ENERPAC TOOL GROUP CORP
For the period ended May 31, 2026. Filed Jul 9, 2026.
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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.
May 31, 2026 · Filed Jul 9, 2026
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 2026-02-28; filed 2026-03-27.
0000006955-26-000025
Item 2. —Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-05-31; filed 2026-07-09.
0000006955-26-000036
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 42 previous paragraphs and 44 current paragraphs.
24 unchanged; 17 reworded; 3 added; 1 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 (3)
Current report
Corporate expenses were $9 million and $11 million in the three months ended May 31, 2026 and 2025, respectively. Corporate expenses were $27 million and $28 million for the nine months ended May 31, 2026 and 2025, respectively. The decrease in expense was primarily driven by higher restructuring costs in the prior year.
Current report
On July 7, 2026, pursuant to the provision of the senior credit facility permitting additional revolving commitments and/or term loans, the Company entered into an amendment to the agreement governing the senior credit to increase the revolving credit facility thereunder from $400 million to $625 million.
Current report
On July 7, 2026, the Company entered into an agreement to acquire Specialized Fabrication Equipment Group LLC (“SFE Group”) for approximately $451 million in cash (subject to customary closing date adjustments), and the issuance of approximately $21 million in restricted stock unit awards (subject to certain vesting requirements) to key personnel of SFE Group in lieu of cash payment of transaction bonuses to be owed by SFE Group to such personnel upon completion of the transaction. The Company expects to fund the transaction with cash on hand and borrowings under the senior credit facility, amended as described above. SFE Group is a global industrial equipment company focused on pipe fabrication, welding, machining, and maintenance tools. The transaction is expected to close during the first quarter of fiscal 2027, subject to customary closing conditions, including regulatory approvals.
Removed paragraphs (1)
Previous report
Corporate expenses were $8 million in both the three months ended February 28, 2026 and 2025. Corporate expenses were $18 million and $17 million for the six months ended February 28, 2026 and 2025, respectively. The increase in expense was driven by higher personnel charges and growth investments.
Reworded paragraphs (17)
Previous wording
The following table sets forth our results of operations (dollars in millions, except per share amounts):
Current wording
The following table sets forth our results of operations:
Previous wording
Consolidated net sales for the three months ended February 28, 2026 were $155 million, an increase of $9 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 $6 million, or 4%. This resulted in an organic sales increase of approximately 2% in the quarter. Management refers to sales adjusted to exclude the impact of foreign currency changes and recent acquisitions and divestitures as "organic sales". In the three months ended February 28, 2026, product sales grew $13 million, or 11%, year-over-year, while foreign currency favorably impacted product sales by $5 million, or 4%, resulting in organic product sales growth of 6% overthe prior-year quarter. Service sales were down$8 million, or 13%, year-over-year, with a favorable impact of foreign currency of$1 million, or 4%, resulting in an organic service sales decline of 17%. Gross profit as a percent of sales decreased to 46.4%, compared to 50.5% in the second quarter of fiscal 2025; the decrease in gross profit margin is due to continued pressure in our service business, primarily in the EMEA region, as well as restructuring costs. Operating profit for the second quarter of fiscal year 2026 was $25 million, a decrease of $6 million compared to the second quarter of fiscal 2025. The decrease in operating profit was mainly driven by the declines in our service business, as well as restructuring costs recorded in the current-year period.
Current wording
Consolidated net sales for the three months ended May 31, 2026 were $168 million, an increase of $9 million, or 6%, compared to the prior-year comparable period. Management refers to sales adjusted to exclude the impact of foreign currency changes and recent acquisitions and divestitures as “organic sales”. The effect of the weakening U.S. dollar on foreign currency rates compared to the prior-year period favorably impacted sales by $4 million, or 2%. This resulted in an organic sales increase of approximately 3% in the quarter. In the three months ended May 31, 2026, product sales grew $11 million, or 8%, year-over-year, with foreign currency favorably impacting product sales by $3 million, or 2%, resulting in organic product sales growth of 6% over the prior-year quarter. Service sales were down $2 million, or 6%, year-over-year, with a favorable impact of foreign currency of$1 million, or 3%, resulting in an organic service sales decline of 8%. Gross profit as a percent of sales increased to 53.0%, compared to 50.4% in the third quarter of fiscal 2025; the increase in gross profit margin is due to the flow through of the growth in product sales along with tariff refunds recorded in the third quarter, partially offset by continued pressure in our service business, primarily in the EMEA region. Operating profit for the third quarter of fiscal year 2026 was $41 million, an increase of $10 million compared to the third quarter of fiscal 2025. The increase in operating profit is due to flow through of the growth in product sales along with tariff refunds recorded in the third quarter, partially offset by continued pressure in our service business.
