UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from to to Commission File No. 1-11288 ENERPAC TOOL GROUP CORP. (Exact name of Registrant as specified in its charter) Wisconsin 39-0168610 (State or other jurisdiction o ...

ENERPAC. @ 1 Fiscal 2021 Fourth Quarter Earnings S e p t e m b e r 2 9 , 2 0 2 1 Forward-Looking Statements Statements in this presentation that are not historical are considered "forward-looking statements" and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in Enerpac Tool Group's Securities and Exchange Commission filings. All estimates of future performance are as of September 29, 2021. ...

Enerpac Tool Group Corp (NYSE:EPAC) Q4 2021 Earnings Conference Call September 29, 2021 11:00 AM ET Company Participants Bobbi Belstner - Senior Director, Investor Relations and Strategy Randy Baker - President, CEO & Director Jeff Schmaling - EVP & COO Ricky Dillon - EVP & CFO Conference Call Participants Brendan Popson - CJS Securities Jeff Hammond - KeyBanc Capital Markets Deane Dray - RBC Capital Markets Ann Duignan - JP Morgan Michael McGinn - Wells Fargo Securities Disclaimer*: This transcript is desi ...

ENERPAC. @ 1 Fiscal 2021 Third Quarter Earnings J u n e 2 9 , 2 0 2 1 Forward-Looking Statements Statements in this presentation that are not historical are considered "forward-looking statements" and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in Enerpac Tool Group's Securities and Exchange Commission filings. All estimates of future performance are as of June 29, 2021. Enerpac Tool Gro ...

Part I—Financial Information [Item 1—Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201%E2%80%94Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for Q3 and nine months ended May 31, 2021, detail operations, balance sheets, cash flows, and notes [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 FY2021 net sales grew 40.5% to $143.1 million, reversing a prior-year loss to $25.3 million net earnings Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended May 31, 2021 | Three Months Ended May 31, 2020 | Nine Months Ended May 31, 2021 | Nine Months Ended May 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $143,149 | $101,879 | $383,233 | $381,939 | | **Gross profit** | $66,847 | $41,947 | $176,887 | $172,728 | | **Operating profit (loss)** | $22,747 | $(1,998) | $37,524 | $20,938 | | **Net earnings (loss) from continuing operations** | $25,257 | $(4,930) | $33,663 | $5,360 | | **Net earnings (loss)** | $25,031 | $(4,999) | $32,811 | $(716) | | **Diluted earnings (loss) per share from continuing operations** | $0.42 | $(0.08) | $0.56 | $0.09 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $842.7 million, long-term debt reduced to $195.0 million, and equity rose to $416.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | May 31, 2021 | August 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $371,817 | $341,132 | | **Total assets** | $842,702 | $824,294 | | **Total current liabilities** | $134,443 | $105,522 | | **Long-term debt, net** | $195,000 | $255,000 | | **Total liabilities** | $425,791 | $465,068 | | **Total shareholders' equity** | $416,911 | $359,226 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow turned positive at $24.9 million, investing activities provided $15.8 million, and financing used $61.7 million Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended May 31, 2021 | Nine Months Ended May 31, 2020 | | :--- | :--- | :--- | | **Cash provided by (used in) operating activities** | $24,889 | $(15,703) | | **Cash provided by investing activities** | $15,808 | $175,935 | | **Cash used in financing activities** | $(61,676) | $(206,398) | | **Net decrease in cash and cash equivalents** | $(15,891) | $(47,548) | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, restructuring, discontinued operations, debt management, and IT&S segment performance - Revenue is disaggregated by timing: for the nine months ended May 31, 2021, **$284.8 million** was recognized at a point in time and **$98.4 million** was recognized over time[31](index=31&type=chunk) - The company recorded restructuring charges of **$1.5 million** and **$2.5 million** for the three and nine months ended May 31, 2021, respectively, related to integrating businesses and driving corporate efficiencies[34](index=34&type=chunk)[37](index=37&type=chunk) - On October 31, 2019, the company completed the sale of its former Engineered Components & Systems (EC&S) segment for **$215.8 million**. The results of EC&S are reported as discontinued operations[40](index=40&type=chunk) - As of May 31, 2021, the company had **$195.0 million** of borrowings under its revolving line of credit, with **$200.5 million** of available borrowing capacity. The company was in compliance with all financial covenants[48](index=48&type=chunk)[50](index=50&type=chunk) - The Industrial Tools & Service (IT&S) segment is the only reportable segment, generating **$358.3 million** in net sales and **$54.8 million** in operating profit for the nine months ended May 31, 2021[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202%E2%80%94Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 FY2021 core growth from economic recovery, covering consolidated and segment performance, restructuring, and liquidity [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q3 2021 consolidated net sales rose 41% to $143 million, driven by core sales recovery and improved gross profit margin - Q3 FY2021 consolidated net sales increased **41% YoY to $143 million**, with core sales up **36%**[74](index=74&type=chunk) - The increase in Q3 core sales was attributed to a substantial rise in sales volume as economies recovered and business activities normalized from the COVID-19 pandemic[74](index=74&type=chunk) - For the nine months ended May 31, 2021, consolidated net sales increased by less than **1%**, with core sales decreasing **1%** due to depressed volumes in the first two quarters[76](index=76&type=chunk) [Segment Results](index=23&type=section&id=Segment%20Results) IT&S segment net sales increased 44% to $133 million in Q3 2021, with operating profit margin expanding to 17.9% IT&S Segment Results (in millions) | Period | Net Sales | Operating Profit | Operating Profit % | | :--- | :--- | :--- | :--- | | **Q3 2021** | $133 | $24 | 17.9% | | **Q3 2020** | $93 | $8 | 8.2% | | **Nine Months 2021** | $358 | $55 | 15.3% | | **Nine Months 2020** | $352 | $54 | 15.4% | - Corporate expenses decreased by **$8 million** for the third quarter and **$17 million** for the nine-month period, primarily due to a gain on the sale of a manufacturing facility in China and savings from restructuring actions[79](index=79&type=chunk) [Cash Flows and Liquidity](index=24&type=section&id=Cash%20Flows%20and%20Liquidity) Strong liquidity with $25 million operating cash flow, $60 million debt reduction, and $136 million cash on hand - Net cash provided by operating activities was **$25 million** for the nine months ended May 31, 2021, compared to a **$16 million use of cash** in the prior-year period[83](index=83&type=chunk) - Net cash used in financing activities was **$62 million**, primarily from a **$60 million net principal payment** on the outstanding credit facility[85](index=85&type=chunk) - The company believes its revolving credit line, cash on hand, and operating cash flows are adequate to meet funding requirements for the foreseeable future[86](index=86&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203%E2%80%94Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages market risks including interest rates, foreign currency, and commodity prices using hedging instruments - The company manages interest rate risk with a mix of variable-rate debt and a fixed-interest-rate swap that fixes the LIBOR-based index on **$100 million** of borrowings[93](index=93&type=chunk) - A hypothetical **10% decrease** in all foreign exchange rates against the U.S. dollar would have lowered quarterly sales by **$7 million** and operating profit by **$1 million** for the three months ended May 31, 2021[93](index=93&type=chunk) - The company is subject to commodity price fluctuations for materials like steel and plastic resin, and strives to pass along price increases to customers to protect profit margins[93](index=93&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204%E2%80%94Controls%20and%20Procedures) Disclosure controls and procedures were effective as of May 31, 2021, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the evaluation date, May 31, 2021[95](index=95&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended May 31, 2021, that have materially affected or are reasonably likely to materially affect internal controls[95](index=95&type=chunk) Part II—Other Information [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202%E2%80%94Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No share repurchases occurred in Q3 2021, with 5,200,770 shares remaining authorized for repurchase - There were **no share repurchases** in the three months ended May 31, 2021[97](index=97&type=chunk) - As of May 31, 2021, the maximum number of shares that may yet be purchased under the company's repurchase programs is **5,200,770**[97](index=97&type=chunk) [Exhibits](index=27&type=section&id=Item%206%E2%80%94Exhibits) Exhibits include CEO and CFO certifications and financial data in Inline XBRL format - The report includes certifications from the Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[98](index=98&type=chunk) - Financial statements and notes are provided in Inline XBRL format as part of Exhibit 101[98](index=98&type=chunk)

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 February 28, 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 ...

Financial Data and Key Metrics Changes - The second quarter sales increased slightly compared to the first quarter but were down 11% year-over-year [37] - Core tools product sales were down 10%, an improvement from down 14% in the first quarter [37] - Adjusted EBITDA margin for the quarter was 10%, down from 12% in the first quarter and the prior year [38] - Free cash flow was positive for the quarter, marking the first time in over five years [49] - The company ended the quarter with $115 million in cash after paying down $45 million of borrowings [50] Business Line Data and Key Metrics Changes - Core sales declined by 11%, with products down 11% and services down 12% [12] - Cortland sales were down 21%, an improvement from down 35% in the first quarter [37] - Adjusted EBITDA decremental margin was 29%, at the low end of the expected range [13] Market Data and Key Metrics Changes - Sales results varied by region, with Europe and Asia Pacific being the best-performing regions [15] - The Americas showed sequential improvement but were still in the mid-teens decline compared to the prior year [15] - The MENAC region experienced a decline due to border closures, impacting service and product revenue [27] Company Strategy and Development Direction - The company is focusing on long-term strategy execution, including new product development and capital allocation priorities [9] - There is a commitment to recruiting, developing, and retaining employees to ensure successful strategy execution [10] - The company plans to take pricing actions in Q3 to address rising commodity and freight costs [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery, expecting to reach near parity with 2019 core sales levels by the end of the fiscal year [51] - The company anticipates accelerated sequential growth in the back half of the year, driven by improving market conditions [52] - Management remains cautious about potential COVID-19 resurgences but is optimistic due to vaccine distribution [52] Other Important Information - The company is navigating complexities of operating during the pandemic while maintaining safety and quality commitments [30] - There is a focus on managing supply chain and inventory levels to meet increasing demand [32] - The company is winding down temporary COVID cost actions, resulting in savings [48] Q&A Session Summary Question: What are the key drivers for