Enerpac Tool Group Corp. · NYSE:EPAC
Enerpac Tool — Q4 2019 Earnings Presentation
24 slides from Enerpac Tool's earnings presentation, Sep 26, 2019
Slide 1: Fiscal 2019 Fourth Quarter Earnings
Fiscal 2019 Fourth Quarter Earnings September 26, 2019 1
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 Corpora
Slide 3: Launch of the New Company
Launch of the New Company New doing business as name and stock symbol “EPAC” (ticker effective October 7, 2019) Serving the Light and Heavy Industrial tool market - $8b We are a premium brand with a 110 years history of providing: Highest precision and reliability Innovation to solve the most
Slide 4: Enerpac Tool Group
Enerpac Tool Group 27% Manpower Tools Core Growth Above Market Sales Distribution Service • Well positioned for continued growth Rental • 80%+ of sales from high margin Tool & Rental • New product development increasing toward 10% • Commercial operations gaining share 73% Driving World-Class Operati
Slide 5: Q4 Results
Q4 Results Net Sales Adjusted Adjusted Adjusted Operating Profit %* EBITDA %* EPS* $166 $158 12.1% 12.1% 15.3% 14.8% $0.21 $0.21 2018 2019 2018 2019 2018 2019 2018 2019 Core sales decline of 3%; impact of strong US Dollar (2%) Strategic exit of low margin service business in North America Dece
Slide 6: 2019 Full Year Recap
2019 Full Year Recap Net Sales Adjusted Adjusted Adjusted $641 $655 Operating Profit %* EBITDA %* EPS* 12.0% 14.7% $0.73 13.2% 10.1% $0.49 2018 2019 2018 2019 2018 2019 2018 2019 Solid full year results Core sales growth of 4%; impact of strong US Dollar (2%) IT&S core growth of 5% Adjusted Op
Slide 7: Fourth Quarter 2019 Comparable Results
Fourth Quarter 2019 Comparable Results Adjusted Operating Profit (US$ in millions except Diluted EPS) • Maintained operating margin % despite reduction in sales F' 2018 F' 2019 Change • Benefits from North American service Sales $166 $158 -5% restructuring offset by decreased volume Adjusted Operati
Slide 8: Net Sales Waterfall
Net Sales Waterfall $170 $165 $166 $3 $2 $2 $5 $160 $158 $155 $150 $145 $140 Q4 '18 Net Sales FX Translation Strategic Exits Pricing Volume Q4 '19 Net Sales The stronger dollar, strategic exits and market deceleration drove lower sales. US and rest of world (ex Europe) were relatively flat – Europe
Slide 9: Adjusted Operating Profit Waterfall
Adjusted Operating Profit Waterfall* Operating Margin % $24 flat year on year at 12.1% $22 $1 $20 $1 $1 $2 $20 $19 $18 $16 $14 $12 $10 Q4 '18 Operating FX Translation Strategic Exits Pricing, Net of Volume Q4 '19 Operating Profit Tariffs Profit Strategic exits provided an immediate benefit which par
Slide 10: Adjusted EBITDA Waterfalls
Adjusted EBITDA Waterfalls* $28 $26 $1 $26 $1 $1 $2 $24 $1 $23 $22 $20 $18 $16 Q4 '18 EBITDA FX Translation Strategic Exits Pricing, Net of Volume Other Q4 '19 EBITDA Tariffs Adjusted EBITDA benefited slightly from service restructuring offset by decreased volume year-over-year. 10 * Includes certai
Slide 11: Fourth Quarter 2019 Comparable Results
Fourth Quarter 2019 Comparable Results (US$ in millions except Diluted EPS) Adjusted Operating Profit • Maintained operating margin % despite reduction in F' 2018 F' 2019 Change sales Sales $166 $158 -5% • Benefits from North American service restructuring offset by decreased volume Adjusted Operati
Slide 12: Industrial Tools & Services
