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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
——————————— 
FORM 10-Q
 ————————————
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-11288 
 ————————————
ENERPAC TOOL GROUP CORP.
(Exact name of registrant as specified in its charter)
 ————————————
Wisconsin 39-0168610
(State of incorporation) (I.R.S. Employer Id. No.)
N86 W12500 WESTBROOK CROSSING
MENOMONEE FALLS, WISCONSIN 53051
Mailing address: P. O. Box 3241, Milwaukee, Wisconsin 53201
(Address of principal executive offices)
(262) 293-1500
(Registrant’s telephone number, including area code)
  ————————————
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTicker Symbol(s)Name of each exchange on which registered
Class A common stock, $0.20 par value per shareEPACNYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨    No  
The number of shares outstanding of the registrant’s Class A Common Stock as of June 24, 2021 was 60,202,564.


Table of Contents
TABLE OF CONTENTS
 
 Page No.
       Item 6—Exhibits

FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS
This quarterly report on Form 10-Q contains certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include statements regarding expected financial results and other planned events, including, but not limited to, anticipated liquidity, anticipated restructuring costs and related savings, anticipated future charges and anticipated capital expenditures. Words such as “may,” “should,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “objective,” “plan,” “project” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We disclaim any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.
The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements:
heavy reliance on suppliers for components used in the manufacture and sale of our products, including a supply chain interruption due to material and cargo shortages, the COVID-19 pandemic, political tensions, or other causes;
potential increases in the costs of commodities and raw materials, or substantial decreases in their availability;
the extent to which the COVID-19 pandemic continues to impact our employees, operations, customers and suppliers;
the deterioration of, or instability in, the domestic and international economy;
decreased demand from customers in the oil & gas industry as a result of significant volatility in oil prices resulting from disruptions in the oil markets;
the continuation of challenging conditions in our various end markets;
our ability to attract, develop, and retain qualified employees;
a material disruption at a significant manufacturing facility;
competition in the markets we serve;
a significant failure in our information technology (IT) infrastructure, such as unauthorized access to financial and other sensitive data or cybersecurity threats;
1


uncertainty over global tariffs, or the financial impact of tariffs;
currency exchange rate fluctuations, export and import restrictions, transportation disruptions or shortages, and other risks inherent in our international operations;
regulatory and legal developments;
litigation, including product liability and warranty claims;
failure to develop new products and the extent of market acceptance of new products;
our ability to successfully identify, consummate and integrate acquisitions and realize anticipated benefits/results from acquired companies as part of our portfolio management process;
the effects of divestitures and/or discontinued operations, including retained liabilities from, or indemnification obligations with respect to, businesses that we sell;
if the operating performance of our businesses were to fall significantly below normalized levels, the potential for a non-cash impairment charge of goodwill and/or other intangible assets, as they represent a substantial amount of our total assets;
our ability to comply with the covenants in our debt agreements and fluctuations in interest rates;
inadequate intellectual property protection or infringement of the intellectual property of others; and
other matters, including those of a political, economic, business, competitive and regulatory nature contained from time to time in our U.S. Securities and Exchange Commission ("SEC") filings, including, but not limited to, those factors listed in the "Risk Factors" section within Item 1A of Part I of our Form 10-K filed with the SEC on October 26, 2020.
When used herein, the terms “we,” “us,” “our” and the “Company” refer to Enerpac Tool Group Corp. and its subsidiaries. Enerpac Tool Group Corp. provides free-of-charge access to its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, through its website, www.enerpactoolgroup.com, as soon as reasonably practicable after such reports are electronically filed with the SEC.
