Business Wire | Dec 21, 2021 08:30AM EST

Enerpac Tool Group Reports First Quarter Fiscal 2022 Results

Dec. 21, 2021

MILWAUKEE--(BUSINESS WIRE)--Dec. 21, 2021--Enerpac Tool Group Corp. (NYSE: EPAC) (the "Company") today announced results for its fiscal first quarter ended November 30, 2021.

"Since joining Enerpac Tool Group in early October, I have been excited by our solid foundation, exceptional products, global footprint and strong balance sheet. I believe that Enerpac is well positioned for further growth and profitability," said Paul Sternlieb, Enerpac Tool Group's President & CEO. "As we expected, our performance in the first quarter was impacted by global supply chain, logistics and inflationary pressures. That said, we continued to see solid demand for our products and we are encouraged by the continued improvements in many of our vertical markets."

Consolidated Results from Continuing Operations

(US$ in millions, except per share)

Three Months Ended

November 30, 2021 November 30, 2020

Net Sales $130.9 $119.4

Net Income $3.2 $4.8

Earnings Per Share $0.05 $0.08

Adjusted Diluted Earnings Per Share $0.16 $0.09

* Consolidated net sales from continuing operations for the first quarter of fiscal 2022 were $130.9 million compared to $119.4 million in the prior year first quarter. Core sales improved 9% year over year, with product sales up 14% and service revenues down 3%. There was minimal impact from foreign currency exchange rates in the quarter. * Fiscal 2022 first quarter GAAP net income from continuing operations and diluted earnings per share from continuing operations were $3.2 million and $0.05, respectively, compared to net income from continuing operations and diluted EPS of $4.8 million and $0.08, respectively, in the first quarter of fiscal 2021. Fiscal 2022 first quarter net income from continuing operations included: a restructuring charge of $2.7 million ($2.7 million, or $0.04 per share, after tax) attributable to the recently announced changes to flatten and simplify the organizational structure; and Executive transition and Board search charges of $3.8 million ($3.8 million, or $0.06 per share, after tax). * 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. * Excluding the items detailed above, adjusted diluted EPS from continuing operations was $0.16 for the first quarter of fiscal 2022 compared to $0.09 in the comparable prior year period.

Industrial Tools & Services (IT&S)

(US$ in millions)

Three Months Ended

November 30, 2021 November 30, 2020

Sales $121.3 $112.2

Operating Profit $18.1 $17.2

Adjusted Op Profit ^(1) $19.6 $17.4

Adjusted Op Profit % ^(1) 16.2% 15.5%

^(1) Excludes $1.6 million of restructuring charges in the first quarter offiscal 2022 compared to$0.1 million of restructuring charges and $0.1 million of impairment &divestiture charges in thefirst quarter of fiscal 2021.

* First quarter fiscal 2022 net sales were $121.3 million, 8% higher than the prior fiscal year's first quarter net sales. Core sales also increased 8% year over year. * The increase in revenue is attributable to the global market recovery from the COVID-19 pandemic and to a lesser extent the impact of pricing actions taken to offset inflationary pressures. * Despite increased material and freight costs, adjusted operating profit margin increased year over year to 16.2% primarily due to increased product sales volume and the associated operating leverage generated in our manufacturing facilities offset by lower service margins due largely to regional mix.

Corporate Expenses and Income Taxes (excluding non-GAAP adjustments)

* Corporate expenses from continuing operations of $5.5 million for the first quarter of fiscal 2022 were $0.8 million lower than the comparable prior year period, primarily resulting from lower equity compensation and health insurance costs offset by higher outside services and wages. * The fiscal 2022 first quarter effective income tax rate from continuing operations of approximately 15% was lower than the first quarter fiscal 2021 rate of approximately 31%.

Discontinued Operations

Discontinued operations represent the impacts from certain retained liabilities associated with the divestiture of the former EC&S segment on October 31, 2019.

Balance Sheet and Leverage

(US$ in millions)

Period Ended

November 30, August 31, November 30, 2021 2021 2020

Cash Balance $126.5 $140.4 $158.6

Debt Balance $175.0 $175.0 $255.0

Net Debt to Adjusted 0.7 0.6 1.9EBITDA**

Net debt at November 30, 2021 was approximately $48 million (total debt of $175 million less $127 million of cash), which increased approximately $14 million from the prior quarter. Net Debt to Adjusted EBITDA from continuing operations was 0.7x at November 30, 2021.