the 19% sequential improvement in the second half? - Management highlighted the recovery in vertical markets, particularly civil construction and alternative energy, as key drivers for growth [57][58] Question: What are the cost headwinds and tailwinds affecting EBITDA margins in the second half? - The biggest tailwind is expected to be improving product volume, with some incremental bonus expenses anticipated [60] Question: How are you managing airfreight and manufacturing variances in the second half? - Management acknowledged that airfreight is a significant factor due to rising demand and is working to minimize it over time [63][64] Question: Can you provide insights on the impact of extreme weather in Texas? - The weather caused approximately $1 million in missed revenue, with expectations for recovery in Q3 [82][84] Question: What is the outlook for cash flow in Q3? - Management indicated that cash flow would depend on inventory management and demand timing, making it difficult to predict [80]

Financial Performance - Sales reached $121 million, with an 11% core sales decline (11% product decrease and 12% service decrease)[7] - Adjusted EBITDA decremental margins were 29%, excluding currency impacts, outperforming the target range of 35%-45%[7] - Adjusted Diluted EPS was $0.06[7] - The company paid down $45 million in debt, bringing leverage to 2.1x[3, 7] - Free Cash Flow generated $1 million, compared to a $9 million usage in the prior year period[7] Market Trends and Regional Performance - IT&S product core sales declines improved sequentially to 10% in Q2 from 14% in Q1[5] - Asia Pacific experienced a low single-digit (LSD) decline in core sales[8] - Europe saw a mid-single-digit (MSD) decline in core sales[8] - The Middle East faced a low double-digit (LDD) decline in core sales[8] - Americas also experienced a low double-digit (LDD) decline in core sales, but showed sequential improvement[8, 9] Outlook and Strategy - The company anticipates net sales returning to pre-COVID levels by the end of the fiscal year[24] - Incremental EBITDA margins are expected to be at the high end of 35%-45%, excluding currency impacts[24, 27] - Sales for the second half of fiscal year 2021 are projected to be between $280 million and $290 million[27]

[Forward-Looking Statements and Cautionary Factors](index=3&type=section&id=Forward-Looking%20Statements%20and%20Cautionary%20Factors) This section outlines forward-looking statements on financial results, liquidity, and restructuring, noting inherent risks and uncertainties - This report contains forward-looking statements regarding expected financial results, liquidity, restructuring costs, and capital expenditures, which involve risks and uncertainties[19](index=19&type=chunk) - Key factors that could cause actual results to differ materially include the impact of the COVID-19 pandemic, economic instability, decreased demand from the oil & gas industry, commodity cost increases, global tariffs, supply chain disruptions, competition, currency fluctuations, regulatory developments, litigation, and the ability to develop new products and integrate acquisitions[20](index=20&type=chunk)[22](index=22&type=chunk) [Part I—Financial Information](index=5&type=section&id=Part%20I%E2%80%94Financial%20Information) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1—Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201%E2%80%94Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements, including operations, comprehensive income, balance sheets, cash flows, and detailed notes [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement provides a summary of the company's revenues, expenses, and net earnings over a specific period Condensed Consolidated Statements of Operations | Metric | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net sales | 119,430 | 146,674 | | Gross profit | 55,264 | 68,688 | | Operating profit | 9,069 | 14,369 | | Net earnings from continuing operations | 4,822 | 6,372 | | Net earnings | 4,598 | 2,121 | | Diluted EPS from continuing operations | $0.08 | $0.11 | | Diluted EPS | $0.08 | $0.03 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement details net earnings and other comprehensive income components, reflecting changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income | Metric | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :------------------------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net earnings | 4,598 | 2,121 | | Foreign currency translation adjustments | 1,400 | 8,492 | | Recognition of foreign currency translation losses from divested businesses | — | 51,994 | | Pension, other postretirement benefit plans, and cash flow hedges | 229 | 441 | | Total other comprehensive income, net of tax | 1,629 | 60,927 | | Comprehensive income | 6,227 | 63,048 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's financial position, including assets, liabilities, and equity, at specific points in time Condensed Consolidated Balance Sheets | Metric | November 30, 2020 ($ thousands) | August 31, 2020 ($ thousands) | | :----------------------------------- | :------------------------------ | :---------------------------- | | Total current assets | 357,815 | 341,132 | | Total assets | 838,575 | 824,294 | | Total current liabilities | 109,704 | 105,522 | | Total liabilities | 470,629 | 465,068 | | Total shareholders' equity | 367,946 | 359,226 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports on cash generated and used by operating, investing, and financing activities over a period Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Cash provided by (used in) operating activities | 8,667 | (22,927) | | Cash (used in) provided by investing activities | (1,858) | 213,342 | | Cash used in financing activities | (1,818) | (195,222) | | Net increase (decrease) in cash and cash equivalents | 6,398 | (4,371) | | Cash and cash equivalents - end of period | 158,568 | 206,780 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the company's operating segments, accounting policy adoptions, and the impact of