ENERPAC TOOL GROUP CORP
For the period ended Feb 28, 2025. Filed Mar 26, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Feb 28, 2025 · Filed Mar 26, 2025
EPAC$38.83-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-11-30; filed 2024-12-20.
0000006955-24-000054
Item 2. —Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-02-28; filed 2025-03-26.
0000006955-25-000008
Item 2. —Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 47 previous paragraphs and 45 current paragraphs.
30 unchanged; 11 reworded; 4 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Consolidated net sales for the first half of fiscal 2025 were $291 million compared to $280 million in the first half of fiscal 2024, an increase of $10 million, or 4%. The effect of the foreign currency rate impact in the first half of the year unfavorably impacted sales by $2 million, or 1%, while the impact of the DTA acquisition favorably impacted sales by $6 million, or 2%, resulting in year-to-date organic sales growth of 2%. Product sales for the year-to-date February 28, 2025 were $230 million compared to $221 million in the prior-year comparable period, an increase of $9 million, or 4%, with nearly flat impact of foreign currency and a $6 million, or 3%, favorable impact of DTA sales, resulting in Product sales organic growth of 1% for the first half of the fiscal year. Service sales for the first half of 2025 increased $2 million, or 3%, compared to the first half of fiscal 2024, with foreign currency unfavorably impacting sales by $1 million, or 1%, resulting in organic growth of $3 million, or 5%. Year-to-date gross profit margin is 50.9%, approximately 110 basis points lower than the prior-year period, due to unfavorable sales mix within both product and service but also the mix between product and service compared to the first half of fiscal 2024. Operating profit for the first half of fiscal year 2025 was $62 million, an increase of $4 million compared to the first half of fiscal 2024. The increase in operating profit was mainly driven by the sales growth being strong enough to offset the impact of lower gross profit, while the decrease in SG&A as a percentage of net sales was mainly driven by the lack of ASCEND program related expenses in the current year compared to the prior-year as a result of the program's completion at the end of the fourth quarter of fiscal 2024.
Current report
IT&S segment net sales for the second quarter of fiscal 2025 increased by$6 million, or 5%, compared to the second quarter of fiscal 2024. The strengthening U.S. dollar on foreign currency rates compared to the second quarter of fiscal 2024 unfavorably impacted sales by$3 million, or 2%, and the first quarter acquisition of DTA favorably impacted sales by$3 million, or 2%. This resulted in an organic sales growth of approximately 4% in the quarter. The organic sales increase related to a strong quarter for our HLT product line, continued ramp up of new products and focused effort by our commercial organization. Operating profit was$39 million, compared to$37 million in the second quarter of fiscal 2024. This increase wasmainly driven by a $1 million increase in gross profit.
Current report
Corporate expenses were $9 million and $8 million for the second quarter of fiscal 2025 and 2024, respectively, and remained flat at $17 million for the first half of fiscal 2025 and 2024. The increase in expense in the second quarter was driven by higher people costs.
Current report
Net cash used in financing activities was $25 million and $2 million for the six months ended February 28, 2025 and February 29, 2024, respectively. The $23 million increase in net cash used in financing activities for the six months ended February 28, 2025 was driven by $33 million of lower net revolver borrowings and $6 million less in taxes paid with respect to equity awards, net of proceeds from the exercise of stock options. These year-over-year net uses of cash in financing were partially offset by $16 million of lower share repurchases due to fewer shares being repurchased in the current-year period.
Removed paragraphs (6)
Previous report
In June 2022, the Company approved a restructuring plan in connection with the initiatives identified as part of the ASCEND transformation program to drive greater efficiency and productivity in global selling, general and administrative resources. The total costs of this plan were then estimated at $6 to $10 million, constituting predominately severance and other employee-related costs to be incurred as cash expenditures and impacting both IT&S and Corporate (see Note 3, “ASCEND Transformation Program” in the notes to the consolidated financial statements). These costs were incorporated into the initial investment of $60 to $65 million.