**Calculated in accordance with the terms of the Company's March 2019 Senior Credit Facility

Outlook

Mr. Sternlieb continued, "While we anticipate the macroeconomic headwinds to sustain into the back half of fiscal 2022, our focus remains on growing the business, improving margins and delivering value to all of our stakeholders. We are reviewing all aspects of our business and are looking for opportunities to drive growth and become an even more efficient organization. The actions we are taking, along with the strength of our offerings and the depth of our global relationships, drive our confidence in Enerpac as we move forward. Based on the expectation of continued solid customer demand along with macroeconomic challenges, we are reiterating our full year guidance for fiscal 2022 and continue to expect full year sales in the range of $590 million to $610 million with incremental adjusted EBITDA margins*** of 35% to 45%, excluding the impact of any changes in foreign currency rates."

***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.

Organizational Appointment

In a separate press release issued today, the Company announced the appointment of Mr. Scott Vuchetich as EVP, Marketing and President-Americas.

Conference Call Information

An investor conference call is scheduled for 10:00 am CT today, December 21, 2021. Webcast information and conference call materials, including an earnings presentation, 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, supply chain risk, material and labor cost increases, 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, and employee mobility, and whether site-specific health and safety concerns related to COVID-19 might 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, the impact of restructurings, operating margin risk due to competitive pricing and operating efficiencies, tax law changes, foreign currency fluctuations and interest rate risk. See the Company's Form 10-K for the fiscal year ended August 31, 2021 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. These non-GAAP measures 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, free cash flow and net debt. This press release includes reconciliations of historical non-GAAP measures to the most comparable GAAP measure, including in the tables attached to this press release. This press release does not include a quantitative reconciliation of non-GAAP measures presented for any future period as such a reconciliation is not practicable. Such future-period measures are presented in a manner consistent with the presentation thereof for historical periods. Management believes the non-GAAP measures presented in this press release 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 common stock 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.

(tables follow)

Enerpac Tool Group Corp.Condensed Consolidated Balance Sheets(Dollars in thousands)(Unaudited) November 30, August 31, 2021 2021

AssetsCurrent assetsCash and cash equivalents $ 126,533 $ 140,352

Accounts receivable, net 112,293 103,233

Inventories, net 83,614 75,347

Other current assets 38,649 38,503

Total current assets 361,089 357,435

Property, plant and equipment, net 47,732 48,590

Goodwill 273,297 277,593

Other intangible assets, net 51,400 54,545

Other long-term assets 78,950 82,084

Total assets $ 812,468 $ 820,247

Liabilities and Shareholders' EquityCurrent liabilitiesTrade accounts payable $ 63,474 $ 61,958

Accrued compensation and benefits 17,712 21,597

Income taxes payable 5,378 5,674

Other current liabilities 45,072 45,535

Total current liabilities 131,636 134,764

Long-term debt, net 175,000 175,000

Deferred income taxes 4,354 4,397

Pension and postretirement benefit liabilities 17,356 17,783

Other long-term liabilities 74,316 76,105

Total liabilities 402,662 408,049

Shareholders' equityCapital stock 16,622 16,604

Additional paid-in capital 207,817 202,971

Treasury stock (667,732 ) (667,732 )

Retained earnings 956,127 953,339

Accumulated other comprehensive loss (103,028 ) (92,984 )

Stock held in trust (3,092 ) (3,067 )

Deferred compensation liability 3,092 3,067

Total shareholders' equity 409,806 412,198

Total liabilities and shareholders' equity $ 812,468 $ 820,247

Enerpac Tool Group Corp.Condensed Consolidated Statements of Earnings(Dollars in thousands, except per share amounts)(Unaudited) Three Months Ended November November 30, 30, 2021 2020

Net sales $ 130,903 $ 119,430

Cost of products sold 71,277 64,166

Gross profit 59,626 55,264

Selling, general and administrative expenses 48,477 43,710

Amortization of intangible assets 2,005 2,136

Restructuring charges 2,737 210

Impairment & divestiture charges - 139

Operating profit 6,407 9,069

Financing costs, net 961 1,716

Other expense, net 480 273

Earnings before income tax expense 4,966 7,080

Income tax expense 1,781 2,258

Net earnings from continuing operations 3,185 4,822

Loss from discontinued operations, net of income taxes (397 ) (224 )