the COVID-19 pandemic - Enerpac Tool Group Corp. operates with two segments: Industrial Tools & Service (IT&S), which is the only reportable segment, and Other[38](index=38&type=chunk) - The company adopted ASU 2016-13 (CECL model) on September 1, 2020, with **no impact on financial statements**[39](index=39&type=chunk) - The COVID-19 pandemic has negatively impacted, and is expected to continue to negatively impact, the global economy and the Company's operating results and financial position[38](index=38&type=chunk) Accumulated Other Comprehensive Loss Component | Accumulated Other Comprehensive Loss Component | November 30, 2020 ($ thousands) | August 31, 2020 ($ thousands) | | :--------------------------------------------- | :------------------------------ | :---------------------------- | | Foreign currency translation adjustments | 74,496 | 75,896 | | Pension and other postretirement benefit plans, net of tax | 24,545 | 24,750 | | Unrecognized losses on cash flow hedges | 54 | 78 | | Total Accumulated other comprehensive loss | 99,095 | 100,724 | [Note 2. Revenue from Contracts with Customers](index=10&type=section&id=Note%202.%20Revenue%20from%20Contracts%20with%20Customers) This note details the company's revenue recognition policies for product sales and service & rental sales - Revenue is generated from product sales (recognized at a point in time, or over time for customized products) and service & rental sales (recognized over time)[43](index=43&type=chunk) Revenue Recognition Timing | Revenue Recognition Timing | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :------------------------- | :-------------------------------------------- | :-------------------------------------------- | | At point in time | 86,780 | 104,812 | | Over time | 32,650 | 41,862 | | Total | 119,430 | 146,674 | Contract Balance Component | Contract Balance Component | November 30, 2020 ($ thousands) | August 31, 2020 ($ thousands) | | :------------------------- | :------------------------------ | :---------------------------- | | Receivables, net | 90,531 | 84,170 | | Contract assets | 5,108 | 6,145 | | Contract liabilities | 3,193 | 2,145 | [Note 3. Restructuring Charges](index=11&type=section&id=Note%203.%20Restructuring%20Charges) This note outlines the company's restructuring initiatives, including workforce reductions and facility consolidations, and associated charges - The company is executing restructuring initiatives to integrate businesses, exit certain services, and drive corporate efficiencies, involving workforce reductions and facility consolidations[48](index=48&type=chunk) Restructuring Charges | Restructuring Charges | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :-------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total charges | 210 | 1,972 | Restructuring Reserve | Restructuring Reserve | November 30, 2020 ($ thousands) | August 31, 2020 ($ thousands) | | :-------------------- | :------------------------------ | :---------------------------- | | IT&S segment | 1,073 | 1,443 | | Corporate | 38 | 267 | [Note 4. Acquisitions](index=12&type=section&id=Note%204.%20Acquisitions) This note details the acquisition of HTL Group, its strategic benefits, and its impact on net sales and asset allocation - On January 7, 2020, the Company acquired HTL Group for **$33.3 million**, enhancing its bolting products and European rental capabilities[52](index=52&type=chunk) - The HTL acquisition generated **$2.4 million in net sales** for the three months ended November 30, 2020, reported within the IT&S segment[52](index=52&type=chunk) - The final purchase price allocation included **$11.3 million of goodwill** and **$16.1 million of intangible assets**[52](index=52&type=chunk) [Note 5. Discontinued Operations and Other Divestiture Activities](index=12&type=section&id=Note%205.%20Discontinued%20Operations%20and%20Other%20Divestiture%20Activities) This note describes the sale of the EC&S segment and other divestiture activities, including their financial impact - The Company completed the sale of its former EC&S segment on October 31, 2019, for **$215.8 million**, as part of a strategic shift to become a pure-play industrial tools and services company[53](index=53&type=chunk) Net Loss from Discontinued Operations | Metric | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net loss from discontinued operations | (224) | (4,251) | - Other divestiture activities included the sale of the UNI-LIFT product line for **$6.0 million** (resulting in a **$4.6 million benefit**) and the Connectors product line for **$2.7 million** (resulting in a **$1.3 million benefit**) in the three months ended November 30, 2019[56](index=56&type=chunk) [Note 6. Goodwill, Intangible Assets and Long-Lived Assets](index=14&type=section&id=Note%206.%20Goodwill,%20Intangible%20Assets%20and%20Long-Lived%20Assets) This note provides details on the company's goodwill, other intangible assets, and estimated amortization expenses Goodwill and Other Intangible Assets | Asset Category | November 30, 2020 ($ thousands) | August 31, 2020 ($ thousands) | | :----------------------- | :------------------------------ | :---------------------------- | | Goodwill | 280,977 | 281,154 | | Other intangible assets, net | 60,097 | 62,382 | - Estimated amortization expense for intangible assets is **$6.0 million** for the remaining nine months of fiscal 2021 and **$7.3 million** for fiscal 2022[58](index=58&type=chunk) [Note 7. Product Warranty Costs](index=14&type=section&id=Note%207.%20Product%20Warranty%20Costs) This note outlines the activity and balances of the company's product warranty reserve over the reporting periods Product Warranty Reserve Activity | Warranty Reserve Activity | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Beginning balance | 892 | 1,145 | | Provision for warranties | 464 | 211 | | Warranty payments | (399) | (206) | | Ending balance | 959 | 1,125 | [Note 8. Debt](index=15&type=section&id=Note%208.