ENERPAC TOOL GROUP CORP

Previous wording

Enerpac Tool Group Corp. is a premier industrial tools, services, technology, and solutions provider serving a broad and diverse set of customers and end markets for mission-critical applications in more than 100 countries. Enerpac Tool Group's businesses are global leaders in providing high pressure hydraulic tools, controlled force products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the most challenging jobs around the world. The Company was founded in 1910 and is headquartered in Menomonee Falls, Wisconsin. During fiscal 2025, the Company is scheduled to relocate our headquarters to Milwaukee, Wisconsin. The Company has one reportable segment, the Industrial Tools & Services Segment ("IT&S"). The IT&S segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the refinery/petrochemical; general industrial; industrial maintenance, repair and operations (“MRO”), machining & manufacturing; power generation, infrastructure, mining and other markets. Financial information related to the Company's reportable segment is included in Note 12,“Segment Information” in the notes to the condensed consolidated financial statements. The Company has an Other operating segment, which does not meet the criteria to be considered a reportable segment.

Current wording

Enerpac Tool Group Corp. is a premier industrial tools, services, technology, and solutions provider serving a broad and diverse set of customers and end markets for mission-critical applications in more than 100 countries. Enerpac Tool Group's businesses are global leaders in providing high pressure hydraulic tools, controlled force products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the most challenging jobs around the world. The Company was founded in 1910 and is headquartered in Milwaukee, Wisconsin. The Company has one reportable segment, the Industrial Tools & Services Segment ("IT&S"). The IT&S segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the refinery/petrochemical; general industrial; industrial maintenance, repair and operations (“MRO”), machining & manufacturing; power generation, infrastructure, mining and other markets. Financial information related to the Company's reportable segment is included in Note 12,“Segment Information” in the notes to the condensed consolidated financial statements. The Company has an Other operating segment, which does not meet the criteria to be considered a reportable segment.

Previous wording

(1)Results are from continuing operations and exclude the financial results of previously divested businesses reported as discontinued operations. The summation of the individual components may not equal the total due to rounding.

Current wording

(1)Results are from continuing operations and exclude the financial results of previously divested businesses reported as discontinued operations. The summation of the individual components may not equal the total due to rounding. Period to period differences between line items included in the table may differ from the amount presented below due to rounding.

Previous 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.

Current wording

Consolidated net sales for the three months ended May 31, 2025 were $159 million an increase of $8 million, or 6%, compared to the prior-year comparable period. The effect of the weakening U.S. dollar on foreign currency rates compared to the prior-year period favorably impacted sales by $1 million, or 1%, and the first quarter acquisition of DTA favorably impacted sales by $5 million, or 3%. This resulted in an organic sales growth of approximately 2% 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 three months ended May 31, 2025, product sales grew $7 million, or 6%, while foreign currency favorably impacted sales by $1 million, or 1%, and the acquisition of DTA (which falls under our Heavy Lifting Technology ("HLT") product line within the product sales activity) favorably impacted product sales by $5 million, or 4%, resulting in organic product sales growth of 1% over the prior-year quarter. In the third quarter of fiscal 2024 we saw net sales recovery in our Other product sales from the temporary shipment delays related to contract negotiations that impacted the second quarter of fiscal 2024. Even with this recovery in the third quarter of fiscal 2024, in the third quarter of fiscal 2025, we saw strong year-over-year growth at $1 million, or 19%. Service sales were up $1 million, or 3%, year-over-year, with a minimal unfavorable impact of foreign currency; therefore, organic sales growth was also 3%. Gross profit as a percent of sales decreased to 50.4%, compared to 51.8% in the third quarter of fiscal 2024; the decrease in gross profit margin is due to continued pressure in our service business and the inclusion of DTA. Operating profit for the third quarter of fiscal year 2025 was $32 million, a decrease of $2 million compared to the third quarter of fiscal 2024. The decrease in operating profit was mainly driven by the increase in restructuring expense which was partially offset by the gross profit increase resulting from the year-over-year sales increase.

