First Quarter of Fiscal 2021 Highlights*

• First quarter fiscal 2021 results reflect sequential improvement from the fourth quarter of fiscal 2020 despite the continued impact of COVID-19.
• Net sales from continuing operations were $119 million for the quarter compared to $111 million from the fourth quarter of fiscal 2020, a 7% sequential improvement. Industrial Tools & Services (IT&S) segment sales increased 9% sequentially. IT&S product core sales improved to a 14% year-over-year decline in the first quarter from a 20% year-over-year decline in the previous quarter.
• Net income from continuing operations was $4.8 million for the current quarter compared to $0.2 million from the fourth quarter of fiscal 2020.
• Achieved decremental margins of 18% in the first quarter, a sequential improvement from prior quarter decremental margins of 28% and significantly better than our target decremental margin range of 35-45%.
• Generated cash flow from operations of $9 million in the quarter ended November 30, 2020 compared to a $23 million use of cash from operations in the first quarter of fiscal 2020, a $32 million increase year-over-year.
• Consolidated core sales decreased 18% year-over-year, with product sales declining 16% and service sales declining 24%. The net year-over-year impact on net sales from acquisitions and divestitures/strategic exits was a reduction of 2%, while foreign currency had a minimal impact on net sales.
• GAAP operating margin from continuing operations was 7.6% for the quarter versus 9.8% in the first quarter of fiscal 2020. Adjusted operating margin from continuing operations was 7.9% for the quarter ended November 30, 2020 compared to 10.2% for the quarter ended November 30, 2019.
• Adjusted EBITDA margin from continuing operations was 12.2% in the first quarter of fiscal 2021, a sequential improvement compared to 9.4% in the fourth quarter of fiscal 2020. Adjusted EBITDA margin from continuing operations was 13.3% in the first quarter of fiscal 2020.
• GAAP diluted earnings per share (“EPS”) from continuing operations was $0.08 in the first quarter of fiscal 2021 versus a $0.11 in the comparable period in fiscal 2020. Adjusted diluted EPS from continuing operations was $0.09 in the first quarter of fiscal 2021 compared to $0.12 in the first quarter of fiscal 2020.
• Leverage (Net Debt to Adjusted EBITDA) was 1.9x at November 30, 2020 compared to 1.8x at August 31, 2020.
  
  
  
  *This news release contains financial measures in accordance with US Generally Accepted Accounting Principles (“GAAP”) in addition to non-GAAP financial measures. Reconciliations of the GAAP to non-GAAP financial measures can be found in the tables accompanying this release.

MILWAUKEE--(BUSINESS WIRE)-- Enerpac Tool Group Corp. (NYSE: EPAC) (the “Company”), today announced results for its fiscal first quarter ended November 30, 2020.

“We are pleased with the continued sequential improvement in sales and profit that we are delivering across the business as we benefit from the strategic actions taken over the last year. Our teams continued their strong execution by investing prudently in our business, supporting our customers and managing costs during these unprecedented times. This has enabled us to achieve another quarter of favorable decremental margins, sustain new product development and commercial effectiveness and generate cash flow from operations in the quarter. Looking ahead, we are seeing improved confidence in some of our end markets as well as in our customers’ ability to navigate the challenges of the pandemic. While we are not out of the woods, we are pleased with our progress, especially in our European region where we returned to pre-COVID levels in the quarter,” said Randy Baker, Enerpac Tool Group’s President and CEO.

Mr. Baker continued, “I want to thank all the Enerpac Tool Group team members worldwide for their efforts during these challenging times. With the significant adjustments our associates have had to make to support the business whether they are working from home or in a company location, these last nine months have put a tremendous amount of pressure on our workforce. I am proud of what our team has accomplished in these unprecedented circumstances. We have consistently met our customers’ needs, taken swift cost actions to right size the business, and protected our balance sheet. Those actions have positioned the company for success and ensured that we are able to continue executing our long-term strategy. And, amidst these achievements, we have put the safety and health of our employees and their families first.”

• Consolidated net sales from continuing operations for the first quarter were $119.4 million compared to $146.7 million in the prior year first quarter. Core sales decreased 18% year-over-year, with product sales down 16% and service down 24%. The net impact of acquisitions and divestitures/strategic exits decreased net sales by an additional 2%, and the impact of foreign currency had a minimal impact on net sales.
• Fiscal 2021 first quarter net income from continuing operations and diluted earnings per share from continuing operations were $4.8 million and $0.08, respectively, compared to net income from continuing operations of $6.4 million and diluted earnings per share from continuing operations of $0.11 in the first quarter of fiscal 2020. Fiscal 2021 first quarter net income from continuing operations included:
  • An impairment & divestiture charge of $0.1 million ($0.1 million or $0.00 per share, after tax); and
  • Restructuring charges of $0.2 million ($0.2 million or $0.00 per share, after tax), primarily related to footprint optimization.
• Fiscal 2020 first quarter net income from continuing operations included a net impairment and divestiture gain of $1.4 million ($1.1 million or $0.02 per share, after tax), restructuring charges of $2.0 million ($1.8 million or $0.02 per share, after tax) related to the restructuring plan announced in fiscal 2019 and facility consolidations, and accelerated debt issuance costs of $0.6 million ($0.5 million or $0.01 per share, after tax) related to the payoff of the term loan.
• Excluding restructuring and impairment & divestiture charges, adjusted diluted EPS from continuing operations was $0.09 for the first quarter of fiscal 2021 compared to $0.12 in the comparable prior year period.

