EPAC 8-K

Enerpac Tool Group Corp (EPAC)

8-K 2023-06-21 For: 2023-06-21

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Wisconsin	001-11288	39-0168610
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, par value $0.20 per share		EPAC		New York Stock Exchange

(d) Exhibits

99.1	Press Release of the Company dated June 21, 2023
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	ENERPAC TOOL GROUP CORP.

	By:	/s/ James Denis
		James Denis
		Executive Vice President, General Counsel and Secretary

Consolidated Results from Continuing Operations
(US$ in millions, except per share)
	Three Months Ended		Nine Months Ended
	May 31, 2023	May 31, 2022	May 31, 2023	May 31, 2022
Net Sales	$156.3	$151.9	$437.6	$419.4
Net Earnings	$17.0	$4.1	$30.5	$9.4
Diluted Earnings Per Share	$0.30	$0.07	$0.53	$0.15
Adjusted Diluted Earnings Per Share	$0.39	$0.16	$1.04	$0.47

EPAC 8-K

Enerpac Tool Group Reports Third Quarter Fiscal 2023 Results, Raises Full-Year Earnings Guidance

Contacts

Industrial Tools & Service (IT&S)
(US$ in millions)
	Three Months Ended		Nine Months Ended
	May 31, 2023	May 31, 2022	May 31, 2023	May 31, 2022
Net Sales	$144.1	$140.4	$402.3	$387.6
Operating Profit	$36.2	$19.2	$93.3	$49.9
Operating Profit %	25.1%	13.7%	23.2%	12.9%
Adjusted Op Profit ⁽¹⁾	$39.8	$19.4	$103.8	$54.7
Adjusted Op Profit % ⁽¹⁾	27.6%	13.8%	25.8%	14.1%

⁽¹⁾Non-GAAP measure, which excludes approximately $1.1 million of restructuring charges and $2.5 million of ASCEND charges in the third quarter of fiscal 2023 and $0.5 million of restructuring charges, $0.1 million of leadership transition charges, $0.1 million of ASCEND charges and a gain on sale of a facility, net of transaction charges, of $0.6 million in the third quarter of fiscal 2022. The nine months ended May 31, 2023 excludes $4.6 million of restructuring charges and $5.8 million of ASCEND charges compared to $3.7 million of restructuring charges, $1.1 million of impairment & divestiture charges, $0.6 million of leadership transition charges, $0.1 million of ASCEND charges and a gain on sale of a facility, net of transaction charges, of $0.6 million in the prior-year period.

Balance Sheet and Leverage
(US$ in millions)
	Period Ended
	May 31, 2023	February 28, 2023	May 31, 2022
Cash Balance	$142.0	$124.7	$123.7
Debt Balance	$234.7	$209.3	$205.0
Net Debt to Adjusted EBITDA^**	1.0	0.9	1.1

Enerpac Tool Group Corp.
Condensed Consolidated Balance Sheets
(In thousands)

	(Unaudited)
	May 31,			August 31,
	2023			2022
Assets
Current assets
Cash and cash equivalents	$	142,001		$	120,699
Accounts receivable, net		103,565			106,747
Inventories, net		93,037			83,672
Other current assets		34,838			31,262
Total current assets		373,441			342,380

Property, plant and equipment, net		41,783			41,372
Goodwill		264,686			257,949
Other intangible assets, net		39,084			41,507
Other long-term assets		74,080			74,104

Total assets	$	793,074		$	757,312

Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable	$	47,151		$	72,524
Accrued compensation and benefits		28,567			21,390
Current maturities of debt		3,125			-
Short-term debt		-			4,000
Income taxes payable		5,982			4,594
Other current liabilities		55,398			50,680
Total current liabilities		140,223			153,188

Long-term debt, net		231,545			200,000
Deferred income taxes		8,226			7,355
Pension and postretirement benefit liabilities		11,492			11,941
Other long-term liabilities		64,969			66,217
Total liabilities		456,455			438,701

Shareholders' equity
Capital stock		16,750			16,679
Additional paid-in capital		218,164			212,986
Treasury stock		(763,675	)		(742,844	)
Retained earnings		991,081			966,751
Accumulated other comprehensive loss		(125,701	)		(134,961	)
Stock held in trust		(3,405	)		(3,209	)
Deferred compensation liability		3,405			3,209
Total shareholders' equity		336,619			318,611

