Enerpac Tool Group Reports Fourth Quarter Fiscal 2021 Results and Provides Guidance for Fiscal 2022

Fourth Quarter of Fiscal 2021 Highlights*

  • Net sales from continuing operations were $145 million in the fourth quarter of fiscal 2021, slightly lower than expectations due to continued supply chain challenges, logistics constraints and COVID related lockdowns, compared to $111 million in the comparable prior year period.
  • Consolidated core sales for the quarter increased 28% year over year, with consolidated product sales increasing 23% and service sales increasing 55%. Foreign currency benefited net sales by 3%.
  • Generated cash flow from operations of $29 million in the quarter ended August 31, 2021 compared to $13 million in the fourth quarter of fiscal 2020. Free cash flow was $27 million in the quarter compared to $10 million in the quarter ended August 31, 2020. Full year free cash flow conversion for the year ended August 31, 2021 was well over 100%, a significant increase compared to fiscal 2020.
  • GAAP operating margin from continuing operations was 9.3% for the fourth quarter of fiscal 2021 versus 2.9% in the comparable prior year quarter. Adjusted operating margin from continuing operations was 13.2% and 4.2% for the quarters ended August 31, 2021 and 2020, respectively.
  • Net income from continuing operations was $6.5 million compared to $0.2 million in the prior year comparable period.
  • Adjusted EBITDA margin from continuing operations was 16.6% in the fourth quarter of fiscal 2021 compared to 9.4% in the fourth quarter of fiscal 2020.
  • Achieved year-over-year incremental adjusted EBITDA margins of 44%, excluding the impact of foreign currency, at the high-end of our target incremental margin range of 35-45%.
  • GAAP diluted earnings per share (“EPS”) from continuing operations was $0.11 in the fourth quarter of fiscal 2021 compared to $0.00 in the prior year comparable period. Adjusted diluted EPS from continuing operations was $0.19 in the fourth quarter of fiscal 2021 compared to $0.02 in the fourth quarter of fiscal 2020.
  • Leverage (Net Debt to Adjusted EBITDA) was 0.6x at August 31, 2021 compared to 1.1x at May 31, 2021.
  • In a separate release, announced retirement of Randy Baker, President & CEO, and the appointment of Paul Sternlieb as his successor effective October 8th, 2021.

    *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 fourth quarter ended August 31, 2021.

“As we closed out this fiscal year, we continued our recovery from the global pandemic, with fourth quarter product sales nearing pre-COVID levels and IT&S product order rates for the quarter comparable to the fourth quarter of 2019. We are pleased to achieve EBITDA margin improvement over fiscal 2019 levels as a result of the structural cost actions we have taken. While we continued to face certain supply chain and other COVID-19-related challenges in the fourth quarter, we are encouraged by the continued strength in many of the vertical markets that we serve and the ongoing positive sentiment of our distributors,” said Randy Baker, Enerpac Tool Group’s President & CEO. “Moving into fiscal 2022, we remain focused on the safety of our employees, supporting our customers, and profitably growing Enerpac Tool Group through organic opportunities, new product development and acquisitions to enhance shareholder value.”

Mr. Baker added, “I want to thank our employees for their hard work and dedication through the extraordinary circumstances we faced throughout the year. Between the on-going challenges associated with the COVID-19 pandemic and the more recent supply chain and logistics challenges resulting from the global economic recovery, our team continues to rise to the challenge to support our customers. We are confident that our business is well positioned for growth as the markets we serve continue to recover from COVID-19 related shutdowns.”

Consolidated Results from Continuing Operations

(US$ in millions, except per share)

Three Months Ended

Twelve Months Ended

August 31, 2021

August 31, 2020

 

August 31, 2021

 

August 31, 2020

Net Sales

$145.4

$111.4

 

$528.7

 

$493.3

Net Income

$6.5

 

$0.2

 

$40.2

 

$5.6

Earnings Per Share

$0.11

$0.00

 

$0.67

 

$0.09

Adjusted Diluted Earnings Per Share

$0.19

$0.02

 

$0.63

 