• First quarter fiscal 2021 net sales were $112.2 million, 17% lower than the prior fiscal year’s first quarter net sales. Core sales decreased 17% year-over-year, while the net impact of acquisitions and divestitures/strategic exits decreased net sales 2% and the impact of foreign currency increased net sales 2%.
• The decrease in revenue is attributable to the decline in demand driven by the COVID-19 pandemic and continued sluggish oil prices.
• Adjusted operating profit margin of 15.5% in the quarter decreased year-over-year primarily due to reduced sales volume, partially offset by significant savings from effective cost management and restructuring initiatives.

Corporate Expenses and Income Taxes (excluding restructuring items)

• Corporate expenses from continuing operations of $6.3 million for the first quarter of fiscal 2021 were $5.1 million lower than the comparable prior year period, primarily resulting from lower operating costs due to the prior-year divestiture of the former Engineered Components and Systems (EC&S) segment, savings from restructuring initiatives and lower incentive compensation and consulting costs.
• The first quarter effective income tax rate from continuing operations of approximately 31% was higher than the first quarter fiscal 2020 rate of approximately 12%.

Discontinued Operations

Discontinued operations represent operating results for the divested EC&S segment through the October 31, 2019 completion date of the divestiture, as well as impacts from certain retained liabilities subsequent to the completion date.

Net debt at November 30, 2020 was approximately $96 million (total debt of $255 million less $159 million of cash), which decreased approximately $6 million from the prior quarter. Net Debt to Adjusted EBITDA from continuing operations was 1.9x at November 30, 2020.

Outlook

Due to ongoing uncertainty and lack of forward visibility into market conditions caused by the COVID-19 pandemic, Enerpac Tool Group continues not to provide fiscal 2021 financial guidance.

Mr. Baker said, “As we progress into our second quarter, we expect that first quarter trends will continue, moderating our typical seasonality. While the uncertainty around the effects of the pandemic may impact the positive trends we are seeing today, we are confident in our ability to make the appropriate adjustments to our business.

“Longer-term, we remain committed to the financial goals presented at our 2019 investor day, including delivering above market core growth, margin expansion, strong cash flow generation and best-in-class returns through disciplined capital allocation.

“The COVID-19 pandemic has shifted our timeline to achieve these objectives, but the fundamental strength and value opportunity of the long-term vision remains sound and we will re-establish the timing to achieve these goals as soon as practicable once the market has appropriately recovered. We remain confident in the strength of the Enerpac business and are committed to our long-term strategy, while we manage through the current dynamic market environment, to deliver shareholder value.”

Conference Call Information

An investor conference call is scheduled for 10:00 am CT today, December 21, 2020. Webcast information and conference call materials are available on the Enerpac Tool Group company website (www.enerpactoolgroup.com).

Safe Harbor Statement

Certain of the above comments represent forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Management cautions that these statements are based on current estimates of future performance and are highly dependent upon a variety of factors, which could cause actual results to differ from these estimates. Among other risks and uncertainties, Enerpac Tool Group’s results are subject to risks and uncertainties arising from general economic conditions, the COVID-19 pandemic, including the impact of the pandemic or related government responses on the Company’s business, the businesses of the Company’s customers and vendors, employee mobility, and whether the Company’s business and those of its customers and vendors will continue to be treated as “essential” operations under government orders restricting business activities or, even if so treated, whether site-specific health and safety concerns related to COVID-19 might otherwise require operations to be halted for some period of time, volatile oil pricing, variation in demand from customers, the impact of geopolitical activity on the economy, continued market acceptance of the Company’s new product introductions, the successful integration of acquisitions, restructuring, operating margin risk due to competitive pricing and operating efficiencies, supply chain risk, material and labor cost increases, tax law changes, foreign currency fluctuations and interest rate risk. See the Company’s Form 10-K for the fiscal year ended August 31, 2020 filed with the Securities and Exchange Commission for further information regarding risk factors. Enerpac Tool Group disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

Non-GAAP Financial Information

This press release contains financial measures that are not measures presented in conformity with GAAP. They include EBITDA from continuing operations, adjusted EBITDA from continuing operations, adjusted earnings (loss) from continuing operations, adjusted diluted earnings (loss) per share from continuing operations, adjusted operating profit from continuing operations, segment adjusted operating profit and net debt. This press release includes reconciliations of these non-GAAP measures to the most comparable GAAP measure, including in the tables attached to this press release. Management believes these non-GAAP measures are commonly used financial measures for investors to evaluate Enerpac Tool Group’s operating performance and financial position with respect to the periods presented and, when read in conjunction with the condensed consolidated financial statements, present a useful tool to evaluate ongoing operations and provide investors with metrics they can use to evaluate aspects of the Company’s performance from period to period. In addition, these are some of the financial metrics management uses in internal evaluations of the overall performance of the Company’s business. Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.

About Enerpac Tool Group

Enerpac Tool Group Corp. is a premier industrial tools and services company serving a broad and diverse set of customers in more than 100 countries. The Company’s businesses are global leaders in 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. Enerpac Tool Group trades on the NYSE under the symbol EPAC. For further information on Enerpac Tool Group and its businesses, visit the Company's website at www.enerpactoolgroup.com.

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Bobbi Belstner

Director of Investor Relations and Strategy

262.293.1912

Source: Enerpac Tool Group