Ladies and gentlemen, thank you for standing by. Welcome to the Enerpac Tool Group's Fourth Quarter Fiscal 2024 Earnings Conference Call. As a reminder, this conference is being recorded October 16, 2024. It is now my pleasure to turn the conference over to Travis Williams, Senior Director of Investor Relations. Please go ahead, Mr. Williams.

Thank you, operator. Good morning and thank you for joining us for Enerpac Tool Group's year-end fiscal 2024 earnings call. On the call today to present the company's results are Paul Sternlieb, President and Chief Executive Officer; and Shannon Burns, our Interim Principal Financial Officer. The slides referenced on today's call are available on the Investor Relations section of the company's website, which you can download and follow along. A recording of today's call will also be made available on our website. Today's call will reference non-GAAP measures. You can find a reconciliation of GAAP to non-GAAP measures in the press release issued yesterday. Our comments will also include forward-looking statements that are subject to business risks that could cause actual results to be materially different. Those risks include matters noted in our latest SEC filings. Now, I will turn it over to Paul.

Thanks, Travis, and good morning. For the full year, Enerpac's financial performance came in essentially as expected. Although our top line growth decelerated over the course of the year, we believe we continue to outpace the very soft general industrial marketplace as evidenced by continued positive revenue growth. As you can see in Slide 3 and Shannon will elaborate on, organic revenue grew 2.2% in fiscal 2024, including 2.7% growth in our core Industrial Tools & Services or IT&S business. Moreover, because of our continued ability to capture efficiencies at the gross profit and SG&A lines, we enjoyed further expansion in profitability, achieving adjusted EBITDA growth of 8%, representing a margin of 25%. Let me turn the call over to Shannon to elaborate on our financial performance. He will also introduce our initial guidance for fiscal 2025. Following that, I'll speak about geographic trends, provide some color on targeted vertical markets and of course talk about our recent acquisition of DTA.

