EnerSysENS
EnerSys Fair Value Disclosure
Fair Value of Financial Instruments
Recurring Fair Value Measurements
The following tables represent the financial assets and (liabilities) measured at fair value on a recurring basis as of March 31, 2026 and March 31, 2025 and the basis for that measurement:
| Total Fair Value Measurement March 31, 2026 | Quoted Price in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||
| Lead forward contracts | $ | (3,521) | $ | — | $ | (3,521) | $ | — | ||||||||||||||||||
| Foreign currency forward contracts | 1,173 | — | 1,173 | — | ||||||||||||||||||||||
| Interest rate swaps | (68) | — | (68) | — | ||||||||||||||||||||||
| Net investment hedges | (69,990) | — | (69,990) | — | ||||||||||||||||||||||
| Total derivatives | $ | (72,406) | $ | — | $ | (72,406) | $ | — | ||||||||||||||||||
| Total Fair Value Measurement March 31, 2025 | Quoted Price in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||
| Lead forward contracts | $ | (225) | $ | — | $ | (225) | $ | — | ||||||||||||||||||
| Foreign currency forward contracts | 1,629 | — | 1,629 | — | ||||||||||||||||||||||
| Interest Rate Swaps | 5 | 5 | ||||||||||||||||||||||||
| Net investment hedges | (33,002) | — | (33,002) | — | ||||||||||||||||||||||
| Total derivatives | $ | (31,593) | $ | — | $ | (31,593) | $ | — | ||||||||||||||||||
The fair values of lead forward contracts are calculated using observable prices for lead as quoted on the London Metal Exchange (“LME”) and, therefore, were classified as Level 2 within the fair value hierarchy as described in Note 1, Summary of Significant Accounting Policies.
The fair values for foreign currency forward contracts and net investment hedges are based upon current quoted market prices and are classified as Level 2 based on the nature of the underlying market in which these derivatives are traded.
The fair value of interest rate swap agreements are based on observable prices as quoted for receiving the variable one month term SOFR and paying fixed interest rates and, therefore, were classified as Level 2.
Financial Instruments
The fair values of the Company’s cash and cash equivalents approximate carrying value due to their short maturities.
The fair value of the Company’s short-term debt and borrowings under the Second Amended Credit Facility (as defined in Note 10), approximate their respective carrying value, as they are variable rate debt and the terms are comparable to market terms as of the balance sheet dates and are classified as Level 2.
The fair value of the Company's 2032 Notes and 2027 Notes, (collectively, the “Senior Notes”) represent the trading values based upon quoted market prices and are classified as Level 2. The 2032 Notes were trading at approximately 102% and 101% of face value on March 31, 2026 and March 31, 2025, respectively. The 2027 Notes were trading at approximately 99% and 96% of face value on March 31, 2026 and March 31, 2025, respectively.
The carrying amounts and estimated fair values of the Company’s derivatives and Senior Notes at March 31, 2026 and 2025 were as follows:
| March 31, 2026 | March 31, 2025 | |||||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||
Senior Notes (1) | $ | 600,000 | $ | 601,425 | $ | 600,000 | $ | 591,420 | ||||||||||||||||||
Derivatives (2) | 72,406 | 72,406 | 31,593 | 31,593 | ||||||||||||||||||||||
(1)The fair value amount of the Senior Notes at March 31, 2026 and March 31, 2025 represent the trading value of the instruments.
(2)Represents lead, foreign currency forward contracts, interest rate swaps, and net investment hedges (see Note 14 for asset and liability positions of the lead, foreign currency forward contracts, interest rate swaps, and net investment hedges at March 31, 2026 and March 31, 2025).
Non-recurring fair value measurements
The valuation of goodwill and other intangible assets is based on information and assumptions available to the Company at the time of acquisition, using income and market approaches to determine fair value. The Company tests goodwill and other intangible assets annually for impairment, or when indications of potential impairment exist (see Note 1).
Goodwill is tested for impairment by determining the fair value of the Company’s reporting units. The unobservable inputs used to measure the fair value of the reporting units include projected growth rates, profitability, and the risk factor premium
added to the discount rate. The remeasurement of the reporting unit fair value is classified as a Level 3 fair value assessment due to the significance of unobservable inputs developed using company-specific information.
The inputs used to measure the fair value of other intangible assets were largely unobservable and accordingly were also classified as Level 3. The fair value of trademarks is based on an estimate of the royalties saved that would have been paid to a third party had the Company not owned the trademark. The fair value of other indefinite-lived intangibles was estimated using the income approach, based on cash flow projections of revenue growth rates, taking into consideration industry and market conditions.
On November 8, 2023, the Company's Board of Directors approved a plan to stop production and operations of residential renewable energy products, which included the OutBack and Mojave brands. 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. As a result the Company's indefinite-lived trademark, which were acquired through acquisition, was recorded at fair value on a non-recurring basis at $880 and the remeasurement resulted in an impairment of $6,020 in the third quarter of fiscal 2024. In determining the fair value of these assets, the Company used a royalty rate of 1.5% based on comparable market rates and used discount rate of 24.5%. The inputs used to measure the fair value were largely unobservable and accordingly were classified as Level 3.
In the fourth quarter of fiscal 2024, the Company finalized a strategy to stop marketing certain brands including the Purcell products. These indefinite-lived trademarks, which were acquired through acquisitions, were recorded at fair value on a non-recurring basis at $7,599 and the remeasurement resulted in the full impairment charge of the carrying value.
In the fourth quarter of fiscal 2026, the Company decided to exit the Sao Paulo, Brazil operations. Associated indefinite-lived trademarks, which were acquired through acquisitions, were recorded at fair value on a non-recurring basis at $402 and the remeasurement resulted in the full impairment charge of the carrying value.
These impairment charges are included under the caption Impairment of indefinite-lived intangibles in the Consolidated Statements of Income.
Hagen, Germany
In fiscal 2021, the Company committed to a plan to substantially close all of its facility in Hagen, Germany, which produces flooded motive power batteries for forklifts. Management determined that future demand for the motive power batteries produced at this facility was not sufficient, given the conversion from flooded to maintenance free batteries by customers, the existing number of competitors in the market, as well as the near term decline in demand and increased uncertainty from the pandemic. As a result, the Company concluded that the carrying value of the asset group was not recoverable and recorded a write-off of $3,975 of the fixed assets to their estimated fair value of $14,456, which was recognized in the third quarter of fiscal 2021. The valuation technique used to measure the fair value of fixed assets was a combination of the income and market approaches. The inputs used to measure the fair value of these fixed assets under the income approach were largely unobservable and accordingly were classified as Level 3.
In the fourth quarter of fiscal 2025, the Company reclassified property, plant and equipment with a carrying value of $7,000 to assets held for sale on the Consolidated Balance Sheet and recognized an impairment loss of $4,867 under the caption Loss on assets held for sale on its consolidated statement of income, by recording the carrying value of these assets to their estimated fair value of $2,113, based on a non-recurring basis. In the fourth quarter of fiscal 2026, the Company recorded a gain on assets held for sale previously impaired of $1,187 based on a non-recurring basis. The fair value was based on the expected proceeds, less costs to sell.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 20, 2026 | Showing above |
| 2025 | May 21, 2025 | |
| 2024 | May 22, 2024 | |
| 2023 | May 24, 2023 | |
| 2022 | May 25, 2022 | |
| 2021 | May 26, 2021 | |
| 2020 | Jun 1, 2020 | |
| 2019 | May 29, 2019 | |
| 2018 | May 30, 2018 | |
| 2017 | May 30, 2017 | |
| 2016 | May 31, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.