistent decreases in both overall carbon emissions as well as carbon intensity. For FY24 sustainability metrics were incorporated into the annual goals of our CEO and certain elements of employee compensation.
We have set net-neutral goals for Scopes 1 (2040) and 2 (2050) and have marked consistent decreases in both overall carbon emissions as well as carbon intensity. In October, 2024 we published our Climate Action Plan Roadmap, detailing our plans to achieve our Scope 1 and 2 related climate goals.
We have implemented company-wide environmental, health and safety policies and practices, which includes monitoring, training and communication of these policies. Quality Systems We utilize a global strategy for quality management systems, policies and procedures, the basis of which is ISO 9001:2015, a worldwide recognized quality standard.
Quality Systems We utilize a global strategy for quality management systems, policies and procedures, the basis of which is ISO 9001:2015, a worldwide recognized quality standard. We believe in the principles of this standard and reinforce the same by requiring mandatory certification to the ISO 9001 standard for all manufacturing locations globally.
Uplinger began his career with EnerSys in 1999 and has held various roles in sales and marketing throughout the Motive Power business. Mr. Uplinger earned a Bachelor of Science in Marketing Management from PennWest California. Environmental Matters and Climate Change Impacts We are committed to the protection of the environment and train our employees to perform their duties accordingly.
Mr. Fisher received his Master of Business Administration degree in from Emory University, and his Bachelor of Science degree in Materials Science and Engineering from Lehigh University. Environmental Matters and Climate Change Impacts We are committed to the preservation of natural resources, protection of the environment, and training our employees to perform their duties accordingly.
Bren-Tronics, Inc is a leading manufacturer of highly reliable portable power solutions, including small and large lithium batteries and charging solutions, for military and defense applications. The acquisition is expected to close by the end of the second quarter of fiscal 2025, subject to the satisfaction of customary closing conditions.
Bren-Tronics Defense LLC, headquartered in Commack, New York, is a leading manufacturer of highly reliable portable power solutions, including small and large format lithium batteries and charging solutions, for military and defense applications. The financial results contributed from this business are reported within our Specialty line of business.
Between fiscal years 2003 through 2024, we made thirty-five acquisitions around the globe. There were no significant acquisitions in fiscal 2024, 2023, and 2022. On May 2, 2024, EnerSys announced that the Company has entered into a definitive agreement to acquire Bren-Tronics, Inc. for approximately $208 million, subject to adjustments.
Between fiscal years 2003 through 2025, we made thirty-six acquisitions around the globe. There were no significant acquisitions in fiscal 2023 or 2024. On July 26, 2024, the Company completed the acquisition of all of the equity of Bren-Tronics Defense LLC for $206.4 million in cash consideration, as set forth in the stock purchase agreement.
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Competition The industrial energy storage market is highly competitive both among competitors who manufacture and sell industrial energy storage solutions and batteries, energy management solutions, dynamic fast chargers for EVs, and among customers who purchase these solutions. Our competitors range from development stage companies to large domestic and international corporations.
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We believe that many such rights and licenses are important to our business by helping to develop strong brand-name recognition in the marketplace.
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Funk has served on the Board of Directors of Crown Holdings Inc., whose shares are traded on the New York Stock Exchange, and is a member of their Audit and Compensation Committees. 9 Table of Contents Joern Tinnemeyer , age 51, Senior Vice President and Chief Technology Officer. Mr.
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Uplinger earned a Bachelor of Science in Marketing Management from PennWest California. Mark E. Matthews, age 51, President, Specialty Global and Acting Chief Technology Officer. Mr. Matthews has served as our President, Specialty Global since April 1, 2024.
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Tinnemeyer has served as Senior Vice President and Chief Technology Officer since October 2017. He joined EnerSys in August 2016 as its Vice President and Chief Technology Officer. Mr. Tinnemeyer is responsible for global engineering, global quality, and technology development. His primary focus of expertise includes energy storage systems, system design optimization, safety topologies and control theory.
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Prior thereto, he served as our Senior Vice President Specialty Global since July 2020 and as Vice President, EnerSys Advance Systems since January 2017, and Senior Director of Sales and Marketing from September 2016 to January 2017. Mr. Matthews has over 25 years of experience in energy storage and battery technology.
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He has worked on some of the most advanced lithium battery packs for major automotive OEMs. He currently also serves as Chairman of NaatBatt, North America’s foremost organization to foster advanced energy storage systems. Mr. Tinnemeyer studied applied mathematics and electrical engineering at the University of Toronto and holds a MSc in Astronautics and Space Engineering. Shawn M.
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He started his career as a lithium battery engineer and has worked various engineering, sales, and operational leadership roles within the battery industry before joining EnerSys in 2016. Mr. Matthews earned a Bachelor of Science Degree in Engineering Management with an emphasis in chemical engineering, from Missouri University of Science and Technology. Keith D.
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He joined EnerSys upon completion of the acquisition of Alpha Technologies in December 2018. Mr. Zogby served as President of Alpha Technologies since 2008 and brings over 30 years of experience in global broadband, telecommunications and renewable energy industries. He has held corporate leadership positions with several leading technology firms. Mr.
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Fisher, age 50, President , Energy Systems Global. Mr. Fisher has served as our President, Energy Systems Global since January 2025.
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Zogby received his Bachelor of Science degree in Industrial and Labor Relations from LeMoyne College, Syracuse, New York, and his Master of Business Administration degree from Duke University’s Fuqua School of Business. He is active in the US Chamber of Commerce, and serves on the C_TEC, Chamber Technology Engagement Center Committee. Chad C.
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Prior to joining EnerSys, he had a 27-year distinguished career at Honeywell, where he served in various roles throughout the organization, most recently as President of Honeywell Intelligrated from February 2022 through December 2024, President Honeywell Building Solutions from November 2021 through January 2022, Vice President & General Manager of Honeywell Building Technologies Global Services from May 2019 through October 2021, Vice President & General Manager of Honeywell Aerospace Mechanical Components Business from May 2014 through April 2019, and Vice President of Honeywell Aerospace Engine Component Customers from February 2011 through April 2014.
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We are aware of the proposed rules on climate disclosure released by the SEC in March of last year. While we are following the progression of the rule, we are pleased to note that we are preparing to meet many of its conditions in advance.
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We are aware of the various regulatory developments on climate (and other sustianbaility-related) disclosures from multiple jurisdictions, including the European Union’s Corporate Sustainability Reporting Directive. While we are following the progression of these rules, we are pleased to note that we are well prepared to meet their conditions at or before EnerSys would be required to do so.
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Above all else, we are dedicated to the safety and well-being of our employees. Diversity, Equity and Inclusion (DEI) Strategy: We believe in attracting and retaining top talent from diverse backgrounds. Our recruitment process ensures that we not only hire individuals that possess the requisite capabilities and skills but also align with our Company values.
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For fiscal year 2025, sustainability metrics were incorporated into the annual goals of our CEO and certain elements of employee compensation. We strive to operate our facilities in a manner that protects the environment and the health and safety of our employees, customers and communities.
Removed
This includes active promotion and activity in diversity and inclusion initiatives, striving to create a work environment where every employee feels valued, respected and empowered to contribute their unique perspectives. We do not tolerate discrimination or harassment of any nature.
Added
Above all else, we are dedicated to the safety and well-being of our employees. Everywhere for Everyone: We believe that success, in part, is built on a variety of perspectives and we are committed to fostering a workplace that values individual talent, supports professional growth and ensures ample opportunities for all employees.
Added
In both our recruiting and performance processes we measure talent on their merit in terms of knowledge, skills and experience and how well they reflect our company values. We do not tolerate discrimination or harassment of any nature.
Added
In addition, we perform annual pay equity studies to evaluate our global pay practices across the organization and routinely audit pay practices globally to ensure compliance with local, state, municipality, country and/or federal law.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+11 added−7 removed187 unchanged
Biggest changeWe rely on a combination of copyright, trademark, patent and trade secret laws, non-disclosure agreements and other confidentiality procedures and contractual provisions to establish, protect and maintain our proprietary intellectual property and technology and other confidential information. Certain of these technologies, especially thin plate pure lead (“TPPL”) technology, are important to our business and are not protected by patents.
Biggest changeIf we are not able to adequately protect our proprietary intellectual property and technology, we may lose any technological advantages and our business, financial position and results of operations may be materially adversely affected. 16 Table of Contents We rely on a combination of copyright, trademark, patent and trade secret laws, non-disclosure agreements and other confidentiality procedures and contractual provisions to establish, protect and maintain our proprietary intellectual property and technology and other confidential information.
For more information, see “ The Inflation Reduction Act of 2022 ("IRA") contains production tax credits for certain battery cells and battery modules.
For more information, see “ The Inflation Reduction Act of 2022 ("IRA") contains production tax credits for certain battery cells and battery modules.
Acquisitions involve numerous risks, including: • inability to overcome significant competition for acquisition targets in the stored energy industry; • inability to identify suitable acquisition candidates or negotiate attractive terms; • difficulty obtaining the financing necessary to complete transactions we pursue, as our credit facilities restrict the amount of additional indebtedness that we may incur to finance acquisitions and place other restrictions on our ability to make acquisitions (and exceeding any of these restrictions would require the consent of our lenders); • failure to identify all material issues through a customary due diligence investigation, and that material issues will arise later; • difficulties in the assimilation of the operations, systems, controls, technologies, personnel, services and products of the acquired business; • potential loss of key employees, customers, suppliers and distributors of the acquired business; • diversion of our management’s attention from other business concerns; • incurrence of additional debt or adverse tax and accounting consequences in connection with any acquisitions; • failure to successfully integrate the acquired businesses in a timely manner, or at all; • incurrence of significant unanticipated expenses associated with integration activities; and • anticipated benefits of an acquisition not being realized fully or at all, or taking longer to realize than we expect.
Acquisitions involve numerous risks, including: • inability to overcome significant competition for acquisition targets in the stored energy industry; • inability to identify suitable acquisition candidates or negotiate attractive terms; • difficulty obtaining the financing necessary to complete transactions we pursue, as our credit facilities restrict the amount of additional indebtedness that we may incur to finance acquisitions and place other restrictions on our ability to make acquisitions (and exceeding any of these restrictions would require the consent of our lenders); 17 Table of Contents • failure to identify all material issues through a customary due diligence investigation, and that material issues will arise later; • difficulties in the assimilation of the operations, systems, controls, technologies, personnel, services and products of the acquired business; • potential loss of key employees, customers, suppliers and distributors of the acquired business; • diversion of our management’s attention from other business concerns; • incurrence of additional debt or adverse tax and accounting consequences in connection with any acquisitions; • failure to successfully integrate the acquired businesses in a timely manner, or at all; • incurrence of significant unanticipated expenses associated with integration activities; and • anticipated benefits of an acquisition not being realized fully or at all, or taking longer to realize than we expect.
Operating in different regions and countries exposes us to a number of risks, including: • multiple and potentially conflicting laws, regulations and policies that are subject to change; • changes in international treaties or trade unions, which may make our products or our customers' products more costly to export or import; • imposition of currency restrictions, restrictions on repatriation of earnings or other restraints imposition of burdensome import duties, tariffs or quotas, which may make our products more costly to export or import; • changes in trade agreements; • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the FCPA; • compliance with data protection regulations; • imposition of new or additional trade and economic sanctions laws imposed by the U.S. or foreign governments; • war or terrorist acts; and 20 Table of Contents • political and economic instability or civil unrest that may severely disrupt economic activity in affected countries.