$0.18

  • Consolidated net sales from continuing operations for the fourth quarter were $145.4 million compared to $111.4 million in the prior year fourth quarter. Core sales improved 28% year over year, with product sales up 23% and service up 55%. The impact of foreign currency increased net sales by 3%.
  • Fiscal 2021 fourth quarter GAAP net income from continuing operations and diluted earnings per share from continuing operations were $6.5 million and $0.11, respectively, compared to net income from continuing operations and diluted EPS of $0.2 million and $0.00, respectively, in the fourth quarter of fiscal 2020. Fiscal 2021 fourth quarter net income from continuing operations included an impairment & divestiture charge of $5.7 million ($5.1 million, or $0.08 per share, after tax) attributable to the Other segment.
  • Fiscal 2020 fourth quarter net income from continuing operations included an impairment & divestiture charge of $0.4 million ($0.2 million, or $0.00 per share, after tax); restructuring charges of $1.0 million ($0.8 million, or $0.01 per share, after tax), primarily related to the restructuring plan announced in March 2020 to reduce redundant segment and corporate costs; a pension curtailment benefit of $0.8 million ($0.6 million, or $0.01 per share, after tax); and accelerated debt issuance costs of $1.0 million ($0.8 million, or $0.01 per share, after tax) related to the early redemption of the Company’s 5.625% Senior Notes due 2022 in June 2020.
  • Excluding the items detailed above, adjusted diluted EPS from continuing operations was $0.19 for the fourth quarter of fiscal 2021 compared to $0.02 in the comparable prior year period.
  • Consolidated net sales for the twelve months ended August 31, 2021 were $528.7 million, compared to $493.3 million for the comparable prior year period. Core sales were up 5% year over year. The impact of foreign currency benefited year-over-year net sales by 2%.
  • Consolidated net income from continuing operations and diluted EPS from continuing operations for the twelve months ended August 31, 2021 were $40.2 million and $0.67, respectively, compared to net income from continuing operations and diluted EPS from continuing operations of $5.6 million and $0.09, respectively, in the comparable prior year period.

Industrial Tools & Services (IT&S)

(US$ in millions)

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

August 31, 2021

August 31, 2020

 

August 31, 2021

 

August 31, 2020

Sales

$134.8

$103.0

 

$493.1

 

$454.9

Operating Profit

$26.9

$11.3

 

$81.7

 

$65.5

Adjusted Op Profit (1)

$26.8

$12.2

 

$84.3

 

$67.3

Adjusted Op Profit % (1)

19.9%

11.8%

 

17.1%

 

14.8%

(1) Excludes $0.1 million of restructuring benefit in the fourth quarter of fiscal 2021 compared to $0.5 million of restructuring charges and $0.4 million of impairment & divestiture charges in the fourth quarter of fiscal 2020. The twelve months ended August 31, 2021 excludes $2.1 million of restructuring charges and $0.5 million of net impairment & divestiture charges compared to $4.5 million of restructuring charges, $3.2 million of net impairment & divestiture gains and $0.4 million of purchase accounting charges in the twelve months ended August 31, 2020.

  • Fourth quarter fiscal 2021 net sales were $134.8 million, 31% higher than the prior fiscal year’s fourth quarter net sales. Core sales increased 28% year over year, with the impact of foreign currency increasing net sales by 3%.
  • The increase in revenue is attributable to the broad-based market recovery, as our largest regions of the world returned to more normalized levels of activity.
  • Adjusted operating profit margin of 19.9% in the quarter increased year over year primarily due to increased sales volume and savings from cost management and restructuring initiatives implemented in prior periods, despite increased material and freight costs.

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

  • Corporate expenses from continuing operations of $6.5 million for the fourth quarter of fiscal 2021 were $0.4 million higher than the comparable prior year period, primarily resulting from higher equity compensation, insurance and consulting costs.
  • The fiscal 2021 fourth quarter effective income tax rate from continuing operations of approximately 36% was lower than the fourth quarter fiscal 2020 rate of approximately 51%.

Discontinued Operations

Discontinued operations represent operating results for the divested EC&S segment through the October 31, 2019 completion date of the divestiture, as well as impacts from certain retained liabilities subsequent to the completion date.