2


PART I—FINANCIAL INFORMATION
Item 1—Financial Statements
ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended May 31,Nine Months Ended May 31,
 2021202020212020
Net sales $143,149 $101,879 $383,233 $381,939 
Cost of products sold76,302 59,932 206,346 209,211 
Gross profit66,847 41,947 176,887 172,728 
Selling, general and administrative expenses40,468 40,766 130,061 142,842 
Amortization of intangible assets2,061 2,174 6,333 6,167 
Restructuring charges1,571 2,448 2,430 6,348 
Impairment & divestiture (benefit) charges (1,443)539 (3,567)
Operating profit (loss)22,747 (1,998)37,524 20,938 
Financing costs, net1,340 4,552 4,395 15,911 
Other expense (income), net540 (1,213)1,598 (1,682)
Earnings (loss) before income tax expense20,867 (5,337)31,531 6,709 
Income tax (benefit) expense(4,390)(407)(2,132)1,349 
Net earnings (loss) from continuing operations25,257 (4,930)33,663 5,360 
Loss from discontinued operations, net of income taxes(226)(69)(852)(6,076)
Net earnings (loss)$25,031 $(4,999)$32,811 $(716)
Earnings (loss) per share from continuing operations
Basic$0.42 $(0.08)$0.56 $0.09 
Diluted$0.42 $(0.08)$0.56 $0.09 
Loss per share from discontinued operations
Basic$(0.00)$(0.00)$(0.01)$(0.10)
Diluted$(0.00)$(0.00)$(0.01)$(0.10)
Earnings (loss) per share
Basic$0.42 $(0.08)$0.55 $(0.01)
Diluted$0.41 $(0.08)$0.54 $(0.01)
Weighted average common shares outstanding
Basic60,144 59,826 59,964 60,012 
Diluted60,574 59,826 60,312 60,358 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3


ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
 Three Months Ended May 31,Nine Months Ended May 31,
 2021202020212020
Net earnings (loss)$25,031 $(4,999)$32,811 $(716)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments6,373 (6,779)16,807 (1,533)
Recognition of foreign currency translation losses from divested businesses   51,994 
Pension, other postretirement benefit plans, and cash flow hedges165 193 517 828 
Total other comprehensive income (loss), net of tax6,538 (6,586)17,324 51,289 
Comprehensive income (loss)$31,569 $(11,585)$50,135 $50,573 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4


ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
May 31, 2021August 31, 2020
ASSETS
Current assets
Cash and cash equivalents$136,279 $152,170 
Accounts receivable, net112,590 84,170 
Inventories, net74,743 69,171 
Other current assets48,205 35,621 
Total current assets371,817 341,132 
Property, plant and equipment, net50,147 61,405 
Goodwill286,933 281,154 
Other intangible assets, net57,626 62,382 
Other long-term assets76,179 78,221 
Total assets$842,702 $824,294 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable$59,898 $45,069 
Accrued compensation and benefits22,136 17,793 
Income taxes payable7,656 1,937 
Other current liabilities44,753 40,723 
Total current liabilities134,443 105,522 
Long-term debt, net195,000 255,000 
Deferred income taxes2,514 1,708 
Pension and postretirement benefit liabilities19,200 20,190 
Other long-term liabilities74,634 82,648 
Total liabilities425,791 465,068 
Commitments and contingencies (Note 14)
Shareholders’ equity
Class A common stock, $0.20 par value per share, authorized 168,000,000 shares, issued 82,990,629 and 82,593,945 shares, respectively16,598 16,519 
Additional paid-in capital200,963 193,492 
Treasury stock, at cost, 22,799,230 shares(667,732)(667,732)
Retained earnings950,482 917,671 
Accumulated other comprehensive loss(83,400)(100,724)
Stock held in trust(2,999)(2,562)
Deferred compensation liability2,999 2,562 
Total shareholders' equity416,911 359,226 
Total liabilities and shareholders’ equity$842,702 $824,294 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


ENERPAC TOOL GROUP CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended May 31,
 20212020
Operating Activities
Net earnings (loss)$32,811 $(716)
Less: Net loss from discontinued operations(852)(6,076)
Net earnings from continuing operations33,663 5,360 
Adjustments to reconcile net earnings to net cash provided by operating activities - continuing operations:
Impairment & divestiture charges (benefit), net of tax effect482 (2,717)
Depreciation and amortization16,438 15,373 
Stock-based compensation expense7,385 9,129 
Benefit for deferred income taxes7,475 1,218 
Amortization of debt issuance costs360 1,367 
Other non-cash (benefits) charges(9,135)1,169 
Changes in components of working capital and other, excluding acquisitions and divestitures:
Accounts receivable(26,692)32,745 
Inventories(3,667)(4,166)
Trade accounts payable14,095 (24,246)
Prepaid expenses and other assets(13,795)1,605 
Income tax accounts(8,639)(13,986)
Accrued compensation and benefits3,875 (12,342)
Other accrued liabilities3,524 (5,148)
Cash provided by operating activities - continuing operations25,369 5,361 
Cash used in operating activities - discontinued operations(480)(21,064)
Cash provided by (used in) operating activities24,889 (15,703)
Investing Activities
Capital expenditures(9,504)(9,308)
Proceeds from sale of property, plant and equipment22,401 635 
Lease buyout for divested business (575)
Proceeds from company owned life insurance policies2,911  
Proceeds from sale of business/product line 10,226 
Cash paid for business acquisitions, net of cash acquired (33,434)
Cash provided by (used in) investing activities - continuing operations15,808 (32,456)
Cash provided by investing activities - discontinued operations 208,391 
Cash provided by investing activities 15,808 175,935 
Financing Activities
Principal repayment on term loan (175,000)
Borrowings on revolving credit facility10,000 100,000 
Principal repayments on revolving credit facility(70,000)(100,000)
Purchase of treasury shares (27,520)
Stock options, taxes paid related to the net share settlement of equity awards & other(32)(1,459)
Payment of cash dividend(2,394)(2,419)
Cash used in financing activities - continuing operations(62,426)(206,398)
Cash provided by financing activities - discontinued operations750  
Cash used in financing activities (61,676)(206,398)
Effect of exchange rate changes on cash5,088 (1,382)
Net decrease in cash and cash equivalents(15,891)(47,548)
Cash and cash equivalents - beginning of period152,170 211,151 
Cash and cash equivalents - end of period$136,279 $163,603 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
General
Enerpac Tool Group Corp. ("Company") is a premier industrial tools and services company serving a broad and diverse set of customers in more than 100 countries. The Company has two operating segments, Industrial Tools & Service ("IT&S") and Other, with the IT&S segment representing the only reportable segment.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet data as of August 31, 2020 was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Company’s fiscal 2020 Annual Report on Form 10-K.
