Thanks, Sarah. Good morning, and thank you for joining us for our fourth quarter and full year earnings call. On the call with me this morning is Mike Schmidtlein, our Chief Financial Officer. Last evening, we posted on our website slides that we will be referencing during the call this morning. If you didn't get a chance to see this information, you can go to the webcast tab in the Investors section of our website at www.enersys.com. I'm going to ask Mike to cover information regarding forward-looking statements.

Thank you, Dave, and good morning to everyone. As a reminder, we will be presenting certain forward-looking statements on this call that are based on management's current expectations and views regarding future events and operating performance and are subject to uncertainties and changes in circumstances. Our actual results may differ materially from the forward-looking statements for a number of reasons. Our forward-looking statements are applicable only as of the date of this presentation. For a list of factors which could affect our future results, including our earnings estimates, see forward-looking statements included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in our annual report on Form 10-K for the fiscal year ended March 31, 2020, which was filed with the U.S. Securities and Exchange Commission. In addition, we will also be presenting certain non-GAAP financial measures. For an explanation of the differences between the comparable GAAP financial information and the non-GAAP information, please see our company's Form 8-K, which includes our press release dated June 1, 2020, which is located on our website at www.enersys.com. Now let me turn it back to you, Dave.

Thanks, Mike. I would like to spend the first few minutes of this morning's call providing an update on how COVID-19 is impacting our business and the things we are doing to confront this challenge. Despite the many challenges this pandemic has brought with it, our focus has been on the health and safety of our employees worldwide. Wherever possible our employees are working from home and every factory is operating in compliance with all applicable health and safety guidelines, rules, and regulations. I am extremely proud of the responsiveness and adaptability of our employees in the face of this crisis. Morale has stayed high as the teams continue to pull together to get the job done for our customers. I'll talk more about our go-forward strategy in this COVID environment later in the call. I'd like to move on to Slide 3. The most significant COVID-related impact on EnerSys was the forced closure of our electric forklift and Class 8 over-the-road OEM truck customers in April, which had an immediate impact and significant effect on order rates. While these customers' facilities have since reopened, many are not operating at full capacity due to market demand or their supply chain disruptions. Though our May sales looks much stronger than April, given the uncertainty about the full size and shape of the truck OEM recovery, we are not in a position to provide forward-looking guidance at this time. While we have only seen minor supply chain disruptions, our largest factories around the world have continued to operate given the vital nature of our products in many critical infrastructure markets, including communications, information technology, defense, energy, and transportation systems. I'd like to move on to Slide 4. In light of the headwinds caused by the COVID outbreak during this quarter, we were…

Thanks Dave. For those of you following along on our webcast, I'm starting with Slide 8. Our fourth quarter net sales decreased 2% over the prior year to $782 million due to a 3% decrease from volume, a 2% decrease in currency net of the 3% increase from acquisitions. On a regional basis, our fourth quarter net sales in the Americas were up 6% to $537 million, while EMEA’s net sales were down 13% at $199 million and Asia decreased 25% in the fourth quarter to $46 million driven by the COVID pandemic. Americas enjoyed a 4% increase from volume and 3% from acquisitions less a 1% decrease in currency. EMEA had a 4% increase from acquisitions, but incurred a 14% volume decrease and 3% in negative currency. Asia had a 20% volume, 4% currency, and 1% price decline as COVID hit this region hardest in our fourth quarter. On a product line basis, net sales for motive power were up 2% year-over-year at $353 million, while reserve power was down 5% to $429 million. Reserve power had an 8% volume, 1% price and 2% currency declines offset by 6% in acquisitions. Motive power had a 1% increase in price, less than 2% foreign currency decline while volume was up 3%. Please now refer to Slide 9, on a sequential basis fourth quarter net sales were up 2% compared to the third quarter fiscal 2020, driven by a 2% volume and 1% price improvements offset by 1% currency decline. On a geographical basis, Americas was up 7%, as motive power recovered from the fire in Richmond, Kentucky. While EMEA was down 2% and Asia was down 22% as the spread of the COVID virus particularly impacted our Asian region. On a product line basis, reserve power was down 4%, while…

Thanks Mike. Sarah, we can now open the line for questions.

