epac-20240531

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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(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, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-11288

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ENERPAC TOOL GROUP CORP.

(Exact name of registrant as specified in its charter)

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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)

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Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Ticker Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.20 par value per share	EPAC	NYSE

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 Filer

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Accelerated Filer

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Non-accelerated Filer

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Smaller 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 20, 2024 was 54,300,146.

Table of Contents

TABLE OF CONTENTS


			Page No.

Forward-Looking Statements and Cautionary Factors			1

Part I—Financial Information

Item 1—Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Earnings			3

Condensed Consolidated Statements of Comprehensive Income			4

Condensed Consolidated Balance Sheets			5

Condensed Consolidated Statements of Cash Flows			6

Notes to the Condensed Consolidated Financial Statements			7

Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations			19

Item 3—Quantitative and Qualitative Disclosures about Market Risk			23

Item 4—Controls and Procedures			24

Part II—Other Information

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds			25

Item 5 —Other Information			25

Item 6—Exhibits			26

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. The terms “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:

•supply chain issues, including shortages of adequate component supply that increase our costs or cause delays in our ability to fulfill orders;

•failure to estimate customer demand properly may result or could have an adverse impact on our business and operating results and our relationship with customers;

•the deterioration of, or instability in, the domestic and international economy and/or in our various end markets, including as a result of geopolitical activity, including the invasion of Ukraine by Russia and international sanctions imposed in response thereto, the armed conflict involving Hamas and Israel, and the attacks on commercial ships in the Red Sea;

•decreased demand from customers in the oil & gas industry, including as a result of significant volatility in oil prices resulting from disruptions in the oil markets;

•uncertainty over global tariffs or the financial impact of tariffs;

•our ability to execute on restructuring actions and on the objectives related to the ASCEND transformation program in order to achieve anticipated incremental operating profit;

•logistics challenges, including global freight capacity shortages, significant increases in freight costs or other delays in our ability to fulfill orders and the previously mentioned attacks on commercial ships in the Red Sea;

•failure to collect on accounts receivable, including in certain foreign jurisdictions where sales are concentrated to a limited number of distributors or agents;

•risks related to our reliance on independent agents and distributors for the distribution and service of products;

•a significant failure in our information technology (IT) infrastructure, such as unauthorized access to financial and other sensitive data or cybersecurity threats;

•a material disruption at a significant manufacturing facility;

•competition in the markets we serve;

•currency exchange rate fluctuations, export and import restrictions, transportation disruptions or shortages, and other risks inherent in our international operations;

•regulatory and legal developments, including litigation, such as product liability and warranty claims;

•failure to develop new products and the extent of market acceptance of new products and price increases

•our ability to execute on our growth strategy;

•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, disposed businesses;

•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;

•a global economic recession;

•the impact of rapidly rising interest rates and material, labor, or overhead cost increases;

•our ability to comply with the covenants in our debt agreements and fluctuations in interest rates;

•our ability to attract, develop, and retain qualified employees;

•inadequate intellectual property protection or infringement of the intellectual property of others;

•our ability to access capital markets; 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 for the fiscal year ended August 31, 2023 filed with the SEC on October 20, 2023.

When used herein, the terms “we,” “us,” “our” and the “Company” refer to Enerpac Tool Group Corp. and its subsidiaries. Reference to fiscal years, such as "fiscal 2024," are to the fiscal year ending on August 31 of the specified year. 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.

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended May 31,				Nine Months Ended May 31,
	2024		2023		2024		2023
Net sales	$	150,389	$	156,253	$	430,796	$	437,595
Cost of products sold	72,506		78,395		207,188		221,464
Gross profit	77,883		77,858		223,608		216,131

Selling, general and administrative expenses	42,101		48,810		125,041		154,116
Amortization of intangible assets	824		1,357		2,480		4,075
Restructuring charges	1,595		2,252		4,393		6,220
Impairment & divestiture charges	—		—		147		—
Operating profit	33,363		25,439		91,547		51,720
Financing costs, net	3,385		3,250		10,793		9,170
Other expense, net	544		525		2,079		1,948
Earnings before income tax expense	29,434		21,664		78,675		40,602
Income tax expense	6,813		4,688		19,877		10,058
Net earnings from continuing operations	22,621		16,976		58,798		30,544
Earnings (loss) from discontinued operations, net of income taxes	3,157		(4,596)		2,535		(6,214)
Net earnings	$	25,778	$	12,380	$	61,333	$	24,330

Earnings per share from continuing operations
Basic	$	0.42	$	0.30	$	1.08	$	0.54
Diluted	$	0.41	$	0.30	$	1.07	$	0.53

Earnings (loss) per share from discontinued operations
Basic	$	0.06	$	(0.08)	$	0.05	$	(0.11)
Diluted	$	0.06	$	(0.08)	$	0.05	$	(0.11)

Earnings per share*
Basic	$	0.47	$	0.22	$	1.13	$	0.43
Diluted	$	0.47	$	0.22	$	1.12	$	0.42

Weighted average common shares outstanding
Basic	54,292		57,052		54,344		56,993
Diluted	54,826		57,432		54,840		57,417

*The total of Earnings per share from continuing operations and Earnings (loss) per share from discontinued operations may not equal Earnings per share due to rounding.

The accompanying notes are an integral part of these condensed consolidated financial statements.

ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended May 31,				Nine Months Ended May 31,
	2024		2023		2024		2023
Net earnings	$	25,778	$	12,380	$	61,333	$	24,330
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	423		2,420		(2,460)		8,918
Pension and other postretirement benefit plans	146		115		1,206		337
Cash flow hedges	139		(542)		1,125		5
Total other comprehensive income (loss), net of tax	708		1,993		(129)		9,260
Comprehensive income	$	26,485	$	14,373	$	61,204	$	33,590

The accompanying notes are an integral part of these condensed consolidated financial statements.

ENERPAC TOOL GROUP CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	(Unaudited)
	May 31, 2024		August 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	132,362	$	154,415
Accounts receivable, net	107,617		97,649
Inventories, net	79,107		74,765
Other current assets	28,712		28,811
Total current assets	347,798		355,640
Property, plant and equipment, net	36,237		38,968
Goodwill	266,814		266,494

SEC Form 10-Q filed by Enerpac Tool Group Corp.