In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the three and nine months ended May 31, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2021. The COVID-19 pandemic has negatively impacted, and is likely to continue to negatively impact to varying extents, the global economy. The Company's operating results and financial position will continue to be subject to the general economic conditions created by the pandemic, and the duration and extent to which the pandemic's effects impact the Company's business will depend on future developments, including the distribution and effectiveness of vaccines globally and therapeutics in minimizing its negative effects on macroeconomic conditions, which still remain uncertain.
The Company has updated our historical caption of "Selling, administrative and engineering expenses" in the Condensed Consolidated Statements of Operations to "Selling, general and administrative expenses." There has been no change to the composition of expenses within the caption in the current or historical periods presented.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which adds an impairment model that is based on expected losses rather than incurred losses and is called the Current Expected Credit Losses (“CECL”) model. This impairment model is applicable to loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables as well as any other financial asset with the contractual right to receive cash. Under the new model, an allowance equal to the estimate of lifetime expected credit losses is recognized, which will result in more timely loss recognition. The guidance is intended to reduce complexity by decreasing the number of credit impairment models. The Company adopted the guidance on September 1, 2020 using the modified retrospective approach and there was no impact to the financial statements as a result of the adoption.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for a limited time to ease the potential burden of accounting for reference rate reform on financial reporting. This guidance applies to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates. The guidance is effective beginning on March 12, 2020 through December 31, 2022. In January 2021, the FASB issued ASU 2021-01 allowing entities to apply certain aspects of ASC 848 (previously ASU 2020-4) to all derivative instruments that undergo a modification of the interest rate used for discounting, margining or contract price alignment as a result of the reference reform. The guidance is also effective through December 31, 2022. The Company has not utilized any of the optional expedients or exceptions available under this guidance. The Company will continue to assess whether this guidance is applicable throughout the effective period.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions and amending and clarifying existing guidance. The guidance is effective for the Company in the first quarter of fiscal 2022 with early adoption permitted. The Company is currently assessing the impact of this ASU on its condensed consolidated financial statements.
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Accumulated Other Comprehensive Loss
The following is a summary of the Company's accumulated other comprehensive loss (in thousands):
May 31, 2021August 31, 2020
Foreign currency translation adjustments$59,089 $75,896 
Pension and other postretirement benefit plans, net of tax24,281 24,750 
Unrecognized losses on cash flow hedges30 78 
Accumulated other comprehensive loss$83,400 $100,724 
Property Plant and Equipment
The following is a summary of the Company's components of property, plant and equipment (in thousands):
May 31, 2021August 31, 2020
Land, buildings and improvements$15,627 $33,548 
Machinery and equipment147,525 134,536 
Gross property, plant and equipment163,152 168,084 
Less: Accumulated depreciation(113,005)(106,679)
Property, plant and equipment, net$50,147 $61,405 
Note 2. Revenue from Contracts with Customers
Nature of Goods and Services
The Company generates its revenue under two principal activities, which are discussed below:
Product Sales: Sales of tools, heavy-lifting solutions, and rope and cable solutions are recorded when control is transferred to the customer (i.e., performance obligation has been satisfied). For the majority of the Company’s product sales, revenue is recognized at a point in time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company to the customer. For certain other products that are highly customized and have a limited alternative use, and for which the Company has an enforceable right of reimbursement for performance completed to date, revenue is recognized over time. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with these custom products. For a majority of the Company’s custom products, machine hours and labor hours (efforts-expended measurement) are used as a measure of progress.
Service & Rental Sales: Service contracts consist of providing highly trained technicians to perform bolting, technical services, machining and joint-integrity work for our customers. These revenues are recognized over time as our customers simultaneously receive and consume the benefits provided by the Company. We consider the input measure (efforts-expended or cost-to-cost) or output measure as a fair measure of progress for the recognition of over-time revenue associated with service contracts. For a majority of the Company’s service contracts, labor hours (efforts-expended measurement) is used as the measure of progress when it is determined to be a better depiction of the transfer of control to the customer due to the timing and pattern of labor hours incurred. Revenue from rental contracts (less than a year and non-customized products) is generally recognized ratably over the contract term, depicting the customer’s consumption of the benefit related to the rental equipment.
Disaggregated Revenue and Performance Obligations
The Company disaggregates revenue from contracts with customers by reportable segment and product line and by the timing of when goods and services are transferred. See Note 13, "Segment Information" for information regarding our revenue disaggregation by reportable segment and product line.