%20Debt) This note details the company's debt structure, including its revolving credit facility, repayments, and covenant compliance Long-Term Debt | Debt Component | November 30, 2020 ($ thousands) | August 31, 2020 ($ thousands) | | :---------------------- | :------------------------------ | :---------------------------- | | Long-term debt, net | 255,000 | 255,000 | - The Senior Credit Facility includes a **$400 million revolving line of credit**, with **$255.0 million borrowed** and **$139.9 million available** as of November 30, 2020[62](index=62&type=chunk) - The Company repaid its **$200 million term loan** in November 2019 and redeemed all **$300 million of 5.625% Senior Notes** in June 2020 to reduce interest costs[62](index=62&type=chunk)[63](index=63&type=chunk) - The Company was in compliance with all financial covenants at November 30, 2020, after proactively amending its interest coverage ratio covenant due to COVID-19[62](index=62&type=chunk) [Note 9. Fair Value Measurements](index=15&type=section&id=Note%209.%20Fair%20Value%20Measurements) This note discusses the fair value of financial instruments, including cash, receivables, debt, and derivative instruments - The fair value of cash, receivables, payables, and variable-rate long-term debt approximated book value due to their short-term nature or market rates[64](index=64&type=chunk) - Foreign currency exchange contracts were a **net asset of less than $0.1 million** (Nov 30, 2020) and **$0.2 million** (Aug 31, 2020)[66](index=66&type=chunk) - The interest rate swap was a **net liability of $0.1 million** at both November 30, 2020, and August 31, 2020[66](index=66&type=chunk) [Note 10. Derivatives](index=16&type=section&id=Note%2010.%20Derivatives) This note explains the company's use of foreign currency exchange contracts and interest rate swaps to manage market risks - The Company uses foreign currency exchange contracts to manage exchange rate risk, with a **notional value of $16.5 million** at November 30, 2020[67](index=67&type=chunk) Foreign Currency Loss, Net | Metric | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :---------------------- | :-------------------------------------------- | :-------------------------------------------- | | Foreign currency loss, net | (49) | (270) | - An interest rate swap fixes the LIBOR-based index on **$100.0 million of variable-rate borrowings** at **0.259%**, expiring in August 2021, qualifying as a cash flow hedge[67](index=67&type=chunk) [Note 11. Earnings per Share and Shareholders' Equity](index=16&type=section&id=Note%2011.%20Earnings%20per%20Share%20and%20Shareholders'%20Equity) This note provides details on basic and diluted earnings per share, share repurchase activities, and total shareholders' equity Earnings Per Share (EPS) | EPS Metric | Three Months Ended Nov 30, 2020 | Three Months Ended Nov 30, 2019 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Basic EPS from continuing operations | $0.08 | $0.11 | | Diluted EPS from continuing operations | $0.08 | $0.11 | | Basic EPS | $0.08 | $0.04 | | Diluted EPS | $0.08 | $0.03 | - The Company did not repurchase shares in the three months ended November 30, 2020, but repurchased **839,789 shares** for **$17.8 million** in the prior-year period[68](index=68&type=chunk) Total Shareholders' Equity | Shareholders' Equity Component | November 30, 2020 ($ thousands) | August 31, 2020 ($ thousands) | | :----------------------------- | :------------------------------ | :---------------------------- | | Total Shareholders' Equity | 367,946 | 359,226 | [Note 12. Income Taxes](index=18&type=section&id=Note%2012.%20Income%20Taxes) This note details income tax expense, effective tax rates, and the impact of tax regulations and the CARES Act Income Tax Metrics | Income Tax Metric | Three Months Ended Nov 30, 2020 | Three Months Ended Nov 30, 2019 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Earnings before income tax expense | $7,080 | $7,322 | | Income tax expense | $2,258 | $950 | | Effective income tax rate | 31.9% | 13.0% | - The effective tax rate increased to **31.9%** from **13.0%** primarily due to prior-year non-recurring benefits related to proposed tax regulations in the United States[74](index=74&type=chunk) - The CARES Act did not have a material impact on consolidated financial statements for the three months ended November 30, 2020[74](index=74&type=chunk) [Note 13. Segment Information](index=18&type=section&id=Note%2013.%20Segment%20Information) This note provides financial information for the company's reportable segment, Industrial Tools & Service (IT&S), and other operating segments - The Industrial Tools & Service (IT&S) segment is the Company's only reportable segment, engaged in the design, manufacture, and distribution of hydraulic and mechanical tools, and providing services and tool rental[75](index=75&type=chunk) Segment Net Sales | Segment Financials (Net Sales) | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :----------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Industrial Tools & Services | 112,175 | 135,592 | | Other Operating Segment | 7,255 | 11,082 | | Total Net Sales | 119,430 | 146,674 | Segment Operating Profit | Segment Financials (Operating Profit) | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Industrial Tools & Services | 17,157 | 26,055 | | Other Operating Segment | (1,809) | (255) | | General Corporate | (6,279) | (11,431) | | Total Operating Profit | 9,069 | 14,369 | [Note 14. Commitments and Contingencies](index=19&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) This note outlines the company's outstanding letters of credit, contingent lease liabilities, and potential regulatory penalties - The Company had outstanding letters of credit totaling **$11.9 million** at November 30, 2020, primarily for commercial contracts and self-insured workers' compensation programs[79](index=79&type=chunk) - The Company is contingently liable for **$6.5 million** in future lease payments from previously divested businesses, extending to fiscal 2025[79](index=79&type=chunk) - An expense was recorded for an estimated financial penalty related to potential violations of Crimea sanctions laws, though no material adverse effect on financial position is expected[81](index=81&type=chunk) [Note 15. Leases](index=20&type=section&id=Note%2015.