Thanks, Paul. On Slide 4, we highlight our full year fiscal 2024 financial results. For the year, we generated organic revenue growth of 2.7% in our Industrial Tools & Services business. Within ITS, organic product and service revenue grew 1.7% and 6.6% respectively. Due to a 9.5% decline at Cortland Biomedical, total organic growth was 2.2% in fiscal 2024. However, as Paul will discuss, we were pleased to see Cortland Medical resume year-over-year growth in the fourth quarter. Due to the sale of Cortland Industrial in late fiscal 2023, total net sales for the company declined 1.5% for the year. Slide 5 reflects the continued progress we've made in improving operating efficiency and SG&A productivity. In full year fiscal 2024, gross margin expanded 180 basis points to 51.1%. This was driven by operational improvements related to the ASCEND transformation as well as other actions, including the impact of pricing and the disposition of Cortland Industrial. Similarly, we continue to benefit from initiatives that improved SG&A efficiency. Adjusted SG&A expense, which excludes ASCEND and other one-time charges from both periods declined 4% year-over-year. As a percent of sales, it improved 60 basis points to 27.6%. Turning to Slide 6, with both top line growth and continued gains in operating efficiency and SG&A productivity, full year adjusted EBITDA increased 8% year-over-year. Adjusted EBITDA margins improved 220 basis points from 22.8% in fiscal 2023 to 25.0% in fiscal 2024. On a GAAP basis, diluted earnings per share from continued operations totaled $1.50 for fiscal 2024, while adjusted EPS increased 19% from $1.45 to $1.72 which benefited from a lower tax rate and a 4% lower share count. The effective tax rate for adjusted EPS was 21.6% in fiscal 2024 as compared to 23.2% in fiscal 2023. On a cash flow basis, we hit the high end of our guidance with free cash flow of $70 million in fiscal 2024. That represents a conversion rate of 82% of net earnings in line with our expectations as we continue to invest in ASCEND during the year. Of note, as we've laid out in the past, we expected free cash flow conversion to be lower in the first few years of the planning period due to investments made as part of the ASCEND program and strategic growth initiatives. We have targeted at least a 100% conversion by fiscal 2026. As you can see on Slide 7, we have captured significant gains since we launched our ASCEND transformation program in fiscal 2022. As of fiscal year end 2024, we reached the official conclusion of the program with total investments of $75 million. Since fiscal 2021, adjusted EBITDA roughly doubled from $75 million to $147 million in fiscal 2024 with margin expansion of approximately 1100 basis points. That represents benefits well above our initial target of $40 million to $50 million and in excess of our revised targets of $50 million to $60 million. And with the full year adjusted EBITDA margin of 25% in fiscal 2024, we achieved that objective a year ahead of plan. Turning to fourth quarter results highlighted on Slide number 8, we delivered year-over-year organic growth of 0.9% in the quarter. ITS growth of 0.8% was comprised of service revenue growth of 9.7% offset by a 1% decline in product revenue. In the fourth quarter, we continue to manage SG&A expenses through efficiency and productivity initiatives. At the same time, gross margins were negatively impacted by project mix and a higher percent of service revenue as compared to our standard products. Turning to the balance sheet, Enerpac's position remains strong. As shown on Slide number 9, net debt was $27 million resulting in a net debt leverage ratio of 0.2 times adjusted EBITDA at year-end fiscal 2024. Total liquidity was $565 million. Subsequent to the end of the fiscal year, we completed the acquisition of DTA. On a pro forma basis including the financing of DTA, the net debt leverage ratio was 0.5 times. This leaves ample capacity to deploy capital for our disciplined M&A strategy as well as our internal investments and opportunistic share repurchase. As outlined in our earnings release and on Slide 10, we have presented our initial guidance for fiscal 2025. While we believe the general industrial market will continue to show a decline in the low-single-digit range for the year, we anticipate organic revenue growth of 0% to 2% at Enerpac. Net sales including the full year contribution from DTA is forecast at $610 million to $625 million. That represents total revenue growth of 5% at the midpoint. Our forecast for adjusted EBITDA is $150 million to $160 million representing a margin of 25.1% at the midpoint in fiscal 2025. As I mentioned, we achieved our target of a 25% adjusted EBITDA margin ahead of schedule in fiscal 2024. Based on our financial framework, our objective has been to achieve a further 50 basis points improvement in subsequent years. In line with that framework, excluding the acquisition of DTA, our adjusted EBITDA margin guidance would have increased approximately 50 basis points to 25.5% in fiscal 2025. While DTA is nicely profitable and additive to EBITDA, it is dilutive on a margin basis in its first year. We project free cash flow of $85 million to $95 million with CapEx of $19 million to $24 million. Note that CapEx is expected to be higher than prior years in fiscal 2025, primarily due to one-time investments for the build-out of our new headquarters, which we've discussed previously. As you can see from this slide, we have included our modeling assumptions, including interest expense, depreciation and amortization along with our adjusted tax rate. With that, let me turn the call back to Paul.