The following table presents information regarding revenues disaggregated by the timing of when goods and services are transferred (in thousands):
Three Months Ended May 31,Nine Months Ended May 31,
2021202020212020
Revenues recognized at point in time$107,316 $73,412 $284,823 $275,413 
Revenues recognized over time35,833 28,467 98,410 106,526 
Total$143,149 $101,879 $383,233 $381,939 
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Contract Balances
The Company's contract assets and liabilities are as follows (in thousands):
May 31, 2021August 31, 2020
Receivables, which are included in accounts receivable, net$112,590 $84,170 
Contract assets, which are included in other current assets7,000 6,145 
Contract liabilities, which are included in other current liabilities3,506 2,145 
Receivables: The Company performs its obligations under a contract with a customer by transferring goods or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. Accounts receivable, net is recorded at face amount of customer receivables less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for expected losses as a result of customers’ inability to make required payments. Management evaluates the aging of customer receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of receivables that may not be collected in the future and records the appropriate provision. The allowance for doubtful accounts was $4.5 million and $5.0 million at at May 31, 2021 and August 31, 2020, respectively.
Contract Assets: Contract assets relate to the Company’s rights to consideration for work completed but not billed as of the reporting date on contracts with customers. The contract assets are transferred to receivables when the rights become unconditional. The Company has contract assets on contracts that are generally long-term and have revenues that are recognized over time.
Contract Liabilities: As of May 31, 2021, the Company had certain contracts where there were unsatisfied performance obligations and the Company had received cash consideration from customers before the performance obligations were satisfied. The majority of these contracts relate to long-term customer contracts (project durations of greater than three months) and are recognized over time. The Company estimates that the $3.5 million will be recognized in net sales from satisfying those performance obligations within the next twelve months, with an immaterial amount recognized in periods after.
Timing of Performance Obligations Satisfied at a Point in Time: The Company evaluates when the customer obtains control of the product based on shipping terms, as control will transfer, depending upon such terms, at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because (i) the Company has a present right to payment at that time; (ii) the legal title has been transferred to the customer; (iii) the Company has transferred physical possession of the product to the customer; and (iv) the customer has significant risks and rewards of ownership of the product.
Variable Consideration: The Company estimates whether it will be subject to variable consideration under the terms of the contract and includes its estimate of variable consideration in the transaction price based on the expected value method when it is deemed probable of being realized based on historical experience and trends. Types of variable consideration may include rebates, incentives and discounts, among others, which are recorded as a reduction to net sales at the time when control of a performance obligation is transferred to the customer.
Practical Expedients & Exemptions: The Company elected to expense the incremental cost to obtaining a contract when the amortization period for such contracts would be one year or less. The Company does not disclose the value of unperformed obligations for (i) contracts with an original expected length of one year or less and    (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.
Note 3. Restructuring Charges
The Company has undertaken or committed to various restructuring initiatives, including workforce reductions, leadership changes, plant consolidations to reduce manufacturing overhead, satellite office closures, the continued movement of production and product sourcing to low-cost alternatives and the centralization and standardization of certain administrative functions. Liabilities for severance are generally to be paid within twelve months, while future lease payments related to facilities vacated as a result of restructuring are to be paid over the underlying remaining lease terms. During fiscal 2019, the Company announced a new restructuring plan focused on (i) the integration of the Enerpac and Hydratight businesses (IT&S segment), (ii) the strategic exit of certain commodity-type services in our North America Services operations (IT&S segment) and (iii) driving efficiencies within the overall corporate structure. In the third quarter of fiscal 2020, the Company announced the expansion and revision of this plan, which further simplifies and flattens the corporate structure through elimination of redundancies between the segment and corporate functions, while enhancing our commercial and marketing processes to become even closer to our customers. Restructuring charges associated with this plan were $1.5 million and $2.2 million in the three and nine months ended May 31, 2021, respectively, and $2.5 million and $5.6 million in the three and nine months ended May 31, 2020, respectively.
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The following summarizes restructuring reserve activity for the IT&S segment and Corporate (in thousands):
Nine Months Ended May 31, 2021
IT&SCorporate
Balance as of August 31, 2020$1,443 $267 
Restructuring charges2,180 9 
Cash payments(1,444)(250)
Other non-cash uses of reserve (1)
(14) 
Impact of changes in foreign currency rates49  
Balance as of May 31, 2021$2,214 $26 
Nine Months Ended May 31, 2020
IT&SCorporate
Balance as of August 31, 2019$2,912 $ 
Restructuring charges4,019 1,590 
Cash payments(4,265)(871)
Other non-cash uses of reserve (1)
(556)(484)
Impact of changes in foreign currency rates(23) 
Balance as of May 31, 2020$2,087 $235 
(1) Majority of non-cash uses of reserve represents accelerated equity vesting with employee severance agreements.
Total restructuring charges (inclusive of the Other segment) being reported in "Restructuring charges" were $1.6 million and $2.5 million in the three and nine months ended May 31, 2021, respectively. Restructuring charges for the three and nine months ended May 31, 2020 were $3.3 million and $7.2 million, respectively, which included approximately $0.8 million of charges in each period being reported in the Consolidated Statements of Operations in "Cost of products sold," with the balance of the charges reported in "Restructuring charges."
Restructuring expenses related to Cortland U.S. (Other segment) were less than $0.1 million and $0.3 million in the three and nine months ended May 31, 2021, respectively. The three and nine months ended May 31, 2020 included $0.8 million (reported in the Condensed Consolidated Statements of Earnings in "Cost of products sold,") and $1.6 million, respectively, which included approximately $0.8 million of charges in each period being reported in the Consolidated Statements of Operations in "Cost of products sold," with the balance of the charges reported in "Restructuring charges." Restructuring reserves for Cortland U.S. were $0.1 million and $0.4 million as of May 31, 2021 and August 31, 2020, respectively.
