Enerpac Tool Group Corp. · NYSE:EPAC
Enerpac Tool — Q2 2023 Earnings Presentation
20 slides from Enerpac Tool's earnings presentation, Mar 22, 2023
Slide 1: Fiscal 2023 Second Quarter Earnings
Fiscal 2023 Second Quarter Earnings March 22, 2023 1
Slide 2: Forward-Looking Statements/Non-GAAP Measures
Forward-Looking Statements/Non-GAAP Measures Statements made in this presentation that are not historical are forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. The terms “may,” “should, ”“could,” “anticipate,” “believe,” “estimate,” “
Slide 3: ASCEND Program Update
ASCEND Program Update ASCEND Transformation Program ▪ One year anniversary since launch of the program ▪ Additional initiatives added to the project funnel over the past year ▪ Key Initiatives ▪ Accelerating organic growth go-to-market strategies ▪ Improving operational excellence and production eff
Slide 4: ASCEND Progress
ASCEND Progress Initiatives Key Actions $ Impact Commercial Building new marketing and engineering capabilities in Growth rail, driving new wins ~$1M each Building relationships with large bridge construction customers, driving new HLT wins Footprint Completed deep evaluation of operations cos
Slide 5: Strategic Plan Key Pillar Update
Strategic Plan Key Pillar Update $ Impact or YTD YoY % Initiatives Key Actions Increase Wind Built global wind team including new Business Vertical Development Manager with vast experience in the sector Implementing new S&OP process to reduce lead times for ~$1M key wind opportunities Recent w
Slide 6: Market Update
Market Update Overview ▪ Year-over-year top line growth driven primarily by pricing ▪ Distributors in the Americas and Europe remain cautious given current macro environment; however, order rates remain steady ▪ Impact of ASCEND initiatives reflected in strong EBITDA margin improvement IT&S Regional
Slide 7: Regional Update
Regional Update Americas ▪ Solid year-over-year core growth ▪ Key Verticals ▪ Infrastructure was strong primarily due to government spending ▪ Rail was favorable due to maintenance of way work as well as rolling stock maintenance ▪ Mining is very strong in Latin America driven by strong demand for c
Slide 8: Regional Update
Regional Update Asia Pacific ▪ Slight year-over-year core growth ▪ Key Verticals ▪ Mining continued to be positive due to demand for iron ore, coal, and precious metals ▪ Infrastructure was strong in Australia due to government investment ▪ Shipbuilding activity continued largely driven by the trans
Slide 9: Second Quarter 2023 Comparable Results
Second Quarter 2023 Comparable Results (US$ in millions except EPS) $142 NET SALES* $137 $139 22.7% 19.1% • Core sales growth of 6% • IT&S product sales 10% 12.0% • Other product 4% • Service -4% • Unfavorable impact of FX ~$3M, reducing core sales by 2% Q2 2022 Q1 2023 Q2 2023 Q2 2022 Q1 2023 Q2 20
Slide 10: Q2 Net Sales Waterfall
Q2 Net Sales Waterfall* (US$ in millions) $144 $1.2 $142 $142.0 $140 Product pricing was the primary $138 $10.3 driver of the year- over-year net $136 sales increase, $136.6 $3.2 offset by FX $134 headwinds and $132 volume & mix $0.5 $130 $128 $126 Net Sales Q2 FY22 Fx Translation Product - Volume &
Slide 11: IT&S Product Net Sales
IT&S Product Net Sales Due to the combination of increased volume (in Q1) and the benefit of pricing actions, first half net sales were well in excess of the peak IT&S product sales the 4 fiscal years prior to COVID and fiscal 2022 11
Slide 12: Adjusted EBITDA Waterfall
Adjusted EBITDA Waterfall* (US$ in millions) $34 $32 $0.4 $32.2 Adjusted EBITDA $30 $4.3 primarily benefited from $28 $0.4 $1.5 product price/cost $26 benefit, favorable $3.2 SG&A, product $24 productivity, service volume & $22 $7.1 mix and Cortland 12.3% 13.3% $20 mix/productivity $18 $16 $16.4 $0.
Slide 13: Operations Update
Operations Update Supply Chain Update ▪ Backlog - Part and component availability improved and worked through older past due backlog in the Americas and Europe ▪ Freight costs - Tightened up our usage of expedited freight, but also saw lower year-over-year ocean freight rates ▪ Commodity prices - Co
Slide 14: Liquidity – Positioned for Success
Liquidity – Positioned for Success (US$ in millions) $16 $133 $209 $202 $8 0.9 $129 0.7 $175 0.6 $125 ($10) Q2 2022 Q1 2023 Q2 2023 Q2 2022 Q1 2023 Q2 2023 Q2 2022 Q1 2023 Q2 2023 Q2 2022 Q1 2023 Q2 2023 Free Cash Flow Cash Balance Gross Debt TTM Financial Leverage* Free Cash Flow (FCF) (excluding F
Slide 15: Raising Fiscal 2023 Full-year Guidance
Raising Fiscal 2023 Full-year Guidance Fiscal 2023 Full Year Guidance: ▪ Net Sales in the range of $580 to $600 million, with core growth of 3%-6% ▪ Projected year-over-year core growth by category We continue to ▪ IT&S Product ~ up mid single digits% be cautious and ▪ IT&S Service ~ down mid single
Slide 16: Appendix
Appendix
Slide 17: Adjusted Operating Profit Waterfall
Adjusted Operating Profit Waterfall* (US$ in millions) $30 $0.5 $28 Adjusted $4.5 $28.7 Operating Profit $26 primarily benefited from $24 product $0.4 $1.5 price/cost benefit, $22 favorable SG&A, $3.2 product $20 productivity, $18 service volume & $7.1 mix and Cortland $16 mix/productivity $14 $12 $
Slide 18: Second Quarter 2023 GAAP vs Non-GAAP Reconciliation
Second Quarter 2023 GAAP vs Non-GAAP Reconciliation (US$ in millions except EPS) Less ASCEND Leadership Restructuring Transformation Transition Other Tax GAAP Charges Charges Charges M&A Charges Adjustments Adjusted Sales $142.0 $142.0 Operating Profit $14.0 ($3.0) ($11.4) ($0.2) ($0.2) $0.0 $28.7 I
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions) Incremental Margin Adjusted EBITDA Q2 Q2 Consolidated 2023 2022 Q2 2023 Q2 2022 % Change Net Earnings $7 $2 0 Net Sales $142 $137 Net Financing Costs $3 $1 Fx Impact $0 ($3) Income Taxes $3 $1 Net Sales adj for Fx $142 $133 $9 Depreciation & Amor
Slide 20: Enerpac Tool Group
ENERPAC (7) TOOL GROUP