Enerpac Tool Group (NYSE:EPAC) FY 2026 Annual General Meeting February 04, 2026 03:00 PM ET Company ParticipantsBen Topercer - Corporate Controller, Principal Accounting Officer and Inspector of ElectionJim Ferland - Non-Executive Chairman of the BoardJim FerlandGood afternoon. I'm Jim Ferland, Chairman of the Board of Directors of Enerpac Tool Group Corporation. On behalf of the company, I wanna welcome you to our 2026 Annual Meeting of Shareholders. Before proceeding with the business portion of the meeti ...

Financial Data and Key Metrics Changes - The company reported a total of 52,773,605 shares of Class A common stock outstanding as of December 1, 2025, with 95.84% represented at the meeting [4] - The voting results indicated a plurality of shares voted for the election of all eight nominated directors, and the proposals for the appointment of Ernst & Young LLP and executive compensation were approved [8] Business Line Data and Key Metrics Changes - No specific data on business line performance or key metrics was provided in the meeting [9] Market Data and Key Metrics Changes - No specific market data or key metrics were discussed during the meeting [9] Company Strategy and Development Direction and Industry Competition - The company is focused on maintaining strong governance with the election of directors and the appointment of independent auditors, indicating a commitment to transparency and accountability [6][8] Management Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during this meeting [9] Other Important Information - The meeting included the retirement of directors Alfredo Altavilla and Judy Altmaier, acknowledging their service to the company [1] - The final voting results will be reported on a Form 8-K to be filed with the SEC and posted on the company's website [9] Q&A Session Summary - No questions were received during the meeting [9]

Financial Performance - Net sales for the three months ended November 30, 2025, were $144.208 million, a decrease of 0.7% compared to $145.196 million in the same period of 2024[13] - Gross profit for the same period was $73.182 million, down from $74.652 million, reflecting a gross margin of 50.8%[13] - Net earnings decreased to $19.131 million, compared to $21.723 million in the prior year, resulting in earnings per share of $0.36, down from $0.40[13] - Operating profit for the quarter was $28.490 million, down from $31.132 million in the previous year[13] - Comprehensive income of $14.514 million for the three months ended November 30, 2025, compared to $12.047 million in the same period of 2024[15] - Basic and diluted earnings per share for Q4 2025 were both $0.36, down from $0.40 in Q4 2024[61] - Operating profit for the consolidated total in Q4 2025 was $28,490,000, down from $31,132,000 in Q4 2024[67] Assets and Liabilities - Total assets as of November 30, 2025, were $818.061 million, a decrease from $827.867 million at the end of August 2025[18] - Cash and cash equivalents decreased to $139.047 million from $151.558 million, indicating a net decrease of $12.511 million during the quarter[21] - The Company reported a net property, plant, and equipment value of $52.7 million as of November 30, 2025, down from $53.3 million as of August 31, 2025[26] - The Company’s accumulated other comprehensive loss increased to $108.8 million as of November 30, 2025, up from $104.1 million as of August 31, 2025, primarily due to foreign currency translation adjustments[25] - As of November 30, 2025, the total long-term debt, less current maturities, is $179.7 million, a decrease from $182.2 million as of August 31, 2025[48] - The Company has a total senior indebtedness of $188.8 million as of November 30, 2025, down from $190 million as of August 31, 2025[48] Cash Flow and Financing - The company reported cash provided by operating activities of $16.0 million, an increase from $8.6 million in the same quarter of the previous year[21] - The Company incurred financing costs of $2.265 million, a decrease from $2.770 million in the prior year[13] - The Company has $399.5 million available for borrowing under the revolving line of credit facility after accounting for outstanding letters of credit[51] - The Company repurchased and retired 376,814 shares for $14.9 million in the three months ended November 30, 2025, with a total of $200 million authorized for repurchase[60] Operational Highlights - The company continues to focus on operational improvements and strategic growth initiatives despite facing challenges in supply chain and market conditions[9] - The IT&S segment reported net sales of $137,762,000 in Q4 2025, compared to $140,134,000 in Q4 2024, with product sales increasing to $112,111,000[66] - The IT&S