Operating in different regions and countries exposes us to a number of risks, including: • multiple and potentially conflicting laws, regulations and policies that are subject to change; • changes in international treaties or trade unions, which may make our products or our customers' products more costly to export or import; • imposition of currency restrictions, restrictions on repatriation of earnings or other restraints imposition of burdensome import duties, tariffs or quotas, which may make our products more costly to export or import; • changes in trade agreements; • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the FCPA; • compliance with data protection regulations; • imposition of new or additional trade and economic sanctions laws imposed by the U.S. or foreign governments; • war or terrorist acts; and • political and economic instability or civil unrest that may severely disrupt economic activity in affected countries.
We invoice our foreign sales and service transactions in local and foreign currencies and translate net sales using actual exchange rates during the period. We translate our non-U.S. assets and liabilities into U.S. dollars using current exchange rates as of the balance sheet dates. Approximately 40% of net sales were generated outside of the United States in fiscal 2024.
We invoice our foreign sales and service transactions in local and foreign currencies and translate net sales using actual exchange rates during the period. We translate our non-U.S. assets and liabilities into U.S. dollars using current exchange rates as of the balance sheet dates. Approximately 40% of net sales were generated outside of the United States in fiscal 2025.
This program authorizes the repurchase of up to $150 million of our common stock, of which authority. The other program authorizes the repurchase of up to such number of shares as shall equal the dilutive effects of any equity-based award granted during such fiscal year and the number of shares exercised through stock option awards during such fiscal year.
This program authorizes the repurchase of up to $200 million of our common stock, of which authority. The other program authorizes the repurchase of up to such number of shares as shall equal the dilutive effects of any equity-based award granted during such fiscal year and the number of shares exercised through stock option awards during such fiscal year.
If our internal controls are found to be ineffective, our results of operations or our stock price may be adversely affected. Our most recent evaluation resulted in our conclusion that, as of March 31, 2024, our internal control over financial reporting was effective.
If our internal controls are found to be ineffective, our results of operations or our stock price may be adversely affected. Our most recent evaluation resulted in our conclusion that, as of March 31, 2025, our internal control over financial reporting was effective.
In addition, many countries in Europe, as well as a number of other 22 Table of Contents countries and organizations, have recently proposed or recommended changes to existing tax laws or have enacted new laws that could significantly increase our tax obligations in many countries where we do business or require us to change the manner in which we operate our business.
In addition, many countries in Europe, as well as a number of other countries and organizations, have recently proposed or recommended changes to existing tax laws or have enacted new laws that could significantly increase our tax obligations in many countries where we do business or require us to change the manner in which we operate our business.
As a global business, we are subject to extensive environmental liability on our operations due to current environmental laws and regulations in the jurisdictions we operate. If convicted or found liable for violation of a law or regulation, we could be subject to significant fines, penalties, repayments or other damages.
As a global business, we are subject to extensive environmental liability on our operations due to current environmental laws and regulations in the jurisdictions we operate. 23 Table of Contents If convicted or found liable for violation of a law or regulation, we could be subject to significant fines, penalties, repayments or other damages.
If we are unable to commence, or, when opened, otherwise do not maintain and grow, our respective operations, or if we are unable to do so cost-effectively or hire and retain highly-skilled personnel there, our ability to manufacture our products profitably would be limited, which may harm our business and operating results.
If we are unable to commence, or, when opened, otherwise do not maintain and grow, our respective operations, if we cannot execute our strategy, or if we are unable to do so cost-effectively or hire and retain highly-skilled personnel there, our ability to manufacture our products profitably would be limited, which may harm our business and operating results.
Cost increases, supply disruptions or shortages of any of our battery components, such as electronic and mechanical parts, or the raw materials used in the production of such parts could adversely affect our business. 14 Table of Contents From time to time, we may experience increases in the cost or a sustained interruption in the supply or shortage of our components.
Cost increases, supply disruptions or shortages of any of our battery components, such as electronic and mechanical parts, or the raw materials used in the production of such parts could adversely affect our business. From time to time, we may experience increases in the cost or a sustained interruption in the supply or shortage of our components.
We believe this law will bolster and extend future demand for our products in the United States. However, we note that implementing regulations for this law are still in process, which creates uncertainty about the extent of its impact on us and our industry.
We believe this law will bolster and extend future demand for our products in the United States. However, 25 Table of Contents we note that implementing regulations for this law are still in process, which creates uncertainty about the extent of its impact on us and our industry.
The taxing authorities of the jurisdictions in which we operate may challenge our tax positions and methodologies for valuing developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and adversely impact our business, financial position and results of operations.
The taxing authorities of the jurisdictions in which we operate may challenge our tax positions and 22 Table of Contents methodologies for valuing developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and adversely impact our business, financial position and results of operations.
Moreover, Federal Reserve Bank of the United States policy, including with 19 Table of Contents respect to rising interest rates and the decision to end its quantitative easing policy, may also result in market volatility or a return to unfavorable economic conditions.
Moreover, Federal Reserve Bank of the United States policy, including with respect to rising interest rates and the decision to end its quantitative easing policy, may also result in market volatility or a return to unfavorable economic conditions.
We cannot assure you that we will be able to compete effectively with our competitors located in 16 Table of Contents those territories, whether by establishing or expanding our manufacturing operations in those territories or acquiring existing manufacturers in those territories. Quality problems with our products could harm our reputation and erode our competitive position.
We cannot assure you that we will be able to compete effectively with our competitors located in those territories, whether by establishing or expanding our manufacturing operations in those territories or acquiring existing manufacturers in those territories. Quality problems with our products could harm our reputation and erode our competitive position.
U.S. legislation included disclosure requirements regarding the use of conflict minerals mined from the Democratic Republic of Congo and adjoining countries and 24 Table of Contents procedures regarding a manufacturer’s efforts to prevent the sourcing of such conflict minerals.
U.S. legislation included disclosure requirements regarding the use of conflict minerals mined from the Democratic Republic of Congo and adjoining countries and procedures regarding a manufacturer’s efforts to prevent the sourcing of such conflict minerals.
Our ongoing compliance with environmental, health and safety laws, regulations and permits could require us to incur significant expenses, limit our ability to modify or expand our facilities or continue production and require us to 23 Table of Contents install additional pollution control equipment and make other capital improvements.
Our ongoing compliance with environmental, health and safety laws, regulations and permits could require us to incur significant expenses, limit our ability to modify or expand our facilities or continue production and require us to install additional pollution control equipment and make other capital improvements.
As of March 31, 2024, approximately $98.9 million remains available under the two programs. Although our Board of Directors has authorized these share repurchase programs, the programs do not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.
As of March 31, 2025, approximately $178.9 million remains available under the two programs. Although our Board of Directors has authorized these share repurchase programs, the programs do not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.
Certain of our customer relationships outside of the U.S. are with governmental entities and are therefore subject to such anti-bribery laws. Our policies mandate compliance with these anti-bribery laws.
Certain of our customer relationships outside of the U.S. are with governmental entities and are therefore subject to such anti-bribery laws. Our policies mandate compliance with these anti- 24 Table of Contents bribery laws.
Additionally, the start-up of operations after such project has been completed is also subject to risk. In addition, in order to complete the construction of the proposed gigafactory, we are relying upon, among other things, short-term and long-term incentive packages through South Carolina and Greenville County, federal funding and benefits under Section 45X of the Inflation Reduction Act.
Additionally, the start-up of operations after such project has been completed is also subject to risk. In addition, in order to complete the construction of the proposed gigafactory, we are relying upon, among other things, short-term and long-term incentive packages through South Carolina and Greenville County, federal funding and benefits under Section 45X of the Internal Revenue Code.
Our software and related services are highly technical and may contain undetected software bugs, errors or other vulnerabilities, which could manifest in ways that could adversely affect our reputation and our business. The software and related services that we offer are highly technical and complex.
Our software and related services are highly technical and may contain undetected software bugs, errors or other vulnerabilities, which could manifest in ways that could adversely affect our reputation and our business. 18 Table of Contents The software and related services that we offer are highly technical and complex.
Furthermore, Brexit could cause disruptions to, and create uncertainty surrounding our business, including affecting our relationships with our existing and future customers, suppliers and associates, which could have an adverse effect on our business, financial results and operations.
Furthermore, Brexit could cause disruptions to, and create uncertainty surrounding our business, including affecting our relationships with our existing and future customers, suppliers and associates, which could have an adverse effect on our 20 Table of Contents business, financial results and operations.
These risks include, but are not limited to: • supply shortages caused by the inability or unwillingness of our suppliers and their competitors to build or operate component production facilities to supply the numbers of battery components required to support the rapid growth of the electric vehicle industry and other industries in which we operate as demand for such components increases; • disruption in the supply of electronic circuits due to quality issues or insufficient raw materials; • a decrease in the number of manufacturers of battery components; and • an increase in the cost of raw materials.
These risks include, but are not limited to: • supply shortages caused by the inability or unwillingness of our suppliers and their competitors to build or operate component production facilities to supply the numbers of battery components required to support the rapid growth of the electric vehicle industry and other industries in which we operate as demand for such components increases; • changes in import and export laws, including, but not limited to, sanctions, tariffs, and other economic measures; • disruption in the supply of electronic circuits due to quality issues or insufficient raw materials; • a decrease in the number of manufacturers of battery components; and • an increase in the cost of raw materials.
Any reduction, elimination, or discriminatory application or expiration of the IRA may materially adversely affect our future operating results and liquidity. We may not be able to maintain adequate credit facilities, which could materially adversely affect our business, financial condition and results of operations.
Any reduction, elimination, or discriminatory application or expiration of Section 45X of the IRC may materially adversely affect our future operating results and operations. We may not be able to maintain adequate credit facilities, which could materially adversely affect our business, financial condition and results of operations.
Our indebtedness could adversely affect our business, financial condition and results of operations and restrict us in ways that limit our flexibility in operating our business. As of March 31, 2024, we had $833 million of total consolidated debt (including finance leases).
Our indebtedness could adversely affect our business, financial condition and results of operations and restrict us in ways that limit our flexibility in operating our business. As of March 31, 2025, we had $1,113 million of total consolidated debt (including finance leases).
Any of these results could adversely affect our business. 26 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Any of these results could adversely affect our business. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We and our business partners maintain significant amounts of data electronically in locations around the world. This data relates to all aspects of our business, including current products and services and future products and services under development. This data also contains certain customer, supplier, partner and employee information. We maintain systems and processes designed to protect this data.
This data relates to all aspects of our business, including current products and services and future products and services under development. This data also contains certain customer, supplier, partner and employee information. We maintain systems and processes designed to protect this data.
Any acquisitions that involve the issuance of our equity securities may dilute our stockholder ownership interests, reduce the market price of our stock, or both, and as a result our business, financial condition and results of operations could be adversely affected. 17 Table of Contents Future acquisitions may involve the issuance of our equity securities as payment, in part or in full, for the businesses or assets acquired.
Any acquisitions that involve the issuance of our equity securities may dilute our stockholder ownership interests, reduce the market price of our stock, or both, and as a result our business, financial condition and results of operations could be adversely affected.
Department of the Treasury and the Internal Revenue Service released proposed rules to provide guidance on the production tax credit requirements under Internal Revenue Code Section 45X (the "Proposed Regulations"). The Proposed Regulations provide guidance on rules that taxpayers must satisfy to qualify for the Section 45X tax credit.
Effective December 14, 2023, the U.S. Department of the Treasury and the Internal Revenue Service released final rules to provide guidance on the production tax credit requirements under IRC Section 45X (the "Final Regulations"). The Final Regulations provide guidance on rules that taxpayers must satisfy to qualify for the Section 45X tax credit.
Changes in accounting principles and guidance could result in unfavorable accounting charges or effects, which could adversely affect our business. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. Any change in these principles could have a significant effect on our reported financial position and financial results.
We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. Any change in these principles could have a significant effect on our reported financial position and financial results.