[Operator Instructions] Our first question comes from the line of Noah Kaye with Oppenheimer. Your line is now open.

Hey, good morning. And thanks for taking the questions. I guess to start, can we maybe unpack a bit the trends that you outlined on Slide 3, you are really talking about the trends you observed in April and May, can you kind of help us walk through and if possible quantify what the downturn looked like in motive and how that started to recover in May, if you can? And then, it also sounds like on the – in some of the reserve markets, in telecom particular you mentioned that it may be trending better than kind of rates exiting your fiscal fourth quarter. So can you just – anything you can do to kind of help us quantify the trough you saw and how to think about kind of revenue run rate?

Yes, I would say the low point in the orders hit around Easter, I would say that seemed to be where things bottomed out and they've been improving fairly, steadily and predictably every week since. And that trend has continued obviously through May and into June we expect that. Almost all I can say – maybe all of our big OEM customers have since reopened, now they've opened – they've reopened the different levels of production. Some of them opened up at, I think the lowest I heard was 50%, I would say the majority of my heard opened up around 70%, and with how they exit this month, we've heard a mixed – it's a range, but I would expect most of them will exit this month between like 70% and 100%, so some of the big ones expect to be fully ramped back up to a 100% by the end of this month. So things are coming back to normal in that part of the business, it was a bit of a shock, obviously when the orders just slowed down so quickly around the early part of April, but to Mike's point we've been scrapping it out of other parts of the business. As I said in my prepared remarks, Noah, the orders coming in from the retailers directly has really held up and especially the home improvement sector, I think that's been – that's helped mitigate some of that depression. I think the, we talked about it's really – there's three types of electric trucks, there's Class 1, which are the big sit-down rider forklift trucks those have pretty good sized batteries. Then there's Class 2, those are the narrow aisle trucks. And then the Class 3 are the walkie trucks. And then Class 8, are the…

Yes. It's helpful, certainly and thanks. The other part of the question was on the reserve side. And is it fair to say, just based on your comments, it sounds like up double digits in the telecom business kind of now versus where you were at in the fourth quarter, that feels like directionally the right way?

Yes. I don't want to say definitively where it's going to finish in Q1, but certainly the battery piece is strong. As folks are out there, hardening their networks. On the equipment side, it's still – I think the – we've got a couple of big projects going. And the biggest projects we're working on right now are related to 5G. As I noted in my prepared remarks, we think that some of the COVID stuff and I'm not trying to – it's still super exciting and it's like I said more important than ever. But there’s some of the schedules have shifted out a month or two, so on the telecom equipment side, we know it's common, we get the forecast, we see it and feel it from the customers, but the battery side has definitely improved dramatically on the telco side. And we expect equipment piece is going to follow shortly.

Okay, great. If I could ask one more and before turning it over, you mentioned expectations around gross profit, gross margin rates and you mentioned some of the efforts, I think you said Mike in your remarks that you're looking at conserving a couple of hundred million dollars in cash, I guess, just one. How should we be thinking about the decremental EBIT margins in general here, where are you kind of managing to? And two, can you give us some more color on what you're flexing besides CapEx to kind of get to that couple of hundred million dollars of cash savings?

Well, the – I'll answer the latter part of your question first. I think that the two biggest pieces to your point was roughly $50 million of CapEx and the other one was, our expectation is that we can take up to $100 million of inventory out not only because of potentially slightly less volume, but remember we're not going to be shipping as much across the ocean as we were a year ago, now that we have NorthStar and we're making better progress there. So the inventory was the second part of that. There were other pieces that we've included, we did not issue a pay increase this year and there's some other smaller items that add-up to that $200 million so. And with regard to the margins and my comment was referencing the gross profit margin, but obviously that should flow back through, but our gross profit margin probably in comparison with the 25% to 26% rate, it's probably going to have a 100 basis point to 200 basis point degradation. And EBIT is probably going to be about 100 points down, I think from what your normal expectations were. So that's about as good a color. The bigger question becomes the top line, and the top line becomes so much more of a question, I think just because of some of the virus mandates and factories that are or are not opening up, it's just hard to predict when those are going to happen or whether any new additional restrictions might be incurred.