Balance Sheet and Leverage

(US$ in millions)

 

 

Period Ended

 

August 31, 2021

May 31, 2021

August 31, 2020

Cash Balance

 

$140.4

$136.3

$152.2

Debt Balance

 

$175.0

$195.0

$255.0

Net Debt to Adjusted EBITDA**

 

0.6

1.1

1.8

 

 

 

 

 

 

 

Net debt at August 31, 2021 was approximately $35 million (total debt of $175 million less $140 million of cash), which decreased approximately $24 million from the prior quarter. Net Debt to Adjusted EBITDA from continuing operations was 0.6x at August 31, 2021.

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

Outlook

Mr. Baker continued, “As we look ahead to the next fiscal year, we are encouraged by our strong backlog, resulting from solid order rates in the fourth quarter. While our largest regions showed encouraging levels of product recovery in the quarter, not all were back to pre-COVID levels. Supply chain constraints, increased commodity costs, logistical shortages, as well as continued slow recovery in certain regions, are expected to create headwinds into fiscal 2022. We anticipate sales to be in the range of $590 million to $610 million for full year fiscal 2022, with the return of our more typical quarterly seasonality. Incremental Adjusted EBITDA margins are expected to be 35% to 45% for the full year, excluding the impact of currency.”

CEO Transition

In a separate press release issued today, the Company announced the retirement of Randy Baker as President & CEO and announced the appointment of Paul Sternlieb as President & CEO, both effective October 8, 2021.

Mr. Baker concluded, “It has been an honor to be the President & CEO of this organization for the past 5 years. We have accomplished a significant transformation of the business in a short period of time. The business is on the path to becoming a best-in-class industrial tools and services company and I am confident that under Paul’s leadership as the new CEO of Enerpac Tool Group, the Company will continue to execute on key initiatives and drive shareholder value.”

Conference Call Information

An investor conference call is scheduled for 10:00 am CT today, September 29, 2021. Webcast information and conference call materials 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, 2020 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 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)
 
August 31, August 31,

2021

2020

Assets
Current assets
Cash and cash equivalents

$

140,352

 

$

152,170

 

Accounts receivable, net

 

103,233

 

 

84,170

 

Inventories, net

 

75,347

 

 

69,171

 

Other current assets

 

38,503

 

 

35,621

 

Total current assets

 

357,435

 

 

341,132

 

 
Property, plant and equipment, net

 

48,590

 

 

61,405

 

Goodwill

 

277,593

 

 

281,154

 

Other intangible assets, net

 

54,545

 

 

62,382

 

Other long-term assets

 

82,084

 

 

78,221

 

 
Total assets

$

820,247

 

$

824,294

 

 
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable

$

61,958

 

$

45,069

 

Accrued compensation and benefits

 

21,597

 

 

17,793

 

Income taxes payable

 

5,674

 

 

1,937

 

Other current liabilities

 

45,535

 

 

40,723

 

Total current liabilities

 

134,764

 

 

105,522

 

 
Long-term debt, net

 

175,000

 

 

255,000

 

Deferred income taxes

 

4,397

 

 

1,708

 

Pension and postretirement benefit liabilities

 

17,783

 

 

20,190

 

Other long-term liabilities

 

76,105

 

 

82,648

 

Total liabilities

 

408,049

 

 

465,068

 

 
Shareholders' equity
Capital stock

 

16,604

 

 

16,519

 

Additional paid-in capital

 

202,971

 

 

193,492

 

Treasury stock

 

(667,732

)

 

(667,732

)

Retained earnings

 

953,339

 

 

917,671

 

Accumulated other comprehensive loss

 

(92,984

)

 

(100,724

)

Stock held in trust

 

(3,067

)

 

(2,562

)

Deferred compensation liability

 

3,067

 

 

2,562

 

Total shareholders' equity

 

412,198

 

 

359,226

 

 
Total liabilities and shareholders' equity

$

820,247

 

$

824,294

 

 
Enerpac Tool Group Corp.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended Twelve Months Ended
August 31, August 31, August 31, August 31,

2021

2020

2021

2020

Net sales

$

145,427

 

$

111,353

 

$

528,660

 

$

493,292

 

Cost of products sold

 

79,158

 

 

66,888

 

 

285,504

 

 

276,099

 

Gross profit

 

66,269

 

 

44,465

 

 

243,156

 

 

217,193

 

 
Selling, general and administrative expenses

 

45,215

 

 

37,672

 

 

175,277

 

 

180,513

 

Amortization of intangible assets

 

1,843

 