Previous report
In September 2022, the Company approved an update to the restructuring plan to a range of $10 to $15 million; these costs were still incorporated into the initial investment value, and the range did not change at that time.
Previous report
In March 2023, the Company increased the anticipated investment range to $70 to $75 million, inclusive of the $10 to $15 million of the previously announced restructuring, over the life of the program.
Previous report
Operating profit for the first quarter of fiscal year 2025 was $33 million, an increase of $2 million compared to the first quarter of fiscal 2024. The increase in operating profit was mainly driven by a $2 million decrease in selling, general & administrative expense ("SG&A") year-over-year. The SG&A decreases were a result of $1 million in lower restructuring charges and $1 million of lower ASCEND transformation program charges.
Previous report
Corporate expenses were $8 million and $9 million in for the first quarter of fiscal 2025 and 2024, respectively. The decrease in expenses was driven by lower ASCEND transformation program charges.
Previous report
Net cash used in financing activities was $13 million for the three months ended November 30, 2024 compared to $2 million of net cash provided by financing activities for the three months ended November 30, 2023. The net cash used in financing activities for the three months ended November 30, 2024 was driven by $4 million of share repurchases, $5 million of taxes paid with respect to equity awards, net of proceeds from the exercise of stock options, and $2 million for the payment of the annual cash dividend. Net cash used in financing activities for the three months ended November 30, 2024 consisted of a $31 million net increase in total borrowings and $2 million of proceeds from the exercise of stock options offset by $26 million of payments to acquire treasury shares, $2 million payment for the annual cash dividend and $2 million for taxes paid with respect to equity awards.
Reworded paragraphs (11)
Previous wording
In March 2022, the Company announced the start of its ASCEND transformation program (“ASCEND”), initially estimating an incremental $40 to $50 million of annual operating profit once fully implemented. ASCEND’s key initiatives include accelerating organic growth strategies, improving operational excellence and production efficiency by utilizing a Lean approach, and driving greater efficiency and productivity in selling, general and administrative expense by better leveraging resources to create a more efficient and agile organization. At that time, the Company anticipated investing $60 to $65 million through the end of fiscal 2024 to complete these actions.
Current wording
In March 2022, the Company announced the start of its ASCEND transformation program. ASCEND's key initiatives included accelerating organic growth strategies, improving operational excellence and production efficiency by utilizing a Lean approach, and driving greater efficiency and productivity in selling, general and administrative("SG&A") expense by better leveraging resources to create a more efficient and agile organization.
Previous wording
In October 2023, the Company announced that during fiscal 2023, the Company had realized approximately $54 million of annual operating profit from execution of the ASCEND program and would no longer be breaking out the ASCEND benefit from results going into fiscal 2024. Through fiscal 2023, the Company invested approximately $60 million as part of the program, both through program charges and restructuring. Through fiscal 2024, the Company has invested approximately $75 million as part of the program, consisting of $19 million through restructuring and $56 million in ASCEND transformation program charges. The ASCEND program was completed at August 31, 2024.
Current wording
In October 2023, the Company announced that during fiscal 2023, the Company had realized approximately $54 million of annual operating profit from execution of the ASCEND program and would no longer be breaking out the ASCEND benefit from results. The ASCEND program was completed as of August 31, 2024, with total program costs of $75 million of which $19 million related to restructuring charges.
Previous wording
Consolidated net sales for the first quarter of fiscal 2025 were $145 million, an increase of $3 million, or 2%, compared to the prior-year comparable period. The effect of foreign currency rates compared to the U.S. dollar unfavorably impacted sales by $1 million, or 1%, and the acquisition of DTA at the beginning of the first quarter favorably impacted first quarter sales by $3 million, or 2%. This resulted in an organic sales decline of approximately 1% in the quarter. Management refers to sales adjusted to exclude the impact of these items (foreign currency changes and recent acquisitions and divestitures) as "organic sales". In the first quarter, product sales grew $1 million, or 1%, while foreign currency unfavorably impacted sales by $1 million, or 1%. The acquisition of DTA (which falls under our Heavy Lifting Technology product line within product) favorably impacted product sales by $3 million, or 3%, resulting in a 3% decline of organic product sales compared to the first quarter of fiscal 2024. The organic product sales decrease is driven by the IT&S segment while Other product sales were favorable to the prior year. Service sales increased $2 million, or 6%, in the quarter with foreign currency impact nearly flat; organic sales for Service were up 6% compared to the prior-year period. Gross profit as a percentage of sales was approximately 51% for the first quarter of fiscal 2025 compared to 52% in the first quarter of fiscal 2024. The decrease in gross profit margin is due to unfavorable sales mix.