Previous wording
Consolidated net sales for the first half of fiscal 2026 were $299 million, an increase of $8 million, or 3%, 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 $9 million, or 3%. This resulted in flat organic sales in the first half of the year compared to the prior-year period. In the first half of fiscal 2026, product sales grew$20 million, or 9%, while foreign currency favorably impacted sales by$7 million, or 3%, resulting in organic product sales growth of 6%over the prior-year period. Service sales were down $12 million, or 19%, year-over-year, with afavorable impact of foreign currency of $2 million, or 3%, resulting in an organic service sales decline of 22%. Gross profit as a percent of sales decreased to 48.5%, compared to 50.9% in the first half of fiscal 2025; the decrease in gross profit margin is due to continued pressure in our service business, primarily in the EMEA region and higher tariff-driven costs flowing through cost of goods sold. Operating profit for the first half of fiscal year 2026 was $54 million, a decrease of $8 million compared to the first half of fiscal 2025. The decrease in operating profit was mainly driven by the declines in our service business and higher tariff-driven costs flowing through cost of goods sold, as well as restructuring costs recorded in the current-year period.
Current wording
Consolidated net sales for the nine months ended May 31, 2026 were $467 million, an increase of $17 million, or 4%, 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 $12 million, or 3%. This resulted in organic sales increase of approxima tely 1% for the nine months ended May 31, 2026 compared to the prior-year period. Product sales for the nine months ended May 31, 2026 grew $31 million, or 9%, with foreign currency favorably impacting sales by $9 million, or 3%, resulting in organic product sales growth of 6%over the prior-year period. Service sales were down $13 million, or 15%, year-over-year, with afavorable impact of foreign currency of $3 million, or 3%, resulting in an organic service sales decline of 18%. Gross profit as a percent of sales remained relatively flat at 50.1%, compared to 50.7% in thenine months ended May 31, 2025; gross profit margin has remained flat as growth in product sales has been offset by activity declines in our service business. Operating profit for the first nine months of fiscal year 2026 was $95 million, a decrease of $1 million compared to the first nine months of fiscal 2025. Operating profit has remained flat as growth related to increased product sales has been offset by activity declines in our service business, primarily in the EMEA region.
Previous wording
The IT&S segment is a global supplier of branded hydraulic and mechanical tools and services to a broad array of end markets, including general industrial; refining and petrochemical; industrial MRO; machining & manufacturing; power generation; infrastructure; mining; and other markets. Its primary products include branded tools, cylinders, pumps, hydraulic torque wrenches, highly engineered heavy lifting technology solutions and other tools (Product product line). The segment provides maintenance and manpower services to meet customer-specific needs and rental capabilities for certain of our products (Service & Rental product line). The following table sets forth the results of operations for the IT&S segment (dollars in millions):
Current wording
The IT&S segment is a global supplier of branded hydraulic and mechanical tools and services to a broad array of end markets, including general industrial; refining and petrochemical; industrial MRO; machining & manufacturing; power generation; infrastructure; mining; and other markets. Its primary products include branded tools, cylinders, pumps, hydraulic torque wrenches, highly engineered heavy lifting technology solutions and other tools (Product product line). The segment provides maintenance and manpower services to meet customer-specific needs and rental capabilities for certain of our products (Service & Rental product line). The following table sets forth the results of operations for the IT&S segment:
Previous wording
IT&S segment net sales for the second quarter of fiscal 2026 increased by$8 million, or 6%, compared to the second quarter of fiscal 2025. The weakening of the U.S. dollar on foreign currency rates compared to the three months ended February 28, 2025 favorably impacted sales by $6 million, or 4%. This resulted in an organic sales increase of $2 million, or 1%, in the quarter. The organic sales increase is driven by growth in our product business, offset by activity declines in our service business. Service sales were down $3 million, or 13%, year-over-year, with a favorable impact of foreign currency of $1 million, or 4%, resulting in an organic service sales decline of 17%. Product sales were up$11 million, or 10%, year-over-year, with a favorable impact of foreign currency of$5 million, or 4%, resulting in organic product sales growth of 6%. The organic sales increase was due to tariff related actions and increased demand. Operating profit for the three months ended February 28, 2026 was$32 million, compared to$39 million in the same period of the prior year. The decrease in operating profit was mainly driven by the declines in our service business, as well as restructuring costs recorded in the current-year period.