 

2,156

 

 

8,176

 

 

8,323

 

Restructuring (benefit) charges

 

(37

)

 

987

 

 

2,392

 

 

7,335

 

Impairment & divestiture charges (benefit)

 

5,659

 

 

408

 

 

6,198

 

 

(3,159

)

Operating profit

 

13,589

 

 

3,242

 

 

51,113

 

 

24,181

 

 
Financing costs, net

 

870

 

 

3,307

 

 

5,266

 

 

19,218

 

Other expense (income), net

 

275

 

 

(1,205

)

 

1,872

 

 

(2,886

)

Earnings before income tax expense

 

12,444

 

 

1,140

 

 

43,975

 

 

7,849

 

 
Income tax expense

 

5,895

 

 

943

 

 

3,763

 

 

2,292

 

Net earnings from continuing operations

 

6,549

 

 

197

 

 

40,212

 

 

5,557

 

(Loss) earnings from discontinued operations, net of income taxes

 

(1,283

)

 

1,242

 

 

(2,135

)

 

(4,834

)

Net earnings

$

5,266

 

$

1,439

 

$

38,077

 

$

723

 

 
Earnings per share from continuing operations
Basic

$

0.11

 

$

0.00

 

$

0.67

 

$

0.09

 

Diluted

 

0.11

 

 

0.00

 

 

0.67

 

 

0.09

 

 
Loss (earnings) per share from discontinued operations
Basic

$

(0.02

)

$

0.02

 

$

(0.04

)

$

(0.08

)

Diluted

 

(0.02

)

 

0.02

 

 

(0.04

)

 

(0.08

)

 
Earnings per share
Basic

$

0.09

 

$

0.02

 

$

0.63

 

$

0.01

 

Diluted

 

0.09

 

 

0.02

 

 

0.63

 

 

0.01

 

 
Weighted average common shares outstanding
Basic

 

60,205

 

 

59,773

 

 

60,024

 

 

59,952

 

Diluted

 

60,678

 

 

60,004

 

 

60,403

 

 

60,269

 

 
Enerpac Tool Group Corp.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Three Months Ended Twelve Months Ended
August 31, August 31, August 31, August 31,

2021

2020

2021

2020

Operating Activities
Cash provided by operating activities - continuing operations

 

29,491

 

 

12,638

 

 

54,860

 

 

17,999

 

Cash used in operating activities - discontinued operations

 

(197

)

 

(94

)

 

(677

)

 

(21,158

)

Cash provided by (used in) operating activities

 

29,294

 

 

12,544

 

 

54,183

 

 

(3,159

)

 
Investing Activities
Capital expenditures

 

(2,515

)

 

(2,745

)

 

(12,019

)

 

(12,053

)

Proceeds from sale of property, plant and equipment

 

8

 

 

73

 

 

22,409

 

 

708

 

Proceeds from company owned life insurance policies

 

-

 

 

-

 

 

2,911

 

 

-

 

Cash paid for business acquisitions, net of cash acquired

 

-

 

 

136

 

 

-

 

 

(33,298

)

Proceeds from sale of business, net of transaction costs

 

-

 

 

-

 

 

-

 

 

10,226

 

Other investing activities

 

-

 

 

(135

)

 

-

 

 

(710

)

Cash (used in) provided by investing activities - continuing operations

 

(2,507

)

 

(2,671

)

 

13,301

 

 

(35,127

)

Cash provided by investing activities - discontinued operations

 

-

 

 

2,809

 

 

-

 

 

211,200

 

Cash (used in) provided by investing activities

 

(2,507

)

 

138

 

 

13,301

 

 

176,073

 

 
Financing Activities
Principal repayments on term loan

 

(20,000

)

 

(40,000

)

 

(90,000

)

 

(140,000

)

Borrowings on revolving credit facility

 

-

 

 

295,000

 

 

10,000

 

 

395,000

 

Principal repayments on term loan

 

-

 

 

-

 

 

-

 

 

(175,000

)

Redemption of 5.625% Senior Notes

 

-

 

 

(287,559

)

 

-

 

 

(287,559

)

Purchase of treasury shares

 

-

 

 

-

 

 

-

 

 

(27,520

)

Stock options, taxes paid related to the net share settlement of equity awards & other

 

160

 