Net earnings $ 2,788 $ 4,598

Earnings per share from continuing operationsBasic $ 0.05 $ 0.08

Diluted 0.05 0.08

Loss per share from discontinued operationsBasic $ (0.01 ) $ (0.00 )

Diluted (0.01 ) (0.00 )

Earnings per share*Basic $ 0.05 $ 0.08

Diluted 0.05 0.08

Weighted average common shares outstandingBasic 60,261 59,811

Diluted 60,621 60,092

*The total of Earnings per share from continuing operations and Loss per sharefromdiscontinued operations may not equal Earnings per share due to rounding.

Enerpac Tool Group Corp.Condensed Consolidated Statements of Cash Flows(In thousands)(Unaudited) Three Months Ended November November 30, 30, 2021 2020

Operating ActivitiesCash (used in) provided by operating activities - $ (3,941 ) $ 8,892 continuing operationsCash used in operating activities - discontinued (785 ) (225 )operationsCash (used in) provided by operating activities $ (4,726 ) $ 8,667

Investing ActivitiesCapital expenditures (3,293 ) (1,905 )

Proceeds from sale of property, plant and equipment 133 47

Cash used in investing activities - continuing (3,160 ) (1,858 )operationsCash provided by investing activities - discontinued - - operationsCash used in investing activities $ (3,160 ) $ (1,858 )

Financing ActivitiesBorrowings on revolving credit facility 5,000 10,000

Principal repayments on revolving credit facility (5,000 ) (10,000 )

Stock options, taxes paid related to the net share (1,308 ) (174 )settlement of equity awards & otherPayment of cash dividend (2,409 ) (2,394 )

Cash used in financing activities - continuing $ (3,717 ) $ (2,568 )operationsCash provided by financing activities - discontinued - 750 operationsCash used in financing activities $ (3,717 ) $ (1,818 )

Effect of exchange rate changes on cash (2,216 ) 1,407

Net cash (decrease) increase from continuing (13,034 ) 5,873 operationsNet cash (decrease) increase from discontinued (785 ) 525 operationsNet (decrease) increase from cash and cash equivalents $ (13,819 ) $ 6,398

Cash and cash equivalents - beginning of period 140,352 152,170

Cash and cash equivalents - end of period $ 126,533 $ 158,568

Enerpac Tool Group Corp.Supplemental Unaudited DataReconciliation of GAAP Measures to Non-GAAP Measures(Dollars in thousands) Fiscal 2021 Fiscal 2022 Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTALSalesIndustrial Tool & $ 112,175 $ 112,739 $ 133,400 $ 134,811 $ 493,125 $ 121,313 $ - $ - $ - $ 121,313 Services SegmentOther 7,255 7,915 9,749 10,616 35,535 9,590 - - - 9,590

Total $ 119,430 $ 120,654 $ 143,149 $ 145,427 $ 528,660 $ 130,903 $ - $ - $ - $ 130,903

% Sales GrowthIndustrial Tool & -17 % -9 % 44 % 31 % 8 % 8 % - - - 8 %Services SegmentOther -35 % -21 % 8 % 28 % -8 % 32 % - - - 32 %

Total -19 % -10 % 41 % 31 % 7 % 10 % - - - 10 %

Operating Profit fromContinuing OperationsIndustrial Tool & $ 17,362 $ 14,880 $ 25,304 $ 26,772 $ 84,318 $ 19,646 $ - $ - $ - $ 19,646 Services SegmentOther (1,662 ) (1,834 ) 14 (968 ) (4,450 ) (1,257 ) - - - (1,257 )

Corporate / General (6,282 ) (6,289 ) (5,808 ) (6,535 ) (24,915 ) (5,486 ) - - - (5,486 )

Adjusted operating $ 9,418 $ 6,757 $ 19,510 $ 19,269 $ 54,953 $ 12,903 $ - $ - $ - $ 12,903 profitImpairment & (139 ) (401 ) - (5,659 ) (6,198 ) - - - - - divestiture chargesRestructuring charges (210 ) (649 ) (1,571 ) 37 (2,392 ) (2,737 ) - - - (2,737 )