Industrial Tools & Services Fourth Quarter FY’18 vs FY’19 Adjusted Adjusted EBITDA %* Net Sales Operating Profit %* 21.4% $153 18.8% 20.7% 18.8% $145 2018 2019 2018 2019 2018 2019 Launched 7 new products in Q4 • Core sales decline resulted from strategic exit $180 IT&S Net Sales of unprofitable serv
Slide 13: IT&S Core Sales Trend
IT&S Core Sales Trend Net Sales Year-over-Year (US$ in millions) Core Sales $200 % change $153 $167 10% $159 $142 $149 $150 $150 $137 $145 5% Service $100 HLT Tools 0% tools trend line $50 product core change $0 -5% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Product core sales declined in the q
Slide 14: Free Cash Flow - Leverage Continues to Improve
Free Cash Flow - Leverage Continues to Improve 140 120 $16 $11 100 $14 80 $100 $17 60 $21 $9 40 $7 $9 $10 $9 20 $27 - FCF F'18 EBITDA (CO) EBITDA (DO) Stock Option Cash Taxes Paid Accr. Comp & Cash Divestiture Cap Ex PWC (CO) PWC (DO) Other WC FCF F'19 Proceeds Benefits Costs Net Debt Reconciliation
Slide 15: Sales Waterfall - Guidance
Sales Waterfall - Guidance • Guidance • Product: NPD and other range of commercial actions partially $575-$600 offset by softening market • Stronger US Dollar • Medical growth • Total~ $55 • Service ~$25 • Service: Non-recurring • Non-Core Product Lines large service projects along ~$30 with slowing
Slide 16: FY'20 EBITDA and EPS Assumptions
FY’20 EBITDA and EPS Assumptions EBITDA Assumptions – Actions taken to date and in FY’20 expected to result in EBITDA margin improvement of ~200bps in FY’20 EBITDA margin expansion from Strategic exits – Improved profitability from our decision to exit $55 million of non-core service and produ
Slide 17: Macro Industry Dynamics
Macro Industry Dynamics • General economic factors – Pre Recession GDP Growth Rate USA growth rates, with inflationary concerns – Global GDP: US & Euro Area decline – PMI declining – Commodity prices increasing • Industrial Tools & Services – Slowing activity in the major markets Euro Area – Dealer
Slide 18: Fiscal 2020 Core Sales Expectations
Fiscal 2020 Core Sales Expectations Core Growth FY 2020 FY’20 core growth Industrial Tools (1%) – 3% estimates exclude strategic exits in Service (9%) – (5%) both product and service Cortland 0% – 4% Consolidated (3%) – 1% • Industrial Tools & Services – Retail demand slower in major regions – Tools
Slide 19: Fiscal 2020 Guidance Summary
Fiscal 2020 Guidance Summary (US$ in millions except EPS) Assumptions Full Year • Key FX rates – approximately $1.10/1€ and 2019 2020E $1.22/1£ Net Sales $655 $575-$600 • Shares outstanding ~61 million Adj. EBITDA* $96 $94-$104 Adj. Diluted EPS* $0.73 $0.68-$0.81 • Free cash flow $50-$75 million • T
Slide 20: Q&A
Q&A
Slide 21: Appendix
Appendix
Slide 22: Fourth Quarter 2019 GAAP vs Non-GAAP Reconciliation
Fourth Quarter 2019 GAAP vs Non-GAAP Reconciliation Im pairm ent & Res tructuring Tax Dives titure & Other Exit Reform GAAP Charges Charges Charges Adjus ted Sales $158.3 $158.3 Operating Profit $8.0 ($6.2) ($4.8) $0.0 $19.1 Incom e Taxes $1.6 ($1.9) $1.4 $2.7 ($0.6) Net Incom e ($0.6) ($4.3) ($6.3)
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (US$ in millions) Adjusted EBITDA Free Cash Flow Q4 Q4 Full Year Full Year 2019 2018 2019 2018 Net Earnings ($1) $11 Net Financing Costs $6 $8 Cash From Operations $54 $106 Income Taxes $2 $0 Capital Expenditures ($28) ($21) Depreciation & Amortization $5 $5 Stock
Slide 24: Enerpac Tool Group
ENERPAC |e) TOOL GROUP