EPAC 8-K

Enerpac Tool Group Corp (EPAC)

8-K 2022-06-28 For: 2022-06-28

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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

99.1	Press Release of the Company dated June 28, 2022
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	ENERPAC TOOL GROUP CORP.

	By:	/s/ James Denis
		Acting General Counsel and Secretary

Consolidated Results from Continuing Operations
(US$ in millions, except per share)
	Three Months Ended		Nine Months Ended
	May 31, 2022	May 31, 2021	May 31, 2022	May 31, 2021
Net Sales	$151.9	$143.1	$419.4	$383.2
Net Income	$4.1	$25.3	$9.4	$33.7
Diluted Earnings Per Share	$0.07	$0.42	$0.15	$0.56
Adjusted Diluted Earnings Per Share	$0.16	$0.28	$0.47	$0.43

EPAC 8-K

Enerpac Tool Group Reports Third Quarter Fiscal 2022 Results

Contacts

Industrial Tools & Services (IT&S)
(US$ in millions)
	Three Months Ended		Nine Months Ended
	May 31, 2022	May 31, 2021	May 31, 2022	May 31, 2021
Net Sales	$140.4	$133.4	$387.6	$358.3
Operating Profit	$19.2	$23.8	$49.9	$54.8
Adjusted Op Profit ⁽¹⁾	$19.4	$25.3	$54.7	$57.5
Adjusted Op Profit % ⁽¹⁾	13.8%	19.0%	14.1%	16.1%

⁽²⁾	Excludes approximately $2.7 million of leadership transition and Board search charges, $0.5 million of business review charges and $3.8 million of ASCEND charges in the third quarter of fiscal 2022 compared to $0.6 million of leadership transition and Board search charges and a gain on sale of facility, net of transaction charges, of $5.4 million in the third quarter of fiscal 2021.

Balance Sheet and Leverage
(US$ in millions)
	Period Ended
	May 31, 2022	February 28, 2022	May 31, 2021
Cash Balance	$123.7	$133.4	$136.3
Debt Balance	$205.0	$175.0	$195.0
Net Debt to Adjusted EBITDA^**	1.1	0.6	1.1

Enerpac Tool Group Corp.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)

	May 31,			August 31,
	2022			2021
Assets
Current assets
Cash and cash equivalents	$	123,705		$	140,352
Accounts receivable, net		117,029			103,233
Inventories, net		86,897			75,347
Other current assets		38,657			38,503
Total current assets		366,288			357,435

Property, plant and equipment, net		44,400			48,590
Goodwill		267,199			277,593
Other intangible assets, net		45,163			54,545
Other long-term assets		74,249			82,084

Total assets	$	797,299		$	820,247

Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable	$	65,741		$	61,958
Accrued compensation and benefits		21,227			21,597
Income taxes payable		3,892			5,674
Other current liabilities		43,666			45,535
Total current liabilities		134,526			134,764

Long-term debt, net		205,000			175,000
Deferred income taxes		6,586			4,397
Pension and postretirement benefit liabilities		16,179			17,783
Other long-term liabilities		68,736			76,105
Total liabilities		431,027			408,049

Shareholders' equity
Capital stock		16,670			16,604
Additional paid-in capital		211,952			202,971
Treasury stock		(704,027	)		(667,732	)
Retained earnings		958,991			953,339
Accumulated other comprehensive loss		(117,314	)		(92,984	)
Stock held in trust		(3,148	)		(3,067	)
Deferred compensation liability		3,148			3,067
Total shareholders' equity		366,272			412,198

Total liabilities and shareholders' equity	$	797,299		$	820,247

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

	Three Months Ended						Nine Months Ended
	May 31,			May 31,			May 31,			May 31,
		2022			2021			2022			2021
Net sales	$	151,894		$	143,149		$	419,395		$	383,233
Cost of products sold		79,847			76,302			227,741			206,346
Gross profit		72,047			66,847			191,654			176,887

Selling, general and administrative expenses		63,095			40,468			162,240			130,061
Amortization of intangible assets		1,792			2,061			5,678			6,333
Restructuring charges		517			1,571			5,086			2,430
Impairment & divestiture charges		-			-			1,116			539
Operating profit		6,643			22,747			17,534			37,524

Financing costs, net		951			1,340			2,668			4,395
Other expense, net		254			540			1,004			1,598
Earnings before income tax expense		5,438			20,867			13,862			31,531

Income tax expense (benefit)		1,377			(4,390	)		4,495			(2,132	)
Net earnings from continuing operations		4,061			25,257			9,367			33,663
Loss from discontinued operations, net of income taxes		(2,418	)		(226	)		(3,715	)		(852	)
Net earnings	$	1,643		$	25,031		$	5,652		$	32,811