segment's operating profit margin decreased to 25.9% in Q4 2025 from 27.1% in Q4 2024[67] - Capital expenditures for the consolidated total in Q4 2025 were $2,677,000, significantly lower than $5,857,000 in Q4 2024[67] Legal and Compliance - The Company provided voluntary self-disclosures to Dutch and U.S. authorities regarding sales linked to the Crimea region of Ukraine, which potentially violated EU and U.S. sanctions[71] - The U.S. investigation closed without further implication, while the Dutch investigation concluded in March 2022, finding that sales transactions violated EU sanctions[71] - The Company has not adjusted its estimate of financial penalties related to ongoing legal proceedings in the Netherlands, believing there will be no material adverse effect on its financial position[72]

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Market Overview - U.S. stock markets opened higher on December 19, 2025, following a volatile week, with major indexes buoyed by cooler-than-expected inflation data for November, raising hopes for potential Federal Reserve rate cuts in the new year [1][2] - The S&P 500 Index opened at 6,792.62 points, up 17.86 points or 0.26 percent, while the Nasdaq Composite Index opened at 23,121.90 points, up 115.54 points or 0.50 percent, and the Dow Jones Industrial Average opened at 47,974.82 points, up 22.97 points or 0.05 percent [2] Economic Outlook - The Federal Reserve cut interest rates by a quarter-point to a range of 3.50%-3.75% during its final meeting of 2025, but further cuts are not guaranteed without significant weakening in the job market [3] - Economic reports are expected to be viewed with skepticism due to distortions caused by a recent government shutdown [3][4] Upcoming Economic Data - Key economic data releases include Final GDP q/q, Core PCE Price Index, Existing Home Sales, and Revised UoM Consumer Sentiment, which are critical for assessing inflation and consumer behavior [4] Quadruple Witching Impact - "Quadruple witching" is occurring today, with a record $7.1 trillion in options expiring, which could lead to increased market volatility [5] Corporate Developments - Oracle (ORCL) shares rose 5.5% on news of a potential joint venture with ByteDance for TikTok's U.S. operations, granting American investors a controlling stake [6] - Micron Technology (MU) shares jumped nearly 5% after a strong earnings report, with a 10% surge the previous day, driven by demand for AI memory solutions [7] - Nike (NKE) shares fell over 10% due to weaker-than-expected revenue from China and higher tariffs impacting gross margins [8] - FedEx (FDX) reported revenue of $23.47 billion and adjusted earnings per share of $4.82, but shares remained flat [9] - Winnebago (WGO) shares soared 12% after strong fiscal first-quarter results and an increased full-year outlook [9] - Darden Restaurants (DRI) reported second-quarter revenue of $3,102.1 million, exceeding estimates, leading to a 1.8% rise in shares [10] - Cintas Corporation (CTAS) shares gained 1.3% after reporting earnings of $1.21 per share, beating expectations [10] - Enerpac Tool Group Corp. (EPAC) shares declined 8.8% after missing earnings estimates [10] Global Economic Developments - The Bank of Japan raised its key policy rate to 0.75%, the highest since 1995, contributing to a rise in global shares [11]

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Financial Data and Key Metrics Changes - Enerpac's first quarter revenue for Fiscal 2026 was $144 million, a decrease of 1% year-over-year [5] - Adjusted EBITDA was $32.4 million, representing a margin of 22.4%, while adjusted earnings per share was $0.36 compared to $0.40 in the previous year [8][10] - Gross profit margin was 50.7%, consistent with previous quarters, but impacted by higher tariff-driven costs [7][8] - Free cash flow increased to $13 million, up $10 million year-over-year, attributed to timing of receipts and payments [9] Business Line Data and Key Metrics Changes - In the Industrial Tools and Services (IT&S) segment, product sales grew 4% organically, while IT&S sales declined 3% [3][5] - Standard products saw low single-digit growth, and heavy-lifting technology (HLT) business experienced double-digit growth [5] - Service revenue declined by 26%, primarily in the EMEA region, particularly the U.K. [5][6] Market Data and Key Metrics Changes - Revenue in the Americas grew by 5%, with product revenue expanding by 8% [6] - EMEA revenue declined by 10%, but product revenue in the region grew by 5% [6] - APAC revenue decreased by 8%, affected by a decline in the HLT business and political uncertainties in Southeast Asia [7] Company Strategy and Development Direction - The company is focused on