The failure to successfully implement efficiency and cost reduction initiatives, including restructuring activities, could materially adversely affect our business, financial position and results of operations, and we may not realize some or all of the anticipated benefits of those initiatives. 15 Table of Contents From time to time, we have implemented efficiency and cost reduction initiatives intended to improve our profitability and to respond to changes impacting our business and industry.
The failure to successfully implement efficiency and cost reduction initiatives, including restructuring activities, could materially adversely affect our business, financial position and results of operations, and we may not realize some or all of the anticipated benefits of those initiatives.
In response to public health epidemics or outbreaks, countries imposed prolonged quarantines and travel restrictions, which may significantly impact the ability of our employees to get to their places of work to produce products, may make it such that we are unable to obtain sufficient components or raw materials and component parts on a timely basis or at a cost-effective price or may significantly hamper our products from moving through the supply chain.
In response to public health epidemics or outbreaks, countries imposed prolonged quarantines and travel restrictions, which may significantly impact the ability of our employees to get to their places of work to produce products, may make it such that we are unable to obtain sufficient components or raw materials and component parts on a timely basis or at a cost-effective price or may significantly hamper our products from moving through the supply chain. 19 Table of Contents We rely on our production facilities, as well as third-party suppliers and manufacturers, in the United States, Australia, Canada, France, Germany, Italy, the People’s Republic of China (“PRC”), the United Kingdom and other countries that were significantly impacted by COVID-19.
Financial and Accounting Risks The Inflation Reduction Act of 2022 ("IRA") contains production tax credits for certain battery cells and battery modules. The Company's ability to benefit from Section 45X production tax credits is not guaranteed and is dependent upon the federal government's ongoing implementation, guidance, regulations, and/or rulemakings that have been the subject of substantial public interest and debate.
The Company's ability to benefit from Section 45X production tax credits is not guaranteed and is dependent upon the federal government's ongoing implementation, guidance, regulations, and/or rulemakings that have been the subject of substantial public interest and debate. In August 2022, President Biden signed the IRA into law.
For example, a global shortage and component supply disruptions of electronic and other battery components is currently being reported, and the full impact to us is not yet known.
For example, a global shortage and component supply disruptions of electronic and other battery components is currently being reported, and the full impact to us is not yet known. Additionally, the U.S. government has recently imposed, and is currently considering imposing, tariffs on certain trade partners.
We cannot predict or estimate the amount or timing of any future acquisitions or related issuances of equity securities. Our stockholders bear the risk of any such future offerings reducing the market price of our stock and diluting their proportionate ownership interests in EnerSys. If our electronic data is compromised, our business could be materially adversely affected.
Our stockholders bear the risk of any such future offerings reducing the market price of our stock and diluting their proportionate ownership interests in EnerSys. If our electronic data is compromised, our business could be materially adversely affected. We and our business partners maintain significant amounts of data electronically in locations around the world.
Our ability to successfully penetrate new geographic markets may depend on new countries adopting, to the extent such incentives are not currently in place and maintaining such incentives. 25 Table of Contents General Risk Factors There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts, and any reduction in or elimination of our dividend payment could reduce the market price of our stock.
General Risk Factors There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts, and any reduction in or elimination of our dividend payment could reduce the market price of our stock.
Any future issuances of equity securities may dilute our stockholders’ proportionate ownership interests in EnerSys. In addition, the benefits derived by us from an acquisition might not outweigh or exceed the dilutive effect of any issuance of equity securities in connection with the acquisition.
In addition, the benefits derived by us from an acquisition might not outweigh or exceed the dilutive effect of any issuance of equity securities in connection with the acquisition. We cannot predict or estimate the amount or timing of any future acquisitions or related issuances of equity securities.
Despite our efforts to protect our proprietary intellectual property and technology and other confidential information, unauthorized parties may attempt to copy or otherwise obtain and use our intellectual property and proprietary technologies.
Certain of these technologies, especially thin plate pure lead (“TPPL”) technology, are important to our business and are not protected by patents. Despite our efforts to protect our proprietary intellectual property and technology and other confidential information, unauthorized parties may attempt to copy or otherwise obtain and use our intellectual property and proprietary technologies.
These systems and technologies must be refined, updated and replaced with more advanced systems on a regular basis in order for us to meet our customers’ demands and expectations.
These systems and technologies must be refined, updated and replaced with more advanced systems on a regular basis in order for us to meet our customers’ demands and expectations. We expect that new technologies applicable to our business will continue to emerge and may be superior to, or render obsolete, the technologies we currently use in our products and services.
We believe that we currently have adequate internal control procedures in place for future periods, including processes related to newly acquired businesses. However, if our internal control over financial reporting is found to be ineffective, investors may lose confidence in the reliability of our financial statements, which may adversely affect our results of operations or stock price.
However, if our internal control over financial reporting is found to be ineffective, investors may lose confidence in the reliability of our financial statements, which may adversely affect our results of operations or stock price. 26 Table of Contents Changes in accounting principles and guidance could result in unfavorable accounting charges or effects, which could adversely affect our business.
Section 45X of the IRA contains a production tax credit equal to 10% of certain eligible production costs, including, without limitation, labor, energy, depreciation and amortization and overhead expenses. On December 14, 2023, the U.S.
The IRA provides for substantial tax credits and incentives for the development of critical minerals, renewable energy, clean fuels, electric vehicles, and supporting infrastructure, among other provisions. Section 45X of the Internal Revenue Code ("IRC") contains a production tax credit equal to 10% of certain eligible production costs, including, without limitation, labor, energy, depreciation and amortization and overhead expenses.
As a result, the final interpretation and implementation of the provisions in the IRA could have a material adverse impact us. Furthermore, future legislative enactments or administrative actions could limit, amend, repeal, or terminate IRA policies or other incentives that we currently hope to leverage.
While Section 45X of the IRC provides for substantial tax benefits for us, there is some uncertainty as to how these provisions will be interpreted and implemented. Furthermore, future legislative enactments or administrative actions could limit, amend, repeal, or terminate IRA policies or other incentives that we currently hope to benefit from.
We cannot assure you that our portfolio of primarily lead-acid products will remain competitive with products based on new technologies. If we are not able to adequately protect our proprietary intellectual property and technology, we may lose any technological advantages and our business, financial position and results of operations may be materially adversely affected.
We cannot assure you that our portfolio of primarily lead-acid products will remain competitive with products based on new technologies.
Removed
We expect that new technologies applicable to our business will continue to emerge and may be superior to, 18 Table of Contents or render obsolete, the technologies we currently use in our products and services.
Added
Department of Energy ("DOE") is subject to review and will be subject to negotiation of specific terms and contingent on our compliance with the requirements negotiated with the DOE. 14 Table of Contents In January 2025, we entered into an agreement with the DOE's Office of Manufacturing and Energy Supply Chains for a $199 million award to support the construction of a new lithium-ion cell production facility in Greenville, South Carolina.
Removed
We rely on our production facilities, as well as third-party suppliers and manufacturers, in the United States, Australia, Canada, France, Germany, Italy, the People’s Republic of China (“PRC”), the United Kingdom and other countries that were significantly impacted by COVID-19.
Added
Since that time, the issuance of certain executive orders, including the Unleashing American Energy Executive Order on January 20, 2025, has required an immediate pause in the disbursement of funds appropriated through the IRA pending a 90-day review period.
Removed
In August 2022, President Biden signed the IRA into law. The IRA provides for substantial tax credits and incentives for the development of critical minerals, renewable energy, clean fuels, electric vehicles, and supporting infrastructure, among other provisions.
Added
We are currently evaluating these executive orders and other related memoranda to determine what, if any, impact they might have on or our previously announced DOE funding. If the DOE proceeds with our funding as planned, such funding will additionally remain subject to certain compliance obligations and other terms and conditions.
Removed
While Section 45X of the IRA provides for substantial tax benefits for us, the Proposed Regulations have not been finalized and remain subject to public comment. There is uncertainty as to how the provisions under the IRA will be interpreted and implemented.
Added
Tariffs, economic sanctions and other changes in U.S. trade policy have in the past and could in the future trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S. goods.
Removed
The Company's ability to ultimately benefit from IRA tax credits is not guaranteed and is dependent to a large degree upon the final scope, terms and conditions of the Proposed Regulations.
Added
Our business, like many other corporations, would be impacted by changes to the trade policies of the United States and foreign countries (including governmental action related to tariffs, international trade agreements, or 15 Table of Contents economic sanctions).
Removed
Certain provisions of the IRA have been the subject of substantial public interest and have been subject to debate, and there are divergent views on potential implementation, guidance, rules, and regulatory principles by a diverse group of interested parties.
Added
Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, the global economy, and our industry, and as a result, could have a material adverse effect on our business, financial condition and results of operations.
Removed
There can be no assurance that our domestic production of battery cells and battery modules with an energy density of not less than 100 watt-hours per 21 Table of Contents liter will fully qualify for the benefits under the IRA.
Added
From time to time, we have implemented efficiency and cost reduction initiatives intended to improve our profitability and to respond to changes impacting our business and industry.
Added
Future acquisitions may involve the issuance of our equity securities as payment, in part or in full, for the businesses or assets acquired. Any future issuances of equity securities may dilute our stockholders’ proportionate ownership interests in EnerSys.
Added
Financial and Accounting Risks 21 Table of Contents The Inflation Reduction Act of 2022 ("IRA") contains production tax credits for certain battery cells and battery modules.
Added
Our ability to successfully penetrate new geographic markets may depend on new countries adopting, to the extent such incentives are not currently in place and maintaining such incentives.
Added
We believe that we currently have adequate internal control procedures in place for future periods, including processes related to newly acquired businesses.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBoth the CIO and Director of Global Cybersecurity possess extensive expertise in information technology and program management, with a wealth of experience, including over 19 combined years of dedicated service within our corporate information security organization.
Biggest changeBoth the CIO and Director of Global Cybersecurity possess extensive expertise in information technology and program management, with a wealth of experience, including over 19 combined years of dedicated service within our corporate information security organization. Furthermore, the executive leadership team is active in security operations, overseeing implementation of policies, procedures, and policies related to cybersecurity, technology, and vendors.
Cybersecurity Governance The Board delegated primary oversight authority to the Audit Committee who plays a pivotal role in ensuring the effectiveness of our cybersecurity strategy. Through regular updates provided by our leadership team, the committee actively evaluates the organization's cybersecurity posture and aids in prioritizing risk mitigation efforts aligned with our strategic objectives.
Cybersecurity Governance 27 Table of Contents The Board delegated primary oversight authority to the Audit Committee who plays a pivotal role in ensuring the effectiveness of our cybersecurity strategy. Through regular updates provided by our leadership team, the committee actively evaluates the organization's cybersecurity posture and aids in prioritizing risk mitigation efforts aligned with our strategic objectives.
Removed
Furthermore, the executive leadership team is active in security operations, overseeing implementation of policies, procedures, and policies related to 27 Table of Contents cybersecurity, technology, and vendors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following sets forth the Company’s principal owned or leased facilities: Region and Property Use Motive Power Energy Systems Specialty Shared (1) Americas: Industrial (2) 3 3 3 5 Warehouse 4 3 — 3 APAC: Industrial (2) — — — 2 EMEA : Industrial (2) 1 1 — 4 Total 8 7 3 14 (1) Certain properties are shared between the different segments (2) Industrial Includes manufacturing and assembly properties We consider our plants and facilities, whether owned or leased, to be in satisfactory condition and adequate to meet the needs of our current businesses and projected growth.
