Enerpac Tool Group Corp. · NYSE:EPAC
Enerpac Tool — Actuant — Q2 2019 Earnings Presentation
20 slides from Enerpac Tool's earnings presentation, Mar 21, 2019
Slide 1: Fiscal 2019 Second Quarter Earnings
INDUSTRIAL ENGINEERED Fiscal 2019 TOOLS & SERVICES COMPONENTS & SYSTEMS Second Quarter Earnings March 21, 2019
Slide 2: Safe Harbor
Safe Harbor 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 Actuant’s Secur
Slide 3: Q2 Fiscal 2019 – Progress on our Strategic Objectives
Q2 Fiscal 2019 – Progress on our Strategic Objectives Core Growth Above Market • Strong core growth in Industrial Tools & Service (“IT&S”) resulting from investments in commercial and new product development processes Driving World-Class Operations and Service • Move to standard product offering in
Slide 4: Strong Q2 driven by solid execution and core IT&S growth
Strong Q2 driven by solid execution and core IT&S growth Adjusted Net Sales Operating Profit %* Adjusted EBITDA %* Adjusted EPS* 8.6% $0.19 11.1% Core Sales 9.7% +7% 6.2% $0.13 +12% +46% 275 272 +36% 2018 2019 2018 2019 2018 2019 2018 2019 Solid results in Q2 • Core sales growth of 7% – IT&S core gr
Slide 5: Creating Greater Shareholder Value
Creating Greater Shareholder Value Industrial Tools & Service Engineered Components & Systems • Now is the right time to become a pure • Solid improvements in the EC&S over play industrial tools business the last several years • Integration of the Hydratight business can • EC&S has a strong foundati
Slide 6: Capital Allocation Framework
Capital Allocation Framework Capital Allocation Priorities Invest in Ourselves • to achieve organic growth, we invest in new product development, sales force effectiveness, etc. Maintain a strong balance sheet • prudent debt reduction as required and/or drives value Invest in strategic tools acquisi
Slide 7: Second Quarter 2019 GAAP vs Non-GAAP Reconciliation
Second Quarter 2019 GAAP vs Non-GAAP Reconciliation (US$ in millions except EPS) Impairment & Divestiture Tax Reform & GAAP Charges Other Costs Adjusted Sales $271.9 $271.9 Operating Profit $16.4 ($6.9) $0.0 $23.3 Income Taxes $5.8 ($0.2) $2.0 $4.0 Net Income $2.8 ($6.7) ($2.0) $11.5 Effective tax r
Slide 8: Second Quarter 2019 Comparable Results
Second Quarter 2019 Comparable Results (US$ in millions except Diluted EPS) F' 2018 F' 2019 Change Sales $275 $272 -1% Adjusted Operating Profit (1) $17 $23 36% 6.2% 8.6% +240 b ps Adjusted Diluted EPS(1) $0.13 $0.19 46% (1) Excluding restructuring, impairment & divestiture charges 8
Slide 9: Core Sales Trend
Core Sales Trend Net Sales Year-over-Year (US$ in millions) Core Sales $350 $317 10% $301 $300 $289 10% $293 6% $276 $275 $272 4% 7% 5% $250 3% 3% 0% $200 0% Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Solid growth for a 6th straight quarter Strong sales growth in IT&S drove overall improvement 9
Slide 10: Net Sales Waterfall
Net Sales Waterfall 7% core sales growth $295 $290 $9 $5 $9 $285 $12 $280 $11 $275 $275 $270 $272 $265 $260 $255 $250 Q2 '18 Net Sales Volume Pricing Fx Translation Acquistions/ Q2' 19 Net Sales Divestitures, Net Positive impact from commercially driven volume and pricing actions partially offset by
Slide 11: Adjusted Operating Profit and EBITDA Waterfalls
Adjusted Operating Profit and EBITDA Waterfalls* Adjusted Operating Profit 240bps margin $33 US$ millions improvement $31 $2 $29 $27 36% Operating $11 $7 $25 Profit increase $23 $21 $23 $1 $19 $3 $17 $15 $17 Q2 '18 Operating Profit Other Mfg/HLT Acquisitions/Divestitures, Net Volume & Pricing Tariff
Slide 12: Industrial Tools & Services
Industrial Tools & Services Second quarter FY’18 vs FY’19 Adjusted Net Sales Operating Profit % Adjusted EBITDA % 20.2% 17.8% 18.0% 150 +22% Core +30% Sales 15.0% +12% 137 2018 2019 2018 2019 2018 2019 Improving Q2 sales trend demonstrates effectiveness of commercial investments • Strong core sales
Slide 13: Engineered Components & Systems
Engineered Components & Systems Second quarter FY’18 vs FY’19 Adjusted Net Sales Operating Profit % Adjusted EBITDA% $138 6.9% 4.5% 5.3% +17% $122 +366% 0.9% 2018 2019 2018 2019 2018 2019 • Net sales decline in the quarter resulted from flat core sales negatively impacted EC&S Net Sales** $180 by di
Slide 14: Free Cash Flow as Expected - Leverage Continues to Improve
Free Cash Flow as Expected - Leverage Continues to Improve $5 $0 $(3) $(7) $8 -$5 $(8) -$10 $(4) -$15 $(7) -$20 $(4) -$25 $(6) $(31) -$30 -$35 Q2 '18 FCF** EBITDA Cash Taxes Working CapEx Deferred VAT Other Q2' 19 FCF Capital Revenue Financial Leverage Gross Debt to Net Debt Net Debt Reconciliation
Slide 15: Macro Industry Dynamics
Macro Industry Dynamics GDP Growth Rate • General economic factors – tempered USA growth rates, with inflationary concerns – Global GDP: US growth / Euro Area decline – Commodity prices stabilized • Industrial Tools & Services – Positive activity continues in tool sales, Euro Area distributor optimi
Slide 16: Fiscal 2019 Core Sales Expectations
Fiscal 2019 Core Sales Expectations 2019 2019 Q1 2019 Q2 Core Growth Actual Actual 2019 1H 2019 2H (guide) Industrial Tools & 3 – 5% 4% +12% +8% MSD Services (IT&S) Engineered 2 – 5% 2% Flat +1% MSD Components & Systems (EC&S) Consolidated 3 – 5% 3% +7% +4% MSD • Industrial Tools & Services – Tools:
Slide 17: Fiscal 2019 Guidance Summary
Fiscal 2019 Guidance Summary (US$ in millions except EPS) Assumptions Full Year • Key FX rates – approximately $1.15/1€ and $1.28/1£ 2018 2019E Full Year Guidance - Unchanged Net Sales $1,183 $1,150 - 1,190 • Full year core sales +3% to +5% EBITDA $145 $155 - 165 • EPS of $1.09 – 1.20 Diluted EPS $1
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions) Adjusted EBITDA Free Cash Flow Q2 Q2 Q2 Q2 2019 2018 2019 2018 Net Earnings $3 ($18) Net Financing Costs $7 $8 Cash From Operations ($22) ($2) Income Taxes $6 $20 Capital Expenditures $8 $5 Depreciation & Amortization $7 $10 Sale of PP&E $0 $0 Re