Enerpac Tool Group Corp. · NYSE:EPAC
Enerpac Tool — Q3 2020 Earnings Presentation
23 slides from Enerpac Tool's earnings presentation, Jun 25, 2020
Slide 1: Fiscal 2020 Third Quarter Earnings
Fiscal 2020 Third Quarter Earnings June 25, 2020 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation that are not historical are considered “forward-looking statements” and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in
Slide 3: COVID-19 - Controlling What We Can Control
COVID-19 - Controlling What We Can Control Employee Safety is #1 Concern Plants are operating as essential businesses with extra safety measures in place Non-production personnel are working from home – over 60% of our employees Suspended all travel except when employees are required at custom
Slide 4: Market Update
Market Update Third Quarter Product Order Rates Decline accelerated at the end of March and troughed in April Starting to see recovery in early Q4 as most regions are slowly reopening Weekly ITS Product Orders YoY during Q3 Fiscal 2020 0% -10% -7% -10% -12% -20% -18% -24% -30% -27% -40% -39% -38
Slide 5: Third Quarter 2020 Summary
Third Quarter 2020 Summary Financials Sales: $102M Adjusted EPS: $(0.06) Core sales decline of 38% (Product down 35% and Service down 47%) Free Cash Flow: $11M of cash compared to $44M in the comparable prior year period Maintained leverage of 1.8x, despite the sharp decline in sales Pro
Slide 6: Strategy Progress
Strategy Progress Invest in Ourselves - Organic Growth New Product Development 6 new product families New Products as a percent of product sales +10% Commercial effectiveness Further realignment of commercial team to get closer to customer Continued support of our distributors through vir
Slide 7: Regional/Vertical Markets – Core Enerpac Products
Regional/Vertical Markets – Core Enerpac Products Americas / Europe Key Verticals Key Power Gen wins - Nuclear Includes products and some service maintenance work as several large sites executed shutdowns Key Power Gen wins - Power Gen/Wind Turbines Providing lifting and positioning equipm
Slide 8: Regional Markets – Service
Regional Markets – Service Market Conditions Combination of COVID-19 and the Oil & Gas shock created a drop in demand Difficult Q3 comparison expected due to strong FY2019 (large service projects that would not repeat), accounted for over one-third of the decline Borders closed in most countri
Slide 9: Current Business Trends
Current Business Trends Encouraging start to June/Q4 with sequential improvements week over week Comes as our customers are returning to work, construction sites are reopening and general level of activity picking up We are optimistic that we will continue to see improving levels of activity b
Slide 10: Current Business Trends - Continued
Current Business Trends - Continued It will take some time to fully recover to pre-COVID-19 levels and there is little clarity on when that may happen The chart below shows the high and low estimates of industrial production based on a survey of economists from financial institutions and other e
Slide 11: Third Quarter 2020 Comparable Results
Third Quarter 2020 Comparable Results (US$ in millions except EPS) $178 NET SALES* 18.8% • Core sales decreased 38% - product -35% and service -47% • IT&S sales -39% • Heavily impacted by COVID-19 pandemic and volatile oil & $102 gas prices • Anticipated year-over-year service decline in Middle East
Slide 12: Net Sales Waterfall
Net Sales Waterfall* (US$ in millions) $185 $180 $175 $3.2 $178.1 $170 $13.9 $165 Planned strategic $160 exits, the stronger $155 $161.0 $40.4 dollar, the impact of $150 the global shut-down due to the COVID-19 $145 pandemic, and the $140 sharp drop in Oil & Gas $135 prices resulted in $130 lower sa
Slide 13: Adjusted EBITDA Waterfall
Adjusted EBITDA Waterfall* (US$ in millions) $55 $50 $4.3 $23.7 $45 $12.3 $40 Adjusted EBITDA decreased year-over- $35 year primarily due to $0.7 COVID-19 and $33.5 $32.8 product/service $30 volume decreases, partially offset by $25 12.3% $9.2 13.3% restructuring and other cost savings $20 initiativ
Slide 14: Strategic Vision
EBITDA Margin Expansion – Controlling What We Can Control Fiscal 2019 Fiscal 2020 Fiscal 2021-2024+ (assuming normal conditions) Incremental Profit EBITDA ~25% Incremental Profit on on Growth Growth Footprint Optimization ~275-325bps* Based on structural Strategic Vision actions taken and when Str
Slide 15: Liquidity – Controlling What We Can Control
Liquidity – Controlling What We Can Control (US$ in millions) 5.6 $44 1.8 1.8 $201 4.0 3.6 $163 $164 1.3 $11 Q3 2019 Q3 2020 Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 Q3 2019 Q2 2020 Q3 2020 Cash Balance TTM Interest Coverage Ratio TTM Financial Leverage Free Cash Flow Cash Preservation Capita
Slide 16: Global Procurement During the Crisis
Global Procurement During the Crisis $150-$160M Direct Global Spend* What We Are Seeing Supply Chain APAC/Menac • No real disruptions • No lost suppliers or stock outs 26% • All suppliers focused on liquidity Europe Logistics 39% • We are moving product Global • Airfreight volatile but no other sign
Slide 17: Capital Allocation Priorities Remain Unchanged
Capital Allocation Priorities Remain Unchanged • Given the volatility in the market, our current Reduce Debt and Maintain a Strong Balance Sheet capital allocation priorities are focused on maintaining a strong balance sheet and financial flexibility Invest in Ourselves to Drive Organic Growth • Inv
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Third Quarter 2020 GAAP vs Non-GAAP Reconciliation
Third Quarter 2020 GAAP vs Non-GAAP Reconciliation (US$ in millions except EPS) Less Purchase Net Impairment & Restructuring Accounting GAAP Divestiture Gains Charges Charges Adjusted Sales $101.9 $101.9 Operating Profit ($2.0) $1.4 ($3.3) ($0.2) $0.1 Income Taxes ($0.4) $0.5 ($1.1) ($0.0) $0.2 Net
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions) Adjusted EBITDA Free Cash Flow Q3 Q3 2020 2019 Q3 Q3 2020 2019 Net Earnings ($5) $27 0 Net Financing Costs $5 $7 Cash From Operations $ 13 $ 53 Income Taxes $0 $5 Capital Expenditures $ (2) $ (8) Depreciation & Amortization $5 $6 Other $ - $ (1)
Slide 22: Adjusted Operating Profit Waterfall
Adjusted Operating Profit Waterfall* (US$ in millions) $50 $45 $4.9 $23.7 Adjusted $40 Operating $12.3 Profit decreased $35 year-over-year primarily due $30 to COVID-19 $0.5 and $28.3 $27.8 product/service $25 volume decreases, $20 partially offset $9.2 by restructuring $15 and other cost savings $1
Slide 23: TOOL GROUP
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