Thanks, Shannon. As you just heard, we are committed to capturing further growth and margin improvement going forward. That effort outlined on Slide 11 will be enabled by what we call Powering Enerpac Performance or PEP, which is our continuous improvement program and a natural extension of ASCEND. With PEP, we are focused on standardization and simplification of all processes from manufacturing to procurement to finance and marketing, eliminating unnecessary steps, reducing complexity and ensuring best practices are consistently applied across the organization. PEP also means challenging ourselves to be better as we drive innovation, improve customer satisfaction and unlock additional opportunities for growth. PEP will utilize the same framework, tools and methodology that we established for ASCEND with the same level of rigor. I'm excited about this journey of continuous improvement and the benefits that will accrue to Enerpac as we move forward. Switching to our geographic performance, as shown on Slide 12, revenue growth across our three regions was mixed. Fiscal 2024 revenue in the Americas was up in the low-single digits. While demand has been flat to declining for ITS standard products and services, heavy lifting technology or HLT remains strong with an expanding funnel. Distributor sentiment remains cautious and they are tightly managing inventories accordingly. In Asia Pacific, our smallest region, full year revenue declined in the mid-single digits. Performance in the region continues to be impacted by softness in the mining sector. However, as discussed last quarter, we continue to add distributors and expand commercial support. With that and the recently launched e-commerce in Australia, we expect the APAC region to return to growth in fiscal 2025. In the EMEA region, we continue to enjoy strong performance with high-single-digit revenue expansion for the year. The gains were broad-based across end markets. And with the recent introduction of e-commerce in Europe and the rollout of Enerpac Commercial Excellence or ECX, which establishes a more disciplined sales process, we expect to capture further market share gains. In the fourth quarter of fiscal 2024, consistent with overall market trends, revenue growth at EMEA slowed from prior quarters to the low-single digits in the fourth quarter. Fourth quarter sales in the Americas region were flat year-over-year and the APAC region was down mid-single digits. As Shannon mentioned, Cortland posted its first year-over-year revenue growth of fiscal 2024 in the fourth quarter. With the resolution of commercial negotiations earlier in the year, we expect Cortland to resume organic growth in fiscal 2025. Several new products recently began commercial launch or are on the path having completed regulatory approval or customer qualification. That should help as we move through the year. Turning to product innovation and slide 13. Over the past year, we've introduced several new products, including our first battery-operated handheld torque wrench lineup, the 100-ton hydraulic lock-grip puller, the 40-ton hydraulic pin puller kits, and our two new battery-powered portable pumps. These have been the result of a refocused product innovation program aligned with customer needs in our key vertical markets. I'm pleased with the progress we're making on innovation and excited about our roadmap moving forward. An important part of gaining traction in the marketplace is our participation at key trade shows, including three we attended in late September. For the first time, we exhibited at the InnoTrans International Trade Fair in Berlin, Germany, the leading fair globally for rail transport technology. At the show, we focused on introducing our brand and launching our RP70A rail stressing kit and our TL248 track lift system aided by a mockup of a live piece of track as shown on Slide 12, both products were highly popular with a large cross-section of attendees. The show exceeded our expectations, generating a large number of new leads and many requests for live demonstrations at customer sites. About the same time, we also exhibited at the MINExpo Show in Las Vegas. At that show, Enerpac featured a range of heavy lifting technology as well as new standard products. And with a new approach to marketing, which included extensive pre and post-show activity, we've rigorously tracked and advanced a significant number of opportunities. Additionally, as shown on Slide 14, we exhibited at WindEnergy in Hamburg, Germany, which attracts industry professionals from across the globe. Enerpac's presence at this event focused on networking with key industry decision-makers as well as showcasing our latest solutions, including high-performance battery tools such as our SC and XC2 cordless battery pumps and the BTW battery torque wrench product line. Attendees were particularly interested in how Enerpac's tools can enhance the efficiency of wind farm maintenance and operations. And speaking of the wind market, trends in this target vertical continue to provide a positive environment for Enerpac. In fact, according to the Energy Information Administration, wind turbines generated more electricity than coal-burning power plants in the US in March and April of this year. That crossover is occurring as breakthroughs in technology have lowered the cost of building wind turbines and battery storage. Analysts estimate that the percentage of electricity from wind will more than double to around 35% by 2050. We believe these favorable dynamics in the wind market provide a very positive environment for Enerpac's highly competitive product lines that serve the full life cycle of wind turbines from manufacturing and installation to operations and maintenance and eventual decommissioning. Moving to Slide 15. In July, we announced the appointment of Eric Chack as Executive Vice President of Operations. Eric brings a record of operations leadership and deep industrial manufacturing experience. In only a short time, he's established a clear operation strategy and detailed playbook to create value through functional excellence, manufacturer effectiveness, and supply chain efficiency. And as announced in a separate release yesterday, Darren Kozik will be joining Enerpac as Executive Vice President and Chief Financial Officer on October 28th. Darren joins us from Manpower Group, where he led their global business, financial planning and analysis, mergers and acquisitions, treasury, procurement, and investor relations functions. He also had a 17-year career at General Electric in roles of increasing scope and global responsibility. We are very much looking forward to having him as part of the team. Finally, turning to Slide 16. We are excited about the acquisition of DTA, which we announced on September 5th. DTA's product line provides an excellent complement to Enerpac's heavy lifting technology. Combining our focus on vertical lift with DTA's specialization in horizontal movement enables us to provide more comprehensive solutions for our customers. We anticipate meaningful revenue synergies as we seek to greatly expand DTA sales and distribution capabilities and reach beyond Europe, which currently accounts for approximately 90% of its sales. On the cost side, we believe DTA will benefit from Enerpac's disciplined operating processes while leveraging shared procurement and back-office expenses. We are already well along in the integration of DTA and have established a lead generation process for cross-selling our equipment. More broadly, DTA is a good example of our M&A strategy. Like DTA, the vast majority of our funnel is based on proprietary targets. While those deals can take longer to develop like DTA, which took about a year, they are based on building a deep relationship and understanding of the strategic fit and value creating opportunity. Before we open the call to questions, I'd like to thank our employees across the globe, including our newest team members from DTA for their excellent work in fiscal 2024. I'd also like to take this opportunity to thank Shannon for his interim leadership of the finance function over the past couple of quarters as we conducted the CFO search. Our finance organization continued to operate extremely effectively and efficiently under Shannon's strong and capable leadership and I'm extremely grateful for all the support he provided. Going forward, Shannon will continue to lead our business decision support office and play a key role in helping drive further growth and productivity enhancements across Enerpac. With that, we'd be happy to take questions.

