On June 24, 2024, Enerpac Tool Group Corp (EPAC, Financial) released its 8-K filing for the third quarter of fiscal 2024, ending May 31, 2024. Enerpac Tool Group, previously known as Actuant, provides high-precision tools, controlled-force products, and solutions for precise heavy lifting. The company operates through two segments: industrial tools and services and other. It categorizes its revenue into two parts: product sales and services, which include manpower services and rentals. Product sales is the largest contributor to the company's total revenue. Geographically, the company operates in the United States, Asia, Australia, Europe, Middle East, and other areas. The U.S. makes up the largest contribution to the company's total revenue.
Performance Overview
Enerpac Tool Group Corp (EPAC, Financial) reported net sales of $150.4 million for the third quarter of fiscal 2024, a 3.8% decline from $156.3 million in the prior-year period. This decline was primarily due to the disposition of Cortland Industrial. However, organic sales increased by 1.2% year-over-year, driven by a 7.3% growth in service revenue and flat product sales.
Financial Achievements
Despite the revenue decline, Enerpac Tool Group Corp (EPAC, Financial) achieved significant margin expansion. The gross margin expanded by 200 basis points year-over-year to 51.8%, driven by pricing actions, a favorable sales mix, and the disposition of Cortland Industrial. Operating profit increased by 31% year-over-year to $33.4 million, with an operating profit margin of 22.2%, up from 16.3% in the third quarter of fiscal 2023. Adjusted operating profit increased by 9% to $37.0 million, with an adjusted operating margin of 24.6%, a 290 basis point expansion over the prior-year period.
Income Statement Highlights
| Three Months Ended | May 31, 2024 | May 31, 2023 |
|---|---|---|
| Net Sales | $150.4 million | $156.3 million |
| Operating Profit | $33.4 million | $25.4 million |
| Net Earnings | $22.6 million | $17.0 million |
| Diluted EPS | $0.41 | $0.30 |
Balance Sheet and Cash Flow
Enerpac Tool Group Corp (EPAC, Financial) reported a cash balance of $132.4 million as of May 31, 2024, compared to $142.0 million in the prior year. The debt balance decreased to $195.7 million from $234.7 million. Net cash provided by operating activities was $30.3 million for the third quarter of fiscal 2024, up from $17.3 million in the prior-year period, primarily due to lower ASCEND transformation payments and higher net earnings.
Segment Performance
The Industrial Tools & Services (IT&S) segment reported net sales of $145.9 million, a 1.3% increase year-over-year, with organic growth of 1.8%. The segment's operating profit margin increased by 300 basis points to 28.1%, and the adjusted operating profit margin improved by 230 basis points to 29.9%.
Outlook
Enerpac Tool Group Corp (EPAC, Financial) has narrowed its fiscal 2024 guidance, projecting organic sales growth of approximately 2% to 3%. The company increased the midpoint of adjusted EBITDA guidance, projecting a range of $147 million to $150 million based on better-than-expected margin performance. Free cash flow guidance remains unchanged at $60 million to $70 million.
“We were pleased with our continued progress in the quarter, particularly on capturing further margin expansion as we focus on driving enhanced operational efficiency and SG&A productivity,” said Paul Sternlieb, Enerpac Tool Group’s President & CEO.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Enerpac Tool Group Corp for further details.