Total liabilities and shareholders' equity	$	793,074		$	757,312

Enerpac Tool Group Corp.
Condensed Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Nine Months Ended
	May 31,			May 31,			May 31,			May 31,
	2023			2022			2023			2022
Net sales	$	156,253		$	151,894		$	437,595		$	419,395
Cost of products sold		78,395			79,847			221,464			227,741
Gross profit		77,858			72,047			216,131			191,654

Selling, general and administrative expenses		48,810			63,095			154,116			162,240
Amortization of intangible assets		1,357			1,792			4,075			5,678
Restructuring charges		2,252			517			6,220			5,086
Impairment & divestiture charges		-			-			-			1,116
Operating profit		25,439			6,643			51,720			17,534

Financing costs, net		3,250			951			9,170			2,668
Other expense, net		525			254			1,948			1,004
Earnings before income tax expense		21,664			5,438			40,602			13,862

Income tax expense		4,688			1,377			10,058			4,495
Net earnings from continuing operations		16,976			4,061			30,544			9,367
Loss from discontinued operations, net of income taxes		(4,596	)		(2,418	)		(6,214	)		(3,715	)
Net earnings	$	12,380		$	1,643		$	24,330		$	5,652

Earnings per share from continuing operations
Basic	$	0.30		$	0.07		$	0.54		$	0.16
Diluted		0.30			0.07			0.53			0.15

Loss per share from discontinued operations
Basic	$	(0.08	)	$	(0.04	)	$	(0.11	)	$	(0.06	)
Diluted		(0.08	)		(0.04	)		(0.11	)		(0.06	)

Earnings per share*
Basic	$	0.22		$	0.03		$	0.43		$	0.09
Diluted		0.22			0.03			0.42			0.09

Weighted average common shares outstanding
Basic		57,052			60,227			56,993			60,292
Diluted		57,432			60,610			57,417			60,640

*The total of earnings per share from continuing operations and loss per share from discontinued 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						Nine Months Ended
	May 31,			May 31,			May 31,			May 31,
	2023			2022			2023			2022
Operating Activities
Cash provided by operating activities - continuing operations	$	16,602		$	2,274		$	24,561		$	7,515
Cash provided by (used in) operating activities - discontinued operations		652			245			2,470			(319	)
Cash provided by operating activities	$	17,254		$	2,519		$	27,031		$	7,196

Investing Activities
Capital expenditures		(2,926	)		(2,140	)		(8,391	)		(6,970	)
Proceeds from sale of property, plant and equipment		11			995			595			1,158
Cash used in investing activities - continuing operations	$	(2,915	)	$	(1,145	)	$	(7,796	)	$	(5,812	)
Cash used in investing activities	$	(2,915	)	$	(1,145	)	$	(7,796	)	$	(5,812	)

Financing Activities
Borrowings on revolving credit facility		26,000			30,000			60,000			45,000
Principal repayments on revolving credit facility		-			-			(24,000	)		(15,000	)
Principal repayments on term loan		(625	)		-			(625	)		-
Proceeds from issuance of term loan		-			-			200,000			-
Payment for redemption of revolver		-			-			(200,000	)		-
Swingline borrowings/repayments, net		-			-			(4,000	)		-
Payment of debt issuance costs		-			-			(2,486	)		-
Purchase of treasury shares		(20,831	)		(36,295	)		(20,831	)		(36,295	)
Stock options, taxes paid related to the net share settlement of equity awards & other		(8	)		62			(1,461	)		(3,161	)
Payment of cash dividend		-			-			(2,274	)		(2,409	)
Cash provided by (used in) financing activities - continuing operations	$	4,536		$	(6,233	)	$	4,323		$	(11,865	)
Cash provided by (used in) financing activities	$	4,536		$	(6,233	)	$	4,323		$	(11,865	)

Effect of exchange rate changes on cash		(1,537	)		(4,866	)		(2,256	)		(6,166	)

Net increase (decrease) from cash and cash equivalents	$	17,338		$	(9,725	)	$	21,302		$	(16,647	)
Cash and cash equivalents - beginning of period		124,663			133,430			120,699			140,352
Cash and cash equivalents - end of period	$	142,001		$	123,705		$	142,001		$	123,705