Thank you. We will now begin the question and answer session. Your first question comes from Tom Hayes from CL King. Your line is open.

Hey, good morning, Paul.

Good morning, Tom.

Hey, appreciate the time this morning. Just a couple of questions. First, on DTA, nice acquisition. Just maybe if you could maybe call out what you see as maybe some of the most prominent opportunities for you in DTA in this upcoming fiscal year?

Yes, sure. Thanks, Tom. We are super excited about DTA. We're happy to get that deal done right here at the beginning of the fiscal year. It's a great business. It has an excellent track record of really solid, strong organic growth, led by the previous owners, who are still continuing to run the business going forward as part of the Enerpac team. I think what we like probably particularly and most about DTA, there's probably, I guess, three things I'd highlight. First and foremost, it's extremely complementary, particularly to our existing HLT business, as I referenced in my remarks earlier. Really their specialty is horizontal movement, a very heavy industrial load. As you know, our HLT business is really all about vertical lifting. There are many applications where customers need both of those. Previously, we didn't really offer horizontal movement. And so we have existing customer relationships, both at the Enerpac side and the DTA side where we can leverage that kind of combined synergy from a commercial perspective. I think the second, as I referenced, is we see lots of opportunity for geographic expansion. The vast majority of DTA sales really are and have been in the European region given their location there in Spain. They've actually never had dedicated sales resources outside of Europe. And so we can leverage the existing sales channel and network that we have in many parts of the world, including here in the Americas, to really help expand and that process is now actually well underway, super excited about the funnel of opportunities we're building there. And I think thirdly, there's a lot of complementarity, particularly in the end markets that we serve, including things like wind and rail that are obviously key verticals for us, where they are strong and where we continue to drive growth and gain share. So I think in all of those, we see really interesting opportunities to continue to drive growth in the DTA business.

No, that was great. Would you say that if you look at your customers are using your HLT technology, they have the need for the more side-to-side moving solutions that DTA brings or are they going elsewhere for those solutions now and just kind of how does that fit into the competitive picture?