Yes. Understood, that's very helpful color. Thanks.

Thank you. Our next question comes from the line of Brian Drab with William Blair. Your line is now open.

Hi, I'm Brian Drab with William Blair. Thanks for taking my questions. Just following up Mike on that last point, the gross margin down, I think you just said a 100 basis points to 200 basis points, what time period are you talking about specifically?

I was talking about the first half.

Yes. So in the second half, how bigger tailwind will you get from lead being down 18% to 20% here? I know that you've had some there, but I mean that seems to me like that at almost one-third of your cost of goods that should be a big deal, six months from now maybe even, I don't know if it's $0.20, $0.25, $0.30 a quarter and then the freight cutting, – freight cost cutting that you just mentioned, how bigger deal is that for gross margin six months from now?

The lead costs themselves can have a 200 basis point to 300 basis point swing. So I would say all things being equal, if today's spot prices kind of remain for the next 60 days, at least our third quarter is probably going to benefit by 200 basis points on the list. So to your point, we're still hedging, although we're hedging at lower rates than you might have seen us in the past. So the freight costs, you should save a little bit more on overall freight just in terms of the amounts shipped, I think everyone is expecting their freight rates themselves to drop not only because of lower demand, but because of the fuel prices being down. So hopefully that's a double benefit for us and freight is a big number in our game so that could have another 50 plus basis point improvement. And the tariffs I did mention that we received some exclusions or let me make clear what my comments were, we received some exclusion primarily on our Alpha-made products that we received them last – this last fiscal year ended March, 2020. We have not received the funds back from customers on that and consequently, we are withholding recognition of that benefit or recovery until the cash is in, but that's about a $5 million benefit that hopefully we'll see in the first half of this year.

Okay. Thanks. And have you seen, related to NorthStar the synergies associated with freight yet or is that in synergies in general or is that still going to show up in the numbers later this year? And can you put a finer point on when we see that?

Yes. I would say Brian, most of that is still ahead of us. There's a little bit of delays for example, one of our big customers over there Daimler, there's certain ISO like approvals we need to get at our French factory in order to ship it. Everyone wants it, they want a shorter supply chain. We want a shorter supply chain. It's just a few of these hurdles that we have to jump through. That's one of the things. And then the biggest issues we've mentioned, there's been a little bit of delay starting up in commissioning some of our new equipment, because we had European suppliers. So that's pushing some of those savings out because of tooling issues and where we're too – we have to tool up different SKUs and different factories. So I would say, in general COVID has pushed a lot of those savings more towards the second half of the year, for sure.

Okay. And then I'll just ask one more for now and bear with me here. I think that this might be helpful for us to understand, but in May, the level of demand that you saw, how did that, forget April, but how did May compare with February and March? Can you give us any sense – I'm just trying to figure out where we are relative to, forget the worst of COVID, in May are you back to levels that are somewhat normal or are still far off from that?

Well, no, I would say we're getting back to normal. I wouldn't say we're there yet, but very much improved versus April for sure. And yes, you're right, April is the month we’re all going to forget.

Yes.

Yes it's getting – it's – I'm hoping to leave June at some simulative normal. So where some of our OEM customers may be aren't back we can hopefully recover those bits in other parts of the business.

Okay. Thank you very much.

All right.

Thank you. [Operator Instructions] Our next question comes from the line of John Franzreb with Sidoti. Your line is now

Good morning guys.

Hi, John.

Regarding cost savings how much do you expect to take out in 2021? And of that how much is fixed versus variable?