investing in growth strategies, including increasing spending on innovation and expanding sales capabilities in key markets [11][12] - Enerpac aims to capitalize on growth opportunities in power generation and infrastructure, with significant contract wins in bridge and tunnel projects [14][15] - The company is enhancing its e-commerce capabilities and implementing a new technology platform to improve user experience and marketing tools [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for the year, supported by strong order growth across all geographic regions [11] - The company maintains its full-year guidance, expecting organic revenue growth of 1%-4% and adjusted EBITDA growth of 6% at the midpoint [10] - Management acknowledged challenges in the service business due to market conditions in the U.K. but remains optimistic about future growth and margin expansion [22][23] Other Important Information - The company announced a change in the investor relations team, with Travis Williams leaving and Darren Kozik becoming the main point of contact for investors [16][17] - Enerpac's balance sheet remains strong, with net debt at $49 million and total liquidity of $539 million [9] Q&A Session Summary Question: What caused the sharp decline in service revenue this quarter? - Management indicated disappointment in service revenue performance, primarily due to a contraction in the U.K. market and ongoing initiatives to capture higher-margin business [21][22] Question: Can you elaborate on changes in services to capture higher value business? - Management discussed transitioning from an agent-based model to a direct model to enhance customer relationships and capture more margin [25][26] Question: What is the pricing strategy heading into 2026? - A small, low single-digit price increase was implemented in December, with ongoing efforts to offset tariff impacts and maintain margins [27][51] Question: Can you provide insights on the 2026 organic growth guidance? - Management highlighted an ambitious innovation program with plans for more new product launches compared to the previous fiscal year [33][34] Question: What is the current status of the M&A funnel? - Management noted an increase in M&A activity and expressed optimism about evaluating several opportunities while maintaining a disciplined approach [60]

Financial Data and Key Metrics Changes - Enerpac's first quarter revenue for Fiscal 2026 was $144 million, a decrease of 1% year-over-year [5] - Adjusted EBITDA was $32.4 million, representing a margin of 22.4%, while adjusted earnings per share was $0.36 compared to $0.40 in the previous year [8][10] - Gross profit margin was 50.7%, consistent with previous quarters, but impacted by higher tariff-driven costs [7] Business Line Data and Key Metrics Changes - In the Industrial Tools and Services (IT&S) segment, product sales grew 4% organically, while IT&S sales declined 3% [3][5] - Standard products saw low single-digit growth, and heavy-lifting technology business experienced double-digit growth year-over-year [5] - Service revenue declined by 26%, primarily in the EMEA region, particularly the U.K. [5][6] Market Data and Key Metrics Changes - Revenue in the Americas grew by 5%, driven by an 8% increase in product revenue [6] - EMEA region revenue declined by 10%, with product revenue growing by 5% but service revenue declining significantly [6] - APAC revenue decreased by 8%, affected by a decline in heavy-lifting technology business and political uncertainties in Southeast Asia [7] Company Strategy and Development Direction - The company is focused on investing in innovation and expanding sales capabilities in markets like India, Australia, and the Philippines [12][14] - Enerpac aims to capitalize on growth opportunities in power generation and infrastructure, with significant contract wins in bridge and tunnel projects [15] - The company is also enhancing its e-commerce capabilities to improve user experience and marketing tools [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for the year, citing strong order growth across all geographic regions [11] - The company is maintaining its full-year fiscal 2026 guidance, expecting organic revenue growth of 1%-4% and adjusted EBITDA growth of 6% at the midpoint [10] - Management acknowledged challenges in the service business but remains optimistic about future growth and margin expansion [22] Other Important Information - The company reported a net debt of $49 million, resulting in a net debt-to-Adjusted EBITDA ratio of 0.3, indicating a strong balance sheet [9] - Total liquidity was $539 million, and free cash flow increased to $13 million, up $10 million year-over-year [9] Q&A Session Summary Question: What caused the sharp decline in service revenue this quarter? - Management noted that the decline was largely driven by a contraction in the U.K. market, with ongoing initiatives to capture higher-margin service business [21][22] Question: Can you elaborate on changes being made in services to capture higher value business? - Management discussed transitioning from an agent-based model to a direct model to enhance customer relationships and margins [25][26] Question: What is the pricing strategy heading into calendar year 2026? - A small, low single-digit price increase was implemented in early December, with ongoing efforts to maintain margins [27] Question: Can you provide insights on the 2026 organic guidance and new product contributions? - Management highlighted an ambitious innovation program with plans to launch more new products than in the previous fiscal year [33][34] Question: How is the backlog compared to a normalized basis? - Management indicated that the backlog has increased due to strong order activity, providing confidence in the outlook for the year [43]

Financial Data and Key Metrics Changes - Enerpac's Q1 Fiscal 2026 revenue was $144 million, a decrease of 1% year-over-year [6] - Adjusted EBITDA was $32.4 million, representing a margin of 22.4%, with adjusted earnings per share at $0.36 compared to $0.40 in the previous year [9][10] - Gross profit margin was 50.7%, consistent with previous quarters, but impacted by higher tariff-driven costs [8][9] Business Line Data and Key Metrics Changes - In the Industrial Tools and Services (IT&S) segment, product sales grew 4% organically, while IT&S sales declined 3% [4][6] - Standard product revenue increased by low single digits, with heavy-lifting technology business experiencing double-digit growth [6] - Service revenue declined by 26%, primarily in the EMEA region, particularly the U.K. [6][7] Market Data and Key Metrics Changes - Revenue in the Americas grew by 5%, driven by an 8% increase in product revenue [7] - EMEA revenue declined by 10%, with product revenue growing 5% but service revenue declining significantly [7][8] - APAC revenue decreased by 8%, affected by a decline in heavy-lifting technology business and political uncertainties in Southeast Asia [8] Company Strategy and Development Direction - The company is focused on growth through investments in innovation and expanding sales capabilities in key markets like India and Australia [12][13] - Enerpac is enhancing its e-commerce capabilities and implementing a new technology platform to improve user experience and marketing tools [13] - The company is targeting growth in power generation and infrastructure sectors, with significant contract wins in bridge and tunnel projects [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for the year, supported by strong order growth across all geographic regions [12] - The company anticipates organic revenue growth of 1%-4% and adjusted EBITDA growth of 6% at the midpoint for Fiscal 2026 [11] - Management acknowledged challenges in the service business but remains optimistic about future growth and margin expansion [22][24] Other Important Information - The company reported a strong balance sheet with net debt of $49 million and total liquidity of $539 million [10] - Enerpac repurchased $15 million of stock in the first quarter while maintaining capacity for strategic M&A [10][57] - A leadership change in investor relations was announced, with the current CFO becoming the main point of contact until a replacement is found [17] Q&A Session Summary Question: What caused the sharp decline in service revenue this quarter? - Management noted disappointment in service revenue performance, primarily due to market contraction in the U.K. and ongoing consolidation in the oil and gas sector [22][24] Question: Can you elaborate on changes being made in services to capture higher value business? - Management discussed transitioning from an agent-based model to a direct model to enhance customer relationships and margins, along with investments in field service capabilities [26][27] Question: What is the pricing strategy heading into 2026? - A small, low single-digit price increase was implemented in December, with ongoing efforts to offset tariff impacts and maintain margins [28][47] Question: How does the backlog look compared to a normalized basis? - Management indicated that while Enerpac is not a backlog-heavy business, there has been an uptick in backlog driven by strong order activity [40] Question: What is the outlook for M&A activity? - Management expressed optimism about increased M&A activity and is actively evaluating several opportunities while maintaining a disciplined approach [57]