 

31

 

 

128

 

 

(1,428

)

Payment of cash dividend

 

-

 

 

-

 

 

(2,394

)

 

(2,419

)

Cash used in financing activities - continuing operations

 

(19,840

)

 

(32,528

)

 

(82,266

)

 

(238,926

)

Cash provided by financing activities - discontinued operations

 

-

 

 

-

 

 

750

 

 

-

 

Cash used in financing activities

 

(19,840

)

 

(32,528

)

 

(81,516

)

 

(238,926

)

 
Effect of exchange rate changes on cash

 

(2,874

)

 

8,413

 

 

2,214

 

 

7,031

 

 
Net cash increase (decrease) from continuing operations

 

4,270

 

 

(14,148

)

 

(11,891

)

 

(249,023

)

Net cash (decrease) increase from discontinued operations

 

(197

)

 

2,715

 

 

73

 

 

190,042

 

Net increase (decrease) from cash and cash equivalents

 

4,073

 

 

(11,433

)

 

(11,818

)

 

(58,981

)

Cash and cash equivalents - beginning of period

 

136,279

 

 

163,603

 

 

152,170

 

 

211,151

 

Cash and cash equivalents - end of period

$

140,352

 

$

152,170

 

$

140,352

 

$

152,170

 

 
Enerpac Tool Group Corp.
Supplemental Unaudited Data
Reconciliation of GAAP Measures to Non-GAAP Measures
(Dollars in thousands) Fiscal 2020 Fiscal 2021
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
Sales
Industrial Tool & Services Segment

$

135,592

 

$

123,361

 

$

92,865

 

$

103,044

 

$

454,863

 

$

112,175

 

$

112,739

 

$

133,400

 

$

134,811

 

$

493,125

 

Other

 

11,082

 

 

10,025

 

 

9,014

 

 

8,309

 

 

38,429

 

 

7,255

 

 

7,915

 

 

9,749

 

 

10,616

 

 

35,535

 

Total

$

146,674

 

$

133,386

 

$

101,879

 

$

111,353

 

$

493,292

 

$

119,430

 

$

120,654

 

$

143,149

 

$

145,427

 

$

528,660

 

 
% Sales Growth
Industrial Tool & Services Segment

 

-9

%

 

-17

%

 

-44

%

 

-29

%

 

-25

%

 

-17

%

 

-9

%

 

44

%

 

31

%

 

8

%

Other

 

12

%

 

-2

%

 

-21

%

 

-39

%

 

-15

%

 

-35

%

 

-21

%

 

8

%

 

28

%

 

-8

%

Total

 

-7

%

 

-17

%

 

-43

%

 

-30

%

 

-25

%

 

-19

%

 

-10

%

 

41

%

 

31

%

 

7

%

 
Operating Profit (Loss) from Continuing Operations
Industrial Tool & Services Segment

$

25,928

 

$

20,963

 

$

8,228

 

$

12,166

 

$

67,284

 

$

17,362

 

$

14,880

 

$

25,304

 

$

26,772

 

$

84,318

 

Other

 

399

 

 

(684

)

 

21

 

 

(1,371

)

 

(1,635

)

 

(1,662

)

 

(1,834

)

 

14

 

 

(968

)

 

(4,450

)

Corporate / General

 

(11,342

)

 

(10,349

)

 

(8,197

)

 

(6,158

)

 

(36,045

)

 

(6,282

)

 

(6,289

)

 

(5,808

)

 

(6,535

)

 

(24,915

)

Adjusted operating profit

$

14,985

 

$

9,930

 

$

52

 

$

4,637

 

$

29,604

 

$

9,418

 

$

6,757

 

$

19,510

 

$

19,269

 

$

54,953

 

Impairment & divestiture benefit (charges)

 

1,356

 

 

768

 

 

1,443

 

 

(408

)

 

3,159

 

 

(139

)

 

(401

)

 

-

 

 

(5,659

)

 

(6,198

)

Restructuring & other exit charges (1)

 

(1,972

)

 

(1,929

)

 

(3,292

)

 

(987

)

 

(8,179

)

 

(210

)

 

(649

)

 

(1,571

)

 

37

 

 

(2,392

)

Purchase accounting inventory step-up charge

 

-

 

 

(202

)

 

(201

)

