EnerSys Touts AI Data Center and Defense ‘Super Cycles’ at Oppenheimer Conference

Key Points

• EnerSys says it is positioned for two major growth “super cycles”: AI/data centers and defense electrification, with management highlighting strong demand across network infrastructure, warehousing, and specialty applications. Data centers and related grid/communications systems already account for a large share of sales.
• The company plans to clarify its growth strategy at an upcoming Investor Day, emphasizing a shift away from broad commodity battery markets toward niche, mission-critical applications where it has customer relationships and operational expertise. Management also pointed to the EnerGize reorganization and a more balanced mix of lead-acid and non-lead-acid products.
• EnerSys sees a significant opportunity in data center UPS and is expanding manufacturing capacity while keeping an eye on tariffs and supply chain risks. It is also reworking its planned lithium plant toward defense-focused uses, including drones and soldier power platforms, rather than EV cell production.

Enersys NYSE: ENS management outlined the company’s growth priorities in data centers, defense, warehousing and energy storage during a discussion at Oppenheimer’s 21st Annual Industrial Growth Conference, emphasizing what President and CEO Shawn O’Connell described as exposure to two major “super cycles.”

Speaking with Oppenheimer Managing Director Noah Kaye, O’Connell said EnerSys provides stored energy solutions across batteries, power electronics, software systems and services for “the most mission-critical applications on the planet.” He said the company is positioned to benefit from demand tied to artificial intelligence infrastructure and the broader communications and utility networks supporting it, as well as aerospace and defense electrification trends.

O’Connell said EnerSys’ network infrastructure business, including telecommunications, utilities and data centers, represents about 42% of sales. Warehousing and logistics accounts for about 41%, while specialty applications, including aerospace and defense, represent about 17%.

CEO Highlights Data Center and Grid Tailwinds

O’Connell said data center growth is creating demand not only inside facilities but across the electrical grid and communications networks. He said EnerSys has a “commanding position” in data centers, communications, utility substations and switchgear control applications.

He also pointed to the company’s warehousing and logistics business, where EnerSys manages electric forklift batteries in more than one out of two U.S. warehouses, according to O’Connell. He said warehouse operators face similar grid constraints as larger technology companies but often lack the same resources to address them.

EnerSys can provide battery energy storage systems that work alongside forklift batteries to reduce costs and improve energy security, O’Connell said. He also framed labor scarcity as a key challenge for customers, saying EnerSys can address it through software that reduces manual intervention and through its own service workforce.

“When that’s not possible, it’s actually an EnerSys employee, not a contractor that shows up to work on our systems,” O’Connell said.

EnerGize Framework Focuses Resources

O’Connell, who became CEO roughly a year ago, said EnerSys has reorganized under what it calls the “EnerGize” framework. The initiative includes centers of excellence for asset-light contract manufacturing and electronics supply chain, lead-acid operations and lithium technology.

He said the lead-acid center of excellence has grouped supply chain, engineering, process control and operational management to capture cost synergies in the company’s legacy lead business. O’Connell also said EnerSys has produced nine lithium chemistries for decades and intends to apply that expertise more broadly.

Asked about the current revenue mix between lead-acid and non-lead-acid offerings, O’Connell said the company had historically been more than 95% dependent on lead-acid batteries for monetization but is now “trending much, much lower.” He suggested a roughly 60/40 lead-acid to non-lead-acid split, which CFO Andi Funk characterized as directionally close while noting the company had not provided a specific figure publicly.

Investor Day to Clarify Growth Model

O’Connell said EnerSys plans to use its upcoming Investor Day to simplify its story and explain how it intends to grow faster than traditional industrial growth rates. He said management wants investors to understand that EnerSys is not targeting broad commodity battery energy storage markets, but rather niche applications where it has existing customer relationships and operational expertise.

He cited warehouses as an example, saying EnerSys understands forklift manufacturers, battery operations and warehouse energy needs better than larger competitors that may focus on broader commercial and industrial markets.

O’Connell said the company also intends to outline a “credible and replicable model” for earnings per share growth, using disciplined operating expense leverage, new product introductions, industry tailwinds, mergers and acquisitions, and capital allocation.

Manufacturing Footprint and Lithium Plant Plans

EnerSys is consolidating parts of its manufacturing footprint while expanding in areas management sees as future growth markets. O’Connell said the company had been capacity constrained in Tijuana for data center products and has invested in Missouri to increase thin plate pure lead, or TPPL, capacity. He said TPPL offers better density than the older lead-calcium battery format previously made in Tijuana.

O’Connell also discussed plans for a lithium plant in Greenville, saying the company still feels “very good” about the project, though an announcement has moved “at the pace of government.” He said the project’s scope is likely to differ from what the company would have described a year ago, with more focus on defense-related applications such as drones and soldier power platforms rather than electric vehicle cell formats.

He said the defense focus could reduce exposure to weekly commercial fluctuations in the EV battery supply chain. O’Connell also said EnerSys has partnerships with the defense apparatus that can help fund equipment and expansion tied to a munitions backlog.

Tariffs and Data Center UPS Opportunity

Funk provided detail on tariff exposure, saying about 22% of EnerSys’ U.S. sourcing is exposed to tariffs. She said the company has about $70 million of annualized exposure, including roughly $50 million to $60 million of direct exposure and $10 million to $15 million of indirect exposure in fiscal 2026. Funk said supply chain mitigations have addressed about $25 million to $30 million, leaving around $40 million of net tariff exposure, which she said the company has proactively offset.

In data centers, O’Connell said EnerSys continues to see growth in lead-acid products, including greenfield builds. He said lead-acid can retain advantages where local authorities, building architecture, fire suppression limitations, customer risk tolerance or cost make lithium less attractive. He added that TPPL batteries can replace traditional lead-acid batteries in existing sites without major modifications.

O’Connell said EnerSys’ data center UPS revenue is approaching $450 million and is currently all lead-acid. He said lithium presents a large opportunity as more greenfield data centers move toward lithium-based stationary UPS systems, though he emphasized that EnerSys currently has zero lithium market share in that area and must prove its system.

Funk said one gigawatt of stationary UPS systems using EnerSys batteries equates to about $100 million in sales. She said total data center capacity is expected to reach about 100 gigawatts by 2030 and that the centralized UPS portion of the addressable market could be around $7 billion by then.

O’Connell said EnerSys’ differentiation in lithium UPS would come from customer trust, supply chain execution, installation, aftercare services and system-level expertise beyond the cell itself. He said some large customers have asked EnerSys to service competitors’ lithium products until EnerSys has its own offering ready, which he said underscores the company’s “right to win.”

He also said AI workloads are creating intermittent load patterns that can stress battery systems, with some operators seeing lithium batteries last two to three years under high intermittency. O’Connell said larger DC systems and centralized backup needs in data centers should remain tailwinds for EnerSys.

About Enersys NYSE: ENS

Enersys, headquartered in Reading, Pennsylvania, is a global leader in stored energy solutions, specializing in manufacturing and distributing industrial batteries, battery chargers, power equipment, and related accessories. The company serves a diverse range of end markets, including telecommunications, data centers, medical, aerospace, defense, electric vehicle motive power, and utility outcomes. Its products are engineered to deliver critical reserve power and motive power applications across key infrastructure and industrial sectors.

The company's product portfolio encompasses lead-acid batteries, lithium-ion energy storage systems, chargers, inverters, power management software, and a broad array of battery accessories.

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