Note 4. Acquisitions
On January 7, 2020, the Company acquired 100% of the stock of HTL Group ("HTL"), a provider of controlled bolting products, calibration and repair services, and tool rental services. The acquisition of HTL provided the Company with a complete line of bolting products and enhanced our European rental capabilities. The Company acquired all of the assets and assumed certain liabilities of HTL for a final purchase price of $33.3 million. The final purchase price allocation resulted in $11.3 million of goodwill (which is not deductible for tax purposes), $16.1 million of intangible assets, and $6.7 million of property, plant and equipment. The intangible assets were comprised of $3.3 million of indefinite-lived tradenames, $12.1 million of amortizable customer relationships and $0.7 million of amortizable patents. The impact on the remaining balance sheet line items was not material.
This acquisition generated net sales of $3.7 million and $9.2 million for the three and nine months ended May 31, 2021, respectively, and $1.9 million and $3.9 million for the three and nine months ended May 31, 2020, which are reported within the IT&S reportable segment. This acquisition does not meet the significance tests to require pro forma financial information otherwise required for acquisitions.
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Note 5. Discontinued Operations and Other Divestiture Activities
Discontinued Operations
On October 31, 2019, as part of our overall strategy to become a pure-play industrial tools and services company, the Company completed the sale of the businesses comprising its former Engineered Components & Systems ("EC&S") segment to wholly owned subsidiaries of BRWS Parent LLC, a Delaware limited liability company and affiliate of One Rock Capital Partners II, LP, for a sales price of $215.8 million, inclusive of $1.3 million of purchase price from the customary finalization of working capital negotiations in the third quarter of fiscal 2020. Approximately $3.0 million of the purchase price was paid in four equal quarterly installments after closing, of which the last $0.7 million was received in the nine months ended May 31, 2021 (this final payment was received greater than one year from the divestiture date and, as such, is reflected in "Cash provided by financing activities - discontinued operations" within the Condensed Consolidated Statements of Cash Flows). In connection with the completion of the sale and after consideration of working capital adjustments, the Company recorded, in fiscal 2020, a net loss of $4.7 million, comprised of a loss of $23.0 million representing the excess of the net assets (exclusive of deferred tax assets and liabilities associated with subsidiaries of the Company whose stock was sold as part of the transaction) as compared to the purchase price less costs to sell and the recognition in earnings of the cumulative effect of foreign currency exchange gains and losses during the year, largely offset by an income tax benefit of $18.3 million associated with the write off of the net deferred tax liability on subsidiaries of the EC&S segment for which the stock was divested. The Company also recognized in conjunction with the completion of the sale an additional $3.3 million of impairment & divestiture costs associated with the accelerated vesting of restricted stock awards for employees terminated as part of the transaction and $2.7 million of additional divestiture charges which were necessary to complete the transaction. The Company maintains financial exposure associated with this divestiture due to certain retained liabilities.
As the aforementioned divestiture was a part of our strategic shift to become a pure-play industrial tools and services company, the results of EC&S operations (including the stated impairment & divestiture charges) are recorded as a component of "Loss from discontinued operations" in the Condensed Consolidated Statements of Operations for all periods presented.
The following represents the detail of "Loss from discontinued operations, net of income taxes" within the Condensed Consolidated Statements of Operations (in thousands):
Three Months Ended May 31,Nine Months Ended May 31,
2021202020212020
Net sales $ $ $ $67,010 
Cost of products sold   49,749 
Gross profit   17,261 
Selling, general and administrative expenses102 116 956 11,567 
Amortization of intangible assets    
Restructuring benefit   (11)
Impairment & divestiture charges (31) 28,699 
Operating loss(102)(85)(956)(22,994)
Financing costs, net   14 
Other loss, net   (104)
Loss before income tax expense (benefit)(102)(85)(956)(22,904)
Income tax expense (benefit)124 (16)(104)(16,828)
Loss from discontinued operations, net of income taxes$(226)$(69)$(852)$(6,076)
* "Loss from discontinued operations, net of income taxes" for the nine-month period in fiscal 2020 presented in the table above includes the results of the EC&S segment for the two months ended October 31, 2019 (the divestiture date) as well as the ancillary impacts from certain retained liabilities subsequent to the divestiture. As a result of the classification of the segment as assets and liabilities held for sale for the two months ended October 31, 2019, the Company did not record amortization or depreciation expense in the results of operations in accordance with U.S. GAAP. Furthermore, the Company excluded EC&S segment employees from the fiscal 2020 bonus compensation plan, hence there are no expenses associated with the plan for that period.