%20Leases) This note describes the company's operating lease arrangements for real estate, vehicles, and equipment, and associated costs - The Company has operating leases for real estate, vehicles, and equipment, typically ranging from 3 to 15 years with renewal options[82](index=82&type=chunk) Lease Costs | Lease Cost Component | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :------------------- | :-------------------------------------------- | :-------------------------------------------- | | Operating lease cost | 3,706 | 4,254 | | Short-term lease cost | 413 | 455 | | Variable lease cost | 882 | 469 | Cash Flow from Leases | Cash Flow from Leases | Three Months Ended Nov 30, 2020 ($ thousands) | Three Months Ended Nov 30, 2019 ($ thousands) | | :-------------------- | :-------------------------------------------- | :-------------------------------------------- | | Operating cash flows | 3,705 | 4,262 | [Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202%E2%80%94Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition and results, covering COVID-19 impact, strategic initiatives, and key financial metrics [General Business Overview](index=20&type=section&id=General%20Business%20Overview) This overview describes Enerpac Tool Group Corp. as a premier industrial tools and services company with a focus on shareholder value - Enerpac Tool Group Corp. is a premier industrial tools and services company, a global leader in high-pressure hydraulic tools and solutions, with the Industrial Tools & Service (IT&S) segment as its sole reportable segment[83](index=83&type=chunk) - The company aims to drive shareholder value through established brands, global distribution, focus on core tools and services, and disciplined capital deployment[83](index=83&type=chunk) [COVID-19 Update](index=20&type=section&id=COVID-19%20Update) This section discusses the significant negative financial impacts of the COVID-19 pandemic and implemented cost-saving measures - The COVID-19 pandemic has caused significant negative financial impacts, particularly on demand, though manufacturing facilities continue to operate with safety precautions[84](index=84&type=chunk) - Temporary cost-saving measures, including reductions in capital expenditures and deferral of tax payments, have been implemented, with some eliminated due to sequential business improvement[86](index=86&type=chunk) - The ultimate impact of the pandemic on the business, results of operations, and financial condition remains uncertain[86](index=86&type=chunk) [General Business Update](index=21&type=section&id=General%20Business%20Update) This update covers the EC&S segment sale, restructuring plans for efficiency, and the favorable impact of foreign currency changes - The sale of the EC&S segment was completed on October 31, 2019, for approximately **$216 million**[87](index=87&type=chunk) - Restructuring plans, focused on integrating Enerpac and Hydratight businesses and driving corporate efficiencies, are expected to yield annual savings of **$12-15 million** from the first phase and an additional **$12-15 million** from expansion[87](index=87&type=chunk) - Changes in foreign currency exchange rates, particularly a weakening U.S. dollar, favorably impact sales, cash flow, and earnings, as over half of sales are international[87](index=87&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section analyzes consolidated net sales, gross profit, and operating profit, highlighting key drivers of change Consolidated Results of Operations | Metric | Three Months Ended Nov 30, 2020 ($ millions) | Three Months Ended Nov 30, 2019 ($ millions) | | :-------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net sales | 119 | 147 | | Gross profit | 55 | 69 | | Operating profit | 9 | 14 | | Net earnings from continuing operations | 5 | 6 | | Diluted EPS from continuing operations | $0.08 | $0.11 | - Consolidated net sales decreased by **$28 million (19%)** year-over-year, primarily due to an **18% decline in core sales** from the COVID-19 pandemic and oil price volatility, partially offset by the HTL Group acquisition and favorable foreign currency[89](index=89&type=chunk)[90](index=90&type=chunk) - Gross profit margins decreased by **1%** due to under-absorption of fixed costs, partially offset by a favorable mix of product and service sales[90](index=90&type=chunk) [Segment Results](index=22&type=section&id=Segment%20Results) This section analyzes the financial performance of the IT&S segment, including net sales and operating profit percentage IT&S Segment Performance | IT&S Segment Metric | Three Months Ended Nov 30, 2020 ($ millions) | Three Months Ended Nov 30, 2019 ($ millions) | | :------------------ | :------------------------------------------- | :------------------------------------------- | | Net sales | 112 | 136 | | Operating profit | 17 | 26 | | Operating profit % | 15.3% | 19.2% | - IT&S segment net sales decreased by **$24 million (17.3%)**, driven by a **17% decline in core sales** due to the COVID-19 pandemic, partially offset by a **$2 million increase** from the HTL Group acquisition and a **2% favorable impact** from foreign currency[91](index=91&type=chunk) - Operating profit percentage for IT&S decreased by **3.9%** due to reduced volumes and under-absorption, partially offset by lower selling, administrative, and engineering (SAE) costs from restructuring savings and reduced discretionary spending[91](index=91&type=chunk) [Corporate](index=22&type=section&id=Corporate) This section details the decrease in corporate expenses, driven by restructuring savings and reduced discretionary spending - Corporate expenses decreased by **$5 million**, from **$11 million** in the prior year to **$6 million**, primarily due to savings from restructuring actions, lower annual bonus program expenses, and reductions in discretionary spending[92](index=92&type=chunk) [Financing