Gain on sale of - - 5,359 - 5,359 - - - - - facility, net oftransaction chargesExecutive transition & - - (551 ) (58 ) (609 ) (3,759 ) - - - (3,759 )board search charges(2)Operating profit $ 9,069 $ 5,707 $ 22,747 $ 13,589 $ 51,113 $ 6,407 $ - $ - $ - $ 6,407

Adjusted OperatingProfit %Industrial Tool & 15.5 % 13.2 % 19.0 % 19.9 % 17.1 % 16.2 % - - - 16.2 %Services SegmentOther -22.9 % -23.2 % 0.1 % -9.1 % -12.5 % -13.1 % - - - -13.1 %

Adjusted Operating 7.9 % 5.6 % 13.6 % 13.2 % 10.4 % 9.9 % - - - 9.9 %Profit % EBITDA from ContinuingOperations (1)Earnings from $ 4,822 $ 3,584 $ 25,257 $ 6,549 $ 40,212 $ 3,185 $ - $ - $ - $ 3,185 continuing operationsFinancing costs, net 1,716 1,338 1,340 870 5,266 961 - - - 961

Income tax expense 2,258 1 (4,390 ) 5,895 3,763 1,781 - - - 1,781 (benefit)Depreciation & 5,458 5,507 5,473 5,173 21,611 5,175 - - - 5,175 amortizationEBITDA $ 14,254 $ 10,430 $ 27,680 $ 18,487 $ 70,852 $ 11,102 $ - $ - $ - $ 11,102

Adjusted EBITDA fromContinuing Operations(1)Industrial Tool & $ 21,002 $ 18,210 $ 28,873 $ 30,421 $ 98,506 $ 22,996 $ - $ - $ - $ 22,996 Services SegmentOther (740 ) (942 ) 897 (133 ) (918 ) (263 ) - - - (263 )

Corporate / General (5,659 ) (5,788 ) (5,327 ) (6,121 ) (22,896 ) (5,135 ) - - - (5,135 )

Adjusted EBITDA $ 14,603 $ 11,480 $ 24,443 $ 24,167 $ 74,692 $ 17,598 $ - $ - $ - $ 17,598

Impairment & (139 ) (401 ) - (5,659 ) (6,198 ) - - - - - divestiture chargesRestructuring charges (210 ) (649 ) (1,571 ) 37 (2,392 ) (2,737 ) - - - (2,737 )

Gain on sale of - - 5,359 - 5,359 - - - - - facility, net oftransaction chargesExecutive transition & - - (551 ) (58 ) (609 ) (3,759 ) - - - (3,759 )board search charges(2)EBITDA $ 14,254 $ 10,430 $ 27,680 $ 18,487 $ 70,852 $ 11,102 $ - $ - $ - $ 11,102

Adjusted EBITDA %Industrial Tool & 18.7 % 16.2 % 21.6 % 22.6 % 20.0 % 19.0 % - - - 19.0 %Services SegmentOther -10.2 % -11.9 % 9.2 % -1.3 % -2.6 % -2.7 % - - - -2.7 %

Adjusted EBITDA % 12.2 % 9.5 % 17.1 % 16.6 % 14.1 % 13.4 % - - - 13.4 %

Notes:(1) EBITDA represents net earnings from continuing operations before financingcosts, net, income tax (benefit) expense, and depreciation & amortization.EBITDA is not a calculation based upon GAAP. The amounts included in the EBITDAand Adjusted EBITDA calculation, however, are derived from amounts included inthe Condensed Consolidated Statements of Earnings. EBITDA and adjusted EBITDAshould not be considered as alternatives to net earnings, operating profit oroperating cash flows. The Company has presented EBITDA and adjusted EBITDAbecause it regularly reviews these performance measures. In addition, EBITDAand adjusted EBITDA are used by many of our investors and lenders, and arepresented as a convenience to them. The EBITDA and adjusted EBITDA measurespresented may not always be comparable to similarly titled measures reported byother companies due to differences in the components of the calculation.(2) Caption updated from "Corporate development & board search fees" usedduring Fiscal 2021. Costs included have not been altered.Enerpac Tool Group Corp.Supplemental Unaudited DataReconciliation of GAAP Measures to Non-GAAP Measures (Continued)(Dollars in thousands, except for per share amounts) Fiscal 2021 Fiscal 2022 Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTALAdjusted Earnings(3)Net Earnings $ 4,598 $ 3,182 $ 25,031 $ 5,266 $ 38,077 $ 2,788 $ - $ - $ - $ 2,788

