Enerpac Tool Group (NYSE: EPAC) reported Q2 EPS of $0.06, $0.06 worse than the analyst estimate of $0.12. Revenue for the quarter came in at $120.7 million versus the consensus estimate of $125.92 million.

Second Quarter of Fiscal 2021 Highlights*

• Achieved continued sequential improvement over the first quarter, breaking the normal second quarter seasonal trends. Given continued improvement in market conditions, providing second half of fiscal 2021 revenue expectations of $280 million to $290 million. Anticipate incremental adjusted EBITDA margins on the high end of 35%-45%, excluding the impact of currency.
• Net sales from continuing operations were $121 million for the second fiscal quarter ended February 28, 2021 compared to $119 million in the first quarter of fiscal 2021, a 1% sequential improvement. Industrial Tools & Services (IT&S) product core sales improved to a 10% year-over-year decline in the second quarter from a 14% year-over-year decline in the first quarter.
• Generated cash flow from operations of $5 million in the quarter ended February 28, 2021 compared to a $6 million use of cash from operations in the second quarter of fiscal 2020, an $11 million increase year-over-year.
• Consolidated core sales for the quarter decreased 11% year-over-year, with product sales declining 11% and service sales declining 12%. The net year-over-year impact on net sales from acquisitions and divestitures/strategic exits was a reduction of 1%, while foreign currency benefited net sales 2%.
• GAAP operating margin from continuing operations was 4.7% for the quarter versus 6.4% in the second quarter of fiscal 2020. Adjusted operating margin from continuing operations was 5.6% for the quarter ended February 28, 2021 compared to 7.4% for the quarter ended February 29, 2020.
• Adjusted EBITDA margin from continuing operations was 9.5% in the second quarter of fiscal 2021 compared to 12.0% in the second quarter of fiscal 2020.
• Achieved year-over-year decremental adjusted EBITDA margins of 29%, excluding the impact of currency, better than our target decremental margin range of 35-45%.
• GAAP diluted earnings per share (“EPS”) from continuing operations was $0.06 in both the second quarter of fiscal 2021 and fiscal 2020. Adjusted diluted EPS from continuing operations was $0.06 in the second quarter of fiscal 2021 compared to $0.09 in the second quarter of fiscal 2020.
• Paid down $45 million of debt in the second quarter. Leverage (Net Debt to Adjusted EBITDA) was 2.1x at February 28, 2021 compared to 1.9x at November 30, 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 historical financial measures can be found in the tables accompanying this release. Incremental (or decremental) Adjusted EBITDA margin is equivalent to the change in Adjusted EBITDA divided by the change in Net Sales for the comparable periods.

MILWAUKEE--(BUSINESS WIRE)-- Enerpac Tool Group Corp. (NYSE: EPAC) (the “Company”) today announced results for its fiscal second quarter ended February 28, 2021.

“Our second quarter showed a number of encouraging signs in the face of a market that continues to be affected by the COVID-19 pandemic,” said Randy Baker, Enerpac Tool Group’s President and CEO. “As anticipated, we saw a sequential sales increase despite the seasonal decrease we typically see in the second quarter. I am encouraged by the positive sentiment among our distributors with some modest improvement in stocking activity in the quarter along with the overall improving level of project activity we are experiencing. Collectively, these serve as clear indicators of the ongoing market recovery.”

Mr. Baker added, “As we have progressed through the pandemic we have kept a long-term view of our business and remained focused on our key strategic initiatives, including investing in new product development, managing our acquisition pipeline, driving greater levels of dealer and customer engagement, and building a culture of inclusion and acceptance for our employees. At the same time, we have been disciplined in our response to shorter term challenges and we have maintained our strong balance sheet, paying down $45 million in debt in the quarter with leverage well within our preferred range. As we move forward and enter a post-COVID world, we believe we are well-positioned to capitalize on growth and increase both profitability and shareholder returns as we pursue our long-term vision as a pure play industrial tool company.”

Outlook

Mr. Baker continued, “While some uncertainty remains as we enter the back half of our fiscal year, we are optimistic that growth will continue to accelerate in the coming months as demand improves and our markets return to a normalized level of activity. For the second half of fiscal 2021, and barring any worsening COVID-19 conditions or related shutdowns, we expect sales to be in a range of $280 million to $290 million with continuing sequential improvement through the end of the fiscal year and anticipate incremental adjusted EBITDA margins on the high end of 35% to 45%, excluding the impact of currency. We expect to return to pre-COVID run rates as we exit the fiscal year.”

Mr. Baker concluded, “Throughout the pandemic we have continued to drive our strategic initiatives. Looking ahead, we are confident in our ability to grow profitability and deliver increasing value for our shareholders. We look forward to returning to normalized run rates and executing our strategy as a pure play industrial tool company.”

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