Enerpac Tool Group (NYSE: EPAC) reported Q1 EPS of $0.09, in-line with the analyst estimate of $0.09. Revenue for the quarter came in at $119 million versus the consensus estimate of $124.34 million.

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.
  

“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.”

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