Slide 1: Fiscal 2020 Fourth Quarter Earnings
Fiscal 2020 Fourth Quarter Earnings September 30, 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 – Executing on Key Priorities
COVID-19 – Executing on Key Priorities Employee Safety is #1 Concern ▪ Plants are operating with additional safety measures in place ▪ Non-production personnel have started to return to the office with some still working from home ▪ Travel is slowly returning to customer/project sites Cost Control M
Slide 4: Market Update
Market Update Product Order Rates ▪ Overall order rates improved in Q4 but continued to be volatile with August 2019 being a tough comparable, with IT&S product core sales declines improving sequentially to 20% from 36% in Q3 Top Graph - IT&S standard product orders in actual dollars; demonstrates t
Slide 5: Fourth Quarter 2020 Summary
Fourth Quarter 2020 Summary Financials ▪ Sales: $111M ▪ Adjusted EPS: $0.02 ▪ Core sales decline of 27% (Product down 23% and Service down 45%) ▪ Free Cash Flow: $10M of cash compared to $50M in the comparable prior year period ▪ Leverage of 1.8x ▪ Temporary cost actions provided ~ $9M in benefits i
Slide 6: Strategy Progress
Strategy Progress Invest in Ourselves - Organic Growth ▪ New Product Development Q4 ▪ 6 new product families ▪ New products as a percent of product sales +10% Full year ▪ 22 new product families and over 370 new tools ▪ +10% of product sales from new products ▪ Commercial effectiveness ▪ Ensuring st
Slide 7: Regional/Vertical Markets – IT&S Products
Regional/Vertical Markets – IT&S Products Americas / Europe ▪ Sequential month on month improvement as the quarter progressed with Europe’s recovery ahead of the Americas ▪ Solid quarter for our HLT sales especially in Europe ▪ Significant marketing activity focused on both retail and wholesale camp
Slide 8: Service and Operations
Service and Operations Service ▪ Service continued to be challenged during the quarter with projects put on hold or pushed out into Q1 ▪ Generally a slow quarter in the Middle East due to summer heat but COVID-19 contributed to further challenges with borders closed ▪ Europe saw sequential improveme
Slide 9: Fourth Quarter 2020 Comparable Results
Fourth Quarter 2020 Comparable Results NET SALES* (US$ in millions except EPS) $158 • Core sales decreased 27% - product -23% and service -45% • IT&S product sales -20% 14.8% • Heavily impacted by COVID-19 pandemic $111 • Rate of decrease improved from -36% in Q3 $102 9.4% • Other product -39% 6.5%
Slide 10: Net Sales Waterfall
Net Sales Waterfall* (US$ in millions) $165 $160 $0.1 $155 $158.3 $8.6 $150 $145 $149.6 $26.8 Planned strategic exits, the impact of the COVID-19 $140 pandemic, and the sharp drop in Oil & Gas prices $135 resulted in lower sales year- $130 over-year $125 $120 $13.9 $115 $110 $2.5 $111.4 $105 $100 $9
Slide 11: Adjusted EBITDA Waterfall
Adjusted EBITDA Waterfall* (US$ in millions) $40 $35 $4.4 $15.2 Adjusted EBITDA decreased year-over-year $30 $9.2 primarily due to COVID-19 product/ $25 service volume $1.8 decreases, partially offset $23.4 by restructuring and other $20 $21.6 12.3% $5.7 13.3% cost savings initiatives resulting in d
Slide 12: Liquidity – Positioning for Success
Liquidity – Positioning for Success (US$ in millions) $50 $460 $211 1.8 1.8 $164 1.7 $152 $286 $255 $11 $10 Q4 2019 Q3 2020 Q4 2020 Q4 2019 Q3 2020 Q4 2020 Q4 2019 Q3 2020 Q4 2020 Q4 2019 Q3 2020 Q4 2020 Free Cash Flow Cash Balance Gross Debt TTM Financial Leverage Cash Preservation Capital Structur
Slide 13: Primary Working Capital
Primary Working Capital Primary Working Capital Trend • Primary working capital 160,000 Primary Working Capital Primary Working Capital % 35.0% improved by $17M quarter-over-quarter • Proactively managed 150,000 30.0% inventory and receivables 140,000 • Compared to May 31, 2020: 25.0% 130,000 • AR d
Slide 14: Thoughts on Fiscal 2021
Thoughts on Fiscal 2021 ▪ Slow market recovery with typical seasonality in first half of fiscal 2021 with potential for growth in the second half of the fiscal year ▪ Continued cost management to deliver comparable decremental margins - may need additional cost actions if recovery is slower than exp
Slide 15: Capital Allocation Priorities Remain Unchanged
Capital Allocation Priorities Remain Unchanged • Given the volatility in the Reduce Debt and Maintain a Strong Balance Sheet market, our current capital allocation priorities are focused on maintaining a strong balance sheet and financial flexibility Invest in Ourselves to Drive Organic Growth • Inv
Slide 16: Thank you to employees for all the hard work and dedication
Thank you to employees for all the hard work and dedication during these challenging times
Slide 17: Q&A
Q&A
Slide 18: Appendix
Appendix
Slide 19: Fiscal 2021 Annual Modeling Assumptions
Fiscal 2021 Annual Modeling Assumptions • Tax Rate: ~25% • Depreciation/Amortization: ~$20-24 million • Interest Expense: ~$6-8 million • Capital Expenditures: ~$10-15 million • Cash Taxes: ~$6-9 million 19
Slide 20: Strategic Vision: EBITDA Margin Expansion
EBITDA Margin Expansion – Controlling What We Can Control Fiscal 2019 Fiscal 2020 Fiscal 2021-2024+ (assuming normal conditions) Incremental Profit EBITDA ~25% Incremental Profit on on Growth Growth Footprint Optimization ~275-325bps* ▪ Based on structural Strategic Vision actions taken and when Str
Slide 21: Fourth Quarter 2020 GAAP vs Non-GAAP Reconciliation
Fourth Quarter 2020 GAAP vs Non-GAAP Reconciliation (US$ in millions except EPS) Less Impairment & Accelerated Pension Divestiture Restructuring Debt Issuance Curtailment GAAP Charges Charges Costs Benefit Adjusted Sales $111.4 $111.4 Operating Profit $3.2 ($0.4) ($1.0) $0.0 $0.0 $4.6 Interest Expen
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions) Adjusted EBITDA Free Cash Flow Q4 Q4 2020 2019 Full Year Full Year Net Earnings $0 ($3) 0 2020 2019 Net Financing Costs $3 $7 Income Taxes $1 $2 Cash From Operations $ (3) $ 54 Depreciation & Amortization $5 $5 Capital Expenditures $ (13) $ (27)
Slide 23: Adjusted Operating Profit Waterfall
Adjusted Operating Profit Waterfall* (US$ in millions) $35 $30 Adjusted $4.6 $15.2 Operating Profit decreased year- over-year primarily $25 $9.2 due to COVID-19 product/service volume decreases, $20 partially offset by $1.8 restructuring and $19.1 other cost savings $17.3 initiatives $15 $5.7 $9.2 $
Slide 24: Enerpac Tool Group
ENERPAC (7) TOOL GROUP