First Quarter of Fiscal 2022 Highlights*

• Net sales from continuing operations were $131 million in the first quarter of fiscal 2022.

• Consolidated core sales for the quarter increased 9% year over year.

• GAAP operating margin from continuing operations was 4.9% and adjusted operating margin from continuing operations was 9.9% for the quarter ended November 30, 2021.

• Adjusted EBITDA margin from continuing operations was 13.4% in the first quarter of fiscal 2022.

• GAAP diluted earnings per share (“EPS”) from continuing operations was $0.05 and adjusted diluted EPS from continuing operations was $0.16 in the first quarter of fiscal 2022.

• Leverage (Net Debt to Adjusted EBITDA) was 0.7x at November 30, 2021.

• Reiterating full-year guidance for fiscal 2022.
  
  
  
  *This news release contains financial measures in accordance with US Generally Accepted Accounting Principles (“GAAP”) in addition to non-GAAP financial measures. Reconciliations of the GAAP to non-GAAP historical financial measures can be found in the tables accompanying this release.

Enerpac Tool Group Corp. (NYSE: EPAC) (the “Company”) today announced results for its fiscal first quarter ended November 30, 2021.

“Since joining Enerpac Tool Group in early October, I have been excited by our solid foundation, exceptional products, global footprint and strong balance sheet. I believe that Enerpac is well positioned for further growth and profitability,” said Paul Sternlieb, Enerpac Tool Group’s President & CEO. “As we expected, our performance in the first quarter was impacted by global supply chain, logistics and inflationary pressures. That said, we continued to see solid demand for our products and we are encouraged by the continued improvements in many of our vertical markets.”

• Consolidated net sales from continuing operations for the first quarter of fiscal 2022 were $130.9 million compared to $119.4 million in the prior year first quarter. Core sales improved 9% year over year, with product sales up 14% and service revenues down 3%. There was minimal impact from foreign currency exchange rates in the quarter.
• Fiscal 2022 first quarter GAAP net income from continuing operations and diluted earnings per share from continuing operations were $3.2 million and $0.05, respectively, compared to net income from continuing operations and diluted EPS of $4.8 million and $0.08, respectively, in the first quarter of fiscal 2021. Fiscal 2022 first quarter net income from continuing operations included:
  • a restructuring charge of $2.7 million ($2.7 million, or $0.04 per share, after tax) attributable to the recently announced changes to flatten and simplify the organizational structure; and
  • Executive transition and Board search charges of $3.8 million ($3.8 million, or $0.06 per share, after tax).
• Fiscal 2021 first quarter net income from continuing operations included an impairment & divestiture charge of $0.1 million ($0.1 million, or $0.00 per share, after tax); and restructuring charges of $0.2 million ($0.2 million, or $0.00 per share, after tax), primarily related to footprint optimization.
• Excluding the items detailed above, adjusted diluted EPS from continuing operations was $0.16 for the first quarter of fiscal 2022 compared to $0.09 in the comparable prior year period.

• First quarter fiscal 2022 net sales were $121.3 million, 8% higher than the prior fiscal year’s first quarter net sales. Core sales also increased 8% year over year.
• The increase in revenue is attributable to the global market recovery from the COVID-19 pandemic and to a lesser extent the impact of pricing actions taken to offset inflationary pressures.
• Despite increased material and freight costs, adjusted operating profit margin increased year over year to 16.2% primarily due to increased product sales volume and the associated operating leverage generated in our manufacturing facilities offset by lower service margins due largely to regional mix.

Corporate Expenses and Income Taxes (excluding non-GAAP adjustments)

• Corporate expenses from continuing operations of $5.5 million for the first quarter of fiscal 2022 were $0.8 million lower than the comparable prior year period, primarily resulting from lower equity compensation and health insurance costs offset by higher outside services and wages.
• The fiscal 2022 first quarter effective income tax rate from continuing operations of approximately 15% was lower than the first quarter fiscal 2021 rate of approximately 31%.

Discontinued Operations

Discontinued operations represent the impacts from certain retained liabilities associated with the divestiture of the former EC&S segment on October 31, 2019.

