EnerSys Touts Data Center Growth, Lithium Trials and South Carolina Defense Pivot in Update Call

• EnerSys holds approx 55% US market share in lead-acid data center batteries and expects that lead-acid business to grow approx 20% this year; also introduced the first lithium data center battery tests and says lithium-driven sales are likely to be seen of funds 2028.

• A planned lithium plant in the South Carolina restructured to support US defense/military energy supply chains, EnerSys cites $200 million in funding for the Department of Energy (seeking reconfirmation) and about $200 million in state benefits, although plans remain aspirational until the government clarifies.

• The main priorities include about $75-$100 million of ongoing capex for the lead-acid footprint, approved $1 billion share repurchase program (the company aggressively buys stock), and approx $40 million per quarter with 45X profits expected $120 million return.

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EnerSys (NYSE:ENS) executives used the company’s update call to explain how the battery and energy storage provider is positioning itself for what CEO Shawn O’Connell described as two “major cycles”: energy security and labor shortages. Joined by CFO Andrea Funk and an investor relations representative, O’Connell emphasized that the company operates in niche, high-impact markets where it typically holds the No. 1 position. 1 or 2 and where long-term customer relationships, service capabilities, and application-specific knowledge can determine.

O’Connell said EnerSys has expanded beyond its roots as a lead-acid battery manufacturer and now offers a “full technology stack,” including batteries (with nine lithium chemistries), electric power, system management and integration software, and an in-house service organization staffed by EnerSys employees instead of subcontractors. He said the company is avoiding the electric vehicle market and the broader commercial and industrial markets, instead focusing on segments where it can “apply” and use proprietary information.

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The company has defined three main markets:

• Network and infrastructureincluding telecommunications service providers, Internet service providers, data centers, and energy utilities.

• Storage of goodsincluding the electrification of forklift fleets and Class 8 over-the-road truck applications, as well as battery energy storage systems (BESS) used to manage store energy demand.

• Aerospace and defenseincluding satellite batteries, submarine systems, unmanned vehicles and drones, military power, and weapons.

O’Connell highlighted EnerSys’ historic position in data centers, saying the company owns approx 55% US market share in lead-acid batteries are used to power the data center. He said EnerSys’ installed base and relationships with UPS original equipment manufacturers—citing Vertiv, Schneider, and Eaton—as well as direct partnerships with hyperscalers, put it in what he called “areas of high trust” where availability and service readiness are critical.

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While the company expects its lead-acid data center business to grow approx 20% this yearO’Connell identified lithium as a major growth vector, noting lithium accounts for approximately 60% to 70% of data centers related to greenfield AI. He said EnerSys is launching its plan first customer trials of the lithium data center battery offering “this month,” with efforts focused on product assurance, communication with UPS systems, and on-site performance.

In terms of timing, O’Connell said EnerSys is a “standard-setter” that expects lithium sales in data centers to begin to appear. of funds 2028 (the company operates in the fiscal year of April to March). He added that batteries are often ordered late in data center construction cycles, even if upstream components such as transformers carry lead times of several years.

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The managers also talked about the evolution of the industry 800-volt DC properties. O’Connell said EnerSys has long offered DC systems with batteries, the biggest change being moving from traditional 480-volt designs to 800-volt designs to improve efficiency and reduce copper requirements. He said the switch should be a “volume lift” for EnerSys because it will require more cells per system.

Separately, O’Connell discussed the needs of power quality in AI environments, describing battery technology as a near-term tool to control the rapid change of load. He said using batteries with power quality can accelerate battery wear, which can increase the need for replacement over time. He also highlighted the opportunity for fast, small-scale energy systems at the edge—an area where he said EnerSys has experience through its telecommunications, cable and broadband businesses.

EnerSys talked about its planned lithium plant in the South Carolinadescribing a strategic change in the way the project was built. O’Connell said the industry was started during the Biden administration when incentives were directed at EV chains, but that subsequent policy emphasis on “foreign entity of concern” (FEOC) laws and changes to EV credits changed the original premise. He said EnerSys has since begun discussions about supporting the US government’s plans to use batteries for the military, citing the risks of relying on China for military power systems.

O’Connell called the company’s statements “wishful thinking” until the final government “clarifies,” but said the talks were positive. He described the government’s intention to consolidate many of the military’s energy-related battery programs into a few programs and suggested that EnerSys could support that effort. He also said that a defense-oriented strategy would be less exposed to open market price changes because sales would be tied to programs rather than competing with lower package prices.

Funk said the company received a $200 million in funding for the Department of Energy (a grant, not a loan) he wants to reaffirm, noting that it is a cost-sharing arrangement and can be adjusted based on changes in scope. He also quoted $200 million in incentives for South Carolinawhich he described as long-term. Both administrations said more detailed financial updates will be provided once the plans are announced, and on time investor day on June 11 at the New York Stock Exchange.

Funk outlined EnerSys’ capital allocation priorities, starting with internal investments. He said the ongoing cost of the lead-acid footprint is expected to be approx $75 million to $100 million before considering a new lithium plant, and noted that this is subject to depreciation.

As for external growth, Funk said EnerSys is done more than 36 purchases since 2004 and continues to love deals on $100 million to $300 million scope in growth markets and margin acceptability, rather than changes or early-stage startups. He also said that the board approved a $1 billion share repurchase programand that the company has been buying stock “very aggressively.”

Funk also discussed EnerSys’ 45X benefitswhich the company finds about $40 million per quarterit is considered a reduction in selling expenses and is not subject to tax. He said the debt currently offsets the state’s income tax liability and refers to expectations $120 million refund which was due “this month,” adding that any delay would incur interest. Funk linked the move to decisions to invest in US energy, including moving production from Monterrey to Kentucky and announcing the closing of the Tijuana plant and moving production to Missouri.

O’Connell said his “Energize” plan—focused on expanding the core business, strengthening the operating model through centers of excellence, and accelerating growth—has progressed ahead of expectations, pointing to cost reductions, efficiencies, and rapid customer-driven redesign work. He also emphasized that EnerSys competes in different markets than the larger EV-focused battery players, stressing that the company’s value addition extends beyond the cell through integration, connectivity, regulatory requirements, and service.

Enersys, headquartered in Reading, Pennsylvania, is a global leader in energy storage solutions, specializing in the manufacturing and distribution of industrial batteries, battery chargers, power tools, and related accessories. The company serves a variety of end markets, including telecommunications, data centers, medical, aerospace, defense, electric vehicle power, and utility products. Its products are designed to deliver critical energy storage and power applications across critical infrastructure and industries.

The company’s product portfolio includes lead-acid batteries, lithium-ion energy storage systems, chargers, inverters, power management software, and a range of battery accessories.

The article “EnerSys Touts Data Center Growth, Lithium Trials and South Carolina Defense Pivot in Update Call” was first published by MarketBeat.