Loss fromDiscontinued (224 ) (402 ) (226 ) (1,283 ) (2,135 ) (397 ) - - - (397 )Operations, net ofincome taxEarnings from $ 4,822 $ 3,584 $ 25,257 $ 6,549 $ 40,212 $ 3,185 $ - $ - $ - $ 3,185 ContinuingOperationsImpairment & 139 401 - 5,659 6,198 - - - - - divestiturechargesRestructuring 210 649 1,571 (37 ) 2,392 2,737 - - - 2,737 chargesGain on sale offacility, net of - - (5,359 ) - (5,359 ) - - - - - transactionchargesExecutive - - 551 58 609 3,759 - - - 3,759 transition & boardsearch chargesNet tax effect of (15 ) (100 ) 2,647 (548 ) 1,984 42 - - - 42 reconciling itemsaboveOther income tax - (632 ) (7,523 ) - (8,155 ) - - - - - benefitAdjusted Earnings $ 5,156 $ 3,902 $ 17,144 $ 11,681 $ 37,881 $ 9,723 $ - $ - $ - $ 9,723 from ContinuingOperations Adjusted DilutedEarnings per share(3)Net Earnings $ 0.08 $ 0.05 $ 0.41 $ 0.09 $ 0.63 $ 0.05 $ - $ - $ - $ 0.05

Loss fromDiscontinued (0.00 ) (0.01 ) (0.00 ) (0.02 ) (0.04 ) (0.01 ) - - - (0.01 )Operations, net ofincome taxEarnings from $ 0.08 $ 0.06 $ 0.42 $ 0.11 $ 0.67 $ 0.05 $ - $ - $ - $ 0.05 ContinuingOperationsImpairment &divestiture 0.00 0.01 - 0.08 0.09 - - - - - charges, net oftax effectRestructuring 0.00 0.01 0.02 0.00 0.03 0.04 - - - 0.04 charges, net oftax effectGain on sale offacility, net of - - (0.04 ) 0.00 (0.04 ) - - - - - transactioncharges, net oftax effectExecutivetransition & board - - 0.01 0.00 0.01 0.06 - - - 0.06 search charges,net of tax effectOther income tax - (0.01 ) (0.12 ) - (0.14 ) - - - - - benefitAdjusted DilutedEarnings per share $ 0.09 $ 0.06 $ 0.28 $ 0.19 $ 0.63 $ 0.16 $ - $ - $ - $ 0.16 from ContinuingOperations Free Cash Flow (4)Cash (used in)provided by $ 8,667 $ 4,579 $ 11,643 $ 29,294 $ 54,183 $ (4,726 ) $ - $ - $ - $ (4,726 )operatingactivitiesCapital (1,905 ) (3,725 ) (3,874 ) (2,515 ) (12,019 ) (3,293 ) - - - (3,293 )expendituresProceeds from sale 47 548 21,806 8 22,409 133 - - - 133 of property, plantand equipmentOther (2 ) (518 ) 4,937 182 4,599 - - - - -

Free Cash Flow $ 6,807 $ 884 $ 34,512 $ 26,969 $ 69,172 $ (7,886 ) $ - $ - $ - $ (7,886 )

Notes continued:(3) Adjusted earnings from continuing operations and adjusted diluted earningsper share represent net earnings and diluted earnings per share per theCondensed Consolidated Statements of Earnings net of charges or credits foritems to be highlighted for comparability purposes. These measures are notcalculated based upon generally accepted accounting principles (GAAP) andshould not be considered as an alternative to net earnings or diluted earningsper share or as an indicator of the Company's operating performance. However,this presentation is important to investors for understanding the operatingresults of the current portfolio of Enerpac Tool Group companies.(4) Free cash flow primarily represents the operating cash flow, proceeds fromthe sale of property, plant and equipment combined with capital expenditures. For all reconciliations of GAAP measures to Non-GAAP measures, the summation ofthe individual components may not equal the total due to rounding. With respectto the earnings per share reconciliations the impact of share dilution on thecalculation of the net earnings or loss per share and discontinued operationsper share may result in the summation of these components not equaling thetotal earnings per share from continuing operations. View source version on businesswire.com: https://www.businesswire.com/news/home/20211221005146/en/

CONTACT: Bobbi Belstner Senior Director, Investor Relations and Strategy 262.293.1912