Current wording
Consolidated net sales for the second quarter of fiscal 2025 were$146 million an increase of$7 million, or 5%, compared to the prior-year comparable period. The effect of the strengthening U.S. dollar on foreign currency rates compared to the second quarter of fiscal 2024 unfavorably impacted sales by $3 million, or 2%, and the first quarter acquisition of DTA favorably impacted sales by $3 million, or 2%. This resulted in an organic sales growth of approximately 5% in the quarter. Management refers to sales adjusted to exclude the impact of these items (foreign currency changes and recent acquisitions and divestitures) as "organic sales". In the second quarter, product sales grew $8 million, or 6%, while foreign currency unfavorably impacted sales by $2 million, or 2%, and the acquisition of DTA (which falls under our Heavy Lifting Technology ("HLT") product line within product) favorably impacted product sales by $3 million, or 3%, resulting in organic product sales growth of 5% over the prior-year quarter. We saw strong year-over-year growth in Other product sales compared to the second quarter of fiscal 2024, which was lower due to temporary shipment delays related to contract negotiations. The gain in products was driven by strong performance in our HLT product line and the continued ramp of new products. Service sales were flat year-over-year, with an unfavorable impact of foreign currency of approximately $1 million, or 4%, which resulted in organic sales growth of 4%. Gross profit as a percent of sales decreased to 50.5%, compared to 51.6% in the second quarter of fiscal 2024; the decrease in gross profit margin is due to unfavorable sales mix, mainly within the service business. Operating profit for the second quarter of fiscal year 2025 was $31 million, an increase of $1 million compared to the second quarter of fiscal 2024. The increase in operating profit was mainly driven by the sales growth being strong enough to offset the impact of lower gross profit, while selling, general & administrative expense ("SG&A") was flat year-over-year.
Previous wording
IT&S segment net sales for the first quarter of fiscal 2025 increased by $3 million, or 2%, compared to the first quarter of fiscal 2024. The strengthening of the U.S. dollar unfavorably impacted sales by approximately $1 million, or 1%, while the acquisition of DTA favorably impacted sales by $3 million, or 2%, resulting in organic sales decline of approximately 1%. The organic sales decline was driven by unfavorable product sales within the Americas region. Operating profit was $38 million compared to $36 million in the first quarter of fiscal 2024. This increase was due to reduction in SG&A.
Current wording
IT&S segment net sales for the first half of fiscal 2025 increased by$9 million, or 3%, compared to the first half of fiscal 2024. The strengthening U.S. dollar on foreign currency rates compared to the first half of fiscal 2024 unfavorably impacted sales by$2 million, or 1%, and the acquisition of DTA favorably impacted sales by$6 million, or 2%, resulting in an organic sales increase of 2%. The organic sales increase related to strong sales within our HLT product line in Americas and APAC, partially offset by unfavorable standard product sales within the Americas region. Operating profit was$77 million, compared to$73 million in the first half of fiscal 2024. This increase was due to reduction in SG&A and increase in gross profit.
Previous wording
Net financing costs were $3 million and $4 million in the three months ended November 30, 2024 and 2023, respectively. Financing costs decreased due to a mix of lower debt balances and lower interest rates.
Current wording
Net financing costs were $2 million and $4 million in the three months ended February 28, 2025 and February 29, 2024, respectively. For the six months ended February 28, 2025 and February 29, 2024, net financing costs were $5 million and $7 million, respectively. Financing costs decreased due to a mix of lower debt balances and lower interest rates.