Earnings per share from continuing operations
Basic	$	0.07		$	0.42		$	0.16		$	0.56
Diluted		0.07			0.42			0.15			0.56

Loss per share from discontinued operations
Basic	$	(0.04	)	$	(0.00	)	$	(0.06	)	$	(0.01	)
Diluted		(0.04	)		(0.00	)		(0.06	)		(0.01	)

Earnings per share*
Basic	$	0.03		$	0.42		$	0.09		$	0.55
Diluted		0.03			0.41			0.09			0.54

Weighted average common shares outstanding
Basic		60,227			60,144			60,292			59,964
Diluted		60,610			60,574			60,640			60,312

*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,
	2022			2021			2022			2021
Operating Activities
Cash provided by operating activities - continuing operations	$	2,274			11,869			7,515			25,369
Cash provided by (used in) operating activities - discontinued operations		245			(226	)		(319	)		(480	)
Cash provided by operating activities	$	2,519			11,643			7,196			24,889

Investing Activities
Capital expenditures		(2,140	)		(3,874	)		(6,970	)		(9,504	)
Proceeds from sale of property, plant and equipment		995			21,806			1,158			22,401
Proceeds from company owned life insurance policies		-			2,911			-			2,911
Cash used in investing activities - continuing operations		(1,145	)		20,843			(5,812	)		15,808
Cash provided by investing activities - discontinued operations		-			-			-			-
Cash used in (provided by) investing activities	$	(1,145	)		20,843			(5,812	)		15,808

Financing Activities
Borrowings on revolving credit facility		30,000			-			45,000			10,000
Principal repayments on revolving credit facility		-			(15,000	)		(15,000	)		(70,000	)
Purchase of treasury shares		(36,295	)		-			(36,295	)		-
Stock options, taxes paid related to the net share settlement of equity awards & other		62			1,767			(3,161	)		(32	)
Payment of cash dividend		-			-			(2,409	)		(2,394	)
Cash used in financing activities - continuing operations	$	(6,233	)		(13,233	)		(11,865	)		(62,426	)
Cash provided by financing activities - discontinued operations		-			-			-			750
Cash used in financing activities	$	(6,233	)		(13,233	)		(11,865	)		(61,676	)

Effect of exchange rate changes on cash		(4,866	)		1,772			(6,166	)		5,088

Net cash (decrease) increase from continuing operations		(9,970	)		21,251			(16,328	)		(16,161	)
Net cash increase (decrease) from discontinued operations		245			(226	)		(319	)		270
Net (decrease) increase from cash and cash equivalents	$	(9,725	)		21,025			(16,647	)		(15,891	)
Cash and cash equivalents - beginning of period		133,430			115,254			140,352			152,170
Cash and cash equivalents - end of period	$	123,705		$	136,279		$	123,705		$	136,279

Enerpac Tool Group Corp.
Supplemental Unaudited Data
Reconciliation of GAAP Measures to Non-GAAP Measures
(Dollars in thousands)	Fiscal 2021															Fiscal 2022
	Q1			Q2			Q3			Q4			TOTAL			Q1			Q2			Q3			Q4		TOTAL
Sales
Industrial Tool & Services Segment	$	112,175		$	112,739		$	133,400		$	134,811		$	493,125		$	121,313		$	125,940		$	140,395		$	-	$	387,647
Other		7,255			7,915			9,749			10,616			35,535			9,590			10,659			11,499			-		31,748
Total	$	119,430		$	120,654		$	143,149		$	145,427		$	528,660		$	130,903		$	136,599		$	151,894		$	-	$	419,395

% Sales Growth
Industrial Tool & Services Segment		-17	%		-9	%		44	%		31	%		8	%		8	%		12	%		5	%		-		8	%
Other		-35	%		-21	%		8	%		28	%		-8	%		32	%		35	%		18	%		-		27	%
Total		-19	%		-10	%		41	%		31	%		7	%		10	%		13	%		6	%		-		9	%