 

-

 

 

(403

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Gain on sale of facility, net of transaction charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

5,359

 

 

-

 

 

5,359

 

Corporate development and board search charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(551

)

 

(58

)

 

(609

)

Operating profit (loss)

$

14,369

 

$

8,567

 

$

(1,998

)

$

3,242

 

$

24,181

 

$

9,069

 

$

5,707

 

$

22,747

 

$

13,589

 

$

51,113

 

 
Adjusted Operating Profit %
Industrial Tool & Services Segment

 

19.1

%

 

17.0

%

 

8.9

%

 

11.8

%

 

14.8

%

 

15.5

%

 

13.2

%

 

19.0

%

 

19.9

%

 

17.1

%

Other

 

3.6

%

 

-6.8

%

 

0.2

%

 

-16.5

%

 

-4.3

%

 

-22.9

%

 

-23.2

%

 

0.1

%

 

-9.1

%

 

-12.5

%

Adjusted Operating Profit %

 

10.2

%

 

7.4

%

 

0.1

%

 

4.2

%

 

6.0

%

 

7.9

%

 

5.6

%

 

13.6

%

 

13.2

%

 

10.4

%

 
EBITDA from Continuing Operations (2)
Earnings (loss) from continuing operations

$

6,372

 

$

3,918

 

$

(4,930

)

$

197

 

$

5,557

 

$

4,822

 

$

3,584

 

$

25,257

 

$

6,549

 

$

40,212

 

Financing costs, net

 

6,729

 

 

4,630

 

 

4,552

 

 

3,307

 

 

19,218

 

 

1,716

 

 

1,338

 

 

1,340

 

 

870

 

 

5,266

 

Income tax expense (benefit)

 

950

 

 

806

 

 

(407

)

 

943

 

 

2,292

 

 

2,258

 

 

1

 

 

(4,390

)

 

5,895

 

 

3,763

 

Depreciation & amortization

 

4,779

 

 

5,277

 

 

5,318

 

 

5,347

 

 

20,720

 

 

5,458

 

 

5,507

 

 

5,473

 

 

5,173

 

 

21,611

 

EBITDA

$

18,830

 

$

14,631

 

$

4,533

 

$

9,794

 

$

47,787

 

$

14,254

 

$

10,430

 

$

27,680

 

$

18,487

 

$

70,852

 

 
Adjusted EBITDA from Continuing Operations (2)
Industrial Tool & Services Segment

$

28,996

 

$

24,022

 

$

11,906

 

$

15,938

 

$

80,862

 

$

21,002

 

$

18,210

 

$

28,873

 

$

30,421

 

$

98,506

 

Other

 

1,275

 

 

244

 

 

926

 

 

(449

)

 

1,996

 

 

(740

)

 

(942

)

 

897

 

 

(133

)

 

(918

)

Corporate / General

 

(10,825

)

 

(8,272

)

 

(6,249

)

 

(5,058

)

 

(30,406

)

 

(5,659

)

 

(5,788

)

 

(5,327

)

 

(6,121

)

 

(22,896

)

Adjusted EBITDA

$

19,446

 

$

15,994

 

$

6,583

 

$

10,431

 

$

52,452

 

$

14,603

 

$

11,480

 

$

24,443

 

$

24,167

 

$

74,692

 

Impairment & divestiture benefit (charges)

 

1,356

 

 

768

 

 

1,443

 

 

(408

)

 

3,159

 

 

(139

)

 

(401

)

 

-

 

 

(5,659

)

 

(6,198

)

Restructuring & other exit charges (1)

 

(1,972

)

 

(1,929

)

 

(3,292

)

 

(987

)

 

(8,179

)

 

(210

)

 

(649

)

 

(1,571

)

 

37

 

 

(2,392

)

Purchase accounting inventory step-up charge

 

-

 

 

(202

)

 

(201

)

 

-

 

 

(403

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Pension curtailment

 

-

 

 

-

 

 

-

 

 

758

 

 

758

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Gain on sale of facility, net of transaction charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

5,359

 

 

-

 

 

5,359

 

Corporate development and board search charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(551

)

 

(58

)

 

(609

)

EBITDA

$

18,830

 

$

14,631

 

$

4,533

 

$

9,794

 

$

47,787

 

