Enerpac Tool Group Reports Third Quarter Fiscal 2024 Results

Core Insights - Enerpac Tool Group Corp. reported net sales of $150 million for the third quarter of fiscal 2024, reflecting a 4% decline year-over-year, primarily due to the divestiture of Cortland Industrial [1][6] - Organic sales increased by 1.2% year-over-year, with service revenue growth of 7.3% and flat product sales [6][8] - The company achieved a gross margin of 51.8%, an increase of 200 basis points year-over-year, driven by pricing actions and a favorable sales mix [7][9] - Operating profit rose by 31% year-over-year to $33.4 million, with an operating margin of 22.2% [8][9] - Adjusted EBITDA was $39.7 million, up 6% year-over-year, with an adjusted EBITDA margin of 26.4%, expanding by 240 basis points [9][10] - The company narrowed its full-year organic revenue growth guidance to 2% to 3% and raised the midpoint of adjusted EBITDA guidance [17] Financial Performance - Net earnings for the third quarter were $22.6 million, or $0.41 per share, compared to $17.0 million, or $0.30 per share, in the prior year [8][9] - Adjusted net earnings were $26 million, or $0.47 per share, compared to $0.39 per share in the previous year [1][8] - Selling, general, and administrative expenses decreased by $7.4 million year-over-year to $43.7 million, reflecting lower transformation program expenses [7][14] Segment Performance - The Industrial Tools & Services (IT&S) segment reported net sales of $145.9 million, a 1.3% increase year-over-year, with organic growth of 1.8% [13][30] - The IT&S segment's operating profit margin improved by 300 basis points to 28.1% [13][30] Cash Flow and Balance Sheet - Net cash provided by operating activities was $30.3 million for the third quarter, up from $17.3 million in the prior year [10][29] - The company reported a cash balance of $132.4 million and a debt balance of $195.7 million as of May 31, 2024 [12][29] - The net debt to adjusted EBITDA ratio improved to 0.5x, down from 1.0x year-over-year [12][16] Outlook - The company projects net sales for fiscal 2024 to be in the range of $585 million to $590 million, considering a $5 million headwind from foreign exchange rates [17] - Free cash flow guidance remains unchanged at $60 million to $70 million [17]