Other Divestiture Activities
On September 20, 2019, the Company completed the sale of the UNI-LIFT product line, a component of our Milwaukee Cylinder business (IT&S segment), for initial net cash proceeds of $6.0 million, which resulted in an impairment & divestiture benefit of $4.6 million in the three months ended November 30, 2019. In the three months ended February 29, 2020, the Company recorded an additional benefit of $0.1 million related to agreement with the buyer on final working capital amounts and various other benefits. In March 2020, the buyer of the UNI-LIFT product line extended a long-term supply agreement with a significant customer. Pursuant
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to the divestiture agreement, this action triggered the requirement for the buyer to pay $1.5 million of contingent proceeds, which was received by the Company in the three months ended May 31, 2020 and recorded as an "Impairment & divestiture benefit" within the Condensed Consolidated Statements of Operations in that period.
After the sale of the UNI-LIFT product line, the Company determined that the remaining Milwaukee Cylinder business was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business. The Company recorded impairment & divestiture charges of $4.6 million in the three months ended November 30, 2019, comprised of impairment charges of $2.5 million representing the excess of net assets held for sale compared to the anticipated proceeds less costs to sell, $1.9 million associated with our withdrawal from the multi-employer pension plan associated with that business and $0.2 million of other divestiture related charges. The Company completed the divestiture of the Milwaukee Cylinder business on December 2, 2019 for a negligible amount. In the three months ended May 31, 2020, the Company recorded inconsequential amounts of impairment & divestiture charges associated with this divestiture.
The historical results of the Milwaukee Cylinder business, inclusive of the UNI-LIFT product line, (which had net sales of $2.9 million in the nine months ended May 31, 2020) are not material to the condensed consolidated financial results.
On October 22, 2019, the Company completed the sale of the Connectors product line (IT&S segment) for net cash proceeds of $2.7 million, which resulted in an impairment & divestiture benefit of $1.3 million in the three months ended November 30, 2019. During the nine months ended May 31, 2020, the Company recorded $0.1 million of impairment & divestiture charges related to a working capital adjustment. The historical results of the Connectors product line (which had net sales of $0.2 million in the nine months ended May 31, 2020) are not material to the condensed consolidated financial results.
At February 29, 2020, the Company determined that it was no longer probable that a loss will occur related to an outstanding legal matter associated with a previously divested business, as such, recorded an impairment & divestiture benefit of $0.8 million in the nine months ended May 31, 2020.
Note 6. Goodwill, Intangible Assets and Long-Lived Assets
Changes in the gross carrying value of goodwill and intangible assets result from changes in foreign currency exchange rates, business acquisitions, divestitures and impairment charges. The changes in the carrying amount of goodwill for the nine months ended May 31, 2021 are as follows (in thousands):
IT&SOtherTotal
Balance as of August 31, 2020$263,537 $17,617 $281,154 
Impact of changes in foreign currency rates5,756 23 5,779 
Balance as of May 31, 2021$269,293 $17,640 $286,933 
The gross carrying value and accumulated amortization of the Company’s intangible assets are as follows (in thousands):
 May 31, 2021August 31, 2020
Weighted Average
Amortization
Period (Years)
Gross
Carrying
Value
Accumulated
Amortization
Net
Book
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Book
Value
Amortizable intangible assets:
Customer relationships14$144,336 $113,848 $30,488 $141,853 $106,491 $35,362 
Patents1214,645 13,793 852 14,365 13,228 1,137 
Trademarks and tradenames123,360 2,409 951 3,277 2,257 1,020 
Indefinite lived intangible assets:
TradenamesN/A25,335  25,335 24,863  24,863 
$187,676 $130,050 $57,626 $184,358 $121,976 $62,382 
The Company estimates that amortization expense will be $1.9 million for the remaining three months of fiscal 2021. Amortization expense for future years is estimated to be: $7.5 million in fiscal 2022, $6.0 million in fiscal 2023, $4.3 million in fiscal 2024, $3.6 million in fiscal 2025, $2.1 million in fiscal 2026 and $6.9 million cumulatively thereafter. The future amortization expense amounts represent estimates and may be impacted by future acquisitions, divestitures, or changes in foreign currency exchange rates, among other causes.
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Note 7. Product Warranty Costs
The Company generally offers its customers an assurance warranty on products sold, although warranty periods may vary by product type and application. The reserve for future warranty claims, which is recorded within the "Other current liabilities" line in the Condensed Consolidated Balance Sheets, is based on historical claim rates and current warranty cost experience. The following summarizes the changes in product warranty reserves for the nine months ended May 31, 2021 and 2020, respectively (in thousands):
 Nine Months Ended May 31,
 20212020
Beginning balance$892 $1,145 
Provision for warranties1,151 354 
Warranty payments and costs incurred(893)(735)
Warranty activity for divested businesses (27)
Impact of changes in foreign currency rates30 1 
Ending balance$1,180 $738 
Note 8. Debt
The following is a summary of the Company’s long-term indebtedness (in thousands):
May 31, 2021August 31, 2020
Senior Credit Facility
Revolver$195,000 $255,000 
Term Loan  
Total Senior Credit Facility195,000 255,000 
Less: Current maturities of long-term debt  
Debt issuance costs  
Total long-term debt, less current maturities$195,000 $255,000 

Senior Credit Facility
In March 2019, the Company entered into a Senior Credit Facility with a syndicate of banks to, among other things, (i) expand the multi-currency revolving line of credit from $300 million to $400 million, (ii) extend the maturity of the Company's Senior Credit Facility from May 2020 to March 2024 and (iii) modify certain other provisions of the credit agreement including a reduction in pricing. The Senior Credit Facility is comprised of a $400 million revolving line of credit and previously provided for a $200 million term loan.