$

14,254

 

$

10,430

 

$

27,680

 

$

18,487

 

$

70,852

 

 
Adjusted EBITDA %
Industrial Tool & Services Segment

 

21.4

%

 

19.5

%

 

12.8

%

 

15.5

%

 

17.8

%

 

18.7

%

 

16.2

%

 

21.6

%

 

22.6

%

 

20.0

%

Other

 

11.5

%

 

2.4

%

 

10.3

%

 

-5.4

%

 

5.2

%

 

-10.2

%

 

-11.9

%

 

9.2

%

 

-1.3

%

 

-2.6

%

Adjusted EBITDA %

 

13.3

%

 

12.0

%

 

6.5

%

 

9.4

%

 

10.6

%

 

12.2

%

 

9.5

%

 

17.1

%

 

16.6

%

 

14.1

%

Notes:
(1) Approximately $0.8 million of the Q3 fiscal 2020 restructuring & other exit charges were recorded in cost of products sold.
(2) EBITDA represents net earnings (loss) 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 Operations. EBITDA and adjusted EBITDA should not be considered as alternatives to net earnings (loss), operating profit (loss) 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 Measures to Non-GAAP Measures (Continued)
(Dollars in thousands, except for per share amounts)
Fiscal 2020 Fiscal 2021
Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL
Adjusted Earnings (Loss) (3)
Net Earnings (Loss)

$

2,121

 

$

2,162

 

$

(4,999

)

$

1,439

 

$

723

 

$

4,598

 

$

3,182

 

$

25,031

 

$

5,266

 

$

38,077

 

(Loss) Earnings from Discontinued Operations, net of income tax

 

(4,251

)

 

(1,756

)

 

(69

)

 

1,242

 

 

(4,834

)

 

(224

)

 

(402

)

 

(226

)

 

(1,283

)

 

(2,135

)

Earnings (Loss) from Continuing Operations

$

6,372

 

$

3,918

 

$

(4,930

)

$

197

 

$

5,557

 

$

4,822

 

$

3,584

 

$

25,257

 

$

6,549

 

$

40,212

 

Impairment & divestiture (benefit) charges

 

(1,356

)

 

(768

)

 

(1,443

)

 

408

 

 

(3,159

)

 

139

 

 

401

 

 

-

 

 

5,659

 

 

6,198

 

Restructuring & other exit charges

 

1,972

 

 

1,929

 

 

3,292

 

 

987

 

 

8,179

 

 

210

 

 

649

 

 

1,571

 

 

(37

)

 

2,392

 

Accelerated debt issuance costs

 

625

 

 

-

 

 

-

 

 

1,041

 

 

1,666

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Purchase accounting inventory step-up charge

 

-

 

 

202

 

 

201

 

 

-

 

 

403

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Pension curtailment

 

-

 

 

-

 

 

-

 

 

(758

)

 

(758

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Gain on sale of facility, net of transaction charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(5,359

)

 

-

 

 

(5,359

)

Corporate development and board search charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

551

 

 

58

 

 

609

 

Net tax effect of reconciling items above

 

(52

)

 

(57

)

 

(624

)

 

(503

)

 

(1,236

)

 

(15

)

 

(100

)

 

2,647

 

 

(548

)

 

1,984

 

Other income tax benefit

 

-

 

 

(74

)

 

-

 

 

-

 

 

(74

)

 

-

 

 

(632

)

 

(7,523

)

 

-

 

 

(8,155

)

Adjusted Earnings (Loss) from Continuing Operations (4)

$

7,561

 

$

5,150

 

$

(3,504

)

$

1,372

 

$

10,578

 

$

5,156

 

$

3,902

 

$

17,144

 

$

11,681

 

$

37,881

 

 
Adjusted Diluted Earnings (loss) per share (3)
Net Earnings (Loss)

$

0.03

 

$

0.04

 

$

(0.08

)

$

0.02

 

$

0.01

 

$

0.08

 

$

0.05

 

$

0.41

 

$

0.09

 

$

0.63

 

(Loss) Earnings from Discontinued Operations, net of income tax

 

(0.07

)

 

(0.03

)

 

0.00

 

 

0.02

 

 

(0.08

)

 

(0.00

)

 

(0.01

)

 

(0.00

)

 

(0.02

)