Enerpac Tool Group Corp.
Supplemental Unaudited Data
Reconciliation of GAAP Measures to Non-GAAP Measures
(In thousands)	Fiscal 2022															Fiscal 2023
	Q1			Q2			Q3			Q4			TOTAL			Q1			Q2			Q3			Q4		TOTAL
Sales
Industrial Tools & Services Segment	$	121,313		$	125,940		$	140,395		$	139,694		$	527,342		$	127,297		$	130,904		$	144,126		$	-	$	402,327
Other		9,590			10,659			11,499			12,133			43,881			12,085			11,056			12,127			-		35,268
Total	$	130,903		$	136,599		$	151,894		$	151,827		$	571,223		$	139,382		$	141,960		$	156,253		$	-	$	437,595

% Sales Growth
Industrial Tools & Services Segment		8	%		12	%		5	%		4	%		7	%		5	%		4	%		3	%		-		4	%
Other		32	%		35	%		18	%		14	%		23	%		26	%		4	%		5	%		-		11	%
Total		10	%		13	%		6	%		4	%		8	%		6	%		4	%		3	%		-		4	%

Adjusted Operating Profit from Continuing Operations
Operating profit	$	6,407		$	4,484		$	6,643		$	13,125		$	30,660		$	12,309		$	13,972		$	25,439		$	-	$	51,720
Impairment & divestiture charges		-			1,116			-			1,297			2,413			-			-			-			-		-
Restructuring charges		2,737			1,832			517			3,049			8,135			982			2,987			2,252			-		6,220
Gain on sale of facility, net of transaction charges		-			-			(585	)		-			(585	)		-			-			-			-		-
Leadership transition charges (benefit) (1)		3,759			1,747			2,800			(37	)		8,269			400			202			90			-		693
Business review charges		-			2,500			502			-			3,002			-			-			-			-		-
M&A charges		-			-			-			-			-			-			196			166			-		362
ASCEND transformation program charges		-			-			3,856			9,760			13,616			9,419			11,372			5,947			-		26,738
Adjusted operating profit	$	12,903		$	11,679		$	13,733		$	27,194		$	65,510		$	23,110		$	28,729		$	33,894		$	-	$	85,733

Adjusted Operating Profit by Segment
Industrial Tools & Services Segment	$	19,646		$	15,654		$	19,421		$	31,878		$	86,600		$	29,099		$	34,836		$	39,814		$	-	$	103,749
Other		(1,257	)		334			1,017			1,853			1,947			1,424			1,156			1,965			-		4,545
Corporate / General		(5,486	)		(4,309	)		(6,705	)		(6,537	)		(23,037	)		(7,413	)		(7,263	)		(7,885	)		-		(22,561	)
Adjusted operating profit	$	12,903		$	11,679		$	13,733		$	27,194		$	65,510		$	23,110		$	28,729		$	33,894		$	-	$	85,733

Adjusted Operating Profit %
Industrial Tools & Services Segment		16.2	%		12.4	%		13.8	%		22.8	%		16.4	%		22.9	%		26.6	%		27.6	%		-		25.8	%
Other		-13.1	%		3.1	%		8.8	%		15.3	%		4.4	%		11.8	%		10.5	%		16.2	%		-		12.9	%
Adjusted Operating Profit %		9.9	%		8.5	%		9.0	%		17.9	%		11.5	%		16.6	%		20.2	%		21.7	%		-		19.6	%

EBITDA from Continuing Operations (2)
Earnings from continuing operations	$	3,185		$	2,121		$	4,061		$	10,224		$	19,591		$	6,409		$	7,158		$	16,976		$	-	$	30,544
Financing costs, net		961			755			951			1,719			4,386			2,815			3,105			3,250			-		9,170
Income tax expense (benefit)		1,781			1,337			1,377			(95	)		4,401			2,383			2,988			4,688			-		10,058
Depreciation & amortization		5,175			4,986			4,822			4,617			19,600			4,193			4,226			4,084			-		12,503
EBITDA	$	11,102		$	9,199		$	11,211		$	16,465		$	47,978		$	15,800		$	17,477		$	28,998		$	-	$	62,275