Current wording
IT&S segment net sales for the third quarter of fiscal 2026 increased by$8 million, or 5%, compared to the third quarter of fiscal 2025. The weakening of the U.S. dollar on foreign currency rates compared to the three months ended May 31, 2025 favorably impacted sales by $4 million, or 3%. This resulted in an organic sales increase of $4 million, or 2%, in the quarter. The organic sales increase is driven by growth in our product business, offset by declines in our service business. Service sales were down $2 million, or 6%, year-over-year, with a favorable impact of foreign currency of $1 million, or 3%, resulting in an organic service sales decline of 8% primarily attributable to lower activity. Product sales were up$9 million, or 7%, year-over-year, with a favorable impact of foreign currency of$3 million, or 2%, resulting in organic product sales growth of 5%. The organic sales increase was due to strong growth in our product business, especially in the Americas driven by our success in the power generation market. Operating profit for the three months ended May 31, 2026 was $49 million, compared to $40 million in the same period of the prior year. The increase in operating profit was mainly driven by the flow through of the growth in product sales along with tariff refunds recorded in the third quarter, partially offset by continued pressure in our service business.
Previous wording
IT&S segment net sales for the first half of fiscal 2026 increased by $6 million, or 2%, compared to the first half of fiscal 2025. The weakening of the U.S. dollar on foreign currency rates compared to the six months ended February 28, 2025 favorably impacted sales by $9 million, or 3%. This resulted in an organic sales decline of $3 million, or 1%. The organic sales decrease is driven by activity declines in our service business, partially offset by growth in our product business. Service sales were down $12 million, or 19%, year-over-year, with a favorable impact of foreign currency of $2 million, or 3%, resulting in an organic service sales decline of 22%. Product sales were up $17 million, or 8%, year-over-year, with a favorable impact of foreign currency of $7 million, or 3%, resulting in organic product sales growth of 5%. The organic sales increase was due to tariff related actions and increased demand. Operating profit for the six months ended February 28, 2026 was $67 million, compared to $77 million in the same period of the prior year. The decrease in operating profit was mainly driven by the declines in our service business, higher tariff-driven costs flowing through cost of goods sold, as well as restructuring costs recorded in the current-year period.
Current wording
IT&S segment net sales for thenine months ended May 31, 2026 increased by $13 million, or 3%, compared to thenine months ended May 31, 2025. The weakening of the U.S. dollar on foreign currency rates compared to the nine months ended May 31, 2025 favorably impacted sales by $12 million, or 3%. This resulted in an organic sales increase of $1 million, or 0.2%. The organic sales increase is driven by growth in our product business, partially offset by declines in our service business. Service sales were down $13 million, or 15%, year-over-year, with a favorable impact of foreign currency of $3 million, or 3%, resulting in an organic service sales decline of 18% primarily attributable to lower activity. Product sales were up $27 million, or 8%, year-over-year, with a favorable impact of foreign currency of $9 million, or 3%, resulting in organic product sales growth of 5%. The organic sales increase was due to strong growth in our product business, especially in the Americas driven by our success in the power generation market. Operating profit for the nine months ended May 31, 2026 was $116 million, compared to $117 million in the same period of the prior year. Operating profit has remained flat as growth related to increased product sales has been offset by activity declines in our service business, primarily in the EMEA region.
Previous wording
Net financing costs were $2 million in both the three months ended February 28, 2026 and 2025 and $4 million and $5 million in the six months ended February 28, 2026 and 2025, respectively. Financing costs decreased due to lower debt balances and interest rates.
Current wording
Net financing costs were $2 million in both the three months ended May 31, 2026 and 2025 and $7 million and $8 million in the nine months ended May 31, 2026 and 2025, respectively. Financing costs decreased for the nine-month period due to lower debt balances and interest rates.
Previous wording
The Company's global operations, acquisition activity (as applicable) and specific tax attributes provide opportunities for continuous global tax planning initiatives to maximize tax credits and deductions. Comparative earnings before income taxes, income tax expense and effective income tax rates are as follows (dollars in millions):
Current wording
The Company's global operations, acquisition activity (as applicable) and specific tax attributes provide opportunities for continuous global tax planning initiatives to maximize tax credits and deductions. Comparative earnings before income taxes, income tax expense and effective income tax rates are as follows:
Previous wording
The effective tax rate for the three months ended February 28, 2026 was 26.3%, compared to 24.5% 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 higher effective tax rate for the three months ended February 28, 2026 was primarily driven by the more favorable tax impact of stock compensation in the prior period as compared to the current period. Both the current and prior-year period effective income tax rates include the impact of non-recurring items.