Biggest changeThe following sets forth the Company’s principal owned or leased facilities: Region and Property Use Motive Power Energy Systems Specialty Shared (1) Americas: Industrial (2) 3 7 2 2 Warehouse 6 3 3 5 APAC: Industrial (2) — 1 — 3 EMEA : Industrial (2) — — — 4 Total 9 11 5 14 (1) Certain properties are shared between the different segments (2) Industrial includes manufacturing and assembly properties We consider our plants and facilities, whether owned or leased, to be in satisfactory condition and adequate to meet the needs of our current businesses and projected growth.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in litigation incidental to the conduct of our business. See Litigation and Other Legal Matters in Note 19 - Commitments, Contingencies and Litigation to the Consolidated Financial Statements, which is incorporated herein by reference.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in litigation incidental to the conduct of our business. See Litigation and Other Legal Matters in Note 20 - Commitments, Contingencies and Litigation to the Consolidated Financial Statements, which is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities Period (a) Total number of shares (or units) purchased (b) Average price paid per share (or unit) (c) Total number of shares (or units) purchased as part of publicly announced plans or programs (d) Maximum number (or approximate dollar value) of shares (or units) that may be purchased under the plans or programs (1)(2) January 1 - January 31, 2024 12,939 $ 99.08 — $ 112,213,965 February 1 - March 1, 2024 115,071 90.85 111,930 102,046,065 March 2 - March 31, 2024 35,451 90.01 35,451 98,855,224 Total 163,461 $ 91.32 147,381 (1) The Company's Board of Directors has authorized the Company to repurchase up to such number of shares as shall equal the dilutive effects of any equity based awards issued during such fiscal year under the 2017 Equity Incentive Plan and the 2023 Equity Incentive Plan and the number of shares exercised through stock option awards during such fiscal year, approximately $34.0 million.
Biggest changePurchases of Equity Securities Period (a) Total number of shares (or units) purchased (b) Average price paid per share (or unit) (c) Total number of shares (or units) purchased as part of publicly announced plans or programs (d) Maximum number (or approximate dollar value) of shares (or units) that may be purchased under the plans or programs (1)(2)(3) December 30, 2024 - January 31, 2025 — $ — — $ 218,927,402 February 1 - March 1, 2025 418,448 102.10 391,856 178,894,463 March 2 - March 31, 2025 852 101.74 — 178,894,563 Total 419,300 $ 102.10 391,856 (1) The Company's Board of Directors has authorized the Company to repurchase up to such number of shares as shall equal the dilutive effects of any equity based awards issued during such fiscal year under the 2017 Equity Incentive Plan and the 2023 Equity Incentive Plan and the number of shares exercised through stock option awards during such fiscal year, approximately $34.0 million.
The Company determined that the DJUSEC index provides a publicly available index of industry peers with similar market capitalization. *$100 invested on March 31, 2019 in stock or index, including reinvestment of dividends.
The Company determined that the DJUSEC index provides a publicly available index of industry peers with similar market capitalization. *$100 invested on March 31, 2020 in stock or index, including reinvestment of dividends.
The Company declared aggregate regular cash dividends of $0.85, $0.70, and $0.70 per share in each of the years ended March 31, 2024, March 31, 2023 and 2022 respectfully. The Company anticipates that it will continue to pay quarterly cash dividends in the future.
The Company declared aggregate regular cash dividends of $0.945, $0.85, and $0.70 per share in each of the years ended March 31, 2025, March 31, 2024 and 2023 respectfully. The Company anticipates that it will continue to pay quarterly cash dividends in the future.
Recent Sales of Unregistered Securities During the fourth quarter of fiscal 2024, we did not issue any unregistered securities. Dividends During fiscal 2024, the Company’s quarterly dividend was $0.175 per share in the first quarter and $0.225 in the second, third, and fourth quarter.
Recent Sales of Unregistered Securities During the fourth quarter of fiscal 2025, we did not issue any unregistered securities. Dividends During fiscal 2025, the Company’s quarterly dividend was $0.225 per share in the first quarter and $0.24 in the second, third, and fourth quarter.
Holders of Record As of May 17, 2024, there were approximately 617 record holders of common stock of the Company. Because many of these shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of stockholders represented by these record holders.
Holders of Record As of May 16, 2025, there were approximately 458 record holders of common stock of the Company. Because many of these shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of stockholders represented by these record holders.
(2) On March 9, 2022, the Company announced the establishment of a $150.0 million stock repurchase authorization, with no expiration date. 31 Table of Contents STOCK PERFORMANCE GRAPH The following graph compares the changes in cumulative total returns on EnerSys’ common stock with the changes in cumulative total returns of the New York Stock Exchange Composite Index, a broad equity market index; and the Dow Jones US Electrical Components and Equipment index ("DJUSEC").
(3) On November 6, 2024, the Company announced the establishment of a $200.0 million stock repurchase authorization, with no expiration date. 31 Table of Contents STOCK PERFORMANCE GRAPH The following graph compares the changes in cumulative total returns on EnerSys’ common stock with the changes in cumulative total returns of the New York Stock Exchange Composite Index, a broad equity market index; and the Dow Jones US Electrical Components and Equipment index ("DJUSEC").
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(2) On March 9, 2022, the Company announced the establishment of a $150.0 million stock repurchase authorization, with no expiration date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating Earnings Operating earnings by segment were as follows: Fiscal 2024 Fiscal 2023 Increase (Decrease) In Millions As % Net Sales (1) In Millions As % Net Sales (1) In Millions % Energy Systems $ 87.0 5.5 % $ 90.4 5.2 % $ (3.4) (3.8) % Motive Power 214.6 14.7 179.9 12.4 34.7 19.3 Specialty 31.4 5.9 40.5 7.8 (9.1) (22.5) Corporate and other (2) 117.2 3.3 17.3 0.5 99.9 NM Subtotal 450.2 12.6 328.1 8.8 122.1 37.2 Inventory adjustment relating to exit activities - Energy Systems (17.1) (1.1) 0.2 — (17.3) NM Inventory adjustment relating to exit activities - Motive Power — — (0.8) (0.1) 0.8 NM Inventory adjustment relating to exit activities - Specialty (3.1) (0.6) — — (3.1) NM Restructuring and other exit charges - Energy Systems (8.9) (0.6) (1.5) (0.1) (7.4) NM Restructuring and other exit charges - Motive Power (11.6) (0.8) (12.8) (0.9) 1.2 (9.1) Restructuring and other exit charges - Specialty (7.6) (1.4) (2.1) (0.4) (5.5) NM Total Amortization - Energy Systems (24.5) (1.5) (27.4) (1.6) 2.9 (10.5) Total Amortization - Motive Power (0.7) — (0.5) — (0.2) 54.9 Total Amortization - Specialty (2.8) (0.5) (2.8) (0.6) — (3.9) Impairment of indefinite-lived intangibles - Energy Systems (13.6) (0.9) (0.1) — (13.5) NM Impairment of indefinite-lived intangibles - Specialty — — (0.4) (0.1) 0.4 NM Legal proceedings charge, net - Energy Systems (3.7) (0.2) — — (3.7) NM Other - Energy Systems (3.7) (0.2) (0.8) — (2.9) NM Other - Motive Power (1.1) (0.1) (0.6) — (0.5) NM Other - Specialty (0.3) (0.1) (0.2) — (0.1) NM Total operating earnings $ 351.5 9.8 % $ 278.3 7.5 % $ 73.2 26.3 % NM = not meaningful (1) The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales.
Biggest changeOperating Earnings Operating earnings by segment were as follows: Fiscal 2025 Fiscal 2024 Increase (Decrease) In Millions As % Net Sales (1) In Millions As % Net Sales (1) In Millions % Energy Systems $ 103.2 6.7 % $ 87.0 5.5 % $ 16.2 18.7 % Motive Power 232.8 15.7 214.6 14.7 18.2 8.4 Specialty 37.0 6.2 31.4 5.9 5.6 17.8 Corporate and other (2) 155.1 4.3 117.2 3.3 37.9 32.3 Subtotal 528.1 14.6 450.2 12.6 77.9 17.3 Inventory adjustment relating to exit activities - Energy Systems (0.3) — (17.1) (1.1) 16.8 (98.4) Inventory adjustment relating to exit activities and step up to fair value relating to recent acquisitions - Specialty (3.3) (0.6) (3.1) (0.6) (0.2) 7.7 Restructuring and other exit charges - Energy Systems (6.0) (0.4) (8.9) (0.6) 2.9 (32.2) Restructuring and other exit charges - Motive Power (5.7) (0.4) (11.6) (0.8) 5.9 (51.1) Restructuring and other exit charges - Specialty (2.7) (0.5) (7.6) (1.4) 4.9 (64.1) Loss on assets held for sale - Motive Power (4.6) (0.3) — — (4.6) NM Total Amortization - Energy Systems (23.6) (1.5) (24.5) (1.5) 0.9 (3.6) Total Amortization - Motive Power (0.7) — (0.7) — — NM Total Amortization - Specialty (7.5) (1.3) (2.8) (0.5) (4.7) NM Impairment of indefinite-lived intangibles - Energy Systems — — (13.6) (0.9) 13.6 NM Legal proceedings charge, net - Energy Systems — — (3.7) (0.2) 3.7 NM Acquisition expense - Motive Power — — (0.2) 0.2 NM Acquisition expense - Specialty (2.5) (0.4) — — (2.5) NM Integration costs - Energy Systems 0.1 — (0.4) — 0.5 NM Integration costs - Specialty (4.1) (0.7) — — (4.1) NM Other - Energy Systems (0.7) (0.1) (3.3) (0.2) 2.6 (65.4) Other - Motive Power (1.7) (0.1) (0.9) (0.1) (0.8) 85.8 Other - Specialty (0.1) — (0.3) (0.1) 0.2 (62.7) Total operating earnings $ 464.7 12.8 % $ 351.5 9.8 % $ 113.2 32.2 % NM = not meaningful (1) The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales; Corporate and other is computed based on total consolidated net sales.
The funds will mature on September 30, 2026, the same as the Company's Second Amended Term loan and Second Amended Revolver. In connection with the agreement, the Company incurred $1.2 million in third party administrative and legal fees recognized in interest expense and capitalized $1.1 million in charges from existing lenders as a deferred asset.
The funds will mature on September 30, 2026, the same as the Company's Second Amended Term loan and Second Amended Revolver. In connection with the agreement, the Company incurred $1.2 million in third party administrative and legal fees recognized in interest expense and capitalized $1.1 million in charges from existing lenders as a deferred asset.
Additionally, the Company derecognized the capitalized deferred asset and recognized the $1.1 million as a deferred financing costs. During the fourth quarter of fiscal 2023, the Company entered into a fourth amendment to the 2017 Credit Facility (as amended, the “Fourth Amended Credit Facility”).
Additionally, the Company derecognized the capitalized deferred asset and recognized the $1.1 million as a deferred financing costs. During the fourth quarter of fiscal 2023, the Company entered into a fourth amendment to the 2017 Credit Facility (as amended, the “Fourth Amended Credit Facility”).
As a result, the Second Amended Credit Facility, now scheduled to mature on September 30, 2026, consists of a $130.0 million senior secured term loan (the “Second Amended Term Loan”), a CAD 106.4 million ($84.2 million) term loan and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”).
As a result, the Second Amended Credit Facility, now scheduled to mature on September 30, 2026, consists of a $130.0 million senior secured term loan (the “Second Amended Term Loan”), a CAD 106.4 million ($84.2 million) term loan and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”).
We believe that we will continue to comply with these covenants and conditions, and that we have the financial resources and the capital available to fund the foreseeable organic growth in our business and to remain active in pursuing further acquisition opportunities. See Note 10 to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
We believe that we will continue to comply with these covenants and conditions, and that we have the financial resources and the capital available to fund the foreseeable organic growth in our business and to remain active in pursuing further acquisition opportunities. See Note 11 to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
(2) The $85.8 million adjustment to EBITDA in fiscal 2024 primarily related to $30.6 million of non-cash stock compensation, $40.7 million of restructuring and other exit charges, impairment of indefinite-lived intangibles and write-down of other current assets of $13.6 million.