Adjusted EBITDA from Continuing Operations (2)
EBITDA	$	11,102		$	9,199		$	11,211		$	16,465		$	47,978		$	15,800		$	17,477		$	28,998		$	-	$	62,275
Impairment & divestiture charges		-			1,116			-			1,297			2,413			-			-			-			-		-
Restructuring charges		2,737			1,832			517			3,049			8,135			982			2,987			2,252			-		6,220
Gain on sale of facility, net of transaction charges		-			-			(585	)		-			(585	)		-			-			-			-		-
Leadership transition charges (benefit) (1)		3,759			1,747			2,800			(37	)		8,269			400			202			90			-		693
Business review charges		-			2,500			502			-			3,002			-			-			-			-		-
M&A charges		-			-			-			-			-			-			196			166			-		362
ASCEND transformation program charges		-			-			3,856			9,760			13,616			9,419			11,372			5,947			-		26,738
Adjusted EBITDA	$	17,598		$	16,394		$	18,301		$	30,534		$	82,828		$	26,601		$	32,234		$	37,453		$	-	$	96,288

Adjusted EBITDA by Segment
Industrial Tools & Services Segment	$	22,996		$	19,260		$	22,853		$	34,154		$	99,263		$	31,698		$	37,458		$	42,525		$	-	$	111,681
Other		(263	)		1,225			1,912			2,741			5,615			2,316			2,050			2,855			-		7,222
Corporate / General		(5,135	)		(4,091	)		(6,464	)		(6,361	)		(22,050	)		(7,413	)		(7,274	)		(7,927	)		-		(22,615	)
Adjusted EBITDA	$	17,598		$	16,394		$	18,301		$	30,534		$	82,828		$	26,601		$	32,234		$	37,453		$	-	$	96,288

Adjusted EBITDA %
Industrial Tools & Services Segment		19.0	%		15.3	%		16.3	%		24.4	%		18.8	%		24.9	%		28.6	%		29.5	%		-		27.8	%
Other		-2.7	%		11.5	%		16.6	%		22.6	%		12.8	%		19.2	%		18.5	%		23.5	%		-		20.5	%
Adjusted EBITDA %		13.4	%		12.0	%		12.0	%		20.1	%		14.5	%		19.1	%		22.7	%		24.0	%		-		22.0	%

Notes:
(1) Caption updated from "Leadership transition & board search charges (benefit)" used during Fiscal 2022, costs included have not been altered.
(2) EBITDA represents net earnings from continuing operations before financing costs, net, income tax expense (benefit), and depreciation & amortization. Neither EBITDA nor adjusted EBITDA are calculated based upon generally accepted accounting principles ("GAAP"). The amounts included in the EBITDA and adjusted EBITDA calculation, however, are derived from amounts included in the Condensed Consolidated Statements of Earnings. EBITDA and adjusted EBITDA should not be considered as alternatives to net earnings, operating profit or operating cash flows. The Company has presented EBITDA and adjusted EBITDA because it regularly reviews these performance measures. In addition, EBITDA and adjusted EBITDA are used by many of our investors and lenders, and are presented as a convenience to them. The EBITDA and adjusted EBITDA measures presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.

Enerpac Tool Group Corp.
Supplemental Unaudited Data
Reconciliation of GAAP To Non-GAAP Guidance
(In millions)
	Fiscal 2023
	Low			High
Reconciliation of Continued Operations GAAP Operating Profit
To Adjusted EBITDA (5)
GAAP Operating profit	$	60		$	74
ASCEND transformation program charges		38			33
Restructuring charges		9			7
Adjusted operating profit	$	107		$	114
Other expense, net		(1	)		(1	)
Depreciation & amortization		17			17
Adjusted EBITDA	$	123		$	130

Reconciliation of GAAP Cash Flow From Operations to Free Cash Flow (5)
Cash provided by operating activities	$	65		$	90
Capital expenditures		(10	)		(15	)
Other		-			-
Free Cash Flow Guidance	$	55		$	75

Notes continued:
(5) Management does not provide guidance on GAAP financial measures as we are unable to predict and estimate with certainty items such as potential impairments, refinancing costs, business divestiture gains/losses, discrete tax adjustments, or other items impacting GAAP financial metrics. As a result, we have included above only those items about which we are aware and are reasonably likely to occur during the guidance period covered.