The Senior Credit Facility also provides the option for future expansion, subject to certain conditions, through a $300 million accordion and/or a $200 million incremental term loan. Borrowings under the Senior Credit Facility bear interest at a variable rate based on LIBOR or a base rate, ranging from 1.125% to 2.00% in the case of loans bearing interest at LIBOR and from 0.125% to 1.00% in the case of loans bearing interest at the base rate. In addition, a non-use fee is payable quarterly on the average unused amount of the revolving line of credit ranging from 0.15% to 0.3% per annum, based on the Company's net leverage.
In November 2019, the Company used the proceeds from the sale of the EC&S segment to pay off the outstanding principal balance on the term loan. In conjunction with the repayment, the Company expensed, within, “Financing costs, net” in the Condensed Consolidated Statements of Operations, the remaining $0.6 million of associated capitalized debt issuance costs. To reduce interest costs, the Company paid down $15 million and $60 million on the revolving line of credit in the three and nine months ended May 31, 2021, respectively, with available cash on hand. At May 31, 2021, there was $195.0 million of borrowings under the revolving line of credit and $200.5 million of available borrowing capacity under the revolving line of credit.
The Senior Credit Facility contains two financial covenants, which are a maximum leverage ratio of 3.75:1 and a minimum interest coverage ratio of 3.5:1. Certain transactions lead to adjustments to the underlying ratios, including an increase to the leverage ratio from 3.75 to 4.25 during the four fiscal quarters after a significant acquisition. The sale of the EC&S segment triggered a reduction of the minimum interest coverage ratio from 3.5 to 3.0 for any fiscal quarter ending within twelve months after the sale of the EC&S segment. In April 2020, the Company proactively amended its Senior Credit Facility to extend the interest coverage ratio at 3.0 for an additional 12 months through October 2021 to mitigate risks associated with the potential impact of the COVID-19 pandemic.
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The Company was in compliance with all financial covenants at May 31, 2021. Borrowings under the Senior Credit Facility are secured by substantially all personal property assets of the Company and its domestic subsidiary guarantors and certain equity interests owned by the foreign law pledgors.
Senior Notes
On April 16, 2012, the Company issued $300 million of 5.625% Senior Notes due 2022 (the “Senior Notes”), of which none remained outstanding as of May 31, 2021. The Senior Notes included a call feature that allowed the Company to redeem them anytime on or after June 15, 2017 at stated redemption prices that reduced to 100% on June 15, 2020, plus accrued and unpaid interest. In order to reduce interest costs, in June 2020, the Company redeemed all of the outstanding Senior Notes at a price equal to 100% of the principal amount thereof, plus the settlement of accrued and unpaid interest.
Note 9. Fair Value Measurements
The Company assesses the inputs used to measure the fair value of financial assets and liabilities using a three-tier hierarchy. Level 1 inputs include unadjusted quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing an asset or liability.
The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and variable rate long-term debt approximated book value at both May 31, 2021 and August 31, 2020 due to their short-term nature and/or the fact that the interest rates approximated market rates. Foreign currency exchange contracts and interest rate swaps are recorded at fair value. The fair value of the Company's foreign currency exchange contracts was a net asset of less than $0.2 million at both May 31, 2021 and August 31, 2020. The fair value of the Company's interest rate swap (see Note 10, “Derivatives”, for further information on the Company's interest rate swap) was a net liability of less than $0.1 million at May 31, 2021 and $0.1 million at August 31, 2020. The fair value of the foreign currency exchange and interest rate swap contracts were based on quoted inactive market prices and therefore classified as Level 2 within the valuation hierarchy.
Note 10. Derivatives
All derivatives are recognized in the balance sheet at their estimated fair value. The Company does not enter into derivatives for speculative purposes. Changes in the fair value of derivatives (not designated as hedges) are recorded in earnings along with the gain or loss on the hedged asset or liability.