Previous wording

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 wording

Consolidated net sales for the nine months ended May 31, 2025 were $449 million compared to $431 million in the nine months ended May 31, 2024, an increase of $19 million, or 4%. The effect of the foreign currency rate impact in the first nine months of the year had a minimal unfavorable impact on sales, while the impact of the DTA acquisition favorably impacted sales by $11 million, or 3%, resulting in year-to-date organic sales growth of 2%. Product sales for the nine months ended May 31, 2025 were $344 million compared to $331 million in the prior-year comparable period, an increase of $14 million, or 4%, with nearly flat impact of foreign currency and a $11 million, or 3%, favorable impact of DTA sales, resulting in Product sales organic growth of 1% for the first nine months of the fiscal year. The growth in product sales was driven by strong performance in our HLT product line. Service sales for the nine months ended May 31, 2025 increased $3 million, or 3%, compared to the nine months ended May 31, 2024, with foreign currency unfavorably impacting sales by $1 million, or 1%, resulting in organic growth of $4 million, or 4%. Year-to-date 2025 gross profit margin was 50.7%, approximately 120 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 nine months of fiscal 2024 and the inclusion of DTA. Operating profit for the first nine months of fiscal year 2025 was $94 million, an increase of $2 million compared to the first nine months of fiscal 2024. The increase in operating profit was mainly driven by sales growth.

Previous wording

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 wording

IT&S segment net sales for the third quarter of fiscal 2025 increased by$7 million, or 5%, compared to the third quarter of fiscal 2024. The weakening of the U.S. dollar on foreign currency rates compared tothree months ended May 31, 2024 favorably impacted sales by$1 million, or 1%, and the first quarter acquisition of DTA favorably impacted sales by$5 million, or 3%. This resulted in an organic sales growth of 1% in the quarter. The organic sales increase is driven by a focused effort by our commercial organization. Operating profit for the three months ended May 31, 2025 was$40 million, compared to$41 million in the same period of the prior year.

Previous 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.

Current wording

IT&S segment net sales for the nine months ended May 31, 2025 increased by$16 million, or 4%, compared to the nine months ended May 31, 2024. The strengthening U.S. dollar on foreign currency rates compared to thenine months ended May 31, 2024 had a minimal unfavorable impact on sales, and the acquisition of DTA favorably impacted sales by$11 million, or 3%, 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 standard product sales remaining flat compared to the nine months ended May 31, 2024. Operating profit for the nine months ended May 31, 2025 was$117 million, an increase of$3 million year-over-year primarily due to an increase in sales.

Previous wording

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 wording

Corporate expenses were $11 million and $9 million for the third quarter of fiscal 2025 and 2024, respectively, and were $28 million and $26 million for the nine months ended May 31, 2025 and 2024, respectively. The increase in expense in the third quarter was driven by higher personnel charges.

Previous 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.

Current wording

Net financing costs were $2 million and $3 million in the three months ended May 31, 2025 and 2024, respectively. For the nine months ended May 31, 2025 and 2024, net financing costs were $8 million and $11 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 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.

Current wording

The effective tax rate for the three months ended May 31, 2025 was 22.2%, compared to 23.1% 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 May 31, 2025 was primarily driven by the more favorable impact of uncertain tax position releases related to statute expirations and lower withholding tax related to current year distributions in comparison to the prior period. Both the current and prior-year period effective income tax rates include the impact of non-recurring items.

Previous 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):

Current wording

At May 31, 2025, we had $141 million of cash and cash equivalents, of which $107 million was held by our foreign subsidiaries and $34 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 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.

Current wording

Net cash provided by oper ating activities was $56 million and $37 million for the nine months ended May 31, 2025 and 2024, respectively. The $19 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 and funds received for legal settlements related to discontinued operations.

Previous 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.

Current wording

Net cash used in investing activities was $43 million and $8 million for the nine months ended May 31, 2025 and 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.

Previous wording

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.

Current wording

Net cash used in financing activities was $40 million and $51 million for the nine months ended May 31, 2025 and 2024, respectively. The $11 million decrease in net cash used in financing activities for the nine months ended May 31, 2025 was driven by $17 million of higher net revolver and term loan payments and $4 million of lower share repurchases due to fewer shares being repurchased in the current-year period, partially offset by $7 million less in taxes paid with respect to equity awards, net of proceeds from the exercise of stock options.

Previous 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.

Current wording

At May 31, 2025, there were no borrowings and $398 million available under the revolving line of credit facility after reduction for $2 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 May 31, 2025.

Previous 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.

Current wording

We had outstanding letters of credit of$6 million and surety bonds of$4 million at May 31, 2025 and$4 million of letters of credit and$4 million of surety bonds at August 31, 2024, the majority of which relate to commercial contracts and self-insured workers' compensation programs.