The $85.8 million adjustment to EBITDA in fiscal 2024 primarily related to $30.6 million of non-cash stock compensation, $40.7 million of restructuring and other exit charges, impairment of indefinite-lived intangibles and write-down of other current assets of $13.6 million.
(2) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRA production tax credits. Also, included are start-up costs for exploration of a new lithium plant as well as start-up operating expenses from the New Ventures operating segment.
(2) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRA production tax credits. Also, included are start-up costs for exploration and construction of a new lithium plant as well as sales and expenses from the New Ventures operating segment.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023. Our discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, opinions, expectations, anticipations and intentions and beliefs.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024. Our discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, opinions, expectations, anticipations and intentions and beliefs.
The Company identifies the following as its four operating segments, based on lines of business: • Energy Systems - uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems used in data centers, as well as telecommunications systems, switchgear and electrical control systems used in industrial facilities and electric utilities, large-scale energy storage and energy pipelines.
The Company identifies the following as its four operating segments, based on lines of business: • Energy Systems - uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems, as well as telecommunications systems, switchgear and electrical control systems used in industrial facilities and electric utilities, large-scale energy storage and energy pipelines.
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Our discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2023 and 2022, has been omitted from this Form 10-K and can be found in Part II, "Item 7.
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Our discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2024 and 2023, has been omitted from this Form 10-K and can be found in Part II, "Item 7.
Management determined that residential renewable energy products no longer fit with the Company’s core strategy and resources will be better allocated toward commercial energy solutions for enterprise customers. The Company currently estimates that the total charges for these actions will amount to approximately $23.5 million.
Management determined that residential renewable energy products no longer fit with the Company’s core strategy and resources will be better allocated toward commercial energy solutions for enterprise customers. The Company currently estimates that the total charges for these actions will amount to approximately $24.5 million.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2024 and 2023, should be read in conjunction with our audited Consolidated Financial Statements and the notes to those statements included in Item 8.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2025 and 2024, should be read in conjunction with our audited Consolidated Financial Statements and the notes to those statements included in Item 8.
We would be unable to continue our operations at current levels if we lost the liquidity provided under our credit 49 Table of Contents agreements. Depreciation and amortization in this table excludes the amortization of deferred financing fees, which is included in interest expense.
We would be unable to continue our operations at current levels if we lost the liquidity provided under our credit agreements. Depreciation and amortization in this table excludes the amortization of deferred financing fees, which is included in interest expense.
The Fourth Amended Credit Facility replaces the London Interbank Offered Rate 48 Table of Contents (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) in the calculation of interest for both the Second Amended Revolver and the Second Amended Term Loan.
The Fourth Amended Credit Facility replaces the London Interbank Offered Rate 36 Table of Contents (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) in the calculation of interest for both the Second Amended Revolver and the Second Amended Term Loan.
For both fiscal 2024 and fiscal 2023, the difference in the foreign effective tax rate versus the U.S. statutory rate of 21% is primarily attributable to lower tax rates in the foreign countries in which we operate.
For both fiscal 2025 and fiscal 2024, the difference in the foreign effective tax rate versus the U.S. statutory rate of 21% is primarily attributable to lower tax rates in the foreign countries in which we operate.
Energy Systems, which combine power conversion, power distribution, energy storage, and enclosures, are used in the telecommunication, broadband, data center and utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions. Motive Power batteries and chargers are utilized in electric forklift trucks, automated guided vehicles (AGVs), and other industrial electric powered vehicles.
Energy Systems, which combine power conversion, power distribution, energy storage, and enclosures, are used in the telecommunication, broadband, data center, and utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions. Motive Power batteries and chargers are utilized in electric forklifts, automated guided vehicles ("AGVs"), and other industrial electric powered vehicles.
As we concentrate more on energy systems and non-lead chemistries, the emphasis on lead will continue to decline. Primary Operating Capital As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable.
As we concentrate more on energy systems and non-lead chemistries, the emphasis on lead is expected to continue to decline. Primary Operating Capital As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable.
The nominal amount of credit available is subject to a leverage ratio maximum of 4.0x EBITDA, as discussed in Liquidity and Capital Resources. 35 Table of Contents During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”).
The nominal amount of credit available is subject to a leverage ratio maximum of 4.0x EBITDA, as discussed in Liquidity and Capital Resources. During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”).
We show both our current ratios and the maximum ratio permitted or minimum ratio required under our Fourth Amended Credit Facility, for fiscal 2024 and fiscal 2023, respectively.
We show both our current ratios and the maximum ratio permitted or minimum ratio required under our Fourth Amended Credit Facility, for fiscal 2025 and fiscal 2024, respectively.
The indefinite-lived trademarks are tested for impairment by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess carrying value over the amount 37 Table of Contents of fair value is recognized as impairment.
The indefinite-lived trademarks are tested for impairment by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess carrying value over the amount of fair value is recognized as impairment.
During fiscal 2024, the Company recorded non-cash charges totaling $7.6 million primarily related to indefinite-lived intangible asset write-off and cash charges of $0.7 million related to severance costs. The Company also recorded a non-cash write off relating to inventories of $17.1 million, which was reported in cost of goods sold.
During fiscal 2024, the Company recorded non-cash charges totaling $0.6 million primarily related to fixed assets and cash charges of $0.7 million related to severance costs. The Company also recorded a non-cash write off relating to inventories of $17.1 million, which was reported in cost of goods sold, and impairment of indefinite lived intangible assets of $6.0 million.
Assumptions utilized are highly judgmental, especially given the role technology plays in driving the demand for products in the telecommunications and aerospace markets. Based on the results of the annual impairment test as of January 1, 2024, we determined that there was no goodwill impairment.
Assumptions utilized are highly judgmental, especially given the role technology plays in driving the demand for products in the telecommunications and aerospace markets. Based on the results of the annual impairment test as of December 30, 2024, we determined that there was no goodwill impairment.
During fiscal 2024, the Company recorded cash charges of $2.1 million relating primarily to site cleanup and $0.5 million of non-cash charges relating to accelerated depreciation of fixed assets. During fiscal 2023, the Company recorded cash charges of $2.2 million relating primarily to site cleanup and $0.6 million of non-cash charges relating to accelerated depreciation of fixed assets.
During fiscal 2024, the Company recorded cash charges of $2.1 million relating primarily to site cleanup and $0.5 million of non-cash charges relating to accelerated depreciation of fixed assets. During fiscal 2025, the Company recorded cash charges of $3.6 million relating primarily to site cleanup and $0.6 million of non-cash charges relating to accelerated depreciation of fixed assets.
The impairment recognized is the amount by which the carrying amount exceeds the fair value of the impaired asset. Business Combinations We account for business combinations in accordance with ASC 805, Business Combinations.
The impairment recognized is the amount by which the carrying amount exceeds the fair value of the impaired asset. Business Combinations 38 Table of Contents We account for business combinations in accordance with ASC 805, Business Combinations.
Management completed its evaluation of key inputs used to estimate the fair value of its indefinite-lived trademarks and determined that an impairment charge was appropriate.
Management completed its 44 Table of Contents evaluation of key inputs used to estimate the fair value of its indefinite-lived trademarks and determined that an impairment charge was appropriate.
The Company currently estimates total charges in the exit to amount to $12.7 million. Cash charges are estimated to total $8.8 million primarily relating to severance and other costs to leave the site. Non-cash charges are estimated to be $3.9 million relating to fixed assets, inventory, and contract assets. The plan is substantially complete as the end of fiscal 2024.
The Company currently estimates total charges in the exit to amount to $13.7 million. Cash charges are estimated to total $9.7 million primarily relating to severance and other costs to leave the site. Non-cash charges are estimated to be $3.9 million relating to fixed assets, inventory, and contract assets. The plan was substantially complete as the end of fiscal 2024.
For eligible electrode active material the credit is equal to 10% of the costs incurred with respect to the production of such materials. During the year ended March 31, 2024 and March 31, 2023, we recognized $136.4 million and $17.3 million, respectively, of Section 45X credits as a reduction to “Cost of sales”.
For eligible electrode active material the credit is equal to 10% of the costs incurred with respect to the production of such materials. During the year ended March 31, 2025 and March 31, 2024, we recognized $184.6 million and $136.4 million, respectively, of Section 45X credits as a reduction to “Cost of sales”.
Accounts payable decreased or used cash of $15.1 million. Net earnings were $269.1 million, depreciation and amortization $92.0 million, stock-based compensation $30.6 million, non-cash charges relating to exit charges of $24.2 million, primarily relating to the Renewables, Spokane, and Sylmar plant closures, non-cash interest of $2.5 million, and non-cash charges for impairment of indefinite-lived intangibles of $13.6 million.
Net earnings were $269.1 million, depreciation and amortization $92.0 million, stock-based compensation $30.6 million, non-cash charges relating to exit charges of $24.2 million, primarily relating to the Renewables, Spokane, and Sylmar plant closures, non-cash interest of $2.5 million, and non-cash charges for impairment of indefinite-lived intangibles of $13.6 million.
Specialty batteries are used in aerospace and defense applications, large over the road trucks, premium automotive and medical products. New Ventures provides energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.
Specialty batteries are used in aerospace and defense applications, large over-the-road trucks, premium automotive, portable power solutions for soldiers in the field, medical and security systems applications. New Ventures provides energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.
In fiscal 2024, the amounts deducted in the calculation of net debt were U.S. cash and cash equivalents and foreign cash investments of $333.3 million, and in fiscal 2023, were $346.7 million. (4) These ratios are included to show compliance with the leverage ratios set forth in our credit facilities.
In fiscal 2025, the amounts deducted in the calculation of net debt were U.S. cash and cash equivalents and foreign cash investments of $343.1 million, and in fiscal 2024, were $333.3 million. (4) These ratios are included to show compliance with the leverage ratios set forth in our credit facilities.
Due to the uncertainty of future cash outflows, uncertain tax positions have been excluded from the above table. Under our Fourth Amended Credit Facility and other credit arrangements, we had outstanding standby letters of credit of $3.9 million as of March 31, 2024.
Due to the uncertainty of future cash outflows, uncertain tax positions have been excluded from the above table. Under our Fourth Amended Credit Facility and other credit arrangements, we had outstanding standby letters of credit of $5.6 million as of March 31, 2025.
Any impairment would be recognized in full in the reporting period in which it has been identified. Based on the results of the annual impairment test as of January 1, 2024, we determined that there were impairments to two indefinite-lived trademarks. For additional information see Note 7 Notes to the Consolidated Financial Statements.
Any impairment would be recognized in full in the reporting period in which it has been identified. Based on the results of the annual impairment test as of December 30, 2024, we determined that there were no impairments to indefinite-lived trademarks. For additional information see Note 8 Notes to the Consolidated Financial Statements.
Foreign currency impact resulted in a gain of $6.1 million in fiscal 2024 compared to a foreign currency loss of $0.7 million in fiscal 2023. Cost of funds associated with our asset securitization totaled $8.8 million fiscal 2024 compared to $2.3 million in fiscal 2023.
Foreign currency impact resulted in a gain of $3.3 million in fiscal 2025 compared to a foreign currency gain of $6.1 million in fiscal 2024. Cost of funds associated with our asset securitization totaled $8.7 million fiscal 2025 compared to $8.8 million in fiscal 2024.
Non-cash charges for inventory and fixed assets write offs, and impairment of an indefinite-lived intangible asset are estimated to be $23.6 million, and cash charges for employee severance and retention payments are estimated to be $0.9 million. The plan is substantially complete as the end of fiscal 2024.
