Slide 1: Fiscal 2021 First Quarter Earnings
Fiscal 2021 First Quarter Earnings December 21, 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: Fiscal 2021 First Quarter – Executing on Key Priorities
Fiscal 2021 First Quarter – Executing on Key Priorities Employee Safety Remains #1 Concern ▪ Plants continue to operate with appropriate safety measures in place ▪ Non-production personnel have started to return to the office (following guidelines from local governments) with ~40% currently working
Slide 4: Market Update
Market Update Product Order Rates ▪ Order rates continued to improve during the quarter, with IT&S product core sales declines improving sequentially to 14% in Q1 from 20% in Q4 Top Graph - IT&S standard product orders in actual dollars; order dollars are trending positively. Bottom graph - The year
Slide 5: First Quarter 2021 Summary
First Quarter 2021 Summary Financials ▪ Sales: $119M ▪ Core sales decline of 18% (Product down 16% and Service down 24%) ▪ Adjusted EBITDA decremental margins of 18%, an improvement over our target range of 35-45% ▪ Adjusted EPS: $0.09 ▪ Temporary cost actions provided ~ $6M in benefits in the quart
Slide 6: Regional/Vertical Markets – IT&S Products
Regional/Vertical Markets – IT&S Products Americas / Europe ▪ Continued sequential improvement in the quarter with Europe’s recovery (year-over-year growth in the quarter) still ahead of the Americas ▪ Key Verticals ▪ Positive trends continued in Power Generation (Wind/Nuclear), Construction, Rail a
Slide 7: Service and Operations
Service and Operations Service ▪ Experienced significant sequential improvement in the quarter (down 24% year-over-year compared to 45% last quarter) ▪ Routine maintenance projects picked up and some larger projects that were stalled due to COVID-19 resumed work ▪ MENAC region continued to be pressu
Slide 8: First Quarter 2021 Comparable Results
First Quarter 2021 Comparable Results NET SALES* (US$ in millions except EPS) $147 • Core sales decreased 18% - product -16% and service -24% 13.3% 12.2% • IT&S product sales -14% $119 9.4% • Heavily impacted by COVID-19 pandemic $111 • Rate of decrease improved from -20% in Q4 • Other product -35%
Slide 9: Net Sales Waterfall
Net Sales Waterfall* (US$ in millions) $155 $150 $1.5 $145 $5.6 $146.7 $140 Final quarter of strategic $16.8 exits (as outlined in Q4 of $135 fiscal 2019) along with the impact of the COVID-19 $130 pandemic, and sluggish Oil & Gas prices resulted in $125 $8.9 lower sales year-over-year $120 $2.5 $11
Slide 10: Adjusted EBITDA Waterfall
Adjusted EBITDA Waterfall* (US$ in millions) $35 $30 $3.8 $9.4 Adjusted EBITDA $25 $6.4 decreased year-over-year primarily due to COVID-19 product/ $20 service volume $3.8 decreases, partially offset $19.4 by restructuring and other $15 12.3% $5.5 cost savings initiatives $1.2 13.3% resulting in dec
Slide 11: Liquidity – Positioned for Success
Liquidity – Positioned for Success (US$ in millions) $286 $10 $7 1.9 $207 1.8 $152 $159 Q1 2020 Q4 2020 Q1 2021 $255 $255 0.8 $25 Q1 2020 Q4 2020 Q1 2021 Q1 2020 Q4 2020 Q1 2021 Q1 2020 Q4 2020 Q1 2021 Free Cash Flow Cash Balance Gross Debt TTM Financial Leverage Free Cash Flow Leverage • Proactivel
Slide 12: Thoughts on Fiscal 2021 Second Quarter
Thoughts on Fiscal 2021 Second Quarter ▪ Despite typical Q2 seasonality, we expect that Q1 trends will continue ▪ Continue to control what we can control ▪ Remain focused on cost management to deliver comparable decremental margins ▪ Continue to invest in long-term growth through new product develop
Slide 13: Clear Value Creation Model – Long Term Vision
Clear Value Creation Model – Long Term Vision CORE GROWTH ABOVE MARKET DRIVING EFFICIENCY AND PROFITABILITY ~5% CORE GROWTH CAGR OR ~25% EBITDA MARGINS 200-300bps CORE SALES GROWTH > MARKET ▪ 35%-45% incremental ▪ Completion of service & margins product line restructuring ▪ Product innovation ▪ Comm
Slide 14: Q&A
Q&A
Slide 15: Appendix
Appendix
Slide 16: 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: ~$5-7 million 16
Slide 17: EBITDA Margin Expansion – Controlling What We Can Control
EBITDA Margin Expansion – Controlling What We Can Control Fiscal 2019 Fiscal 2020 Fiscal 2021 Timing Dependent on Market Recovery Incremental Profit EBITDA ~25% Incremental Profit on on Growth Continue Footprint Growth Optimization ~275-325bps* ▪ Based on structural Strategic Vision actions taken an
Slide 18: First Quarter 2021 GAAP vs Non-GAAP Reconciliation
First Quarter 2021 GAAP vs Non-GAAP Reconciliation (US$ in millions except EPS) Less Impairment & Divestiture Restructuring GAAP Charges Charges Adjusted Sales $119.4 $119.4 Operating Profit $9.1 ($0.1) ($0.2) $9.4 Income Taxes $2.3 $0.0 $0.0 $2.3 Net Income $4.8 ($0.1) ($0.2) $5.2 Effective tax rat
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions) Adjusted EBITDA Free Cash Flow Q1 Q1 2021 2020 Q1 Q1 Net Earnings $5 $6 0 2021 2020 Net Financing Costs $2 $6 Income Taxes $2 $1 Cash From Operations $ 9 $ (23) Depreciation & Amortization $6 $5 Capital Expenditures $ (2) $ (5) Restructuring Char
Slide 20: Adjusted Operating Profit Waterfall
Adjusted Operating Profit Waterfall* (US$ in millions) $30 Adjusted $25 Operating Profit $3.8 $9.5 decreased year- over-year primarily due to COVID-19 $20 $6.4 product/service volume decreases, partially offset by $15 restructuring and $3.8 other cost savings $15.0 initiatives $9.2 $0.7 $10 $5.5 $2.
Slide 21: Enerpac Tool Group
ENERPAC (7) TOOL GROUP