Right. Yes, it depends on the customer; not all of them do, but in some cases, yes, they absolutely need that. In fact, it's a bit, I guess, funny because we actually discovered post the acquisition that DTA was bidding on some projects where we just didn't literally offer the side-to-side solution with our existing customers. So I mean it definitely points to there's a very specific need and opportunity out there. Those are a handful of cases where obviously we're now joined up in doing that. But it clearly highlights that there is that shared application opportunity in many of our customers.

Okay. Maybe just one last one on DTA. Do they have a service or a recurring revenue component that would be complementary to your service business?

Yes, they do, actually. So because it's capital equipment, it obviously requires regular maintenance and parts and the like. That is a nice and growing business for them. We do think like many businesses in this space, certainly smaller businesses. Historically, the focus has been on the sale of new equipment. And I wouldn't say aftermarket has been an afterthought. They serve their customers well. But we believe there's certainly an opportunity for us to drive more focused growth on the aftermarket side of the business and that's one of our key growth initiatives for DTA. And that also tends to be margin accretive within the business.

Okay. Just maybe shifting gears a little bit to your '25 outlook. I was just wondering if you could provide a little bit more color as how you see your key target verticals performing in '25 vis-a-vis your guidance. I mean you mentioned the wind a little bit, but maybe some commentary on the rail, the MRO, and the infrastructure market. More specifically on the infrastructure market as we seem to be getting some market signals that maybe projects aren't moving as fast as people had originally anticipated, but maybe that will pick up in the back half of the year. So any color you can provide on that would be great?

Yes, sure. I think on our key verticals, if I take them in turn, we obviously referenced we were recently exhibiting at a number of key shows. In fact, I was at the two shows in Germany for wind and rail. And I think at both of those end markets, we continue to see reasonably positive signs in terms of demand profile and investment activity happening there. So I think we feel good going into FY'25 here around what that could look like and support our overall organic growth and we continue to drive additional or disproportionate resources and investment against wind and rail end markets, including innovation that I talked about in my remarks earlier. I think in the infrastructure space, we still certainly see the opportunity set, particularly given, obviously all the funding activity. And that's probably most robust here in the US. But I'd remind folks that that level of infrastructure investment in many cases is happening around the world. We see that in Japan. We see that in other parts of Asia. We see that in many parts of Europe with aging infrastructure. So the need is there. Funds are being made available. I think it's slower than most of us would like to see in terms of the rollout, particularly here in the US. But what does give me a little bit more comfort is we've got access to some more proprietary data sets that give us insight into some of the more leading indicators around where these projects are in their lifecycle. And we do see them progressing. And that gives us access to kind of early stage in the bidding process to be able to drive kind of brand specification and preference for Enerpac. So we are hopeful we'll see more of that infrastructure activity play out into actual revenue here in fiscal '25. And we wouldn't really ascribe much, I would say, in fiscal '24.

Maybe just one follow-up and then I'll go back to the queue. On the infrastructure, I'll call it slowness, I've got some kind of mixed drivers for that. I was just wondering your thoughts on kind of what's maybe slowing down the project flows. Is it regulatory issues? Is it setting? Is it just I'm assuming it's not financing. Just your thoughts on that?

Yes. I don't think it's financing per se. I think some of it might be permitting. I think there's also just practical labor availability, which is still a challenge, just given the tight labor market still here in the US market. But those are the things that we hear. But I think the intent is there. As we said, the funds obviously are being made available. And I think it's just a matter of working through the typical timelines on process to get these things bid out and get the permitting done. As you know, where Enerpac participates, it tends to be sort of towards the latter stage of the cycle, right? I mean projects get bid out and the funds are awarded. It's not really until materials show up at site, they actually need to start truly physically putting things together—they're Enerpac tools come into play.

Okay. Appreciate the color. Thanks, Paul.

Okay. Thanks, Tom.

Your next question comes from the line of Ross Sparenblek from William Blair. Your line is open.

Hey, good morning, gentlemen.

Good morning.

Good morning.

Maybe just starting with the 2025 guidance on the organic front. Can you maybe help us frame just your assumptions as we think about market growth across the three geographies? I believe you called out APAC is improving, but also annual price and market share expectations for the new products. I mean I always get the sense that the expectation here is that it's going to be more second half loaded than the guidance on the organic front?