Previous wording
The effective tax rate for the three months ended November 30, 2024 was 22.1%, compared to 23.6% for the comparable prior-year period. The effective tax rate in each time period was impacted by year-to-date losses and deductions in jurisdictions where no tax benefit can be realized. The lower effective tax rate for the three months ended November 30, 2024 was primarily driven by the more favorable tax impact of stock compensation in comparison to the prior-year period. Both the current and prior-year effective income tax rates include the impact of non-recurring items.
Current wording
The effective tax rate for the three months ended February 28, 2025 was 24.5%, compared to 29.3% for the comparable prior-year period. The effective tax rate in each time period was impacted by year-to-date losses and deductions in jurisdictions where no tax benefit can be realized. The lower effective tax rate for the three months ended February 28, 2025 was primarily driven by the more favorable tax impact of stock compensation in comparison to the prior-year period. Both the current and prior-year effective income tax rates include the impact of non-recurring items.
Previous wording
At November 30, 2024, we had $131 million of cash and cash equivalents, of which $109 million was held by our foreign subsidiaries and $22 million was held domestically. The following table summarizes our cash flows provided by operating, investing and financing activities (dollars in millions):
Current wording
At February 28, 2025, we had $120 million of cash and cash equivalents, of which $101 million was held by our foreign subsidiaries and $19 million was held domestically. The following table summarizes our cash flows provided by operating, investing and financing activities (dollars in millions):
Previous wording
Net cash provided by operating activities was$9 million for the three months ended November 30, 2024, while net cash used in operating activities for thethree months ended November 30, 2023 was $7 million. The $16 million variance year-over-year was driven by higher earnings, lower annual incentive compensation payments made in the first quarter compared to the prior-year period and the non-recurrence of payments for legal settlements related to discontinued operations.
Current wording
Net cash provided by oper ating activities was $16 million and $7 million for the six months ended February 28, 2025 and February 29, 2024, respectively. The $9 million year-over-year variance is driven by higher earnings, lower annual incentive compensation payments made in the first quarter compared to the prior-year period and the non-recurrence of payments for legal settlements related to discontinued operations.
Previous wording
Net cash used in investing activities was $33 million and $3 million for thethree months ended November 30, 2024 and 2023, respectively. This increase was due to the payment of $27 million for the acquisition of DTA and increased capital expenditures relating to build-out costs for the Company's new headquarters location in Milwaukee, with an anticipated move-in date later in fiscal 2025.
Current wording
Net cash used in investing activities was $39 million and $6 million for the six months ended February 28, 2025 and February 29, 2024, respectively. This increased use of cash was due to the payment of $27 million for the acquisition of DTA and increased capital expenditures relating to build-out costs for the Company's new headquarters location in Milwaukee, with an anticipated move-in date during the third quarter of fiscal 2025.
Previous wording
At November 30, 2024, there were no borrowings and $399 million available under the revolving line of credit facility after reduction for$1 million of outstanding letters of credit issued under the senior credit facility. The Company was in compliance with all covenants under the senior credit facility at November 30, 2024.
Current wording
At February 28, 2025, there were no borrowings and $399 million available under the revolving line of credit facility after reduction for $1 million of outstanding letters of credit issued under the senior credit facility. The Company was in compliance with all covenants under the senior credit facility at February 28, 2025.
Previous wording
We had outstanding letters of credit of$2.9 million and surety bonds of$3.8 million at November 30, 2024 and$4.4 million of letters of credit and$3.8 million of surety bonds at August 31, 2024, the majority of which relate to commercial contracts and self-insured workers' compensation programs.
Current wording
We had outstanding letters of credit of$4.0 million and surety bonds of$3.8 million at February 28, 2025 and$4.4 million of letters of credit and$3.8 million of surety bonds at August 31, 2024, the majority of which relate to commercial contracts and self-insured workers' compensation programs.