Costs, net](index=22&type=section&id=Financing%20Costs,%20net) This section explains the significant decrease in net financing costs due to debt repayments and interest rate savings Net Financing Costs | Metric | Three Months Ended Nov 30, 2020 ($ millions) | Three Months Ended Nov 30, 2019 ($ millions) | | :------------------ | :------------------------------------------- | :------------------------------------------- | | Financing costs, net | 2 | 7 | - Net financing costs decreased significantly due to the payoff of the outstanding term loan in November 2019 and interest rate savings from the retirement of **5.625% Senior Notes** in Q4 fiscal 2020[93](index=93&type=chunk) [Income Tax Expense](index=23&type=section&id=Income%20Tax%20Expense) This section analyzes the company's income tax expense and the increase in the effective tax rate compared to the prior year Income Tax Metrics | Income Tax Metric | Three Months Ended Nov 30, 2020 | Three Months Ended Nov 30, 2019 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Earnings before income tax expense | $7 | $7 | | Income tax expense | $2 | $1 | | Effective income tax rate | 31.9% | 13.0% | - The effective tax rate for the three months ended November 30, 2020, was **31.9%**, up from **13.0%** in the prior-year period, primarily due to non-recurring benefits in the prior year[95](index=95&type=chunk) [Cash Flows and Liquidity](index=23&type=section&id=Cash%20Flows%20and%20Liquidity) This section reviews cash flows from operating, investing, and financing activities, and assesses the company's liquidity position Cash Flow Activities | Cash Flow Activity | Three Months Ended Nov 30, 2020 ($ millions) | Three Months Ended Nov 30, 2019 ($ millions) | | :---------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | 9 | (23) | | Net cash (used in) provided by investing activities | (2) | 213 | | Net cash used in financing activities | (2) | (195) | | Net increase (decrease) in cash | 6 | (4) | - Cash and cash equivalents totaled **$159 million** at November 30, 2020, with **$142 million** held by foreign subsidiaries[96](index=96&type=chunk) - The Company had **$140 million available for borrowing** under its revolving line of credit at November 30, 2020, and believes its liquidity is adequate for the foreseeable future[100](index=100&type=chunk)[101](index=101&type=chunk) [Primary Working Capital Management](index=24&type=section&id=Primary%20Working%20Capital%20Management) This section provides an overview of the company's primary working capital components, including receivables, inventory, and payables Primary Working Capital | Working Capital Metric | November 30, 2020 ($ millions) | PWC% | August 31, 2020 ($ millions) | PWC% | | :------------------------ | :----------------------------- | :--- | :--------------------------- | :--- | | Accounts receivable, net | 91 | 19% | 84 | 19% | | Inventory, net | 71 | 15% | 69 | 16% | | Accounts payable | (47) | (10)%| (45) | (10)%| | Net primary working capital | 115 | 24% | 108 | 25% | [Commitments and Contingencies](index=24&type=section&id=Commitments%20and%20Contingencies) This section details outstanding letters of credit, contingent lease liabilities, and potential legal and regulatory matters - The Company is contingently liable for **$7 million** in future lease payments from previously divested businesses, extending to fiscal 2025[102](index=102&type=chunk) - Outstanding letters of credit totaled **$12 million** at November 30, 2020, for commercial contracts and workers' compensation programs[102](index=102&type=chunk) - The Company is subject to legal and regulatory matters, including a potential financial penalty related to Crimea sanctions, but expects no material adverse effect[102](index=102&type=chunk) [Contractual Obligations](index=24&type=section&id=Contractual%20Obligations) This section states that contractual obligations have not materially changed from the prior fiscal year's annual report - Contractual obligations have not materially changed in fiscal 2021 from what was disclosed in the Annual Report on Form 10-K for the year ended August 31, 2020[103](index=103&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) This section affirms the reasonableness of accounting estimates and refers to the annual report for detailed policy information - Management believes the accounting estimates used in the condensed consolidated financial statements are reasonable and appropriate[104](index=104&type=chunk) - Detailed information on critical accounting policies, methodology, and assumptions can be found in the fiscal 2020 Annual Report on Form 10-K[104](index=104&type=chunk) [Item 3—Quantitative and Qualitative Disclosures about Market Risk](index=24&type=section&id=Item%203%E2%80%94Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the company's exposure to financial and market risks, including interest rate, foreign currency, and commodity cost, and mitigation strategies [Interest Rate Risk](index=24&type=section&id=Interest%20Rate%20Risk) This section describes how the company manages interest rate risk using variable-rate debt and fixed-interest-rate swaps - The Company manages interest expense using a mixture of variable-rate debt and fixed-interest-rate swaps[105](index=105&type=chunk) - As of November 30, 2020, long-term debt included **$255 million of variable-rate borrowing** under the revolving line of credit[105](index=105&type=chunk) - The Company is the fixed-rate payor on an interest-rate swap that effectively fixes the LIBOR-based index on **$100 million of its revolving credit facility borrowings**[105](index=105&type=chunk) [Foreign Currency Risk](index=25&type=section&id=Foreign%20Currency%20Risk) This section details the company's exposure to foreign currency fluctuations and its use of exchange contracts for mitigation - The Company has significant non-U.S. operations in Australia, the Netherlands, the United Kingdom, United Arab Emirates, and China, exposing it to foreign currency risk[108](index=108&type=chunk) - Foreign currency exchange contracts are used to mitigate