Yes. I think if I start from a market perspective, I mean, Shannon did walk through that. Our kind of view around fiscal '25 guidance at this point, and as you know, we're not doing or issuing quarterly guidance. So we're really trying to call for the next 12 months, which is not the easiest thing to do sitting in where we are at this date and time. But I think our view is that the overall market will likely continue to show a decline probably in the low single-digit range. So that's kind of the starting point. Obviously, where we're talking about organic growth, we do continue to believe we'll be performing above market, obviously, above a weaker market condition. That's really comprised of a number of things. Certainly, strong commercial execution. We continue to drive Enerpac Commercial Excellence or ECX. We actually will be rolling that out in the EMEA region in fiscal '25 after we've completed the rollout and the implementation in Americas. So we think that will be a nice driver of continued commercial execution for us. There will be some pricing activity. I think it will be more muted than in recent years. Certainly, we'll take pricing actions as needed to continue to cover and offset if not more than offset inflationary pressures that we have seen. And I'd remind folks, we do continue to see an inflationary environment. That's decelerated, but it's not deflationary, right? So we there are pricing actions we need to take to cover inflationary costs. And then we do have plans not only to drive stronger commercial execution and full rollout and I'd say carryover effect on products launched late in fiscal '24, but also new product launches that we're planning, I would say, predominantly in the second half of fiscal '25. So it really is a combination of all of those. And again, I'd remind folks, I mean, generally speaking, we tend to be a little bit second half or back half weighted overall in the Enerpac revenue as you think about our revenue flows for the year.

Yes, I'd just add on this. As we think about the 50 basis point improvement that we talked about in the base business, pricing. But it also is that continuous improvement program that Paul highlighted, PEP, and that's going to drive SG&A productivity and operational efficiency as we continue to move forward and execute very similar projects as we did to ASCEND.

Okay. So when we think about kind of the margin guidance then it's somewhat of a broad range, maybe flat volume with some productivity initiatives gets you towards the higher end with some price? And then maybe the lower end is just baking in maybe not as great share gains offsetting the low single-digit market decline. Maybe could you also layer in also what the dilution is from the DTA on the margin front, if you didn't say that already?

Yes, sure. No, I think, you're right on your comments earlier. I mean, obviously, we are providing a range. And I think certainly, there is a component of volume in there and just getting the overhead benefit from that the overhead absorption benefit. But regardless, as Shannon referenced, I mean, we will continue and we do have a funnel that will continue to execute of continuous improvement initiatives just like we're executing in ASCEND. We're calling that PEP Powering Enerpac Performance. We're running that just the same with the same mechanism as we ran ASCEND. So from the perspective of anybody here within the four walls of Enerpac, it will feel very much consistent with the way that we executed the ASCEND program. We're just not calling out or adjusting out externally any one-time charges related to that. Those will just flow through the P&L. I think from the standpoint of DTA, what we said is, it is margin dilutive at this point in time, certainly in year one for Enerpac. But we still believe it's a great business and we think we have opportunities, not just on the growth side, I talked about earlier. But also from a margin improvement perspective. Generally, Shannon referenced, excluding DTA, we would have been targeting about 50 basis points of EBITDA margin expansion for fiscal '25 year-over-year. With DTA, effectively, we're close to flat. So you can kind of do the math behind that.

Got it. Okay. That's helpful. And then thinking about free cash flow conversion targets for 2026 with ASCEND stepping down. I know distributors and SKU rationalization has been part of the working capital narrative. But can you just maybe remind us of any other levers that are at your disposal to help get that free cash flow conversion up?

