Enerpac Tool(US:EPAC)2024-12-20 17:41Financial Performance - Net earnings for the three months ended November 30, 2024, were $21,723 thousand, an increase from $17,738 thousand in the same period last year, representing a growth of 22.3%[11] - Comprehensive income decreased to $12,047 thousand from $18,108 thousand year-over-year, primarily due to foreign currency translation adjustments[11] - Net sales for the three months ended November 30, 2024, increased to $145,196 thousand from $141,970 thousand, representing a growth of 1.6%[24] - Gross profit for the same period was $74,652 thousand, slightly up from $74,250 thousand, indicating a gross margin improvement[24] - Operating profit rose to $31,132 thousand compared to $28,662 thousand, reflecting a year-over-year increase of 5.2%[24] - Net earnings from continuing operations increased to $21,723 thousand, up from $18,305 thousand, marking a growth of 18.5%[24] - Basic earnings per share from continuing operations improved to $0.40, compared to $0.34 in the prior year, a rise of 17.6%[24] - Total revenues for the three months ended November 30, 2024, reached $145,196 thousand, compared to $141,970 thousand in the prior year, marking a growth of about 2.5%[55] - The company reported net earnings of $21,723 thousand for the three months ended November 30, 2024, compared to $23,974 thousand for the same period in 2023, indicating a decrease of about 9.4%[53] Cash Flow and Investments - The company reported cash provided by operating activities from continuing operations of $8,649 thousand, a significant improvement from cash used in the previous year of $3,917 thousand[16] - Capital expenditures for the quarter were $5,857 thousand, an increase from $1,567 thousand in the same period last year[16] - The company made cash payments for business acquisitions totaling $27,196 thousand during the quarter[16] - Cash and cash equivalents decreased to $130,733 thousand from $167,094 thousand, a decline of 21.8%[14] - Net cash used in investing activities increased to $33 million in Q3 2024 from $3 million in Q3 2023, primarily due to a $27 million acquisition of DTA and capital expenditures for the new headquarters[109] Debt and Liabilities - Long-term debt remained relatively stable at $188,294 thousand compared to $189,503 thousand in the previous quarter[14] - The company had $193.8 million in borrowings outstanding under term loans as of November 30, 2024, with no borrowings under the revolving line of credit[47] - Total long-term debt, less current maturities, was $188.3 million as of November 30, 2024, compared to $189.5 million as of August 31, 2024[66] - The company had outstanding letters of credit of $2.9 million and surety bonds of $3.8 million at November 30, 2024[79] Acquisitions and Goodwill - The Company acquired 100% of DTA The Smart Move, S.A. for an initial purchase price of $27.2 million, with a potential total purchase price of €36.0 million based on financial objectives[60] - As of November 30, 2024, the Company recognized $22.0 million of goodwill and $3.0 million of property, plant, and equipment from the acquisition[60] - The acquisition completed generated net sales of $3.2 million for the three months ended November 30, 2024, contributing to the IT&S segment[43] Operational Challenges and Strategies - The company anticipates continued challenges from supply chain issues and geopolitical instability affecting future performance[20] - Enerpac Tool Group Corp. emphasizes the importance of maintaining operational improvements and executing its growth strategy to navigate market uncertainties[21] - The company plans to expand its digital ecosystem and focus on emerging markets, particularly in Asia Pacific, to drive organic growth[101] - The company is relocating its headquarters to Milwaukee, Wisconsin, with an anticipated move-in date later in fiscal 2025[100] Tax and Regulatory Matters - The company’s effective income tax rate for the three months ended November 30, 2024, was 22.1%, a slight decrease from 23.6% in the same period of 2023[53] - The effective tax rate for the three months ended November 30, 2024, was 22.1%, down from 23.6% in the prior-year period[74] - The company believes that ongoing legal proceedings and regulatory matters will not have a material adverse effect on its financial position or cash flows[128] Share Repurchase and Financing - The Company repurchased and retired 109,860 shares for $4.4 million in the three months ended November 30, 2024[91] - Since the inception of the initial share repurchase program in fiscal 2012, the company has repurchased a total of 30,192,041 shares for $843 million[135] - Net financing costs decreased to $3 million in the three months ended November 30, 2024, from $4 million in the prior year[88] Risk Factors - The company is subject to various financial and market risks, including interest rate risk, foreign currency risk, and commodity cost risk[131][132] - A 10% decrease in foreign exchange rates would have resulted in a $8 million reduction in quarterly sales and a $1 million reduction in operating profit for the three months ended November 30, 2024[131]