Hold on John, I got a reference. So, the salary freeze that we talked about is somewhat across the Board, but that's I'll count most of it is the fixed piece. There's been a number of other – we have a tremendous amount of temporary labor throughout the fleet that we use to flex, particularly in EMEA, where adding permanent employees is such an expensive endeavor. So as we've reduced those employees we've been able to do that much more cost effectively in that, that one certainly is a variable component. But if you think about just things like the travel restrictions that we've had, sales meetings, customer trips, there's been a fairly substantial amount of that that would show up in the selling and other operating expenses which we might normally think of as fixed expenses. But in this instance they would become more variable. So I guess to answer your question, I would say it's probably a fifty-fifty blend between what our fixed and variable costs that we've been able to reduce on that call it $40 million number.

Okay. All right. And in regards to Exide and the other competitor, can you talk a little bit about the pricing environment in Europe and maybe a little bit of color also in North America? Exide has been in and out of bankruptcy a couple of times doesn't seem like you've been interested in the assets before. I can't imagine you're interested in the assets now. But more the pricing environment and how you expect that kind of to play out across the continents?

Yes, what was interesting about this bankruptcy John, was that they've bifurcated the company between the U.S. and Europe. I would say in Europe, it's going to be business as usual. I don't foresee many changes or impacts. I think when it comes to the U.S. their position I just don't think that especially given the current demand environment, I think, that it shouldn't have a meaningful impact one way or the other would be my best counsel at this point. It's very hard to say, I don't want to say too much, obviously it's a sensitive issue right now, given that they are in the midst of that process. But by and large, I would say I don't expect it to have meaningful impact on the pricing environment per se in either region.

Okay. And just, I guess one last question, and I'm sure I missed this, but how much is left outstanding in the insurance claims? And do we expect that to be wrapped up by the June quarter?

All right, so we had stated previously that our total amount of claims between the property and casualty and the business interruption was just under $50 million. So I believe that we're probably – we were at – we've collected in cash to date, a total of about $26 million. So let's say that we are somewhere over 50% on the claim now. Obviously the insurer has to review the claim. They may have different thoughts on the matter. And to our point in our stated remarks, the fact that some of our employees are working remotely, not only at the location where we need to get supporting information, but in other locations and the consultants that are hired by us, the consultants hired by insurance carrier, the insurance carrier, everybody is working remotely. So, the hope that we could have this thing wrapped up in the fourth quarter, kind of went out the window by the middle of March. But I'm still hopeful, it's now June 2. And the month ends in about 33, 34 days. So I know we're going to make additional progress because we've made that progress, but how much further can we say that we'll be done, I think, we accelerated our claim process versus apparently what other parties do when they have these types of losses. So we're probably trying to push the envelope a little faster than normal and we are doing it in a time where that is kind of difficult. But we'll certainly make progress in Q1. I can't promise we'll be wrapped up in Q1.

Got it. One last question. Dave, if I may, when do you think you are going to bring the team back together to ready?

I mean, a lot depends on Governor, Wolf. I would say probably starting around June 21 maybe is sort of my goal. And then we run into the July 4 holiday. So certainly by the return of the July 4 holiday. John, I got to say it really has not been – I think, the Mike's group has had the most stress. They've been trying to close the year, and the quarter, and that's very still paper-centric, unfortunately. So that team I'm really proud of them. They've worked their tails off in the past several weeks. But other than that, and then [indiscernible] kept the labs open. So other than some of the lab technicians and getting some of those engineers back in the labs it's – there's not – I don't feel a gun to our head and we just want to do it gracefully, and we want everyone to feel good about it. But I would say starting late June, probably coming out of the July 4, and of course, we're going to have to follow all of the distancing and protective equipment guidelines as outlined by the State of Pennsylvania. But it's going to happen in the coming weeks.

John, just as a reminder, and I'll say this cause I'm sitting in the Warrensburg factory, which is where I've been in the last two months. And here life is fairly normal. There is a small component of our office staff that are working remotely, but by and large parking lots full and life has been pretty normal, I think, in a lot of our factories.