 

(0.04

)

Earnings (Loss) from Continuing Operations

$

0.11

 

$

0.06

 

$

(0.08

)

$

0.00

 

$

0.09

 

$

0.08

 

$

0.06

 

$

0.42

 

$

0.11

 

$

0.67

 

Impairment & divestiture (benefit) charges, net of tax effect

 

(0.02

)

 

(0.01

)

 

(0.02

)

 

0.00

 

 

(0.04

)

 

0.00

 

 

0.01

 

 

-

 

 

0.08

 

 

0.09

 

Restructuring & other exit charges, net of tax effect

 

0.02

 

 

0.04

 

 

0.04

 

 

0.02

 

 

0.11

 

 

0.00

 

 

0.01

 

 

0.02

 

 

0.00

 

 

0.03

 

Accelerated debt issuance costs, net of tax effect

 

0.01

 

 

-

 

 

-

 

 

0.01

 

 

0.02

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Purchase accounting inventory step-up charge, net of tax effect

 

-

 

 

0.00

 

 

0.00

 

 

-

 

 

0.01

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Pension curtailment, net of tax effect

 

-

 

 

-

 

 

-

 

 

(0.01

)

 

(0.01

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Gain on sale of facility, net of transaction charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(0.04

)

 

0.00

 

 

(0.04

)

Corporate development and board search charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

0.01

 

 

0.00

 

 

0.01

 

Other income tax benefit

 

-

 

 

0.00

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(0.01

)

 

(0.12

)

 

-

 

 

(0.14

)

Adjusted Diluted Earnings (Loss) per share from Continuing Operations (4)

$

0.12

 

$

0.09

 

$

(0.06

)

$

0.02

 

$

0.18

 

$

0.09

 

$

0.06

 

$

0.28

 

$

0.19

 

$

0.63

 

 
Free Cash Flow (5)
Cash (used in) provided by operating activities

$

(22,927

)

$

(5,814

)

$

13,038

 

$

12,544

 

$

(3,159

)

$

8,667

 

$

4,579

 

$

11,643

 

$

29,294

 

$

54,183

 

Capital expenditures

 

(3,187

)

 

(3,780

)

 

(2,341

)

 

(2,745

)

 

(12,053

)

 

(1,905

)

 

(3,725

)

 

(3,874

)

 

(2,515

)

 

(12,019

)

Proceeds from sale of property, plant and equipment

 

162

 

 

288

 

 

185

 

 

73

 

 

708

 

 

47

 

 

548

 

 

21,806

 

 

8

 

 

22,409

 

Other

 

1,353

 

 

122

 

 

-

 

 

12

 

 

1,487

 

 

(2

)

 

(518

)

 

4,937

 

 

182

 

 

4,599

 

Free Cash Flow

$

(24,599

)

$

(9,184

)

$

10,882

 

$

9,884

 

$

(13,017

)

$

6,807

 

$

884

 

$

34,512

 

$

26,969

 

$

69,172

 

 
Notes continued:
(3) Adjusted earnings (loss) from continuing operations and adjusted diluted earnings (loss) per share represent net earnings (loss) and diluted earnings (loss) per share per the Condensed Consolidated Statements of Operations net of charges or credits for items to be highlighted for comparability purposes. These measures are not calculated based upon generally accepted accounting principles (GAAP) and should not be considered as an alternative to net earnings (loss) or diluted earnings (loss) per share or as an indicator of the Company's operating performance. However, this presentation is important to investors for understanding the operating results of the current portfolio of Enerpac Tool Group companies.
(4) Q3 Fiscal 2020 results included an adjusted loss from continuing operations, therefore adjusted loss per share is not diluted and is, instead, calculated with basic shares.
(5) Free cash flow primarily represents the operating cash flow, proceeds from the sale of property, plant and equipment combined with capital expenditures.
 
For all reconciliations of GAAP measures to Non-GAAP measures, the summation of the individual components may not equal the total due to rounding. With respect to the earnings per share reconciliations the impact of share dilution on the calculation of the net earnings or loss per share and discontinued operations per share may result in the summation of these components not equaling the total earnings (loss) per share from continuing operations.

 

Bobbi Belstner
Senior Director, Investor Relations and Strategy
262.293.1912

Source: Enerpac Tool Group