Non-cash charges for inventory and fixed assets write offs, and impairment of an indefinite-lived intangible asset are estimated to be $23.6 million, and cash charges for employee severance and retention payments are estimated to be $0.9 million. The plan was completed as the end of fiscal 2025.
Cash charges for employee severance related payments, cleanup related to the facility, contractual releases and legal expenses are estimated to be $9.2 million and non-cash charges from inventory and fixed asset write-offs are estimated to be $9.3 million. These actions will result in the reduction of approximately 165 employees. The plan is substantially complete as the end of fiscal 2024.
Cash charges for employee severance related payments, cleanup related to the facility, contractual releases and legal expenses are estimated to be $9.2 million and non-cash charges from inventory and fixed asset write-offs are estimated to be $9.3 million. These actions will result in the reduction of approximately 165 employees.
We have substantial liquidity with $333 million of available cash and cash equivalents and available and undrawn, under all its lines of credit of approximately $938 million at March 31, 2024 to cover short-term liquidity requirements and anticipated growth in the foreseeable future.
We have substantial liquidity with $343 million of available cash and cash equivalents and available and undrawn, under all lines of credit of approximately $653 million at March 31, 2025 to cover short-term liquidity requirements and anticipated growth in the foreseeable future.
Historically, the volatility of commodity costs and foreign currency exchange rates have caused large swings in our production costs. Since the beginning of fiscal year 2024, we have experienced a range in lead prices from approximately $1.05 per pound to approximately $0.90 per pound.
Historically, volatility of commodity costs and foreign currency exchange rates have caused large swings in our production costs. In the fiscal year 2025, we have experienced a range in lead prices from approximately $0.85 per pound to $1.00 per pound.
The Company currently estimates that the total charges for these actions will amount to approximately $3.6 million relating to $1.4 million in cash charges for employee severance, and non-cash charges of $2.2 million relating to fixed assets, facility lease, and inventory. The plan is substantially complete as the end of fiscal 2024.
The Company currently estimates that the total charges for these actions will amount to approximately $3.6 million relating to $1.4 million in cash charges for employee severance, and non-cash charges of $2.2 million relating to fixed assets, facility lease, and inventory. The majority of the charges were incurred in fiscal 2024.
For additional information see Note 1 of Notes to the Consolidated Financial Statements. Asset Impairment Determinations We test for the impairment of our goodwill and indefinite-lived trademarks at least annually and whenever events or circumstances occur indicating that a possible impairment has been incurred. We assess whether goodwill impairment exists using both qualitative and quantitative assessments.
Asset Impairment Determinations We test for the impairment of our goodwill and indefinite-lived trademarks at least annually and whenever events or circumstances occur indicating that a possible impairment has been incurred. We assess whether goodwill impairment exists using both qualitative and quantitative assessments.
Other (Income) Expense, Net Fiscal 2024 Fiscal 2023 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Other (income) expense, net $ 9.4 0.3 % $ 8.2 0.2 % $ 1.2 15.1 % NM = not meaningful Other (income) expense, net was expense of $9.4 million in fiscal 2024 compared to expense of $8.2 million in fiscal 2023.
Other (Income) Expense, Net Fiscal 2025 Fiscal 2024 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Other (income) expense, net $ 7.0 0.2 % $ 9.4 0.3 % $ (2.4) (25.9) % NM = not meaningful Other (income) expense, net was expense of $7.0 million in fiscal 2025 compared to expense of $9.4 million in fiscal 2024.
In fiscal 2024 and 2023, we repurchased 1,002,415 and 358,365 shares of common stock for $95.7 million and $22.9 million, respectively. In fiscal 2022, we repurchased 1,966,334 shares of common stock for $156.4 million. A substantial majority of the Company’s cash and investments are held by foreign subsidiaries.
In fiscal 2025 and 2024, we repurchased 1,568,292 and 1,002,415 shares of common stock for $154.0 million and $95.7 million, respectively. In fiscal 2023, we repurchased 358,365 shares of common stock for $22.9 million. A substantial majority of the Company’s cash and investments are held by foreign subsidiaries.
Earnings Before Income Taxes Fiscal 2024 Fiscal 2023 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Earnings before income taxes $ 292.2 8.2 % $ 210.6 5.7 % $ 81.6 38.7 % As a result of the factors discussed above, fiscal 2024 earnings before income taxes were $292.2 million, an increase of $81.6 million or 38.7% compared to fiscal 2023. 45 Table of Contents Income Tax Expense Fiscal 2024 Fiscal 2023 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Income tax expense $ 23.1 0.6 % $ 34.8 0.9 % $ (11.7) (33.7) % Effective tax rate 7.9 % 16.5 % (8.6) % Our effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions in which we operate and the amount of our consolidated income before taxes.
Earnings Before Income Taxes Fiscal 2025 Fiscal 2024 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Earnings before income taxes $ 406.5 11.2 % $ 292.2 8.2 % $ 114.3 39.2 % As a result of the factors discussed above, fiscal 2025 earnings before income taxes were $406.5 million, an increase of $114.3 million or 39.2% compared to fiscal 2024. 46 Table of Contents Income Tax Expense Fiscal 2025 Fiscal 2024 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Income tax expense $ 42.8 1.2 % $ 23.1 0.6 % $ 19.7 85.6 % Effective tax rate 10.5 % 7.9 % 2.6 % Our effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions in which we operate and the amount of our consolidated income before taxes.
This increase was driven by significant pricing/mix gains partially offset by slightly lower volumes and higher operating expenses. Specialty operating earnings percentage of net sales decreased 190 basis points in fiscal 2024 compared to fiscal 2023.
This increase was driven by significant pricing and mix gains partially offset by higher operating expenses. Specialty operating earnings percentage of net sales increased 30 basis points in fiscal 2025 compared to fiscal 2024.
The following table provides a reconciliation of net earnings to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) for March 31, 2024 and 2023, in connection with the Second Amended Credit Facility: Fiscal 2024 Fiscal 2023 (in millions, except ratios) Net earnings as reported $ 269.1 $ 175.8 Add back: Depreciation and amortization 92.0 91.2 Interest expense 49.9 59.5 Income tax expense 23.1 34.8 EBITDA (non GAAP) (1) $ 434.1 $ 361.3 Adjustments per credit agreement definitions (2) 85.8 51.7 Adjusted EBITDA (non-GAAP) per credit agreement (1) $ 519.9 $ 413.0 Total net debt (3) $ 511.1 $ 736.0 Leverage ratios (4) : Total net debt/adjusted EBITDA ratio 1.0 X 1.8 X Maximum ratio permitted 4.00 X 4.25 X Consolidated interest coverage ratio (5) 11.0 X 7.3 X Minimum ratio required 3.0 X 3.0 X (1) We have included EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) because our lenders use them as key measures of our performance.
The total net debt, as defined under the Fourth Amended Credit Facility is $781.1 million for fiscal 2025 and is 1.3 times adjusted EBITDA (non-GAAP), compared to total net debt of $511.1 million and 1.0 times adjusted EBITDA (non-GAAP) for fiscal 2024. 50 Table of Contents The following table provides a reconciliation of net earnings to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) for March 31, 2025 and 2024, in connection with the Second Amended Credit Facility: Fiscal 2025 Fiscal 2024 (in millions, except ratios) Net earnings as reported $ 363.7 $ 269.1 Add back: Depreciation and amortization 100.9 92.0 Interest expense 51.1 49.9 Income tax expense 42.8 23.1 EBITDA (non GAAP) (1) $ 558.5 $ 434.1 Adjustments per credit agreement definitions (2) 56.2 85.8 Adjusted EBITDA (non-GAAP) per credit agreement (1) $ 614.7 $ 519.9 Total net debt (3) $ 781.1 $ 511.1 Leverage ratios (4) : Total net debt/adjusted EBITDA ratio 1.3 X 1.0X Maximum ratio permitted 4.00 X 4.00 X Consolidated interest coverage ratio (5) 12.5 X 11.0 X Minimum ratio required 3.0 X 3.0 X (1) We have included EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) because our lenders use them as key measures of our performance.
There are currently several critical and complex aspects of the IRA awaiting final regulations from the IRS and U.S. Treasury Department. The uncertainty of a final ruling and changes to the current guidance could materially affect the benefits we have recognized and expect to recognize from the advanced manufacturing production credit.
There are currently several critical and complex aspects of the IRA. The uncertainty of changes to the current guidance could materially affect the benefits we have recognized and expect to recognize from the advanced manufacturing production credit.
The fiscal 2024 foreign effective income tax rate was 13.8% on foreign pre-tax income of $193.0 million compared to an effective income tax rate of 16.8% on foreign pre-tax income of $171.9 million in fiscal 2023.
The fiscal 2025 foreign effective income tax rate was 0.1% on foreign pre-tax income of $205.0 million compared to an effective income tax rate of 13.8% on foreign pre-tax income of $193.0 million in fiscal 2024.
During fiscal 2024, the Company recorded cash charges relating to site cleanup and decommissioning equipment of $4.4 million. During fiscal 2023, the Company recorded cash charges relating primarily to severance and manufacturing variances of $2.8 million and non-cash charges of $7.3 million relating to fixed asset write-offs.
The majority of these charges were recorded by the end of fiscal 2024. During fiscal 2023, the Company recorded cash charges relating primarily to severance and manufacturing variances of $2.8 million and non-cash charges of $7.3 million relating to fixed asset write-offs.
Primary Operating Capital and Primary Operating Capital percentages at March 31, 2024, 2023 and 2022 are computed as follows: ($ in Millions) March 31, 2024 March 31, 2023 March 31, 2022 Accounts receivable, net $ 524.7 $ 637.8 $ 719.4 Inventory, net 697.7 797.8 715.7 Accounts payable (369.5) (378.6) (393.1) Total primary operating capital $ 852.9 $ 1,057.0 $ 1,042.0 Trailing 3 months net sales $ 910.7 $ 989.9 $ 907.0 Trailing 3 months net sales annualized $ 3,642.8 $ 3,959.6 $ 3,628.1 Primary operating capital as a % of annualized net sales 23.4 % 26.7 % 28.7 % Liquidity and Capital Resources We believe that our financial position is strong.
Accounts payable increased due to seasonality. 35 Table of Contents Primary Operating Capital and Primary Operating Capital percentages at March 31, 2025, 2024 and 2023 are computed as follows: ($ in Millions) March 31, 2025 March 31, 2024 March 31, 2023 Accounts receivable, net 597.9 $ 524.7 $ 637.8 Inventory, net 740.0 697.7 797.8 Accounts payable (405.7) (369.5) (378.6) Total primary operating capital $ 932.2 $ 852.9 $ 1,057.0 Trailing 3 months net sales $ 974.8 $ 910.7 $ 989.9 Trailing 3 months net sales annualized $ 3,899.2 $ 3,642.8 $ 3,959.6 Primary operating capital as a % of annualized net sales 23.9 % 23.4 % 26.7 % Liquidity and Capital Resources We believe that our financial position is strong.
Credit Facilities and Leverage During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”).
Credit Facilities and Leverage During the second quarter of fiscal 2022, we entered into a second amendment to the Amended Credit Facility (as amended, the “Second Amended Credit Facility”).
Interest Expense Fiscal 2024 Fiscal 2023 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Interest expense $ 49.9 1.4 % $ 59.5 1.6 % $ (9.6) (16.1) % Interest expense of $49.9 million in fiscal 2024 (net of interest income of $3.2 million) was $9.6 million lower than the $59.5 million in fiscal 2023 (net of interest income of $1.7 million).