exchange rate risk, not for speculative purposes[108](index=108&type=chunk) - A hypothetical **10% decrease** in all foreign exchange rates against the U.S. dollar would result in a **$6 million reduction in quarterly sales**, a **$1 million reduction in operating profit**, and a **$37 million reduction to equity**[108](index=108&type=chunk) [Commodity Cost Risk](index=25&type=section&id=Commodity%20Cost%20Risk) This section addresses the company's exposure to raw material price fluctuations and strategies to pass on cost increases - The Company is exposed to commodity cost risk from raw materials like steel and plastic resin, which are subject to price fluctuations[108](index=108&type=chunk) - The Company strives to pass along commodity price increases to customers to avoid profit margin erosion[108](index=108&type=chunk) [Item 4—Controls and Procedures](index=25&type=section&id=Item%204%E2%80%94Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures and reports on changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=25&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of November 30, 2020 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of November 30, 2020[110](index=110&type=chunk) [Changes in Internal Control Over Financial Reporting](index=25&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the quarter - There were no changes in internal control over financial reporting during the quarter ended November 30, 2020, that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[110](index=110&type=chunk) [Part II—Other Information](index=26&type=section&id=Part%20II%E2%80%94Other%20Information) This part includes information on unregistered sales of equity securities and a list of exhibits filed with the report [Item 2—Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202%E2%80%94Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the company's share repurchase program and any unregistered sales of equity securities - The Company's Board of Directors has authorized a share repurchase program, with **5,200,770 shares remaining for purchase** as of November 30, 2020[112](index=112&type=chunk) - No shares were repurchased during the three months ended November 30, 2020[112](index=112&type=chunk) [Item 6—Exhibits](index=26&type=section&id=Item%206%E2%80%94Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications and financial data in XBRL format - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1, 32.2) as required by the Sarbanes-Oxley Act of 2002[113](index=113&type=chunk) - The report includes financial statements formatted in Inline Extensible Business Reporting Language (Inline XBRL) as Exhibit 101[113](index=113&type=chunk)

Financial Data and Key Metrics Changes - The first quarter sales increased by 7% compared to the fourth quarter of fiscal 2020 but were down 19% year-over-year [40] - Core tools product sales were down 14%, an improvement from down 20% in the fourth quarter [40] - Adjusted EBITDA margin for the quarter was 12%, up 300 basis points from the fourth quarter [41] - EPS was reported at $0.09 per share, marking an improvement over the fourth quarter [16] Business Line Data and Key Metrics Changes - Core sales declined by 18% year-over-year, with products down 16% and services down 24% [15] - Service sales improved sequentially, down 24% year-over-year compared to a decline of 45% in the previous quarters [30] - The Cortland business experienced a 35% decline year-over-year, an improvement from 39% in the previous quarter [37] Market Data and Key Metrics Changes - European operations were the best-performing region, showing moderate growth compared to fiscal 2020 [17] - The Americas saw a decline in the high teens but showed sequential improvement during the quarter [18] - Asia-Pacific declined in the low 20% range, affected by pandemic shutdowns in Southeast Asia, while China showed recovery [26] Company Strategy and Development Direction - The company remains focused on cost management and driving the highest possible margins while maintaining a strong balance sheet [59] - Continued investment in R&D and commercial processes is emphasized to support organic growth [60] - The company is committed to launching new products, maintaining a 10% new product objective [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a gradual return to normal business conditions, contingent on the pandemic's trajectory [13] - The advent of the COVID vaccine has fostered optimism within the distribution channel, although guidance remains suspended due to market unpredictability [58] - The company expects to see continued sequential improvement in cash flow generation as the year progresses [69] Other Important Information - The company generated approximately $7 million in free cash flow during the quarter, with a $6 million increase in accounts receivable [56] - The net leverage ratio was reported at 1.9 times trailing 12 EBITDA, indicating a healthy financial position [57] - The company has implemented a new product development launch strategy to enhance customer engagement and distributor participation [28] Q&A Session Summary Question: Readiness to handle increased orders and inflation - Management indicated they have improved their sales and operations planning process to predict influxes of new orders and maintain a positive on-time delivery rate [64][66] Question: Cash flow expectations for the second quarter - Management does not anticipate a reversal in cash flow for the second quarter, expecting continued improvement as the year progresses [69] Question: Dependency on air freight and transportation costs - Air freight is used on an exception basis, and management is monitoring its impact closely [72] Question: Changes in compensation and bonus accruals - The reinstatement of the bonus plan will be reflected in quarterly results, with no furloughs planned for the remainder of the year [79] Question: Backlog status and visibility - Management confirmed that the backlog is up year-over-year and is optimistic about continued sequential improvement [100][102]