The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations. In order to manage this risk, the Company utilizes foreign currency exchange contracts to reduce the exchange rate risk associated with recognized non-functional currency balances. The effects of changes in exchange rates are reflected concurrently in earnings for both the fair value of the foreign currency exchange contracts and the related non-functional currency asset or liability. These derivative gains and losses offset foreign currency gains and losses from the related revaluation of non-functional currency assets and liabilities (amounts included in "Other (income) expense" in the Condensed Consolidated Statements of Operations). The U.S. dollar equivalent notional value of these short duration foreign currency exchange contracts was $16.0 million and $16.7 million at May 31, 2021 and August 31, 2020, respectively. The fair value of outstanding foreign currency exchange contracts was a net asset of less than $0.2 million at both May 31, 2021 and August 31, 2020. Net foreign currency gain (loss) (included in "Other expense" in the Condensed Consolidated Statements of Operations) related to these derivative instruments were as follows (in thousands):
 Three Months EndedNine Months Ended
 May 31, 2021May 31, 2020May 31, 2021May 31, 2020
Foreign currency gain (loss), net$7 $(842)$67 $(1,393)
The Company is the fixed-rate payor on an interest rate swap contract that fixes the LIBOR-based index used to determine the interest rates charged on a total of $100.0 million of the Company's LIBOR-based variable rate borrowings on the revolving line of credit. The contract carries a fixed rate of 0.259% and expires in August 2021. The swap agreement qualifies as a hedging instrument and has been designated as a cash flow hedge of forecasted LIBOR-based interest payments. The change in the fair value of the interest rate swap, a gain of less than $0.1 million in both the three and nine months ended May 31, 2021 is recorded in other comprehensive income (loss). The Company expects to reclassify the loss of less than $0.1 million out of accumulated other comprehensive loss ("AOCL") and into Financing costs, net, during the remainder of the fiscal year. The Company’s LIBOR-based variable rate borrowings outstanding with terms matching the pay-fixed interest rate swap as of May 31, 2021 and August 31, 2020 were $140.0 million and $180.0 million, respectively.
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Note 11. Earnings per Share and Shareholders' Equity
The Company's Board of Directors has authorized the repurchase of shares of the Company's common stock under publicly announced share repurchase programs. Since the inception of the initial share repurchase program in fiscal 2012, the Company has repurchased 22,799,230 shares of common stock for $667.7 million. As of May 31, 2021, the maximum number of shares that may yet be purchased under the programs is 5,200,770 shares. The Company did not repurchase shares in the nine months ended May 31, 2021. During the three months ended May 31, 2020, the Company repurchased 839,789 shares for $17.8 million. The Company repurchased 1,343,662 shares for $27.5 million in the nine months ended May 31, 2020.
The reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share amounts):
 Three Months Ended May 31,Nine Months Ended May 31,
 2021202020212020
Numerator:
Net earnings (loss) from continuing operations$25,257 $(4,930)$33,663 $5,360 
Net loss from discontinued operations(226)(69)(852)(6,076)
Net earnings (loss)$25,031 $(4,999)32,811 (716)
Denominator:
Weighted average common shares outstanding - basic60,144 59,826 59,964 60,012 
Net effect of dilutive securities - stock based compensation plans430  348 346 
Weighted average common shares outstanding - diluted60,574 59,826 60,312 60,358 
Earnings (loss) per common share from continuing operations:
Basic$0.42 $(0.08)$0.56 $0.09 
Diluted$0.42 $(0.08)$0.56 $0.09 
Loss per common share from discontinued operations:
Basic$(0.00)$(0.00)$(0.01)$(0.10)
Diluted$(0.00)$(0.00)$(0.01)$(0.10)
Earnings (loss) per common share:
Basic$0.42 $(0.08)$0.55 $(0.01)
Diluted$0.41 $(0.08)$0.54 $(0.01)
Anti-dilutive securities from stock based compensation plans (excluded from earnings per share calculation)548 2,479 990 1,435 

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The following table illustrates the changes in the balances of each component of shareholders' equity for the three months ended May 31, 2021 (in thousands):
 Common StockAdditional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Stock
Held in
Trust
Deferred
Compensation
Liability
Total
Shareholders’
Equity
 Issued
Shares
Amount
Balance at February 28, 202182,879 $16,576 $197,036 $(667,732)$925,451 $(89,938)$(2,996)$2,996 $381,393 
Net earnings— — — — 25,031 — — — 25,031 
Other comprehensive income, net of tax— — — — — 6,538 — — 6,538 
Stock contribution to employee benefit plans and other5 1 96 — — — — — 97 
Vesting of restricted stock awards17 3 (3)— — — — —  
Stock based compensation expense— — 2,157 — — — — — 2,157 
Stock option exercises89 18 2,008 — — — — — 2,026 
Tax effect related to net share settlement of equity awards— — (356)— — — — — (356)
Stock issued to, acquired for and distributed from rabbi trust1  25 — — — (3)3 25 
Balance at May 31, 202182,991 $16,598 $200,963 $(667,732)$950,482 $(83,400)$(2,999)$2,999 $416,911 
The following table illustrates the changes in the balances of each component of shareholders' equity for the three months ended May 31, 2020 (in thousands):
 Common StockAdditional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Stock
Held in
Trust
Deferred
Compensation
Liability
Total
Shareholders’
Equity
 Issued
Shares
Amount
Balance at February 29, 202082,540 $16,508 $189,716 $(658,017)$923,622 $(117,464)$(2,434)$2,434 $354,365 
Net earnings— — — — (4,999)— — — (4,999)
Other comprehensive income, net of tax— — — — — (6,586)— — (6,586)
Stock contribution to employee benefit plans and other6 1 96 — — — — — 97 
Vesting of restricted stock awards13 3 (3)— — — — —  
Treasury stock repurchases— — — (9,715)— — — — (9,715)
Stock based compensation expense— — 3,184 — — — — — 3,184 
Stock option exercises   — — — — —