Interest Expense Fiscal 2025 Fiscal 2024 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Interest expense $ 51.2 1.4 % $ 49.9 1.4 % $ 1.3 2.3 % Interest expense of $51.2 million in fiscal 2025 (net of interest income of $3.1 million) was $1.3 million higher than the $49.9 million in fiscal 2024 (net of interest income of $3.2 million).
Cash used in investing activities for fiscal 2024, 2023 and 2022 was $92.5 million, $44.8 million and $69.2 million, respectively. During fiscal 2024 we had $8.3 million related to the acquisition of Industrial Battery and Charger Services Limited (IBCS). In fiscal 2023 and 2022, we did not make any acquisitions.
Cash used in investing activities for fiscal 2025, 2024 and 2023 was $336.4 million, $92.5 million and $44.8 million, respectively. During fiscal 2025 we had $206.4 million related to the acquisition of Bren-Tronics. In fiscal 2024 we had $8.3 million related to the acquisition of Industrial Battery and Charger Services Limited (IBCS).
Energy Systems also includes highly integrated power solutions and services to broadband, telecom, data center, and renewable and industrial customers, as well as thermally managed cabinets and enclosures for electronic equipment and batteries. • Motive Power - power for electric industrial forklifts used in manufacturing, warehousing and other material handling applications, AGVs, as well as mining equipment, diesel locomotive starting and other rail equipment. 33 Table of Contents • Specialty - premium batteries for starting, lighting and ignition applications in premium automotive and large over-the-road trucks, energy storage solutions for satellites, spacecraft, commercial aircraft, military land vehicles, aircraft, submarines, ships and other tactical vehicles, as well as medical devices and equipment; and • New Ventures - energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles We evaluate business segment performance based primarily upon operating earnings exclusive of highlighted items.
Energy Systems also includes highly integrated power solutions and services to broadband, telecom, data center, and industrial customers, as well as thermally managed cabinets and enclosures for electronic equipment and batteries. • Motive Power - power for electric industrial forklifts, AGVs other material handling equipment used in manufacturing, and warehousing operations, as well as equipment used in floor care, mining, rail and airport ground support applications. 33 Table of Contents • Specialty - premium starting, lighting and ignition applications in transportation, energy solutions for satellites, spacecraft, commercial aircraft, military, aircraft, submarines, ships, other tactical vehicles, defense applications and portable power solutions for soldiers in the field, as well as medical devices and equipment. • New Ventures - energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.
During fiscal 2023, the Company recorded $1.7 million primarily related to severance costs and non-cash charges totaling $0.4 million primarily relating to contract assets. 42 Table of Contents Ooltewah In June, 2022, the Company committed to a plan to close its facility in Ooltewah, Tennessee, which produced flooded motive power batteries for electric forklifts.
During fiscal 2025, The Company recorded cash charges of $0.9 million primarily related to relocation costs. 43 Table of Contents Ooltewah In June, 2022, the Company committed to a plan to close its facility in Ooltewah, Tennessee, which produced flooded motive power batteries for electric forklifts.
The majority of that cash and investments is expected to be utilized to fund local operating activities, capital expenditure requirements and acquisitions. The Company believes that it has sufficient sources of domestic and foreign liquidity. The Federal Reserve Bank has discontinued quantitative easing, raised interest rates in response to inflation concerns.
The majority of that cash and investments is expected to be utilized to fund local operating activities, capital expenditure requirements and acquisitions. The Company believes that it has sufficient sources of domestic and foreign liquidity.
Selling expenses, our main component of operating expenses, increased $5.8 million or 2.6% in fiscal 2024 compared to fiscal 2023. Restructuring, exit and other charges Exit Charges Fiscal 2024 Programs Renewables On November 8, 2023, the Company's Board of Directors approved a plan to stop production and operations of residential renewable energy products, which include our OutBack and Mojave brands.
Restructuring, exit and other charges Exit Charges Fiscal 2024 Programs 42 Table of Contents Renewables On November 8, 2023, the Company's Board of Directors approved a plan to stop production and operations of residential renewable energy products, which include our OutBack and Mojave brands.
Operating Items Fiscal 2024 Fiscal 2023 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Operating expenses $ 589.6 16.5 % $ 544.9 14.7 % $ 44.7 8.2 % Restructuring, exit and other charges 28.1 0.8 16.4 0.4 11.7 71.0 Impairment of indefinite-lived intangibles 13.6 0.4 0.5 0.1 13.1 NM 41 Table of Contents Operating Expenses Operating expenses increased $44.7 million or 8.2% in fiscal 2024 from fiscal 2023 and increased as a percentage of net sales by 180 basis points.
Operating Items Fiscal 2025 Fiscal 2024 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Operating expenses $ 608.7 16.8 % $ 589.6 16.5 % $ 19.1 3.2 % Restructuring, exit and other charges 14.4 0.4 28.1 0.8 (13.7) (48.7) Impairment of indefinite-lived intangibles — — 13.6 0.4 (13.6) NM Loss on assets held for sale 4.6 0.2 — — 4.6 NM Operating Expenses Operating expenses increased $19.1 million or 3.2% in fiscal 2025 from fiscal 2024 and increased as a percentage of net sales by 30 basis points.
Primary operating capital was $852.9 million (yielding a primary operating capital percentage of 23.4%) at March 31, 2024 and $1,057.0 million (yielding a primary operating capital percentage of 26.7%) at March 31, 2023.
Primary operating capital was $932.2 million (yielding a primary operating capital percentage of 23.9%) at March 31, 2025 and $852.9 million (yielding a primary operating capital percentage of 23.4%) at March 31, 2024.
Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 1 - Summary of Significant Accounting Policies to the Consolidated Financial Statements in Item 8. In preparing our financial statements, management is required to make estimates and assumptions that, among other things, affect the reported amounts in the Consolidated Financial Statements and accompanying notes.
In preparing our financial statements, management is required to make estimates and assumptions that, among other things, affect the reported amounts in the Consolidated Financial Statements and accompanying notes.
This decrease was due to a 13% decrease in organic volume and an 1% decrease in foreign currency translation impact, partially offset by a 5% increase in pricing.
This decrease was due to a 2% decrease in organic volume, a 1% decrease in foreign currency translation impact, and a 1% decrease in pricing.
Operating earnings increased $73.2 million or 26.3% in fiscal 2024, compared to fiscal 2023 . Operating earnings, as a percentage of net sales, increased 230 basis points in fiscal 2024, compared to fiscal 2023. The Energy Systems operating earnings percentage of net sales increased 30 basis points in fiscal 2024 compared to fiscal 2023.
Operating earnings increased $113.2 million or 32.2% in fiscal 2025, compared to fiscal 2024 . Operating earnings, as a percentage of net sales, increased 300 basis points in fiscal 2025, compared to fiscal 2024. The Energy Systems operating earnings percentage of net sales increased 120 basis points in fiscal 2025 compared to fiscal 2024.
This decrease in sales was driven by a decrease in demand from telecommunication and broadband customers as a result of a pause in their capital spending, partially offset by stronger demand within the data center market. Net sales of our Motive Power segment in fiscal 2024 increased by $4.9 million, or 0.3%, compared to fiscal 2023.
This decrease in sales was driven by a capital spending pause by our telecommunication and broadband customers at the end of fiscal 2024 that continued but improved throughout fiscal 2025, partially offset by stronger demand within the data center customers. Net sales of our Motive Power segment in fiscal 2025 increased by $27.9 million, or 1.9%, compared to fiscal 2024.
During fiscal 2022, the Company recorded cash charges, primarily relating to severance of $8.1 million and non-cash charges of $3.5 million primarily relating to fixed asset write-offs. The Company also recorded a non-cash write off relating to inventories of $1.0 million, which was reported in cost of goods sold.
The Company also recorded a non-cash write off relating to inventories of $1.0 million, which was reported in cost of goods sold. During fiscal 2023, the Company recorded cash charges of $2.2 million relating primarily to site cleanup and $0.6 million of non-cash charges relating to accelerated depreciation of fixed assets.
The proceeds from Senior Notes were used to pay down our second and third amended term loans in the amount of $293.9. Additionally, we borrowed $182.5 million under the Second Amended Revolver and repaid $427.5 million of the Second Amended Revolver. Net repayments on short-term debt were $0.2 million.
During fiscal 2024, the Company issued $300 million in Senior Notes, due January 15, 2032. The proceeds from Senior Notes were used to pay down our second and third amended term loans in the amount of $293.9. Additionally, we borrowed $182.5 million under the Second Amended Revolver and repaid $427.5 million of the Second Amended Revolver.
Accrued expenses provided funds of $5.7 million primarily from increases to contract liabilities of $6.3 million, freight of $2.4 million, warranties of $2.2 million, and other miscellaneous accruals of $5.2 million partially offset by decreases to tax related liabilities of $7.8 million, including the decrease in income taxes payable of $17.3 million related to the IRA production credits, and interest payments net of accruals of $3.2 million. 46 Table of Contents During fiscal 2022, accounts receivable increased or used cash of $129.0 million due to higher revenue during fiscal 2022, as compared to a COVID-19 restricted revenue in fiscal 2021.
Accrued expenses provided funds of $5.7 million primarily from increases to contract liabilities of $6.3 million, freight of $2.4 million, warranties of $2.2 million, and other miscellaneous accruals of $5.2 million partially offset by decreases to tax related liabilities of $7.8 million, including the decrease in income taxes payable of $17.3 million related to the IRA production credits, and interest payments net of accruals of $3.2 million.
Approximately 25% of our revenue is now subject to agreements that adjust pricing to a market-based index for lead. Customer pricing changes generally lag movements in lead prices and other costs by approximately six to nine months. In fiscal 2024, customer pricing has increased due to certain commodity prices and other costs having increased throughout the year.
Customer Pricing Our selling prices increased over the last several years to offset the volatile cost of commodities. Approximately 25% of our revenue is subject to agreements that adjust pricing to a market-based index for lead. Customer pricing changes generally lag movements in lead prices and other costs by approximately six to nine months.
Cash provided by operating activities for 2023 was $279.9 million and cash used by operating activities in 2022 was $65.6 million. During fiscal 2024, accounts receivable decreased or provided cash of $108.6 million due to lower sales and strong collection efforts. Inventory decreased or provided cash of $75.6 million due to lower sales.
During fiscal 2024, accounts receivable decreased or provided cash of $108.6 million due to lower sales and strong collection efforts. Inventory decreased or provided cash of $75.6 million due to lower sales. Accounts payable decreased or used cash of $15.1 million.
If actual results were to differ materially from the estimates made, the reported results could be materially affected. 36 Table of Contents Revenue Recognition In accordance with ASC 606, we recognize revenue only when we have satisfied a performance obligation through transferring control of the promised good or service to a customer.
Revenue Recognition In accordance with ASC 606, we recognize revenue only when we have satisfied a performance obligation through transferring control of the promised good or service to a customer.
In establishing this rate, we consider historical and expected returns for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions. The expected return on plan assets is incorporated into the computation of pension expense.
We set the expected long-term rate of return based on the expected long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this rate, we consider historical and expected returns for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions.
Our average debt outstanding was $977.7 million in fiscal 2024, compared to our average debt outstanding of $1,303.4 million in fiscal 2023. Our average cash interest rate incurred in fiscal 2024 and fiscal 2023 was 4.9% and 4.6%, respectively.
Our average debt outstanding was $1.1 billion in fiscal 2025, compared to our average debt outstanding of $977.7 million in fiscal 2024. Our average cash interest rate incurred in fiscal 2025 and fiscal 2024 was 4.3% and 4.9%, respectively. The increase in interest expense in fiscal 2025 compared to fiscal 2024 is slightly higher borrowing levels.