Current wording
The effective tax rate for the three and nine months ended May 31, 2026 was 23.0% and 24.5%, respectively, compared to 22.2% and 22.9% respectively, for the respective comparable prior-year period. The effective tax rate in each period was impacted by year-to-date losses and deductions in jurisdictions where no tax benefit can be realized. The higher effective tax rate for the three months ended May 31, 2026 was primarily driven by the more favorable tax impact of uncertain tax position releases related to statute of limitations expirations in the prior period as compared to the current period. The higher effective tax rate for the nine months ended May 31, 2026 was primarily driven by the more favorable tax impact of stock compensation in the prior period as compared to the current period. Both the current and prior-year period effective income tax rates include the impact of non-recurring items.
Previous wording
At February 28, 2026, we had $99 million of cash and cash equivalents, of which $90 million was held by our foreign subsidiaries and $9 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, 2026, we had $116 million of cash and cash equivalents, of which $100 million was held by our foreign subsidiaries and $16 million was held domestically. The following table summarizes our cash flows provided by operating, investing and financing activities:
Previous wording
Net cash provided by operating activities was $29 million and $16 million for the six months ended February 28, 2026 and 2025, respectively. The $13 million year-over-year variance is primarily driven by the timing of payments and increases in contract liabilities.
Current wording
Net cash provided by operating activities was $69 million and $56 million for the nine months ended May 31, 2026 and 2025, respectively. The $13 million year-over-year variance is primarily driven by working capital improvements and decreases in cash taxes paid.
Previous wording
Net cash used in investing activities was $7 million and $39 million for the six months ended February 28, 2026 and 2025, respectively. This decreased use of cash was primarily due to the $27 million payment made for the DTA acquisition in the first quarter of fiscal 2025 and the decrease in capital expenditures in the current year after the prior year increase from the headquarter move during fiscal 2025.
Current wording
Net cash used in investing activities was $11 million and $43 million for the nine months ended May 31, 2026 and 2025, respectively. This decreased use of cash was primarily due to the $27 million payment made for the DTA acquisition in the first quarter of fiscal 2025 and the decrease in capital expenditures in the current year compared to increased expenditures related to relocation of the Company’s corporate headquarters in fiscal 2025.
Previous wording
Net cash used in financing activities was $75 million and $25 million for the six months ended February 28, 2026 and 2025, respectively. The $50 million increase in net cash used in financing activities for the six months ended February 28, 2026 was driven by higher share repurchases in the current-year period.
Current wording
Net cash used in financing activities was $94 million and $40 million for the nine months ended May 31, 2026 and 2025, respectively. The $54 million increase in net cash used in financing activities for the nine months ended May 31, 2026 was driven by higher share repurchases in the current-year period.
Previous wording
At February 28, 2026, there were no borrowings and $399 million available under the revolving line of credit facility. The Company was in compliance with all covenants under the senior credit facility at February 28, 2026.
Current wording
At May 31, 2026, there were no borrowings and $400 million available under the revolving line of credit facility. The Company was in compliance with all covenants under the senior credit facility at May 31, 2026.
Previous wording
We believe that the revolving credit line, combined with our existing cash on hand and anticipated operating cash flows, will be adequate to meet operating, debt service, acquisition and capital expenditure funding requirements for the foreseeable future.
Current wording
We believe that the revolving credit line under the senior credit facility, as amended, combined with our existing cash on hand and anticipated operating cash flows, will be adequate to meet operating, debt service, acquisition and capital expenditure funding requirements for the foreseeable future.
Previous wording
We use primary working capital as a percentage of sales (PWC %) as a key metric of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows a comparison of primary working capital (dollars in millions):
Current wording
We use primary working capital as a percentage of sales (PWC %) as a key metric of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows a comparison of primary working capital:
Previous wording
We had outstanding letters of credit of$7 million and surety bonds of$5 million at February 28, 2026 and$6 million of letters of credit and$5 million of surety bonds at August 31, 2025, 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$5 million at May 31, 2026 and$6 million of letters of credit and$5 million of surety bonds at August 31, 2025, the majority of which relate to commercial contracts and self-insured workers' compensation programs.