Financial Data and Key Metrics Changes - Enerpac's second quarter revenue reached $155 million, representing a 2% organic growth year-over-year [6] - Adjusted EBITDA margin decreased to 21.3% from 23.2% in the previous year [9] - Earnings per share were reported at $0.31, down from $0.38 in the year-ago period, while adjusted earnings remained at $0.39 [9][10] - Gross margins declined by 410 basis points year-over-year due to lower service business volume [8] Business Line Data and Key Metrics Changes - Product sales in the industrial tools and service segment (ITNS) grew 6% organically year-over-year, marking the highest growth in 10 quarters [3] - Service revenue within ITNS declined by 17%, impacting overall growth and profitability [6][10] - The services business represented approximately 20% of the ITNS segment in fiscal 2025 [4] Market Data and Key Metrics Changes - The Americas region saw a solid 4% growth, with product sales increasing nearly 6% [7] - EMEA region experienced a 1% decline in revenue due to a 21% drop in service revenue, despite a 7% increase in product revenue [7][8] - Asia Pacific resumed modest growth, particularly in India, which saw double-digit growth due to strength in steel and heavy equipment manufacturing [8] Company Strategy and Development Direction - The company is restructuring its EMEA service operations to align with current market conditions and transition towards higher-margin service business [4][13] - Enerpac is focused on improving operating efficiency through the Powering Enerpac Performance (PEP) initiative [13] - The company aims to continue investing in innovation, as demonstrated by new product launches at CONEXPO [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty created by the ongoing conflict in the Middle East, which has led to a pause in service work [23] - The company narrowed its fiscal 2026 guidance to a net sales range of $635 million to $650 million, reflecting organic sales growth of 1% to 3% [12] - Management expects continued pressure on the service side of the business in the near term but anticipates a rebound in Q4 [11][12] Other Important Information - The company secured a five-year contract worth several million dollars annually with a major oil and gas company in the U.K. North Sea [4][57] - Year-to-date free cash flow increased to $23 million from $5 million in the first half of fiscal 2025 [10] - The company repurchased $51 million worth of stock during the quarter, with approximately $135 million remaining from the $200 million authorized [11] Q&A Session Summary Question: Impact of Middle East conflict on business - Revenue from the Middle East accounts for about 10% of total revenue, with some service work paused due to the conflict [22][23] Question: Updated guidance and quarter-to-quarter expectations - Product business is expected to grow mid-single digits, while service is projected to decline in the low to mid-teens [25][26] Question: HLT business and project slowdowns - No project slowdowns reported; HLT business remains strong with good backlog and customer engagement [36] Question: M&A pipeline and capital allocation - The company is evaluating M&A opportunities and prioritizing organic investments, with a robust M&A pipeline [37][39] Question: New U.K. service contract details - The five-year contract is expected to start generating revenue in Q4 of this fiscal year [57] Question: New product introductions and revenue impact - Six new products launched at CONEXPO, with expected revenue benefits in the second half of the year [53][56]

Financial Data and Key Metrics Changes - Enerpac's second quarter revenue reached $155 million, reflecting a 2% organic growth year-over-year [7] - Adjusted EBITDA margin decreased to 21.3% from 23.2% in the previous year [10] - Earnings per share were reported at $0.31, down from $0.38 in the same period last year, while adjusted earnings remained at $0.39 [10][12] Business Line Data and Key Metrics Changes - The Industrial Tools and Service segment (ITNS) saw a 1% organic sales increase, with product sales growing 6% but offset by a 17% decline in service revenue [7][10] - The services business, which constituted about 20% of the ITNS segment in fiscal 2025, faced challenges in the EMEA region, leading to restructuring efforts [5][10] - Cortland, categorized under other segments, experienced exceptional growth of 27% in the second quarter [7] Market Data and Key Metrics Changes - The Americas region reported a solid 4% growth, with product sales increasing nearly 6% [8] - In the EMEA region, product revenue grew 7%, but overall revenue declined by 1% due to a 21% drop in service revenue [8] - Asia Pacific resumed modest growth, particularly in India, which saw double-digit growth due to strength in steel and heavy equipment manufacturing [9] Company Strategy and Development Direction - The company is focusing on restructuring its EMEA service operations to create a more competitive cost structure and support higher-margin service business [5][14] - The "Powering Enerpac Performance" (PEP) initiative aims to improve operating efficiency and procurement processes [14] - Enerpac is committed to innovation, having launched several new products at the CONEXPO trade show, which are expected to enhance its market position [16][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing pressure in the service business and the potential impact of geopolitical conflicts on operations and economic growth [12][13] - The company narrowed its fiscal 2026 guidance to a net sales range of $635 million to $650 million, anticipating organic sales growth of 1% to 3% [13] - Management expressed optimism about the product business while expecting a rebound in service revenue in the fourth quarter [25][51] Other Important Information - The company reported a strong balance sheet with net debt of $89 million and total liquidity of $499 million [11] - Free cash flow for the first half of fiscal 2026 increased to $23 million, up from $5 million in the previous year [12] - A five-year contract with a major oil and gas company in the U.K. North Sea was secured, expected to generate several million dollars annually [5][57] Q&A Session Summary Question: Impact of Middle East conflict on business - Revenue from the Middle East accounts for about 10% of total revenue, with some service work paused due to the conflict, but management believes this work will eventually resume [23][24] Question: Updated guidance and quarterly expectations - Product business is strong with expected mid-single-digit growth, while service revenue is projected to decline in the near term but rebound in Q4 [25][26] Question: Project slowdowns due to macroeconomic uncertainty - No current slowdowns in the HLT business, which remains strong with good backlog and customer engagement [35] Question: M&A pipeline and capital allocation - The company is actively evaluating M&A opportunities and prioritizing organic investments, with share repurchases also being a focus [36][38] Question: New U.K. service contract details - The five-year contract is expected to start generating revenue in Q4 of this fiscal year, with significant financial impact anticipated [57]