Additionally, we borrowed $310.5 million under the Second Amended Revolver and repaid $500.5 million of the Second Amended Revolver and $5.2 million of the Second Amended Term loan. Net repayments on short-term debt were $21.7 million.
The proceeds of $300.0 million from the new Third Amended Term Loan were used to repay our 2023 Senior notes for the same amount. Additionally, we borrowed $310.5 million under the Second Amended Revolver and repaid $500.5 million of the Second Amended Revolver and $5.2 million of the Second Amended Term loan. Net repayments on short-term debt were $21.7 million.
During fiscal 2024, the Company recorded cash charges of $7.1 million primarily related to severance costs, relocation expenses, and manufacturing variances and non-cash charges totaling $0.4 million. The Company also recorded a non-cash write off relating to inventories of $3.1 million, which was reported in cost of goods sold.
The Company also recorded a non-cash write-off relating to inventories of $1.6 million, which was reported in cost of goods sold. During fiscal 2024, the Company recorded cash charges relating to site cleanup and decommissioning equipment of $4.4 million. During fiscal 2025, the Company recorded $0.5 million cash charges relating to site cleanup.
Gross Profit Fiscal 2024 Fiscal 2023 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Gross profit $ 982.8 27.4 % $ 840.1 22.7 % $ 142.7 17.0 % Gross profit increased $142.7 million or 17.0% in fiscal 2024 compared to fiscal 2023.
Gross Profit Fiscal 2025 Fiscal 2024 Increase (Decrease) In Millions As % Net Sales In Millions As % Net Sales In Millions % Gross profit $ 1,092.4 30.2 % $ 982.8 27.4 % $ 109.6 11.1 % Gross profit increased $109.6 million or 11.1% in fiscal 2025 compared to fiscal 2024.
Payment of cash dividends to our stockholders were $34.5 million, treasury stock open market purchases were $95.7 million, and payment of taxes related to net share settlement of equity awards were $9.2 million. Proceeds from stock options were $10.8 million, and payments for financing costs for debt modification were $4.1 million.
Net repayments on short-term debt were $0.2 million. Payment of cash dividends to 48 Table of Contents our stockholders were $34.5 million, treasury stock open market purchases were $95.7 million, and payment of taxes related to net share settlement of equity awards were $9.2 million.
Financing activities used cash of $270.5 million in fiscal 2023. During fiscal 2023, we entered into the Third Amended Credit Facility providing additional borrowing through the Third Amended Term Loan. The proceeds of $300.0 million from the new Third Amended Term Loan were used to repay our 2023 Senior notes for the same amount.
Proceeds from stock options were $10.8 million, and payments for financing costs for debt modification were $4.1 million. Financing activities used cash of $270.5 million in fiscal 2023. During fiscal 2023, we entered into the Third Amended Credit Facility providing additional borrowing through the Third Amended Term Loan.
During fiscal 2021, the Company recorded charges relating to severance of $23.3 million and $7.9 million primarily relating to fixed asset write-offs. 43 Table of Contents Impairment of indefinite-lived intangibles During fiscal 2024 and 2023, the Company recorded non-cash charges of $13.6 million and $0.5 million, respectively, related to impairment of indefinite-lived trademarks.
During fiscal 2021, the Company recorded charges relating to severance of $23.3 million and $7.9 million primarily relating to fixed asset write-offs. During fiscal 2022, the Company recorded cash charges, primarily relating to severance of $8.1 million and non-cash charges of $3.5 million primarily relating to fixed asset write-offs.
We discuss below the more significant estimates and related assumptions used in the preparation of our Consolidated Financial Statements.
We discuss below the more significant estimates and related assumptions used in the preparation of our Consolidated Financial Statements. If actual results were to differ materially from the estimates made, the reported results could be materially affected.
To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective tax rate in a given financial statement period could be materially affected. 39 Table of Contents Production Tax Credits Under the Inflation Reduction Act We continue to evaluate the extent of benefits available to us pursuant to the IRA, which we expect will favorably impact our results of operations in future periods.
To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective tax rate in a given financial statement period could be materially affected.
In fiscal 2024, the Company capitalized $4.1 million in debt issuance costs in connection with the 2032 Senior Notes and wrote off $0.8 million in issuance costs relating to our Second and Third Amended Term Loans. In fiscal 2023, the Company capitalized $1.2 million in debt issuance costs in connection with the Third and Fourth amended Credit Facilities.
The Company capitalized $4.1 million in debt issuance costs in connection with the 2032 Senior Notes and wrote off $0.8 million in issuance costs relating to our Second and Third Amended Term Loans. Included in interest expense were non-cash charges related to amortization of deferred financing fees of $1.9 million and $1.7 million in fiscal 2025 and fiscal 2024, respectively.
Prepaid and other current assets were a use of funds of $32.0 million, primarily from an increase of $13.6 million of contract assets, as well as an increase of $12.3 million in other prepaid expenses, such as taxes, insurance and other advances.
Prepaid and other current assets increased by $220.0 million, primarily from an increase of $192.1 million of prepaid taxes, $16.3 million of contract assets, $12.8 million in other prepaid expenses, such as insurance and other advances, offset by a decrease of $1.2 million of other current assets.
The Fourth Amended Credit Facility replaces the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) in the calculation of interest for both the Second Amended Revolver and the Second Amended Term Loan.
The Fourth Amended Credit Facility replaces the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) in the calculation of interest for both the Second Amended Revolver and the Second Amended Term Loan. On January 11, 2024, we issued $300 million in aggregate principal amount of our 6.625% Senior Notes due 2032 (the “2032 Notes”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+2 added−2 removed13 unchanged
Biggest changeOn September 29, 2022, we terminated our cross-currency fixed interest rate swap contracts with an aggregate notional amount of $300 million and executed cross-currency fixed interest rate swap contracts with an aggregate notional amount of $150 million, maturing on December 15, 2027.
Biggest changeWe hedge our net investments in foreign operations against future volatility in the exchange rates between the U.S. dollar and Euro. On September 29, 2022, we executed cross-currency fixed interest rate swap contracts with an aggregate notional amount of $150 million, maturing on December 15, 2027.
At March 31, 2024 such agreements effectively convert $200 million of our variable-rate debt to a fixed-rate basis, utilizing the one-month Term SOFR as a floating rate reference. Fluctuations in SOFR and fixed rates affect both our net financial investment position and the amount of cash to be paid or received by us under these agreements.
At March 31, 2025 such agreements effectively convert $200 million of our variable-rate debt to a fixed-rate basis, utilizing the one-month Term SOFR as a floating rate reference. Fluctuations in SOFR and fixed rates affect both our net financial investment position and the amount of cash to be paid or received by us under these agreements.
We estimate that a 10% increase in our cost of lead would have increased our cost of goods sold by approximately $72 million for the fiscal year ended March 31, 2024. Foreign Currency Exchange Rate Risks We manufacture and assemble our products globally in the Americas, EMEA and Asia.
We estimate that a 10% increase in our cost of lead would have increased our cost of goods sold by approximately $69 million for the fiscal year ended March 31, 2025. Foreign Currency Exchange Rate Risks We manufacture and assemble our products globally in the Americas, EMEA and Asia.
We had the following contracts outstanding at the dates shown below: Date $’s Under Contract # Pounds Purchased Average Cost/Pound Approximate % of Lead Requirements (1) (in millions) (in millions) March 31, 2024 $50.0 53.0 $0.94 8% March 31, 2023 47.9 50.0 0.96 8 March 31, 2022 56.8 54.0 1.05 8 (1) Based on the fiscal year lead requirements for the periods then ended.
We had the following contracts outstanding at the dates shown below: Date $’s Under Contract # Pounds Purchased Average Cost/Pound Approximate % of Lead Requirements (1) (in millions) (in millions) March 31, 2025 $63.8 70.0 $0.91 8% March 31, 2024 $50.0 53.0 $0.94 8% March 31, 2023 $47.9 50.0 $0.96 8% (1) Based on the fiscal year lead requirements for the periods then ended.
At March 31, 2024 and 2023, we estimate that an unfavorable 10% movement in the exchange rates would have adversely changed our hedge valuations by approximately $29.5 million and $32.7 million, respectively. 52 Table of Contents
At March 31, 2025 and 2024, we estimate that an unfavorable 10% movement in the exchange rates would have adversely changed our hedge valuations by approximately $75.5 million and $29.5 million, respectively. 53 Table of Contents
In order to hedge against increases in our lead cost, we have entered into forward contracts with financial institutions to fix the price of lead. A vast majority of such contracts are for a period not extending beyond one year.
Our largest single raw material cost is for lead, for which the cost remains volatile. In order to hedge against increases in our lead cost, we have entered into forward contracts with financial institutions to fix the price of lead. A vast majority of such contracts are for a period not extending beyond one year.
Those contracts that result in a liability position at March 31, 2024 are $20.9 million (pre-tax). Those contracts that result in an asset position at March 31, 2024 are $3.6 million (pre-tax). The impact on the Company due to nonperformance by the counterparties has been evaluated and not deemed material.
Those contracts that result in a liability position at March 31, 2025 are $34.0 million (pre-tax). Those contracts that result in an asset position at March 31, 2025 are $2.5 million (pre-tax). The impact on the Company due to nonperformance by the counterparties has been evaluated and not deemed material.
A 100 basis point increase in interest rates would have increased annual interest expense by approximately $0.4 million on the variable rate portions of our debt. Commodity Cost Risks—Lead Contracts We have a significant risk in our exposure to certain raw materials. Our largest single raw material cost is for lead, for which the cost remains volatile.
A 100 basis point increase in interest rates would have increased annual interest expense by approximately $1.1 million on the variable rate portions of our debt. 52 Table of Contents Commodity Cost Risks—Lead Contracts We have a significant risk in our exposure to certain raw materials.
We also selectively hedge anticipated transactions that are subject to foreign exchange exposure, primarily with foreign currency exchange contracts, which are designated as cash flow hedges in accordance with Topic 815 - Derivatives and Hedging.
Realized and unrealized gains and losses on these contracts are recognized in the same period as gains and losses on the hedged items. We also selectively hedge anticipated transactions that are subject to foreign exchange exposure, primarily with foreign currency exchange contracts, which are designated as cash flow hedges in accordance with Topic 815 - Derivatives and Hedging.
Excluding the cross currency fixed interest rate swap agreements, the vast majority of these contracts will settle within one year. 50 Table of Contents Interest Rate Risks We are exposed to changes in variable U.S. interest rates on borrowings under our credit agreements, as well as short term borrowings in the U.S. and our foreign subsidiaries.
Interest Rate Risks We are exposed to changes in variable U.S. interest rates on borrowings under our credit agreements, as well as short term borrowings in the U.S. and our foreign subsidiaries.
Depending on the movement in the exchange rates between the U.S. dollar and Euro at maturity, the Company may owe the counterparties an amount that is different from the notional amount of $150 million.
Depending on the movement in the exchange rates between the U.S. dollar and Euro at maturity, the Company may owe the counterparties an amount that is different from the notional amount of $600 million. Excluding the cross currency fixed interest rate swap agreements, the vast majority of these contracts will settle within one year.
Removed
We hedge our net investments in foreign operations against future volatility in the exchange rates between the U.S. dollar and Euro.
Added
On July 2, 2024, the Company entered into cross-currency fixed interest rate swap contracts with an aggregate notional amount of $150 million, maturing on January 15, 2029.
Removed
Realized and unrealized gains and losses on these contracts are recognized in the same period as gains and 51 Table of Contents losses on the hedged items.
Added
Additionally, on December 23, 2024 and December 24, 2024 , the Company entered into cross-currency fixed interest rate swap contracts each with an aggregate notional amount of $150 million, maturing on June 15, 2028 and December 15, 2026, respectively.

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