Yes, I can make a few comments. Shannon can add color as well. But I'd say, first and foremost, I think the team continues to do a nice job on working capital. We've made multiple improvements this year. We still see runway to drive continued improvements on optimizing working capital. With Eric Chak on board, we see more opportunities on inventory optimization as well. And I think the team has done a nice job with regards to AR, DSO. I think I'd say working against us, but one factor that Shannon referenced is in our CapEx for fiscal '25. We do have a higher amount, which we've talked about previously just because of the HQ or headquarter one-time relocation costs and the build-out of that, which is on plan and on budget. It's just hit those costs largely hit or the CapEx largely hits here in fiscal '25.

Yes. And I'd just add there. I mean given versus the last couple of years, there's just less noise in terms of a lot of ASCEND charges and cash flow. So we should have a much cleaner year in fiscal year '25.

Perfect. Thank you, guys.

Thank you.

Your next question comes from the line of Steve Silver from Argus Research. Your line is open.

Thanks, operator, and thanks for taking the questions and congratulations on a productive year.

Thanks, Steve.

My first question, as the leverage in the company continues to be below the target range with the continued strong free cash flow and the cash position even after the DTA deal, that combined with the robust share repurchase activity. Just wondering if there are any updated thoughts or color around the thinking around the capital allocation strategy?

Yes, sure. Thanks for the question. Our focus remains the same. I would say our target leverage ratio still remains 1.5 to 2.5 times on a normalized basis. Obviously, we are below that even with the kind of pro forma of DTA here as we start off fiscal '25. That in mind, I think our priorities are really unchanged. I'd say number one focus continues to be internal investments, capital investments, and we continue to support any and all of those that have great business case and good returns for our shareholders. Unfortunately, that's never going to use up all of our available capital resources. So from there, it's really a balanced approach between maintaining enough capacity or dry powder for inorganic growth and acquisitions like DTA and then opportunistically returning capital to shareholders, predominantly through share repurchase as we've done, right, through $38 million of share repurchase in fiscal '24. And we still have roughly, I think, 2.7 million shares remaining under the current authorization. So we'll continue to look at that and discuss with our Board on an opportunistic basis about share repurchase because certainly, we're bullish about the future of Enerpac and the investments we're making. But we do want to maintain sufficient dry powder. We've been doing a lot of work behind the scenes on continuing to build out our funnel for acquisitions. Obviously, those take time and they are episodic. DTA, as an example, took about a year, right, from start to finish. And so these are just a long process. But really, I'm pleased with the progress we're making on the funnel build-out, the quality and the quantity, the vast majority of what we've got in that funnel remain proprietary targets with good conversations. So we just want to maintain a really superior balance sheet to be able to support those decisions when we take them.

That's helpful. Great. And one more if I may. Given the fact that the tool industry and the industrial industry at large remain really fragmented. Are you seeing any signs of wider consolidation in the industry given the macroeconomic challenges that you cited earlier and just really the still elevated interest rate environment. Is there any signal of increased consolidation across the industry?

Yes. I wouldn't highlight anything of note, Steve. There are from time to time acquisitions that get done. But I wouldn't say there's any consistent indication of significant consolidation by one or two large acquirers. But you're right, it is an opportunity and it's an opportunity for Enerpac. I mean the market, as I've referenced multiple times, remains quite fragmented, especially through the lens that we look at it and the adjacencies that we're also looking at. DTA is a good example. And so that does present, I think, a very unique opportunity for us on our inorganic growth program. But to date, no, I don't think there's anything that I would highlight where we've seen particular kind of focused and consistent consolidation efforts by others.

Great. Thanks for the color and best of luck in the upcoming year.

Okay. Thank you, Steve.

Thank you.

And that concludes our question-and-answer session. I will now turn the call back over to President and CEO, Paul Sternlieb for some final closing remarks.

Okay. Well, thanks again for joining us this morning. We will be presenting and hosting one-on-one meetings at the upcoming Baird Global Industrial Conference on November 14th in Chicago. And on December 3rd and 4th, we will be at the UBS Global Industrials and Transportation Conference in Palm Beach, Florida. In the meantime, Travis will be available to take any follow-up questions. Thank you and have a good day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.