Okay. We don't get too comfortable, Mike. Thanks for taking my questions.

No worries. Thanks.

Thank you. Our next question comes from the line of Greg Wasikowski with Weber Research. Your line is now open.

Hey, good morning guys. This is actually Mike on the line for Greg. How you doing?

Hello Mike.

Good. How are you doing?

Good. Thanks for making time. A lot of my questions have been already touched on, but I did want to loop back on some of your costs. And I know someone asked earlier a bit on lead pricing and you kind of touched on your ability to hedge kind of generally there. But I was wondering if you to get a bit more specific around maybe how aggressive can you get down here to take advantage of softer pricing, both, I guess, from a capacity perspective and then from a risk perspective? Where kind of the goalposts that you would use to kind of think about being aggressive down here and locking in similar pricing in wider margin?

Well, hedging – the hedges that you make is the spot rate declines is always probably more painful than when lead is going up and you don't hedge.

Sure.

Because when lead is going up and you don't hedge, you can at least point to the spot prices to support your price increases. But when lead is going down and you're paying the lead from a forward contract you made 90 days earlier, that is harder to justify. But let me just start Mike, by saying most of our European region have contractual obligations where they simply pass this through on a formula-driven basis. So for them it's just a do the math and plug in the number. And so even though we never get the timing perfect in terms of when the costs hit our P&L versus the revenue and our customers can time their purchases to some extent, to kind of, on the margins get a little bit better deal. If they think the lead price is going up in the upcoming period, they will order more before the price goes up. And if they think lead is about to fall, they will order less. In the Americas, it's much more of a stated price list and then it's discounts off that on the motive power side. And on the reserve power it's more of a contractual driven where the prices are probably a little stickier. But you have to be aware of what your competition is doing. And you normally expect rational [indiscernible] find ourselves in. But that's the only caveat I would give you is if for some reason that the logic of the pricing throughout the competitive field were to break down, that's the only thing that you would have to be worried about.

Got you. So we shouldn't view it as kind of a minor lever for you guys to pull at times like this, when we get kind of a softer patch? It's not something you have the framework really in place to play with all that much.

Like I said, pricing in Americas tends to have less changes perhaps both on the upside and downside. In EMEA, it just goes with what the formula is based upon.

Got you, okay. That's helpful. You mentioned one of your earlier questions as well around kind of long-term margins and kind of some of the shifts you are making in labor, particularly internationally, and the headwinds associated kind of bringing on permanent employees versus, I guess, presumably independent contractors. Is that more EMEA focused versus Asia Pacific just due to the kind of the higher taxation and regulatory hurdles there? And should we view those changes as permanent, or would we think maybe in Asia Pacific that's more of an intermediate term shifts kind of measured in several quarters or a year or two versus something maybe more systemic in EMEA?

Yes, I would say that it's much more prevalent in EMEA to have contract employees. And you have permanent workforce that have been there for a decade or more. And then you have a temp force that works and turns over slightly higher and the price you pay for perhaps high return at the lower seniority levels is you don't have quite the severance cost if you need to flex your business. So in Asia, you don't see that concept of temp employees traditionally, because the demand for, or the ability for them to find other work has allowed – hasn't allowed temp labor to kind of catch on, so to speak. Although severance costs in Asia don't underestimate those costs. They are fairly generous relative to what you pay the employee. The severance costs can be fairly high there. But right now I would say our plants in Asia have already pretty much [indiscernible] we've dismiss the temporary labor. We largely feel like we've got the staffing levels where we need to be for the foreseeable future. And most of that happened in late March and early April.

Okay, okay. All right, guys I appreciate the time. Thanks.

Thanks Mike.

Thank you. This concludes today's question-and-answer session. I would now like to turn the call back to David Shaffer for closing remarks.

Thanks, Sarah. And I want to thank everyone for attending and taking your time to attend our call today. We look forward to providing further updates on our progress on our first quarter 2021 call in August. Have a great day. Bye-bye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.