Operating Profit from Continuing Operations
Industrial Tool & Services Segment	$	17,362		$	14,880		$	25,304		$	26,772		$	84,318		$	19,646		$	15,654		$	19,421		$	-	$	54,721
Other		(1,662	)		(1,834	)		14			(968	)		(4,450	)		(1,257	)		334			1,017			-		94
Corporate / General		(6,282	)		(6,289	)		(5,808	)		(6,535	)		(24,915	)		(5,486	)		(4,309	)		(6,705	)		-		(16,501	)
Adjusted operating profit	$	9,418		$	6,757		$	19,510		$	19,269		$	54,953		$	12,903		$	11,679		$	13,733		$	-	$	38,314
Impairment & divestiture charges		(139	)		(401	)		-			(5,659	)		(6,198	)		-			(1,116	)		-			-		(1,116	)
Restructuring charges		(210	)		(649	)		(1,571	)		37			(2,392	)		(2,737	)		(1,832	)		(517	)		-		(5,086	)
Gain on sale of facility, net of transaction charges		-			-			5,359			-			5,359			-			-			585			-		585
Leadership transition & board search charges (2)		-			-			(551	)		(58	)		(609	)		(3,759	)		(1,747	)		(2,800	)		-		(8,305	)
Business review charges		-			-			-			-			-			-			(2,500	)		(502	)		-		(3,002	)
ASCEND transformation program charges		-			-			-			-			-			-			-			(3,856	)		-		(3,856	)
Operating profit	$	9,069		$	5,707		$	22,747		$	13,589		$	51,113		$	6,407		$	4,484		$	6,643		$	-	$	17,534

Adjusted Operating Profit %
Industrial Tool & Services Segment		15.5	%		13.2	%		19.0	%		19.9	%		17.1	%		16.2	%		12.4	%		13.8	%		-		14.1	%
Other		-22.9	%		-23.2	%		0.1	%		-9.1	%		-12.5	%		-13.1	%		3.1	%		8.8	%		-		0.3	%
Adjusted Operating Profit %		7.9	%		5.6	%		13.6	%		13.2	%		10.4	%		9.9	%		8.5	%		9.0	%		-		9.1	%

EBITDA from Continuing Operations (1)
Earnings from continuing operations	$	4,822		$	3,584		$	25,257		$	6,549		$	40,212		$	3,185		$	2,121		$	4,061		$	-	$	9,367
Financing costs, net		1,716			1,338			1,340			870			5,266			961			755			951			-		2,668
Income tax expense (benefit)		2,258			1			(4,390	)		5,895			3,763			1,781			1,337			1,377			-		4,495
Depreciation & amortization		5,458			5,507			5,473			5,173			21,611			5,175			4,986			4,822			-		14,983
EBITDA	$	14,254		$	10,430		$	27,680		$	18,487		$	70,852		$	11,102		$	9,199		$	11,211		$	-	$	31,513

Adjusted EBITDA from Continuing Operations (1)
Industrial Tool & Services Segment	$	21,002		$	18,210		$	28,873		$	30,421		$	98,506		$	22,996		$	19,260		$	22,853		$	-	$	65,109
Other		(740	)		(942	)		897			(133	)		(918	)		(263	)		1,225			1,912			-		2,873
Corporate / General		(5,659	)		(5,788	)		(5,327	)		(6,121	)		(22,896	)		(5,135	)		(4,091	)		(6,464	)		-		(15,689	)
Adjusted EBITDA	$	14,603		$	11,480		$	24,443		$	24,167		$	74,692		$	17,598		$	16,394		$	18,301		$	-	$	52,293
Impairment & divestiture charges		(139	)		(401	)		-			(5,659	)		(6,198	)		-			(1,116	)		-			-		(1,116	)
Restructuring charges		(210	)		(649	)		(1,571	)		37			(2,392	)		(2,737	)		(1,832	)		(517	)		-		(5,086	)
Gain on sale of facility, net of transaction charges		-			-			5,359			-			5,359			-			-			585			-		585
Leadership transition & board search charges (2)		-			-			(551	)		(58	)		(609	)		(3,759	)		(1,747	)		(2,800	)		-		(8,305	)
Business review charges		-			-			-			-			-			-			(2,500	)		(502	)		-		(3,002	)
ASCEND transformation program charges		-			-			-			-			-			-			-			(3,856	)		-		(3,856	)
EBITDA	$	14,254		$	10,430		$	27,680		$	18,487		$	70,852		$	11,102		$	9,199		$	11,211		$	-	$	31,513

Adjusted EBITDA %
Industrial Tool & Services Segment		18.7	%		16.2	%		21.6	%		22.6	%		20.0	%		19.0	%		15.3	%		16.3	%		-		16.8	%
Other		-10.2	%		-11.9	%		9.2	%		-1.3	%		-2.6	%		-2.7	%		11.5	%		16.6	%		-		9.0	%
Adjusted EBITDA %		12.2	%		9.5	%		17.1	%		16.6	%		14.1	%		13.4	%		12.0	%		12.0	%		-		12.5	%

Notes:
(1) EBITDA represents net earnings from continuing operations before financing costs, net, income tax (benefit) expense, and depreciation & amortization. EBITDA is not a calculation based upon 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.
(2) Caption updated from "Corporate development & board search fees" used during Fiscal 2021 also updated to consolidate "Executive Transition and board search charges" and "Sr. Leadership transition charges" during the first part of Fiscal 2022 into one row. Costs included have not been altered.