Net debt at November 30, 2021 was approximately $48 million (total debt of $175 million less $127 million of cash), which increased approximately $14 million from the prior quarter. Net Debt to Adjusted EBITDA from continuing operations was 0.7x at November 30, 2021.

**Calculated in accordance with the terms of the Company’s March 2019 Senior Credit Facility

Outlook

Mr. Sternlieb continued, “While we anticipate the macroeconomic headwinds to sustain into the back half of fiscal 2022, our focus remains on growing the business, improving margins and delivering value to all of our stakeholders. We are reviewing all aspects of our business and are looking for opportunities to drive growth and become an even more efficient organization. The actions we are taking, along with the strength of our offerings and the depth of our global relationships, drive our confidence in Enerpac as we move forward. Based on the expectation of continued solid customer demand along with macroeconomic challenges, we are reiterating our full year guidance for fiscal 2022 and continue to expect full year sales in the range of $590 million to $610 million with incremental adjusted EBITDA margins*** of 35% to 45%, excluding the impact of any changes in foreign currency rates.”

***Incremental (or decremental) adjusted EBITDA margin is equivalent to the change in adjusted EBITDA divided by the change in Net Sales for the comparable periods.

Organizational Appointment

In a separate press release issued today, the Company announced the appointment of Mr. Scott Vuchetich as EVP, Marketing and President-Americas.

Conference Call Information

An investor conference call is scheduled for 10:00 am CT today, December 21, 2021. Webcast information and conference call materials, including an earnings presentation, are available on the Enerpac Tool Group company website (www.enerpactoolgroup.com).

Safe Harbor Statement

Certain of the above comments represent forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Management cautions that these statements are based on current estimates of future performance and are highly dependent upon a variety of factors, which could cause actual results to differ from these estimates. Among other risks and uncertainties, Enerpac Tool Group’s results are subject to risks and uncertainties arising from general economic conditions, supply chain risk, material and labor cost increases, the COVID-19 pandemic, including the impact of the pandemic or related government responses on the Company’s business, the businesses of the Company’s customers and vendors, and employee mobility, and whether site-specific health and safety concerns related to COVID-19 might require operations to be halted for some period of time, volatile oil pricing, variation in demand from customers, the impact of geopolitical activity on the economy, continued market acceptance of the Company’s new product introductions, the successful integration of acquisitions, the impact of restructurings, operating margin risk due to competitive pricing and operating efficiencies, tax law changes, foreign currency fluctuations and interest rate risk. See the Company’s Form 10-K for the fiscal year ended August 31, 2021 filed with the Securities and Exchange Commission for further information regarding risk factors. Enerpac Tool Group disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

Non-GAAP Financial Information

This press release contains financial measures that are not measures presented in conformity with GAAP. These non-GAAP measures include EBITDA from continuing operations, adjusted EBITDA from continuing operations, adjusted earnings (loss) from continuing operations, adjusted diluted earnings (loss) per share from continuing operations, adjusted operating profit from continuing operations, segment adjusted operating profit, free cash flow and net debt. This press release includes reconciliations of historical non-GAAP measures to the most comparable GAAP measure, including in the tables attached to this press release. This press release does not include a quantitative reconciliation of non-GAAP measures presented for any future period as such a reconciliation is not practicable. Such future-period measures are presented in a manner consistent with the presentation thereof for historical periods. Management believes the non-GAAP measures presented in this press release are commonly used financial measures for investors to evaluate Enerpac Tool Group’s operating performance and financial position with respect to the periods presented and, when read in conjunction with the condensed consolidated financial statements, present a useful tool to evaluate ongoing operations and provide investors with metrics they can use to evaluate aspects of the Company’s performance from period to period. In addition, these are some of the financial metrics management uses in internal evaluations of the overall performance of the Company’s business. Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.

About Enerpac Tool Group

Enerpac Tool Group Corp. is a premier industrial tools and services company serving a broad and diverse set of customers in more than 100 countries. The Company’s businesses are global leaders in high pressure hydraulic tools, controlled force products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the most challenging jobs around the world. The Company was founded in 1910 and is headquartered in Menomonee Falls, Wisconsin. Enerpac Tool Group common stock trades on the NYSE under the symbol EPAC. For further information on Enerpac Tool Group and its businesses, visit the Company's website at www.enerpactoolgroup.com.

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